Another decrease in world production and stocks of corn had almost no effect on quotations

In the September corn balance sheet, as in the previous one, USDA experts sharply lowered the forecasts of world production and ending stocks. However, the market hardly reacted to this as traders expected worse performance.

The market’s attention is focused on the balance sheets for the US and the EU. The forecast for corn production in the EU in 2022/23 was reduced by only 2 million tons to 58 million tons (according to estimates by European agencies in the range of 55-56 million tons), and the import forecast was left at the level of 19 million tons, which is almost equal to 18.5 million tons of the previous season.

For the USA, the corn production forecast was reduced by 10.54 million tons to 354.19 million tons, which would be 29.75 million tons less than the 2021 harvest, although the day before analysts estimated it at an average of 357.8 million tons, and Pro Farmer experts – to 349.5 million tons. The production forecast was adjusted due to a decrease in the estimate of the area before harvesting by 1 million acres to 80.84 million acres (85.4 million acres last year) and the yield forecast – by 2.9 bushels/acre to 172.5 bushels /acre or 10.8 t/ha (11.1 t/ha last year), while Pro Farmer estimates the yield at 168.1 bush/acre or 10.55 t/ha.

For China, the production forecast was increased by 3 million tons to 274 million tons (272.55 million tons last year), and the import estimate was left at the level of 18 million tons (23 million tons last year), which increased the pressure on prices.

Compared to the August report, the new corn balance for the 2022/23 FY has undergone the following changes:

• The estimate of initial reserves was increased by 0.3 million tons to 312.14 million tons (292.78 million tons in 2021/22 FY and 306.37 million tons in 2020/21 FY), in particular for the EU – by 1 million tons due to an increase import in 2021 by 2.5 million tons to 18.5 million tons.
• The global production forecast was reduced by 7.03 million tons to 1.1726 billion tons (1.219 billion tons in 2021/22 FY and 1.129 billion tons in 2020/21 FY), in particular for the EU – by 2 million tons to 58 million tons (70 .9 million tons in 2021/22 FY), the USA – by 10.54 to 354.19 (383.94) million tons, which is partially compensated by an increase in the estimate for Ukraine by 1.5 to 31.5 (42) million tons and China – by 3 to 274 (272.55) million tons. For Brazil and Argentina, forecasts were left unchanged.
• The estimate of world consumption was reduced by 4.59 million tons to 1,180.18 million tons (1,200.4 million tons in FY 2021/22 and 1,143.29 million tons in FY 2020/21), in particular for the USA due to a reduction in feed and ethanol consumption – by 3.81 to 304.8 (314.84) million tons. In Asia, consumption will decrease due to the replacement of corn with slightly cheaper wheat.
• The global export forecast was reduced by 2.04 million tons to 183.58 million tons, which is 10.7% less than the 203.26 million tons of the 2021/22 season, in particular for the USA – by 2.54 million tons to 57.79 million tons (62.87 million tons in 2021/22 MR and 69.78 million tons in 2020/21 MR), while for Ukraine the estimate was increased by 0.5 million tons to 13 million tons (26 in 21/22 and 23, 86 at 20/21). Ukraine and the USA, which are the main world exporters of corn, will reduce exports by 18 million tons this year, so the problems with the harvest in South America can dramatically change the balance in the second half of the season.
• The estimate of world imports was reduced by 1.53 million tons to 178.25 million tons (181.8 million tons in 2021/22 FY), primarily for Canada, which will increase its own production – by 1 million tons to 1.5 million tons Forecasts for China and the EU were left unchanged.
• The estimate of ending stocks was reduced by 2.15 million tons to 304.53 million tons (312.14 million tons in 2021/22 FY and 293.29 million tons in 2020/21 FY), in particular for the USA – by 4.32 to 30 .95 (38.73 and 31.36) million tons and Ukraine – by 0.7 to 11.37 (5.57) million tons, while for China it was increased by 3 million tons to 207.22 (210.24 ) million tons

After the release of the report, stock exchange quotations for corn rose:

• December futures in Chicago – by 1.3% to $272.8/t (+7.9% for a month, +17.4% for two months),
• November futures on Paris Euronext – by 0.7% to €336.5/t or $329.8/t (-1.9% for the month, + 9.6% for two months).

Black Sea corn continues to fall in price, and October futures in Chicago fell 1% to $322.5/t from Monday (-3.5% for the month, -8.5% for the two months).

Tags: Ukraine, corn, EU, prices, wheat, USA