USDA experts lowered the forecast of world corn production for 2023/24 MY, but increased it for 2024/25 MY

In July's supply and demand balance sheet, USDA experts slightly lowered their 2023/24 FY corn production forecast (although for Brazil, estimates remained unchanged and exceeded local analysts' forecasts), which led to a decrease in ending stocks and offset the increase in production in the new season, so there was not much impact on prices

For 2023/24 MR, the forecast of world corn production was reduced by 2.65 to 1225.4 million tons, in particular for Argentina – by 1 to 52 (36) million tons, Mexico – by 0.6 to 22.7 (28.1) million tons, and the forecast of world consumption was increased by 2 to 1218.66 million tons. As a result, the estimate of final reserves was reduced by 3.2 to 309.1 million tons, in particular for the USA - by 3.7 to 47.7 (34.55 ) million tons and Ukraine - by 1.4 to 1.5 (2.8) million tons. The export estimate was increased by 1.8 to 200.9 million tons, in particular for the USA - by 1.9 to 56.5 (42 ,2) million tons, Ukraine - by 2 to 28 (27.12) million tons, although according to official data, Ukraine exported 29.3 million tons, so in August USDA may revise the balance for the 2023/24 MY.

Compared to the June estimates, the world corn balance for the 2024/25 FY has undergone the following changes:

• The estimate of initial reserves was reduced by 3.26 to 309.13 million tons (302.33 million tons in FY 2023/24).
• The global production forecast was increased by 4.25 to 1,224.79 million tons (1,225.45 million tons in 2023/24 FY and 1,160 million tons in 2022/23 FY), in particular for the USA – by 6.1 to 383.56 (389 ,7) million tons, although the estimate for the EU was reduced by 0.8 to 64 (61) million tons, Canada – by 0.5 to 14.5 million tons, the Russian Federation – by 0.4 to 14.5 million tons.
• The estimate of world consumption was left at the level of 1,222.18 (1,218.66) million tons.
• The forecast of world exports was left at the level of 191.81 (200.95) million tons, although the estimate for the USA was increased by 0.6 million tons, and decreased for the EU by 0.2 million tons and the Russian Federation - by 0.4 million tons.
• The estimate of world final reserves was increased by 0.87 to 311.64 (309.13) million tons, primarily for non-exporting countries: Pakistan – by 1.4 million tons and Turkey – by 0.2 million tons. At the same time, for the main exporters, estimates decreased: for Ukraine by 0.8 to 0.68 (1.51) million tons and for the United States – by 0.12 to 53.2 (47.67) million tons.

On the report, December corn futures on the Chicago Stock Exchange rose 1% to $163.3/t (-13% compared with data after the release of the June report), halting a monthly decline caused by forecasts of a higher harvest in the United States.

The CFTC report showed that specialty funds increased their net short and long positions to a record 354,000 and 62,600 contracts respectively. This indicates that speculators expect price growth in the near future.

Traders did not react to the USDA report and continue to monitor the heat in Ukraine, the EU and the Russian Federation, which may significantly reduce the potential of the future harvest.