World Grain - May 2019 - 16

GRAINMARKET REVIEW

COARSE

GRAINS
Large corn production forecasts
overshadow weather concerns

by Chris Lyddon

A U.S. Department of Agriculture (USDA) report that raised
2018-19 world corn production, while cutting U.S. exports as
global competitors potentially move in on markets, helped provide enough bullish sentiment to overcome fears about the effect
of wet weather on U.S. plantings.
In its Agri Commodity Markets Research report for March,
Rabobank said corn had faced pressure early in the month, beIRUH ÀRRGLQJ LQ WKH 86 0LGZHVW DQG VKRUW FRYHULQJ GURYH D
recovery. The pressure came from a sharp fall in wheat and barley, which switched demand away from corn, and growing world
production prospects, Rabobank said.
"Ukraine has supplied 70% higher volumes to the global
market since the beginning of the season, and the outlook for
South American corn production is quite good, due largely to
record early plantings of Brazil's safrinha corn," Rabobank
said. "Conducive planting weather across Europe and Ukraine
is raising expectations for high global competition with U.S.
corn in the summer."
Rabobank also noted that U.S. domestic demand for corn continues to suffer from weak ethanol prices. A Weekly Commodity
Snapshot published by Rabobank on April 17 said that large
USDA acreage and stocks estimates were "eclipsing concerns
about delayed plantings and, combined with heavy international competition, have funds throwing caution to the wind."
"Bearish sentiment on CBOT corn could deliver an unexpected supply shock later this year if spooked U.S. farmers cut
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Rabobank said.
Rabobank noted concern about U.S. plantings delayed by wet
weather in the Midwest but took a relaxed view.
"Given the U.S. farmer's propensity to plant row crops quickly,
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they continue through May," Rabobank said.
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crop in South America.
"The USDA increased production estimates by 1.5 million
tonnes last week and indications are those numbers could rise
further, especially if Brazilian weather holds for the safrinha
crop," the bank said.
In its April 11 Market Perspectives report, the U.S. Grains
Council also noted the effect of increased USDA estimates on the
16

Monthly corn price
(in U.S. dollars per tonne)

200

150

100

Sep 18 Oct 18 Nov 18 Dec 18

Jan 19

Feb 19 Mar 19

Maize (U.S.), no. 2, yellow, f.o.b. U.S. Gulf ports
Source: USDA, World Bank

market but added that "with good odds that USDA will lower its
forecast of 2019 U.S. corn planted acres in May's reports, there
should be fundamental support coming soon."
The USDA's April 9 World Agricultural Supply and Demand
Estimates report pointed to a U.S. 2018-19 outlook with lower
feed and residual use for corn, with reductions in use for ethanol
and export, as well as larger stocks. The USDA cut its forecast for
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a month earlier of 314.72 million. U.S. corn exports were cut to
58.42 million tonnes from 60.33 million the previous months.
5HGXFHG H[SRUWV UHÀHFW ³FXUUHQW RXWVWDQGLQJ VDOHV DQG H[pectations of increased competition from Brazil, Argentina, and
Ukraine," the USDA said. The forecast for Brazil's 2018-19 exports was raised to 31 million tonnes from 29 million, while Argentina saw its corn exports raised to 30.5 million tonnes from 30
million. The USDA also added 500,000 tonnes to its forecast for
Ukraine's corn exports, bringing it to 29.5 million tonnes.
The USDA also added 5.27 million tonnes to its global coarse
grain production forecast for 2018-19, bringing it to 1.377 billion.
"This month's foreign coarse grain outlook is for larger production, increased trade, greater use, and marginally higher
stocks relative to last month," the USDA said. "Brazil corn proGXFWLRQLVUDLVHGUHÀHFWLQJLPSURYHG\LHOGSURVSHFWVIRUVHFRQG
crop corn."
Forecasts also had been raised for the E.U., Mexico and Indonesia, while crop expectations have been cut for the Philippines
and Pakistan. For corn alone, forecast world production was
raised to 1.107 billion tonnes, up from the forecast made a month
earlier of 1.106 billion.
"Major global trade changes for 2018-19 include higher projected corn exports for Brazil, Argentina, the E.U. and Ukraine
with a partially offsetting reduction for the U.S.," it said.
Chris Lyddon is World Grain's European correspondent.
He may be contacted at: chris.lyddon@ntlworld.com.
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May 2019 / World Grain / www.World-Grain.com

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