Corn prices rose sharply after the USDA’s December report significantly lowered the estimate of global stocks

In December’s supply and demand report, USDA experts unexpectedly lowered their estimate of global corn stocks in 2024/25 due to a reduction in their production forecast and a sharp increase in their consumption forecast, sending Chicago futures higher.

In MY 2024/25, world stocks are expected to be 20 million tons lower than last year, and global corn consumption is expected to exceed production by 20 million tons amid increased ethanol processing in the US and Brazil, while in MY 2023/24 production exceeded corn consumption by 10 million tons.

December corn futures on the Chicago Stock Exchange rose 1.5% to $173.4/t on the report (+2.2% from the November report), but their growth was limited by a sharp reduction in the import forecast to China

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

• The initial stock estimate was raised by 2 to 316.22 million tonnes (304.66 million tonnes in MY 2023/24) after prior season balance adjustments.
• The global production forecast was reduced by 1.51 to 1217.89 million tons (1229.63 million tons in 2023/24 MY and 1160 million tons in MY 2022/23), in particular for Mexico by 0.8 to 23.7 (23, 5) million tons and the EU – by 0.8 to 58 (61.87) million tons, while estimates for Ukraine were increased by 0.3 to 26.5 (32.5) million tons and Canada – by 0.15 to 15.35 (15.42) million tons. The European Commission recently increased the forecast of the corn harvest in the EU from 58 to 59.6 million tons, but the USDA took this into account.
• The estimate of world consumption was increased by 8.18 to a record 1223.66 (1218.07) million tons, in particular for Brazil by 2 million tons, the USA by 1.27 million tons, the EU by 0.7 million tons, and Ukraine by 0.4 million tons. Ratings for Iran and Bangladesh have also been raised. We will remind that in November the consumption estimate was increased by 6.16 million tons.
• The global export forecast was increased by 3.21 to 193.04 (193) million tons, in particular for the USA – by 3.81 to 62.87 (58.23) million tons. Production and export forecasts were left unchanged for Brazil and Argentina.
• The global import forecast was increased by 0.5 to 183.92 (197.13) million tons, in particular for Mexico – by 0.5 to 24.5 (24.7) million tons and the EU – by 0.5 to 19.5 (19.8) million tons. At the same time, for China, the estimate was reduced by 2 to 14 (23.5) million tons.
• The estimate of global ending stocks was immediately reduced by 7.7 to 296.44 (316.22) million tons, while analysts estimated them at 303.6 million tons. For the USA, the forecast was reduced by 5.08 to 44.15 (44.7) million tons, and for China – by 2 to 204.27 (211.29) million tons.

Forecasts of a reduction in imports by China and an increase in the export of cheap corn from the USA increase the pressure on the prices of Ukrainian corn.

Good weather in South America is improving crop prospects, which will put upward pressure on quotes in the second half of the season. If world consumption grows less than the USDA forecasts, the world corn balance may improve.

Tags: corn, prices