Middle East and North African wheat discharges usually fall in June and July, before rebounding sharply in August. That pattern has held again this year, with 908,865 Mt offloaded so far this month. That is equal to a rate of 41,158 Mt/d, and is down from 38,870 Mt/d discharged in June. It is also slightly below the import pace from a year ago of 45,956 Mt/d. Most of the wheat going to those regions comes from Ukraine and Russia, which usually ramp up exports in July following harvest.
Corn and soybean prices on the CBOT have steadied at higher levels in the last couple days, as signs of improving US crops took some steam out of recent rallies. Corn ratings were generally higher across Indiana, Illinois and Pennsylvania, while soybeans improved in Illinois, Kansas and Nebraska. If this translates into higher exports later this year, it could take some pressure off the low export levels seen from Brazil recently.
Brazil exported 94,000 Mt of corn in June, and was below last year’s 645,014 Mt and also below 2019’s 2.189mn Mt. Brazilian corn loadings usually pick up strongly in July as well, but only 468,189 Mt has been exported so far this month, with one-third of the month left to go. That compares to 3.791mn Mt in 2020 and 5.529mn Mt in 2019. Brazilian soybean exports have been closer to normal levels. Argentinian corn exports have been near-normal, but soybeans are currently 252,346 Mt, and sharply below last year’s 936,655 Mt.
Ukrainian wheat exports are currently on a pace of 12,983 Mt/d this month, which is down a sharp 61% from June’s 33,621 Mt/d. The decline is counter to the trend in each of the last two years, where exports rose by nearly 800%. Russian exports show a similar trend, with this month’s loadings down 61% from June, to 19,810 Mt/d. They were up 660% in July last year, and up 425% in July 2019. Both countries’ exports are being adversely affected by drought conditions.
Following a US corn planting season that progressed faster-than-normal, the development of the crop has lost some ground recently. Only around 26% of the crop is silking, which is below the five-year average of 30%. The corn condition shows 65% good-to-excellent compared to 69% a year ago. The next worry for the market is drought in the northwestern part of the corn belt, and its effect on the upcoming pollination.
While the shortfall in crop condition may not seem especially significant, it may be enough to keep prices rangebound just below their recent highs. Strong prices may help to encourage an increase in the pace of southern hemisphere exports. Corn exports from Argentina reached 120,438 Mt/d in June, and are down slightly so far this month to 94,009 Mt/d. The country typically exports the most in July or August. Exports from Brazil usually begin ramping up sharply in July and peak sometime in August. So far this month, however, Brazilian exports are 17,875 Mt/d and are far short of 120,382 Mt/d seen in the same month a year ago. Drought has hampered this year’s production.
Soybean exports from Brazil fell to 255,113 Mt/d in June from 398,945 Mt/d in May. Both levels were sharply below the same periods a year earlier, with exports in June 2020 at 411,596 Mt/d. Some farmers were said to be holding back exports while awaiting higher prices, but prices have been sideways or lower since a peak was reached about a month ago. Argentinian exports were also down in June to just 11,622 Mt/d. That is down 41% from May and 73% lower than a year ago.
Part of the decline is also normal seasonality, as exports from both countries typically peak in April or May and decline steadily through January before rising again.
US corn loadings are 50% lower so far this month than in May, and currently at 106,521 Mt/d. Loadings normally decline after a peak sometime between March and May, as the new crop is planted and developed. This month’s drop is slightly larger than average, with June loadings falling 14% in 2020, 56% in 2019 and 4% in 2018.
Corn prices are higher today, after weekend rains saturated much of the Midwest. The rally is being fueled by worries about excess rain creating flooding conditions. It is countered by other parts of the corn belt, which were experiencing drought conditions, and found the rain to be beneficial.
Russian wheat exports are up sharply so far this month, at 49,193 Mt/d. Volumes are increasing on the prospect of an improving crop and better weather conditions. Russian exports were 8,540 Mt/d in the same month a year ago and 15,779 Mt/d in June 2019. Meanwhile, the US wheat crop condition is deteriorating, with 49% said to be in good or excellent condition through Monday. That’s down from 52% a year ago, with some farmers in the Great Plains suggesting that excessive heat is combining with drought to damage the crop.
Brazilian soybean loadings are 316,814 Mt/d so far this month, down from 391,891 Mt/d in May and 411,596 a year ago. Some farmers are holding back stocks, which is hampering exports and causing some crushers to import beans. Brazilian imports this month stand at 2,400 Mt/d, and are the first since February.
Less than favorable weather has been hampering the US crop, and creating a dead-cat bounce in prices. Soybeans rated good-to-excellent were 60% in Monday’s update, which is down from 67% two weeks earlier. If prices continue to move higher, it could bring some Brazilian farmers off the sidelines and prompt destocking.
Russian wheat export prices have fallen slightly recently, based on an improved outlook for the upcoming harvest. That could help to boost the normal surge in wheat loadings, which usually takes place in July. Russian loadings are 11,191 Mt/d so far this month, which is up from 6,575 Mt/d in May. Last year, loadings surged in July to 79,367 Mt/d from just 8,540 Mt/d in June.
At the half-way point of the month, wheat discharges in the Middle East and North Africa regions are 39,154 Mt/d so far, which is -10% from a year ago. Egypt offloaded 9,674 Mt/d to date, which is down from 15,408 Mt/d in June last year. Some countries are discharging more than last year, however, including Morocco and Iran. They imported 8,993 Mt/d and 4,402 Mt/d respectively so far this month, which is up 58% and 83% respectively from a year ago.
MENA’s imports from Ukraine are up 41% this month from a year ago, to 11,558 Mt/d, but is countered by a decline of 43% from Russia, which delivered 6,923 Mt/d so far this month. Supplies from Russia may increase as the month progresses, as Russian exports are 12,135 Mt/d and up 42% from a year ago. Ukrainian exports are 48% lower so far, at a much lower 3,271 Mt/d. Wheat exports from both countries usually pick up strongly starting in July.