Wasde: US corn rewrites records as USDA aims at 406m mt crop

12 May 2020 | Tim Worledge

That the US is on course for a big 2020/21 crop has been accepted, so the main question was how big and how much would be heading to ending stocks, yet the USDA still managed to serve up surprises as it set out its stall for the new marketing year.

In pure data terms, analysts polled by Agricensus had looked for ending stocks of 3.45 billion bu (87.5 million mt), based on an average 177.4 bpa yield and an 88.3 million acre planting.

The USDA delivered an even bigger crop, 178.5 bpa on 89.6 million acres delivering just over 406 million mt of corn, but undercut those ending stock expectations by boosting domestic demand for feed, seed and industrial, with the agency banking on a quick rebound for ethanol and livestock.

Estimates look for 3.32 billion bu (84.2 million mt) in 2020/21 ending stocks, just over 3 million mt shy of analysts’ estimates.

However, with focus so sharp on the US, the rest of the world had been overlooked.

So where analysts had expected global ending stocks to reach 332.4 million mt, a Brazil crop of 106 million mt and a Ukrainian one nearing 40 million mt ended up pushing stocks to 339.62 million mt.

It could have been worse, however, while the USDA marking that the US would have an all time record corn supply of 18 billion bushels (457.22 million mt), and acknowledging that, if realised, US ending stocks would be the highest since the 1987/88 marketing year.

US outlook

For 2020/21, the USDA is forecasting a rebound in corn used in the ethanol sector, despite the industry weathering a spectacular collapse in demand under Covid-19 lockdowns.

The agency expects 5.2 billion bu (132 million mt) to be consumed in the grind, which would be a stunning comeback after cutting its 2019/20 outlook to 4.95 billion bu (125.7 million mt).

Feed and residual use are also expected to rebound quickly, topping 6.05 billion bu (153.67 million mt), while the USDA also increased the 2019/20 outlook again – despite shutdowns at meat processing facilities – to 5.7 billion bu (144.78 million mt).

“Growth in world corn trade” is likely to be enough to take US 2020/21 corn exports to 2.15 billion bu (54.6 million mt), and the pace of this year’s exports has been enough to tempt the USDA into increasing its 2019/20 outlook, by 50 million bu to 1.775 billion bu (45 million mt).

That boost to 2019/20 exports and domestic feed use went some way to reining in ending stocks, while the USDA also dropped its harvested estimate by 100,000 acres to 81.4 million acres and pared back its yield to 167.8 bpa, from 168 bpa.

That reduced some of the overheads heading into the current marketing year by enough to almost leave ending stocks unchanged – adding just 8 million bu (203,000 mt) to hand off at 2.098 billion bu (53.29 million mt).

Rest of the world

With the huge increase in US production and significant increases in Brazil and Ukraine amongst others, global supply in 2020/21 is expected to sail past 1.18 billion mt, an increase of 75 million mt – close to 7%.

Consumption, however, lagged gaining just 30 million mt to 1.16 billion mt and passing virtually all of that 20 million mt oversupply into ending stocks.

For 2019/20, the USDA also boosted ending stocks by over 11 million mt to 314.73 million mt, mostly coming from a 10 million mt plunge in global domestic demand as it was cut from 1.13 billion mt to 1.12 billion mt on a Covid-19-related hit to consumption.

However, the trade shrugged off much of the global picture, focusing instead on the better-than-expected outlook for US domestic corn, which left corn futures lower by around a cent in the aftermath of the report’s release.

Key to meeting the assumptions will be the speed in which US demand recovers from or adapts to Covid-19 restriction measures.