The USDA has sharply increased its forecast for corn production and stocks, including in Ukraine

In yesterday's report, USDA experts significantly changed the balance on corn by 2021/22 MY and 2022/23 MY, increasing estimates of production and final stocks, which surprised markets.

In the balance of 2021/22 MY , the forecast of corn production was increased by 0.45 million tons to 1216.07 million tons, the consumption forecast was reduced by 1 million tons to 1198.39 million tons, as a result of which the estimate of final stocks was increased by 1.53 million tons up to 310.92 million tons, although analysts estimate them at 308.5 million tons.

The balance sheet for 2022/23 MY significantly increased estimates of corn production, consumption and final stocks, but they will be significantly lower than last year's level, so they will not significantly affect corn prices, which were high before the war in Ukraine.

Compared to the May report , the balance for 2022/23 MY has undergone the following changes:

• The estimate of initial reserves was increased by 1.53 million tons to 310.92 million tons (293.25 million tons in 2021/22 MY and 306.37 million tons in 2020/21 MY).
• The forecast of world production was increased by 5.09 million tons to 1.18581 billion tons (1.216 billion tons in 2021/22 MY and 1.129 billion tons in 2020/21 MY) due to an increase in the estimate for Ukraine by 5.5 million tons to 25 million tons (42.13 million tons in 2021/22 MY) against the background of successful sowing, although in the south and east of the country are fighting. For the United States, China, Brazil and Argentina, the estimates remained unchanged.
• The forecast of world consumption increased by 1.31 million tons to 1186.28 million tons (1198.39 million tons in 2021/22 MY and 1143.29 million tons in 2020/21 MY), in particular for Ukraine - by 1.5 million tons and EU countries - by 1 million tons.
• The forecast of world exports was left at 187.7 million tons, which will be inferior to 196.7 million tons in the 2021/22 season, as exports from Ukraine will decrease from 23 to 9 million tons.
• The forecast of world imports was reduced by 0.16 million tons to 176.68 million tons (179.45 million tons in 2021/22 MY), as the reduction in supplies to Jordan, Morocco and Peru will not be offset by an increase in imports to the EU by 1 million tons 16 million tons (16 million tons). For China, the estimate was left at 18 million tons, which will be 5 million tons lower than the 2021/22 MY.
• The estimate of final stocks increased by 5.32 million tons to 310.45 million tons, which will be only 0.47 million tons lower than the level of 2021/22 MY, but 5.3 million tons higher than the average estimate of analysts. For Ukraine, the estimated reserves were increased from 8.07 to 12.07 million tons, for the United States - from 34.55 to 35.55 million tons.

Declining corn production in major exporting countries (the United States and Ukraine) will remain a major factor in price pressures, especially amid blocking exports from Ukrainian ports.

July corn futures in Chicago hardly changed after the release of the report and traded at $ 304.4 / t, while December rose by $ 1.48 / t to $ 296.44 / t, although both fell in a month by 1% and 4.6%, respectively.