Market News & Headlines >> Tighter Corn Stocks to Underpin Prices
Last Thursday’s USDA monthly supply/demand update projected significant declines in U.S. and world corn ending stocks due to lower U.S. production and strengthening world demand, confirming trade expectations.
The tighter carryout estimates figure to make the corn market more sensitive to U.S. summer weather and should raise the fundamental price floor under corn futures.
USDA’s first monthly projection of the 2018/19 U.S. corn carryout, at 1.682 billion bushels, was 51 million above the average of trade estimates in a Bloomberg news survey, but 500 million bushels or nearly 23% below this year’s projected carryout of 2.182 billion bushels.
USDA’s 2018/19 world corn carryout projection, meanwhile, at 159.15 million metric tons, was below all trade estimates, which averaged 183.60 million tons in a range from 165.0-193.8 million. At USDA’s projected level, world corn ending stocks next year would be the lowest in six years and the world stocks/use ratio would be the second tightest on record behind 2010/11.
USDA forecast world corn production will rise by nearly 20 million metric tons in 2018/19 despite lower U.S. output, thanks in part to increases for major producers Brazil, Argentina and Ukraine, but world demand is expected to surpass production by 35.7 million tons.