A sharp increase in the forecast of the corn harvest for the US and China collapsed the quotation

In a January report, USDA experts unexpectedly raised their 2023/24 FY 2023/24 global corn production, consumption and stocks forecasts to record highs, sending prices crashing. However, they left Brazil's crop forecast unchanged, although local agencies significantly lowered their estimates.

According to the report, March corn futures fell on the Chicago exchange by 2.4% to $176/t (-8.6% compared to the data after the December report), and on the Paris exchange - by 0.3 % to €191/t or $209.15/t (-5.4%).

Compared to the December estimates, the January corn balance for the 2023/24 MR underwent the following changes:

• The estimate of initial reserves was increased by 0.46 mln t to 300.56 mln t (310.52 mln t in FY 2022/23) as a result of the balance sheet adjustment for FY 2022/23.
• The global production forecast was increased by 13.66 to 1,235.73 million tons (1,155.63 million tons in 2022/23 FY, 1,217 million tons in 2021/22 FY and 1,129 million tons in 2020/21 FY), in particular for China - on 11.84 to 288.84 (277.2) million tons and the USA - by 2.72 to 389.69 (346.74) million tons thanks to improved yields, while for Brazil the forecast was reduced by only 2 to 127 (137) million tons, although local agencies lowered their estimates to 117-120 million tons against the background of delays and reductions in the area of sowing of second-crop corn. For India and Paraguay, crop forecasts have also been increased.
• The estimate of world consumption was increased by 4.12 to 1211.07 (1165.59; 1202.9 and 1143.29) million tons, in particular for the USA and China - by 2 million tons, while for the EU the forecast was reduced by 1 million tons.
• The global export forecast was reduced by 0.57 to 200.89 (180.81) million tons, in particular for Brazil – by 1 to 54 (57) million tons.
• The forecast of world imports was reduced by 0.77 to 190.76 (172.21 and 184.59) million tons, in particular for the EU by 1 to 23.5 (23.15) million tons, although estimates were increased for Iran, Iraq and Turkey .
• The estimate of global ending stocks was increased by 10 to 325.22 (300.56, 306.9 and 293.29) million tons, although analysts estimated them at 313 million tons. An increase in stocks in China by 10 million tons will hardly affect the world market , as the country continues to actively import corn.

The Brazilian agency CONAB reduced the forecast of corn production in the country by another 1 million tons to 117.6 million tons (137 million tons last year) against the background of a possible reduction in the area of sowing of second-crop corn.

The Rosario Grain Exchange raised its forecast for Argentina's corn crop to 59 million tonnes, although the USDA kept its estimate at 55 million tonnes.

Thus, the market will remain under pressure from large inventories and reduced demand until the conclusion of the corn harvest in Argentina and Brazil.