USDA experts cut forecasts for 2023/24 corn production, consumption and stocks, prompting lower prices

Corn prices fell 1.8% amid a downgrade in US export estimates, despite lower forecasts for 2023/24 global corn production, consumption and stocks in a new USDA report. The drop in the US harvest forecast in FY 2023/24 to 383.83 million tons does not scare traders, as it will be the second largest in history after FY 2016/17.

Compared to the July report, the new corn balance for the 2023/24 FY has undergone the following changes:

• The estimate of initial reserves was increased by 1.62 to 297.9 (310.24) million tons due to the adjustment of the balance for 2022/23 MY and an increase in the forecast of the harvest in Brazil by 2 to 135 (116) million tons.
• The global production forecast was immediately reduced by 10.97 to 1213.5 million tons (1151.78 million tons in 2022/23 FY, 1217 million tons in 2021/22 FY and 1129 million tons in 2020/21 FY), in particular for the USA - by 5.32 to 383.83 (348.7) million tons due to a decrease in productivity from 11.13 to 10.98 t/ha, for the EU – by 3.7 to 59.7 (52.97) million tons against the background reduction of sowing areas and yield (especially in Italy, Romania, Germany and Hungary), for China - by 3 to 277 (277.2) million tons due to excessive precipitation in the main producing provinces, for the Russian Federation - by 1.7 to 14, 6 (15.83) million tons due to a decrease in area and productivity. At the same time, the production forecast for Canada was increased by 0.3 to 15.3 (14.54) million tons, and for Ukraine - by 2.5 to 27.5 (27) million tons (although UZA estimates it at 24.2 million tons ), as precipitation and moderate temperatures in July will have a positive effect on productivity.
• The global consumption forecast was reduced by 6.28 to 1,200.37 million tons (1,164.1 million tons in 2022/23 FY, 1,202.9 million tons in 2021/22 FY, 1,143.29 million tons in 2020/21 FY), in particular for the main countries - importers by 4.2 million tons, including the EU - by 2.6 million tons.
• The estimate of world exports was reduced by 2.07 to 196.19 million tons (177.5 million tons in 2022/23 MR and 204.7 million tons in 2021/22 MR), in particular for the USA – by 1.27 to 52.05 (41.28) million tons and the EU - by 0.9 to 4.1 (3.8) million tons. For Ukraine, the export forecast was left at the level of 19.5 (28) million tons, although UZA estimates it at 20 million tons .
• The estimate of world imports was reduced by 1.29 to 187.11 (173.84 and 184.59) million tons, in particular for Egypt - by 1 to 7.5 million tons, as well as for Algeria and Vietnam.
• The forecast of world ending stocks was reduced by 3.07 to 311.05 million tons (297.92 million tons in 2022/23 MR, 306.9 million tons in 2021/22 MR and 293.29 million tons in 2020/21 MR), while analysts estimated them at 313.83 million tons. For China, the estimate was reduced by 3 to 201.3 (205.32) million tons, for the USA - by 1.51 to 55.94 (37) million tons.

On the Chicago Mercantile Exchange, December corn futures fell 1.8% to $191.8/t on Friday, adding just 0.7% for the month.

On the Paris exchange, November corn futures fell 1.2% to €222.75/t or $243.8/t, unchanged for the month and not reacting to a cut in the EU harvest forecast.

A strong corn crop in Brazil in 2022/23 MR and in the US in 2023/24 MR, on the back of higher US inventories, will add pressure on quotations in the coming months, unless the weather in Argentina and Brazil in the fall at planting time corrects.