USDA surprises by cutting 2024 US corn production

The January report from the United States Department of Agriculture (USDA) has been conflicting in recent years, and this January 2025 was no different. Industry analysts have been projecting crops with ever-rising yields, which is normal given the technology that is being used. Projections in May already start with record projected levels, but, of course, they await the weather progress. In 2024, the weather was practically perfect for crops, but even so the projections and the actual final data were divergent. Will there be changes in methodology ahead? It clearly seems so, since the divergences between the projection and the effective data have brought fundamental changes to markets.

The first estimate of US production is officially released in the May supply and demand report. In recent years, the analysis sector has projected record yield in this first projection. Then, the weather defines this alignment with the estimate. The issue is that in recent years this projection and the final data have been very divergent, that is, there is a misalignment in the monthly update of the supply and demand picture and the production projection. In January, the final data end up not confirming the projection of the analysis sector, and surprises end up occurring, bringing great volatility to prices.

In this January report, with the closing of the 2024 crop, it was no different. The initial projection with high yields and the perfect climate for the 2024 season sent the estimate to over 183 bushels/acre. There were small cuts until December, but the final data ended up being 179.4 bushels/acre, a new record, indeed, but below the projection. It is important to point out that the USDA agency that projects the crop is not the same one that defines the final data. This yield cut brought a significant cut to production, of almost 6 mln tons.

Now, the final production of 377.6 mln tons has made it possible to have even smaller final stocks than those that had been projected. Stocks fell from 44 to 39 mln tons, as USDA held back part of demand. The current stocks are not a disaster, however, they will demand much from the 2025 crop and suggest some containment of exports from now on through prices and premiums.

The CBOT prices broke the important technical barrier of USD 4.60/bushel and, depending on the pace of exports from now on, they could reach USD 5.10. In March, the first planting intention for the 2025 crop will be released, and, after that, another weather season will affect the US crop. It seems to us that it will not be difficult for corn to recover at least 2 mln acres in the next planting.

Small adjustments to China’s crop and imports, now more in line with data from the Chinese government. The focus now is on the climate situation in South America. At this point, we must evaluate the climate backdrop. The rain in Argentina was very good until the end of December. In January, in these first 10 days, there were a real decrease in rain and the arrival of high temperatures. Even so, the western region registered regular rain that has kept the local corn and soybean crops in good condition. Buenos Aires, Santa Fé, and Entre Rios show this irregular rain, which is quite worrying for crops from now on. Argentina will have another dry week ahead with the return of rain only in the week of the 20th. We do not see a worrying scenario for the neighboring country.

Tags: projection, China, corn, USDA, prices, weather, US, Production, yields, crop, stocks