The USDA report triggered a sharp rise in corn prices in Chicago
the USDA Report, which unexpectedly reduced residues of maize in the United States at the end of the 2019/20 MG, surprised the market and led to the rise in December corn futures by 5.5% to $150/t
yesterday, In the published quarterly report by the USDA with the final balance of season 2019/20, in particular data on stocks of grain as of September 1 (the end of the season for soybeans and corn) estimate of corn production was left at the level of the September WASDE report, however the consumption has dramatically increased thanks to strong exports and domestic consumption, resulting in the estimate for ending stocks was reduced compared with the September forecast by 6.5 million tonnes to 50,75 mln t, up 10% inferior to the indicator of September 1, 2019 While the average rating of stocks by analysts was 57,15 million tons.
During June-August, the export and domestic consumption of corn in the U.S. compared to the corresponding period in 2019 has increased from 75.7 to 76.7 million tonnes, thanks to increased exports to China by a decline in consumption of ethanol. In the period January-may (quarantine) domestic consumption of corn is significantly inferior to the volumes of the previous year. Therefore, the market surprised the experts by the USDA edited the balance for corn only at the end of the season.
Yesterday traders ignored the data of the EIA report on production and stocks of ethanol in the United States, which recorded another decline in ethanol production for the week by 2.8% to 881 thousand barrels/day due to the low margin of processing in the background of falling oil prices and demand for fuel.
In today's report on weekly export sales of corn from the US volumes are expected to decrease, because during the week China did not buy significant quantities of corn.
Reduction in corn stocks at the beginning of the season 2020/21 is dramatically changing the world balance of corn that the USDA update 9 Oct. Until that date, the price of corn will gradually rise, while the new report can contain unexpected surprises, such as the assessment of the volume of domestic consumption of corn in the U.S. in 2020/21 MG that grows on the background of the pandemic.
According to forecasts, Mexico that is the largest buyer of corn from the US, increase for the year own production of grain by 4% to 28 million tonnes, South Africa – from 11.75 to 15.6 million tonnes, while the corn harvest in the EU and Ukraine will decrease.
In Ukraine, the price of maize at the port for October deliveries remain at 182-185 $/t, for more recent periods dropped to 175-180 $/t. Rainfall this week will delay harvesting and delivery to ports that will support prices on fast delivery at a high level.
the Increase in export prices of American, Argentinean, Brazilian and Ukrainian corn 196-210 $/t FOB will reduce the demand from importers, which are holding back purchases in anticipation of renewed global balance for wheat and corn, hoping for lower prices after the markets of oilseeds.
