Abundant Global Corn Supplies

Corn harvests in the Northern Hemisphere are nearly completed and overall harvest results confirm abundant supplies. In the United States, record yields are paving the way to a remarkable crop. In the Black Sea region, Russia is harvesting a new record crop for the second consecutive year, while Ukraine is collecting a near-record crop. India's production has rebounded with a more normal monsoon, and the EU crop has turned out to be more in line with historical trends despite a poor season in France, the top producer in the EU. Bumper crops in these countries are leading global corn production to a new record, more than offsetting reductions elsewhere. Although declining prices have boosted consumption, exporter ending stocks are building up with large U.S. stocks.

Nevertheless, ongoing plantings in the Southern Hemisphere mean that the 2016/17 global supply remains tentative. Planting progress in Argentina has been within historical trends even with the projected sharp increase in area, while the planting pace for first-crop corn in Brazil has been faster than a year ago. Brazilian farmers will plant their second-crop in early 2017. Market conditions in these two major players favor corn over soybean plantings. In Argentina, export taxes and quantitative restrictions were removed for corn but remain for soybeans. In Brazil, domestic prices remain elevated, reflecting tight corn supplies. The extent to which farmers respond to current market signals as planting progresses in the Southern Hemisphere could yet impact the already large global supply outlook.

OVERVIEW

For 2016/17, global corn production is projected higher from last month with larger crops for the United States, Ukraine, and Russia. Global trade is projected higher driven by stronger imports for Iran and Saudi Arabia. Exports are raised for both Russia and Ukraine. The U.S. season-average farm price is forecast 5 cents higher to $3.30 per bushel.

PRICES

Since last month, the spread between major FOB export quotes has narrowed. The Brazilian quote has declined slightly on planting progress, while other origins have moved up on trade prospects. The Brazilian quote is down $2/ton to $185, and Argentine is up $2/ton to $174. Quotes for the United States and Black Sea are up $6/ton each to $167 and $171, respectively. Since February, U.S. corn has been the lowest on a FOB basis.

TRADE CHANGES IN 2016/17

Selected Exporters

  • Ukrainian corn is raised 300,000 tons to 18.0 million on expected stronger demand from traditional markets in the Middle East.
  • Russian corn is boosted 200,000 tons to 4.7 million on a record crop.

Selected Importers

  • Indonesian corn is cut 200,000 tons to 2.0 million reflecting policies discouraging imports.
  • Iranian corn is up 500,000 tons to 6.5 million on projected stronger feed demand.
  • South Korean corn is trimmed 200,000 tons to 9.8 million on a slower pace of purchases.
  • Saudi Arabian corn is boosted 200,000 tons to 3.7 million on stronger demand for competitively-priced feed grains.

TRADE CHANGES IN 2015/16

Selected Exporters – based on trade data

  • U.S. corn is finalized up 698,000 tons to 51.2 million, while sorghum is down 105,000 tons to 7.9 million.
  • Argentine corn is finalized up 372,000 tons to 21.7 million.
  • EU barley is cut 600,000 tons to 9.5 million.

Selected Importers – based on trade data

  • Chinese sorghum is finalized up 484,000 tons to 8.3 million, but barley is down 331,000 tons to 5.9 million.
  • Indonesian corn is shaved 300,000 tons to 1.8 million.
  • Malaysian corn is up 300,000 tons to 4.1 million.
  • Taiwanese corn is raised 200,000 tons to 4.5 million.
  • Turkish corn is trimmed 200,000 tons to 700,000.
  • Vietnamese corn is up 600,000 tons to 8.6 million.