USDA adjusts exports and cuts corn stockpiles

The report from the United States Department of Agriculture (USDA) for this month updated the supply and demand picture, with some confirmations and some surprises. The surprises came from the reduction in the area to be reaped, which was greater than the cut in the planted area. This brought production back below 400 mln tons but may suggest strong adjustments to the productivity estimate in August. The confirmations came from old-crop exports, with a strong correction, as we had been indicating, directly affecting cuts in stockpiles. With perfect weather in July during the pollination phase, the 2025 crop appears to be the least of the US concerns. Now, with the imposition of tariffs on large importers of corn and soymeal, this could affect US exports and shift demand from South Asia to South America if tariffs are not negotiated by August.

Expectations for this July report from USDA were focused on the updated planted area and the old-crop export projection. Planted area was duly updated to 95.2 mln acres, according to the first preliminary planting data released on June 30th. The surprise of this information came not from the planted area, but from the projected area to be reaped. USDA reduced the projected area to be reaped from 87.4 to 86.8 mln acres. In other words, planting fell by 100,000 acres from the planting target, but the harvest lost 500,000 acres. This is due to the floods in Texas and the Mississippi Delta.

This smaller area brought production to 398 mln tons, still a record, but lower than the initial estimate. With perfect weather in July, we are unlikely to see any signs of a further reduction in production potential. In August, USDA conducts its field productivity survey, with the update released on August 10th. Private projections suggest the figure could be higher than the 181 bushels/acre currently forecast.

The most significant update, however, was the adjustment to the old-crop export projection, a topic we have regularly covered here. The adjustment went from 66 to 69.85 mln tons. This is because weekly sales have already reached 69.4 mln tons, with seven weeks remaining until the end of the business year. It would not be surprising if USDA had to raise its projection again in August. With this combination of factors, old-crop stocks fell to 34 mln tons and to 42 mln tons for the new crop, which was only reduced by the cut in the export forecast for the 2025/2026 business year.

Attention is now focused on the trade conflict, which has expanded to several countries, but particularly to some major importers of US corn. The United States announced additional tariffs that are set to take effect August 1st for several countries, but primarily for Japan, South Korea, Malaysia, Thailand, and Tunisia, all regular buyers of US corn, and in the case of Japan, the second-largest importer. These countries have not retaliated against the tariffs, so it is unclear whether they will continue to purchase US-origin corn. However, if this crucial corn-consuming bloc has to buy from other importers, the only logical option will be South America, namely Brazil and Argentina.

Despite the positive information on the supply and demand picture, with new-crop stockpiles declining and with no potential for growth in the short term, prices on the Chicago Board of Trade have lost support at USD 4.00/bushel. Tariffs on major importers may be weighing more heavily on prices this week. The market appears to be focused on USD 3.70/bushel, the reference price for local producers.

Argentina has survived the hike in taxes from 9.5% to 12% since July 1st. July shipments are expected to reach 3 mln tons, due to export records, down from 4 mln tons in the same month last year. However, August signals a potentially larger shipment, with 3.3 mln tons, with records already above August 2024. The stance of Asian countries regarding tariffs and US purchases could determine whether demand will increase for Argentina and Brazil. Even if tariffs are ultimately negotiated at 10 to 20%, South American corn will remain cheaper compared to US corn.

Tags: planted area, corn, USDA, export, US, Production, stockpiles