Global Corn Ending Stocks Build on Larger Crops

U.S. corn ending stocks for 2016-17 didn’t get any heavier this month, but global stocks did.

Updated supply-demand estimates released by the USDA on Tuesday pegged estimated worldwide corn ending stocks for the current marketing year at 222.98 million tonnes, up from 220.68 million last month and roughly 11 million above the previous year.

The bulk of the increase in global ending stocks can be attributed to higher global production, with the USDA once again raising its estimate of this year’s Brazilian crop, which is now seen at a whopping 93.5 million tonnes. That’s up from 91.5 million in March and represents an increase of 7 million tonnes from just two months ago. The latest Brazilian government data indicates “a higher than expected” increase in planted area in both the centre-west and northern production regions, the USDA said.

If accurate, the latest Brazilian corn production estimate puts this year’s crop almost 40% above last year’s drought-reduced output of just 67 million.

At the same time, the USDA also lifted its estimate of the 2016-17 corn crop in Argentina, bumping it 1 million tonnes higher from March to 38.5 million, based on reports of higher yields. Last year’s crop in Argentina amounted to only 29 million tonnes.

Projected corn production for Mexico, Indonesia, Pakistan and South Africa was also revised higher this month, although Paraguay, Ecuador, and Russia did see reductions.

As for the U.S., the USDA held its 2016-17 corn ending stocks estimate steady from March at 2.32 billion bu – up from 1.73 billion a year earlier – as an increase in expected corn for ethanol use was offset by a reduction in feed and residual use.

Corn used to produce ethanol is up 50 million bu this month to 5.45 billion, based on the most recent data from the Grain Crushings and Co-Products Production report which estimated the amount of corn used to produce ethanol to be record high during December-February. However, offsetting is a 50 million bu reduction in projected feed and residual use to 5.5 billion bu based on disappearance indicated during the first half of the marketing year in the March 31 Grain Stocks report.

Corn futures were trading a couple of cents lower following the release of the report.

The estimated season-average corn price received by producers is unchanged at the midpoint this month, with the range narrowed to US$3.25 to $3.55/bu.

Source: DePutter Publishing Ltd.