Corn prices did not react to the decline in world stocks and crops in the US in the new USDA report

In the November balance of supply and demand, USDA experts unexpectedly raised their forecasts for global corn production and consumption, and lowered the estimate of global stocks in MY 2024/25.

It is expected that in MY 2024/25 the global corn consumption will exceed the production by 10 mln tonnes, while in MY 2023/24 the production exceeded the consumption by 10 mln tonnes.

Analysts expected lower estimates of corn yields and production for the U.S., but the report exceeded these expectations, as USDA experts lowered the yield forecast from 183.8 to 183.1 bushels/acre (11.48 t/ha), and production from 386.18 to 384.64 million tons (389.7 million tons last year).

According to the report, December corn futures on the Chicago Board of Trade increased by 0.8% to 169.7 $/t (+3.7% compared to the data after the release of the October report), but their growth was limited by a sharp decline in the forecast of imports to China, caused by the increase in domestic production.

Compared to the October estimates, the new corn balance for 2024/25 MY has undergone the following changes:

• Estimated beginning stocks increased by 1.57 to 314.22 mln tonnes (304.09 mln tonnes in MY 2023/24) after adjusting the balance for MY 2023/24.
• The world production forecast is raised by 2.21 to 1219.4 million tons (1229.11 million tons in MY 2023/24 and 1160 million tons in MY 2022/23), as the decrease in the US by 1.54 to 384.64 (389.7) million tons, Mexico by 0.5 million tons and the EU by 0.2 million tons will be offset by an increase in the harvest in Uganda, Malawi, Mozambique, Kenya, Cameroon and Belarus.
• The forecast for global consumption was increased by 6.16 to 1229.48 (1219.48) million tons.
• The estimate of world exports was lowered by 0.67 to 189.83 (195.65) million tons, in particular for Brazil – by 1 to 48 (44) million tons, South Africa – by 0.4 to 2.8 million tons. For the US and Ukraine, the forecasts were left unchanged.
• The estimate of world imports was reduced by 0.43 to 183.41 (196.2) million tons, in particular for China – by 3 to 16 (23.5) million tons, while for Mexico the forecast was increased by 1.5 to 24 (24.7) million tons, and for the countries of the South Asia – by 0.9 to 19.6 (19.07) million tons.
• The forecast for world ending stocks was lowered by 2.38 to 304.14 (314.22) million tons, although analysts had estimated them at 305.7 million tons. The estimate was lowered for China by 3.07 to 206.27 (211.29) million tons and for the United States by 1.5 to 49.2 (44.7) million tons.

Decrease in the forecast of corn exports by the black sea countries will support prices for Ukrainian corn, especially amid increased demand from Egypt and Turkey. However, prices will be limited by China’s import cuts and increased supplies from the US.

Overall, the report was neutral, so traders will be watching local production and import forecasts in China, which will affect the markets in the near future.

Tags: USDA Report, corn, prices