Porto Alegre, August 17, 2020 – The USDA’s report for August reflects the picture of productivity potential adjusted by the reality of the U.S. crop. Expectations for record productivity were confirmed in this report. The market was a little surprised that stocks did not grow in the proportion of production, but USDA contained the increase in stocks with more demand. The surprise of the report is the upward trend in imports from Europe, with potential for 25 million tons.
The 2020 U.S. corn crop was planted within an optimal window, until May 30. Quite different from what happened in 2019, when the planting was strongly delayed by rains, the 2020 season started very well. The climate in June and July showed the rain regime adjusted to the need of crops, and only in Texas did the drought complicate potentials. High summer temperatures do not seem to have affected crops, and not even the adjusted rainfall regime seems to have brought problems. Productivity was raised from 178.5 to 181.8 bushel/acre, a new record. Some satellite research companies project even higher figures. The harvest must begin in September.
Production jumped from 381 to 388 million tons in this August update, a new record. Consequently, the market expected stocks to show proportional growth. USDA raised stocks from 67 to 70 million tons. The increase in the projection of domestic demand and exports consolidated this adjustment. Even so, these are very high stocks even with all the demand expansion. So, there is not much room for a major price recovery without a strong ‘new fact.’
The attention ended up turning to the data of greater corn imports by Europe. Europe has imports to be confirmed at 21 million tons in the 2019/20 cycle, a new record. For 2020/21, the projection is now estimated at 25 million tons. Some wheat losses in France and Russia would be contributing to this figure. The point is that Europe imports mainly from Brazil, Argentina, and Ukraine and could be a supportive point to Brazilian sales in 2020 and 2021.
Agência SAFRAS Latam
Copyright 2020 – Grupo CMA