Corn prices did not respond to lower estimates of global stocks and US harvest in new USDA report

In November's supply and demand balance sheet, USDA experts unexpectedly raised their forecasts for world corn production and consumption, and lowered their estimate of world stocks in FY 2024/25.

In FY 2024/25, global corn consumption is expected to exceed production by 10 million tons, while in FY 2023/24, production exceeded consumption by 10 million tons.

Analysts had expected lower yield and production estimates for U.S. corn, but the report's data exceeded those expectations, as USDA experts lowered their yield forecast from 183.8 to 183.1 bushels/acre (11.48 t/ha) and production from 386, 18 to 384.64 million tons (389.7 million tons last year).

December corn futures on the Chicago Stock Exchange rose 0.8% to $169.7/t on the report (+3.7% from the October report), but their growth was limited by a sharp decline in the import forecast to China, caused by the increase of own production.

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

• The estimate of initial reserves was increased by 1.57 to 314.22 mln t (304.09 mln t in 2023/24 MY) after adjusting the balance for 2023/24 MY.
• The global production forecast was raised by 2.21 to 1,219.4 million tons (1,229.11 million tons in FY 2023/24 and 1,160 million tons in FY 2022/23), as the estimate for the United States decreased by 1.54 to 384.64 ( 389.7) million tons, Mexico by 0.5 million tons and the EU by 0.2 million tons will be compensated by the increase in harvest in Uganda, Malawi, Mozambique, Kenya, Cameroon and Belarus.
• The forecast of world consumption was increased by 6.16 to 1229.48 (1219.48) million tons.
• The estimate of world exports was reduced by 0.67 to 189.83 (195.65) million tons, in particular for Brazil – by 1 to 48 (44) million tons, South Africa – by 0.4 to 2.8 million tons. For the USA and Ukraine forecasts were left unchanged.
• The estimate of world imports was reduced by 0.43 to 183.41 (196.2) million tons, in particular for China – by 3 to 16 (23.5) million tons, while for Mexico the forecast was increased by 1.5 to 24 (24 .7) million tons, and the PSA countries - by 0.9 to 19.6 (19.07) million tons.
• The forecast of world ending stocks was reduced by 2.38 to 304.14 (314.22) million tons, although analysts estimated them at 305.7 million tons. The estimate for China was reduced by 3.07 to 206.27 (211.29) million t and the USA - by 1.5 to 49.2 (44.7) million tons.

A decrease in the corn export forecast by the Black Sea countries will support prices for Ukrainian corn, especially against the background of increased demand from Egypt and Turkey. However, prices will be limited by a reduction in imports by China and an increase in supplies from the United States.

Overall, the report was neutral, so traders will be watching local production and import forecasts in China to influence markets in the near term.