The US Department of Agriculture USDA has made significant changes to its assessment of global corn supply in its October report. For example, at the beginning of the financial year 2018/19, US analysts raised their estimate for corn stocks by 2% to 198.2 million tonnes. However, the reserves would still be 13% smaller than at the beginning of the preseason. Its assessment of international corn production has remained virtually unchanged for the USDA, with 1.068 bn t expected to be 3.3% more than in the previous year. However, higher production is also faced with higher consumption. At 1.107 billion tonnes, this is 4.1% higher than in the previous year.
As in the previous year, the 2018/19 production will not be enough to cover the demand. This is driven by the global reduction in inventories. At the end of the financial year, corn reserves of just under 160 million tonnes are expected, which would be around 20% less than in the previous year and even 30% less than at the end of 2016/17. At national level, stock reduction in China is particularly serious. There are likely to be no more 60 million tons available at the end of the financial year, 26.5% less than in the previous year and even 42% fewer than at the end of 2016/17. Supply to the United States, where corn holdings of 46.1 million tonnes are targeted, is also less comfortable than before, 15.3% less than at the end of the previous year.
US corn exports are expected to hold record levels
The US maize exports 2018/19 are currently estimated at 62.5 million t, which would be just as much as in the record year 2017/18.The reason for the brisk US export business is the persistently strong buying interest, coupled with low competition on the world market, as well as ample supply, which should continue to drive trade in 2018/19. First new lots of US corn were sold at the end of September and met with very strong demand. While buying interest may ease off in the coming months, it appears that corn is in high demand due to a general lack of alternatives on the international feed grain market. This is mainly due to the announced lower global wheat and barley production of minus 3% compared to the previous year. In many parts of the world, heat and drought have curtailed yields, creating a scarce supply of fodder for pet food - which has boosted corn demand.
ZMP Live Expert Opinion
Global corn production is expected to rise again in 2018/19, but consumption is also growing, outpacing production in 2017/18. Even in the current marketing year, global corn production will be unable to meet demand. This is at the expense of supplies. Weak grain harvests in many parts of the world have increased the import requirements of many countries, and corn is in demand. US exporters could give the sales opportunities.
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