USDA experts did not reduce the forecast of corn production in Brazil, which surprised the market


The April WASDE supply and demand report lowered forecasts for global corn production, consumption, exports, and stocks, but to a much lesser extent than analysts had expected, which surprised the market and led to a drop in quotations. The harvest forecast for Brazil was left unchanged, although local agencies lowered their estimates, but the USDA usually makes adjustments on the eve of the harvest.

Compared to the March estimates, the new corn balance for 2023/24 MY has undergone the following changes:

  • Estimate of beginning stocks increased by 0.58 to 302.19 mln tonnes (310.52 mln tonnes in 2022/23 MY) due to the adjustment of the balance for 2022/23 MY.
  • The forecast for world production was lowered by 2.38 to 1227.86 million tons (1157.74 million tons in 2022/23 MY, 1217 million tons in 2021/22 MY and 1129 million tons in 2020/21 MY), in particular for South Africa – by 1.5 to 14 (17.1) million tons, Argentina – by 1 to 55 (36) million tons and Mexico – by 0.5 to 23.3 (28.08) million tons. For Brazil, the harvest forecast was left at 124 (137) mln tonnes, while analysts estimated it at 121.75 mln tonnes, and Conab agency lowered the estimate from 112.75 to 110.9 (131.2) mln tonnes.
  • The estimate of world consumption was lowered by 0.47 to 1211.77 (1166.34, 1202.9 and 1143.29) million tons, in particular for Argentina – by 1 million tons, which will be partially offset by an increase in consumption in the US.
  • The forecast for global exports was lowered by 1.68 to 200.59 (180.23) million tons, in particular for South Africa by 0.9 to 2 million tons and India by 0.8 million tons, while the estimate for Russia was increased by 0.3 million tons. Export forecasts for the US, Ukraine, Argentina and Brazil remained unchanged, although Conab lowered its forecast for Brazil by 1 million tons to 31 million tons compared to last year’s 54.6 million tons.
  • The forecast for global imports was lowered by 2 to 187.47 (172.21 and 184.59) million tons, in particular for the EU – by 1 to 21 (23.15) million tons, Southeast Asia – by 0.4 million tons, while the estimate for Mexico was increased by 0.5 to 21.1 million tons. For China, the forecast was left at 23 million tons.
  • The estimate of world ending stocks was lowered by 1.35 to 318.28 (302.19, 306.9 and 293.29) million tons, although analysts estimate them at 316.72 million tons. For the US, the estimate was lowered by 1.27 to 53.9 (34.55) million tons.

According to the report, the may corn futures on the Chicago stock exchange yesterday fell by 0.5% to 168.8 $/t (-2.5% compared to the data after the release of the report in March), while December futures for the new crop are trading at 9% more expensive – at 183.5 $/t.

Ukrainian corn is offered at the best price on the world market – 175-180 $/t FOB, so the demand for it remains high, although it has already been confirmed that Chinese buyers have canceled purchases of 4-5 vessels of Ukrainian corn over the past 2 weeks.

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