In the wake of dryness in the western Corn Belt and a vicious August derecho, estimated US corn production and ending stocks are continuing to tick lower.
In updated monthly supply-demand estimates released Friday, the USDA trimmed forecasted nationwide 2020 corn production by 178 million bu from last month to 14.722 billion bu, while projected 2020-21 ending stocks dropped 336 million bu to 2.167 billion.
Going into today’s report, most traders and analysts were expecting a downgrade in the production and ending stocks estimates compared to last month, although the cut in the production number was steeper than expected. The ending stocks estimate was generally in line with trade ideas. Corn futures were trading 6 to 7 cents higher following the report’s release.
The downward revision in the corn production number was due to a 1-million acre drop in expected harvested area from last month to 82.5 million acres, while the average yield was reduced ever so slightly to 178.4 bu/acre from 178.5 bu. The average corn yield in Iowa, which was hit worst by the dryness and the storm, is now pegged at 186 bu/acre, down 5 bu from September and well below 198 bu last year. The average Illinois yield was dropped 3 bu from last month to 200 bu, although that is still well above 181 bu in 2019.
The total 2020-21 corn supply was further reduced from last month by a smaller carryin from the previous marketing year. A USDA grains stocks report last month pegged total stockpiles of corn as of Sept. 1 – the official close of the 2019-20 marketing year - at 2 billion bu, down 10% from a year ago and well below the 2.253-billion bu estimate the USDA used as part of its September supply-demand update.
On the demand side, the USDA offset at least some of the smaller supply by reducing expected corn for ethanol use by 50 million bu to 5.05 billion, based weekly ethanol production data as reported by the Energy Information Administration into early October. Projected feed and residual use was also lowered by 50 million bu from September to 5.775 billion to reflect the smaller 2020 crop and higher expected prices
The average expected 2020-21 corn price was raised a dime from last month to $3.60/bu, slightly above the 2019-20 average of $3.56 and close to the 2018-19 average of $3.61.
Projected 2020-21 Argentina and Brazil corn production were left steady from last month at 50 million and 110 million tonnes, respectively. However, world corn ending stocks were lowered to 300.45 million tonnes in October from 306.79 million in September and 304.24 million in 2018-19.
Source: DePutter Publishing Ltd.
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