Stocks were unchanged despite downgrading forecasts for global corn production and stocks in the USDA report as the U.S. crop estimate was unexpectedly raised

In the September supply and demand balance sheet, USDA experts again lowered their forecasts for world corn production and stocks in FY 2024/25. But the market hardly reacted to it, given the unexpected increase in the US crop forecast.

Analysts had expected a reduction in US corn preharvest acreage and yield estimates from 183.1 to 182.4 bushels/acre, but USDA experts kept the acreage unchanged and raised the yield forecast to 183.6 bushels/acre (11.51 t/ha ), and, accordingly, production - by 1 million tons to 385.73 million tons (389.7 million tons last year).

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

• The estimate of initial reserves was increased by 1.11 to 309.63 mln t (302.82 mln t in FY 2023/24) after adjusting the balance for FY 2023/24.
• The global production forecast was reduced by 1.25 to 1218.57 million tons (1224.33 million tons in 2023/24 MR and 1160 million tons in 2022/23 MR), in particular for the EU - by 1.5 to 59 (61.45 ) million tons (especially for Romania and Hungary), Serbia – by 0.3 to 5.5 million tons, the Russian Federation – by 0.6 to 13.5 (16.6) million tons. At the same time, the forecast for the USA was increased by 1 to 385.7 (389.7) million tons, and for Ukraine it was left at the level of 27.2 (32.5) million tons, although local agencies estimate the harvest at 23-25 million tons.
• The global consumption forecast was raised by 1.68 to 1,219.85 (1,217.52) million tons (especially for Mexico and Brazil), which will exceed production.
• The estimate of world exports was reduced by 0.1 to 191.37 (199.73) million tons, in particular for the Russian Federation – by 0.4 to 3.8 (6.2) million tons and Serbia – by 0.2 to 3.3 million tons, while for Canada the forecast was increased by 0.2 to 1.9 million tons.
• The estimate of world imports was reduced by 0.45 to 185.4 (192.53) million tons, in particular for China – by 2 to 21 (23.5) million tons, while for the EU the forecast was increased by 1 to 19 (19.5 ) million tons
• The forecast of world final stocks was reduced by 1.82 to 308.35 (309.63) million tons, in particular for China – by 1.5 to 211.3 million tons and the USA – by 0.4 to 52.3 (46) million At the same time, analysts estimated them at 309.4 million tons.

Based on the report, December corn futures on the Chicago Stock Exchange rose by 0.3% to $159.23/t (+0.7% compared to the data after the August report).

In the balance sheet for 2023/24 MR, USDA experts left unchanged the forecasts of corn production in South America. In particular, for Argentina, the forecast was left at the level of 50 million tons (although local agencies estimate the harvest at 47-48 million tons), and for Brazil - at the level of 122 million tons, while the official Conab agency estimates the harvest at 115.72 million tons.

An increase in the shortage of corn supplies from the Black Sea countries will keep the prices of Ukrainian corn at a high level, and the adjustment of harvest forecasts for South America and the United States may lead to an increase in stock market quotations.