Higher corn export and inventory estimates in the USDA report added pressure on quotes

In a December report, USDA experts raised their 2023/24 FY 2023/24 global corn production, consumption and inventory estimates to record levels, which will put upward pressure on prices in the near term. But difficult weather conditions in Brazil during the sowing of the second crop of corn may support the quotation.

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

• The estimate of initial reserves was increased by 0.88 mln t to 300.1 mln t (310.34 mln t in FY 2022/23) as a result of data adjustments for FY 2022/23.
• The global production forecast was increased by 1.28 to 1,222.07 million tons (1,157.24 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 Ukraine - on 1 to 30.5 (27) million tons, the Russian Federation – by 1 to 17 (15.8) million tons, the EU – by 0.3 to 60.1 (52.4) million tons, while the estimate for Mexico was reduced by 1 to 25.5 million tons and Canada - by 0.22 to 15.08 (14.54) million tons.
• The global consumption forecast was raised by 1.92 to 1,206.95 (1,167.66; 1,202.9 and 1,143.29) million tons, which looks very optimistic considering the indicators of the last three seasons.
• The estimate of world exports was increased by 1.84 to 201.46 (180.98) million tons, in particular for the USA - by 0.63 to 53.34 (42.2) million tons, Ukraine - by 1 to 21 (27) million t.
• The estimate of world imports was increased by 1.66 to 191.53 (172.21 and 184.59) million tons, in particular for Mexico - by 0.8 million tons, as well as for Turkey and Iraq.
• The forecast for global ending stocks was raised by 0.23 to 315.22 (300.1, 306.9 and 293.29) million tonnes, while analysts estimated them at 313.44 million tonnes.

The U.S. MSME does not typically adjust its output forecasts early in the growing season, so estimates for Brazil and Argentina were left unchanged, although analysts lowered their crop forecasts in Brazil amid delays in soybean planting, which could lead to lower second-crop corn acreage and the overall corn crop.

The Brazilian agency CONAB reduced the forecast of corn production in the country by another 0.53 million tons to 118.53 million tons (137 million tons last year), while the USDA estimates it at 129 million tons.

According to the report, March corn futures on the Chicago exchange fell by 0.5% to $191.1/t (-3.7% compared to the date of the November report), and on the Paris exchange - by 0. 2% to €201.25/t or $216.6/t (-2.7%).

According to the CFTC, traders actively closed short positions and opened long positions last week, indicating expectations for further price increases.