September USDA corn balance sheet surprised traders and led to lower prices

USDA’s September corn balance sheet, which raised beginning and ending stocks and the US crop estimate, surprised traders and sent corn prices lower. Analysts had predicted a decline in corn yields in the US, which happened in the USDA report, but due to the increase in planted areas, the harvest estimate was raised, contrary to market expectations.

Compared to the August estimates, the new corn balance for the 2023/24 MY has undergone the following changes:

• The initial stock estimate has been raised by 1.55 to 299.47 million t (310.54 million t in MY 2022/23) following a balance sheet adjustment for MY 2022/23, where the forecast for the harvest in Brazil has been increased by 2 to 137 (116) million t and in Mexico – by 1.5 to 28 million tons.
• The global production forecast was increased by 0.79 to 1,214.29 million tons (1,155.62 million tons in MY 2022/23, 1,217 million tons in MY 2021/22, and 1,129 million tons in MY 2020/21), in particular for the USA – on 0.59 to 384.42 (348.7) million tons thanks to an increase in the sowing area by 800 thousand acres, for Ukraine – by 0.5 to 28 (27) million tons against the background of favorable weather, while for the EU the estimate was reduced by 0 .3 to 59.4 (52.97) million tons, especially for France and Bulgaria, although production in Germany will increase slightly.
• The estimate of world consumption was reduced by 0.6 to 1199.77 million tons (1166.69 million tons in 2022/23 MY, 1202.9 million tons in 2021/22 MY and 1143.29 million tons in 2020/21 MY).
• The global export forecast is left at the level of 196.19 million tons, in particular for Ukraine – at the level of 19.5 (28) million tons against the background of the still blocked Black Sea ports. At the same time, for 2022/23 FY, the export estimate was increased by 4.16 to 181.66 million tons (204.7 million tons in 2021/22 MY), in particular for Brazil, Argentina, and the USA – by 1 million tons to 57 million tons, 23 million tons and 42.29 million tons, respectively.
• The forecast of world imports was also left at the level of 187.11 (175.6 and 184.59) million tons.
• The estimate of world ending stocks was increased by 2.94 to 313.99 million tons (299.47 million tons in 2022/23 MY, 306.9 million tons in 2021/22 MY and 293.29 million tons in 2020/21 MY), primarily for Brazil, the USA and Ukraine, although analysts estimated reserves at 310.12 million tons.

According to the report, December corn futures in Chicago fell by 1.9% to $187.6/t (-2.2% for the month, -32% for the year), and November futures on the Paris exchange – by 0.8% to €209.75/t or $225.4/t (-6.2% for the month, -35% for the year).

For China, forecasts were left unchanged, but China’s CASDE estimates the FY 2023/24 corn crop at 284.9 million tons, compared to USDA’s previous estimate of 277 million tons, so the data may be adjusted in the next report.

Tags: corn, prices, USDA Report