The USDA cut its forecasts for corn production and stocks within traders' expectations

The USDA's November report turned out to be fairly neutral, although analysts expected a more substantial increase in the production forecast for the US, which should have improved the balance for 2022/23 FY.

In the new balance sheet, USDA experts lowered their forecast for world production and ending stocks for the fourth month in a row, which was in line with traders' expectations, so it did not lead to an increase in quotations. The biggest changes are for the US, the EU and South Africa, while China, Brazil and Argentina are mostly unchanged.

Compared with the October report, the following changes have been made to the new corn balance sheet for 2022/23 MY:

• The estimate of initial reserves was raised by 0.67 million t to 307.68 million t (292.78 million t in FY 2021/22 and 306.37 million t in FY 2020/21), due to increased reserves in Canada.
• The global production forecast was reduced by 0.35 million tons to 1.1639 billion tons (1.217 billion tons in 2021/22 FY and 1.129 billion tons in 2020/21 FY), in particular for the EU – by 1.4 million tons to 54.8 million tons (70.98 million tons in 2021/22 MR), South Africa - by 0.6 to 16.7 (16.3) million tons, although for the USA it was increased by 0.89 to 353.84 (382.9 ) million tons. Despite the drought, the forecast for Argentina was left unchanged, as well as for Brazil, while it was lowered for Nigeria and the Philippines, and raised for Angola, Mali, Pakistan, Turkey and Senegal.
• The estimate of world consumption was increased by 0.75 million tons to 1,175.3 million tons (1,203.08 million tons in 2021/22 FY and 1,143.29 million tons in 2020/21 FY), in particular for the USA - by 0.64 to 305 .45 (317.12) million tons and Canada – by 0.6 to 15 (17.36) million tons, which compensates for the decrease in the forecast for the EU by 1.4 to 74.7 (82.9) million tons and the PSA countries by 0.8 to 47.9 (48.5) million tons, where the use of forage wheat instead of corn will increase.
• The global export forecast was reduced by 0.3 million tons to 182.74 million tons, which would be 10.4% less than the 2021/22 MR indicator of 201.83 million tons. The export forecast was reduced for South Africa, and for the USA, Ukraine, Brazil and Argentina was left unchanged.
• The estimate of world imports was reduced by 1.36 million tons to 177.6 million tons (183.9 million tons in 2021/22 MR), in particular for the PSA countries - by 0.5 million tons to 17.5 (16.16) million t. For China and the EU, the import estimates were left unchanged, while for Algeria, Turkey and Vietnam they were lowered.
• The forecast of world ending stocks was reduced by 0.43 mln t to 300.76 mln t (307.687 mln t in FY 2021/22 and 293.29 mln t in FY 2020/21), as the increase in the estimate of reserves in the US by 0.25 mln t to 30.02 (38 and 31.36) million t and Vietnam does not compensate for their reduction in Nigeria and South Africa.

Analysts had expected a more significant decrease in the estimate of stocks, but the USDA practically did not change the balance on corn, so the quotations decreased slightly:

• December futures in Chicago – by 0.1% to $261.6/t (-4% for the month),
• March futures on the Paris Euronext – by 1% to €323.5/t or $330/t (-5.2% for the month),
• December futures in Chicago - by 0.6% to $260.5/t (-12.8% for the month).

The reduction in global demand for corn against the background of increased wheat supply will increase the pressure on quotations in the near future.