Demand Down but US Corn Ending Stocks Still Tighter

The USDA may have scaled back demand but projected 2020-21 US corn ending stocks have tightened this month regardless.

In much-anticipated updated supply-demand estimates released on Tuesday, the USDA pegged corn ending stocks for the current marketing year at 1.552 billion bu, down 150 million bu from the December estimate and below 1.919 billion a year earlier.

All of the reduction is due to a smaller 2020 US corn production estimate, which falls to 14.182 billion bu this month, down 324 million bu from December. In addition to a slight reduction in harvested area, the USDA also trimmed its average yield estimate, dropping it to 172 bu/acre. That is down from 175.8 bu a month earlier but still above the previous year’s 167.5 bu average.

The ending stocks estimate was generally in line with the average pre-report trade guess of 1.559 billion but futures were trading sharply higher at the noon hour - up as much as 25 cents in the nearby March contract

On the demand side, the 2020-21 corn export forecast was cut 100 million bu from December to 2.55 billion bu, although that remains well up from 1.778 billion last year. The reduction in the export forecast reflects ‘sharply lower supplies and higher expected prices,’ the USDA said. Corn used for ethanol was reduced as well, with the government now estimating it at 4.96 billion bu versus 5.05 billion in December and 4.852 billion in 2019-20.

Finally, forecasted 2020-21 feed and residual use was lowered 50 million bu from December to 5.65 billion bu, based on the government’s stocks report, also released today, which showed indicated September-November disappearance below expectations.

Globally, the USDA cut its 2020-21 world corn production estimate, as declines for Argentina and Brazil more than offset increases for China and India.

For Argentina, the USDA cut projected output by 1.5 million tonnes to 47.5 million in the wake of dryness during December which reduced yield prospects for early-planted corn in key central growing areas. Brazil’s crop was lowered 1 million tonnes from last month to 109 million due to reduced yield expectations for first-crop corn in southern Brazil.

World corn ending stocks are projected at 283.83 million tonnes this month, down from 288.96 million in December and 303.01 million in 2019-20 but still slightly above the average trade guess.

The expected season average corn price is estimated at US$4.20/bu this month, up 20 cents from December and $3.56 a year earlier.

Source: DePutter Publishing Ltd.

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