Corn prices in Chicago fell, despite the decline in inventory estimates in the USDA report

In the February corn supply and demand report, USDA experts unexpectedly sharply lowered their estimate of world opening stocks and production forecast and, accordingly, ending stocks. But despite the bullish report, futures in Chicago fell due to a significant reduction in forecasts for world imports and exports.

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

• The estimate of initial reserves was reduced by 1.65 to 315.81 million tons (304.83 million tons in MY 2023/24), in particular for Argentina by 1 million tons and Ukraine by 0.5 million tons.
• The global production forecast has been reduced by 1.88 to 1,212.47 million tons (1,230 million tons in MY 2023/24 and 1,160 million tons in MY 2022/23), in particular for Argentina due to drought – by 1 to 50 (50) million tons (which exceeds the estimates of local agencies) and for Brazil against the backdrop of prolonged rains – by 1 to 126 (122) million tons.
• The forecast for world consumption has been reduced by 0.51 to 1237.96 (1219.09) million tons, in particular for Argentina – by 2 to 14.3 (14.25) million tons, which is partially offset by increased consumption in Ukraine and Southeast Asian countries.
• The estimate of world exports was reduced by 2.18 to 189.23 (193.25) million tons, in particular for Ukraine – by 1 to 22 (29.5) million tons, and for Brazil – by 1 to 46 (39.5) million tons against the backdrop of a sharp decline in demand from China.
• The estimate of world imports has been reduced by 2 to 181.1 (197.13) million tons, in particular for China – by 3 to 10 (23.5) million tons, which is partially offset by increased supplies to Vietnam and Chile.
• The forecast for world ending stocks was reduced by 3.03 to 290.31 (315.81) million tons, in particular for China – by 3 to 203.18 (211.29) million tons. Analysts estimated stocks at 292.5 million tons.

On the data of the report, March corn futures on the CBOT exchange in Chicago fell by 1.6% to 190.5/t (+2.9% compared to the data after the release of the January report), while corn futures in Paris rose by 0.2% to 217.75 €/t or 225.6 $/t (+1.9%).

A sharp reduction in China’s Corn Imports will increase the pressure on quotes, especially against the backdrop of improving weather conditions in Argentina and Brazil in the coming weeks.

The decrease in the export forecast for Ukraine is due to a decrease in demand for rather expensive Ukrainian corn.

Tags: Ukraine, China, corn, prices, USA