Lowered 2023/24 Forecast and Increased 2024/25 Outlook

In its July supply and demand balance sheet, USDA experts slightly lowered their 2023/24 fiscal year (FY) corn production forecast. However, the estimates for Brazil remained unchanged and exceeded local analysts' expectations. The decrease in ending stocks offset the increase in production for the new season, resulting in minimal impact on prices.

Adjustments for 2023/24

For the 2023/24 marketing year (MY), the global corn production forecast was reduced by 2.65 million tons to 1,225.4 million tons.

Notable adjustments include:

• Argentina: Reduced by 1 million tons to 52 million tons.
• Mexico: Reduced by 0.6 million tons to 22.7 million tons.

The forecast for global consumption increased by 2 million tons to 1,218.66 million tons. Consequently, the estimate of final reserves was lowered by 3.2 million tons to 309.1 million tons.

Specific reductions include:

• USA: Reduced by 3.7 million tons to 47.7 million tons.
• Ukraine: Reduced by 1.4 million tons to 1.5 million tons.

The export estimate increased by 1.8 million tons to 200.9 million tons, with specific increases for:

USA: Increased by 1.9 million tons to 56.5 million tons.Ukraine: Increased by 2 million tons to 28 million tons, although official data shows Ukraine exported 29.3 million tons, suggesting a possible revision in the August USDA balance for the 2023/24 MY.

Adjustments for 2024/25

Compared to June estimates, the world corn balance for the 2024/25 FY underwent the following changes:

• Initial Reserves: Reduced by 3.26 million tons to 309.13 million tons.
• Global Production Forecast: Increased by 4.25 million tons to 1,224.79 million tons, with specific changes including:

1. USA: Increased by 6.1 million tons to 383.56 million tons.
2. EU Reduced by 0.8 million tons to 64 million tons.
3. Canada: Reduced by 0.5 million tons to 14.5 million tons.
4. Russia: Reduced by 0.4 million tons to 14.5 million tons.

The estimate for world consumption remained at 1,222.18 million tons. The forecast for global exports remained at 191.81 million tons, with minor adjustments for:

USA: Increased by 0.6 million tons.EU: Decreased by 0.2 million tons.Russia: Decreased by 0.4 million tons.

The estimate for world final reserves increased by 0.87 million tons to 311.64 million tons, primarily for non-exporting countries like Pakistan (up by 1.4 million tons) and Türkiye (up by 0.2 million tons). However, estimates for major exporters decreased:

• Ukraine: Reduced by 0.8 million tons to 0.68 million tons.
• USA: Reduced by 0.12 million tons to 53.2 million tons.

Market Reactions

Following the report, December corn futures on the Chicago Stock Exchange rose by 1% to $163.3/t, halting a monthly decline spurred by higher harvest forecasts in the United States. This represents a 13% drop compared to data after the June report.

The CFTC report revealed that specialty funds increased their net short and long positions to record highs of 354,000 and 62,600 contracts, respectively, indicating speculators anticipate price growth in the near future.

Weather Concerns

Traders have not significantly reacted to the USDA report, instead focusing on the ongoing heatwaves in Ukraine, the EU, and Russia, which could severely impact the potential of future harvests.

The USDA's latest adjustments to corn production forecasts highlight the volatility and complexity of global agricultural markets. As traders and stakeholders monitor environmental factors and market dynamics, strategic planning and adaptive measures will be crucial in navigating the upcoming season.