The decrease in the forecast of corn production in the EU by 8 million tons worsened the balance of the USDA for 2022/23 MR

If in the July report USDA experts almost did not change the balance on corn, then in August they sharply reduced the forecasts of world production and final stocks due to a decrease in the harvest in the EU by 8 million tons.

World prices hardly reacted to the deterioration of the balance, as traders have already taken into account the reduction of the harvest in the forecasts of Stratégie Grains, where the estimate of corn production in the EU in 2022/23 MR was reduced by 10 million tons to 55.4 million tons, which is a decrease of 14.4 million tons will be inferior to the indicator of the previous season.

In comparison with the July report, the new corn balance for 2022/23 MR underwent the following changes:

• The estimate of initial reserves was reduced by 0.44 million tons to 311.84 million tons (292.89 million tons in FY 2021/22 and 306.37 million tons in FY 2020/21).
• The global production forecast was reduced by 6.29 million tons to 1.1796 billion tons (1.218 billion tons in 2021/22 FY and 1.129 billion tons in 2020/21 FY), in particular for the EU - by 8 million tons to 60 million tons (70 .5 million tons in 2021/22 MY) due to the drought in Europe, for the USA - by 3.7 to 364.73 (383.94) million tons, which is partially compensated by the increase in the harvest in Ukraine by 5 million tons to 30 (41) million tons and Russia - by 0.5 to 15 (15.23) million tons. For China, Brazil and Argentina, estimates were left unchanged.
• The global consumption forecast was reduced by 0.47 million tons to 1,184.77 million tons (1,199.8 million tons in 2021/22 FY and 1,143.29 million tons in 2020/21 FY) as a result of a reduction in feed consumption in the EU by 2 million tons and the USA by 0.45 million tons, which is offset by an increase in consumption in Ukraine by 1 million tons and Russia by 0.3 million tons.
• The estimate of world exports was increased by 3.05 million tons to 185.62 million tons (200.44 million tons in 2021/22 MR), in particular for Ukraine from 9 to 12.5 million tons against the background of the unblocking of Black Sea ports, which compensates for the reduction exports from the EU by 2 million tons and the USA by 0.6 million tons.
• The forecast of world imports was increased by 2.7 million tons to 179.78 million tons (178.58 million tons in 2021/22 MR), in particular for the EU - by 3 million tons to 19 million tons. For China, the import forecast was left at the level of 18 million tons (23 million tons in 2021/22 MR).
• The estimate of ending stocks was reduced by 6.26 million tons to 306.68 million tons (311.84 million tons in 2021/22 FY and 293.29 million tons in 2020/21 FY), in particular for the USA - by 2.06 to 35 .27 (38.86 and 31.36) million tons, for the EU - by 1 to 7.56 (8.66) million tons.

Analysts estimated ending stocks at 309.82 million tons, so the USDA forecast led to a rise in quotes.

• December corn futures on the Chicago Mercantile Exchange rose 2.4% to $252.8/t on Friday, adding 9.5% for the month and partially offsetting the previous month's (between-reports) drop of 23%.
• October Black Sea corn futures in Chicago rose 0.5% to $322.5/t (+1.5% for the month and -5.2% for the two months).
• November corn futures on the Paris Euronext rose 0.5% or €1.75/t to €336.5/t or $345.08/t (+6.7% for the month and +0.7% in two months).

A reduction in the US corn harvest will increase demand for Ukrainian corn supplies through the Black Sea ports, so any problems with exports from Ukraine will have a dramatic impact on world prices.