The USDA again lowered its forecasts for world corn production, consumption and stocks

For the seventh month in a row, USDA experts have lowered their forecasts for global corn production, consumption and stocks. However, the market barely reacted to yesterday's report and quotes were unchanged, as the decline in the production forecast for Argentina was in line with analysts' estimates, although it exceeded the data of local agencies.

Compared to the January estimates, the new corn balance for the 2022/23 MR has undergone the following changes:

• The estimate of initial reserves was increased by 0.3 million t to 306.28 million t (292.54 million t in FY 2021/22 and 306.37 million t in FY 2020/21) as a result of the balance sheet adjustment for FY 2021/22.
• The global production forecast was reduced by 4.57 million tons to 1,151.36 million tons (1,217 million tons in 2021/22 FY and 1,129 million tons in 2020/21 FY), in particular for Argentina – by 5 to 47 (49.5) million .t, although analysts estimated it at 48.5 million t, and the local exchange in Rosario (RGE) lowered the estimate by 2.5 million t to 42.5 million t due to the prolonged drought. For Brazil, the forecast was left unchanged at 125 (116) million tons, although the Conab agency lowered its estimate by 1.3 million tons to 123.7 million tons due to the delay in the sowing of second-crop corn.
• The estimate of world consumption was reduced by 3.1 million tons to 1,162.34 million tons (1,202.5 million tons in 2021/22 FY and 1,143.29 million tons in 2020/21 FY), in particular for Argentina – by 2 million tons, Brazil - by 3 million tons, although for the EU it was increased by 2 million tons.
• The global export forecast was increased by 2.9 million tons to 181.07 million tons (204.7 million tons in 2021/22 MR), in particular for Ukraine - by 2 to 22.5 (27) million tons, Brazil - by 3 to 50 (48) million tons, which compensates for the reduction of the estimate for Argentina by 3 to 35 (34) million tons due to the reduction of the harvest. For the USA, the estimate was left unchanged, despite the low pace of exports in the first half of the season.
• The forecast of world imports was increased by 1.55 million tons to 177 million tons (184.5 million tons in 2021/22 FY), in particular for the EU - by 2 to 23.5 (19.8) million tons against the background of increased supplies from Ukraine, for which the export of cheap corn is blocked by restrictions on the grain corridor.
• The estimate of world ending stocks was reduced by 1.14 million t to 295.28 million t (306.3 million t in FY 2021/22 and 293.29 million t in FY 2020/21), while analysts estimated them at 294.7 million tons. The decrease in reserves in Ukraine and Indonesia partially offsets their growth in Brazil and Canada.

Traders expected and had already factored in a cut in the production forecast for Argentina, so the "bullish" USDA report did not lead to a significant jump in prices, which remain at last month's level.

Yesterday, quotes rose:

• by 0.7% to $267.1/t - March futures in Chicago (+1% for the month),
• by 1.2% to €289/t or $310.1/t - March futures on Paris Euronext (+1.7%).

At the same time, February futures for Black Sea corn in Chicago fell by 0.3% to $253/t (-1.9%).

Lower global fertilizer prices are contributing to an increase in U.S. corn acreage, which will put upward pressure on prices in the near term, especially amid offers of cheap corn from Ukraine and improved crop prospects in Brazil thanks to abundant rainfall at planting time.