USDA Expected to Adjust US Corn Acreage Estimates

USDA Surprises Traders by Maintaining Corn Production Forecasts for Brazil and Argentina

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Unchanged Production Forecasts

Traders were closely monitoring the global corn balance data for the 2023/24 marketing year, expecting significant reductions in the corn crop forecasts for Brazil and Argentina. However, the USDA experts surprised the market by maintaining optimistic forecasts for these key South American producers.

Global Corn Balance Overview

In the latest global corn balance for the 2023/24 marketing year, the USDA kept the global corn production forecast steady at 1228.1 million tons. The production forecasts for Brazil and Argentina remained at 122 million tons and 51 million tons, respectively. This contrasts with the average market expectations of 121 million tons for Brazil and 50.9 million tons for Argentina.

Adjustments in Export and Consumption Forecasts

The USDA increased the current season’s corn export estimates by 1.73 million tons to 199.11 million tons and raised the consumption forecast by 1.03 million tons to 1216.95 million tons. These changes will result in an increase in initial stocks for the new season by 0.69 million tons, bringing them to 312.39 million tons compared to 300.94 million tons in the previous season.

2024/25 MY Corn Balance Adjustments

The new balance for corn in the 2024/25 marketing year saw the following adjustments compared to the May balance:

  • Initial Stock Estimate: Reduced by 0.69 million tons to 312.39 million tons (300.94 million tons in 2023/24 MY).
  • Global Production Forecast: Raised by 0.61 million tons to 1220.54 million tons (1228.1 million tons in 2023/24 MY), including an increase for Ukraine by 0.7 million tons to 27.7 million tons, offsetting a reduction for Russia by 0.6 million tons to 15.4 million tons.
  • Global Consumption Estimate: Increased by 1.41 million tons to 1222.16 million tons (1216.65 million tons in 2023/24 MY), with higher consumption in Ukraine (+0.2 million tons), the EU (+0.1 million tons), and Southeast Asia (+0.15 million tons).
  • Global Export Forecast: Raised by 0.65 million tons to 191.75 million tons (199.11 million tons in 2023/24 MY), including an increase for Ukraine by 0.5 million tons to 24.5 million tons, but reduced for Russia by 0.2 million tons to 5 million tons. Export forecasts for the USA, Brazil, and Argentina remained unchanged.
  • Global Import Forecast: Increased by 1.79 million tons to 186.16 million tons (186.58 million tons).
  • Ending Stocks Estimate: Reduced by 1.5 million tons to 310.77 million tons (312.39 million tons in 2023/24 MY).

Market Reaction

Following the release of the report, July corn futures on the Chicago exchange rose by 1% to $178.8/t, while December futures increased by 0.8% to $184.5/t. Despite these increases, the overall bearish outlook for the corn balances in the 2023/24 and 2024/25 marketing years will likely continue to exert pressure on prices, especially given the improving weather conditions in the USA.

The USDA’s decision to maintain optimistic production forecasts for Brazil and Argentina has caught traders by surprise, influencing short-term market movements. While the immediate reaction saw a slight uptick in futures prices, the broader bearish outlook and favorable weather conditions in the USA suggest continued pressure on corn prices. Stakeholders should remain attentive to further updates and market signals as the season progresses.