Higher corn export and inventory estimates in the USDA report added pressure on quotes

In the December report, USDA experts increased to record levels the estimates of global corn production, consumption and stocks in 2023/24 MY, which will increase the pressure on prices in the near future. However, difficult weather conditions in Brazil during the planting of the second corn crop may support the quotes.

Compared to the November estimates, the December balance of corn for 2023/24 MY has undergone the following changes:

• Estimate of beginning stocks increased by 0.88 mln tonnes to 300.1 mln tonnes (310.34 mln tonnes in 2022/23 MY) due to the adjustment of data for 2022/23 MY.
• The global production forecast was increased by 1.28 million tons to 1222.07 million tons (1157.24 million tons in 2022/23 MY, 1217 million tons in 2021/22 MY and 1129 million tons in 2020/21 MY), including Ukraine – by 1 to 30, 5 (27) million tons, Russia – by 1 to 17 (15.8) million tons, the EU – by 0.3 to 60.1 (52.4) million tons, while the estimate for Mexico was reduced by 1 to 25.5 million tons and Canada – by 0.22 to 15.08 (14.54) million tons.
• The forecast for world consumption was increased by 1.92 to 1206.95 (1167.66, 1202.9 and 1143.29) million tons, which looks very optimistic given the performance of the last three seasons.
• The estimate of world exports was increased by 1.84 to 201.46 (180.98) million tons, in particular for the United States – by 0.63 to 53.34 (42.2) million tons, Ukraine – by 1 to 21 (27) million tons.
• The estimate of world imports was increased by 1.66 to 191.53 (172.21 and 184.59) million tons, in particular for Mexico – by 0.8 million tons, as well as for Turkey and Iraq.
• The forecast of world ending stocks was increased by 0.23 to 315.22 (300.1, 306.9 and 293.29) million tons, while analysts estimated them at 313.44 million tons.

Usually the USDA does not adjust its production forecasts at the beginning of the growing season, so for Brazil and Argentina, the estimates remained unchanged, although analysts lowered crop forecasts in Brazil amid a delay in soybean planting, which could lead to a reduction in the area under corn second crop and the total corn crop.

Brazilian Agency CONAB lowered its forecast of corn production in the country by another 0.53 million tons to 118.53 million tons (137 million tons last year), while the USDA estimates it at 129 million tons.

According to the report, March corn futures on the Chicago Board of Trade fell 0.5% to 191.1 $/t (-3.7% compared to the date of the November report), and on the Paris Stock Exchange – by 0.2% to 201.25 €/t or 216.6 $/t (-2.7%).

According to the CFTC, last week traders were actively closing short positions and opening long ones, which indicates the expectation of further price increases.

Tags: corn, prices