The International Grains Council broke ranks with other
commentators by factoring in yield loss to the US corn crop from sowing delays,
as it ditched expectations of a rise in the country's harvest this year.
The intergovernmental group cut by 10m tonnes, to 350.0m
tonnes (13.8bn bushels), its forecast for this year's US corn harvest, the
The downgrade, which took the production forecast below last
year's record 353.7m-tonne crop, reflected in part a reduced area estimate,
with US farmers seen switching more land to soybeans than had been thought.
The IGC's previous estimate forecast a 2% slide in plantings
- half that forecast days later, on March 31, by a key US Department of
Agriculture sowings report, which pegged domestic corn seedings at 91.6m acres, well below
'Delays to planting'
The council on Friday highlighted "likelihood of more
acreage switching to soybeans", the main rival to corn in US growers' spring
However, the IGC also cited "delays to planting" in its
downgraded estimate, a reference to the slow start to US corn sowing in many
states, thanks to a late start to spring after a harsh winter, which left soil
temperatures unusually cold in some areas, with heavy rains interrupting fieldwork
on many farmers too.
US farmers had, as of Sunday, completed 6% of sowings, compared
with the average of 14% by then, US Department of Agriculture data late on
'Most of the worries
Many commentators have remained sanguine this week over US
harvest prospects despite the sowing delays.
At Chicago broker RJ O'Brien, Richard Feltes said that "importantly,
the 2014 US corn planting season, while starting out slow, is not on track to
replicate the pronounced delays of 2013".
In New York, Citigroup's Sterling Smith said that "the heart
of the planting window is not even open yet and most of the worries are
premature", adding that "we should see many pockets of aggressive field work
before the rains arrive later this weekend".
In Australia, trading house Pentag Nidera said that "given
the excellent moisture the crop will be going into, and the fact that the optimal
US corn planting window is still well and truly open, it's not hard to imagine
a scenario where crop scouts could soon be talking of above trend line yield
"We've already heard a number of analysts suggesting a good
growing season may have potential to deliver national average yields well in
excess of 170 bushels an acre – an eventuality that would solve the US and
global corn balance sheet issues in one fell swoop."
Nonetheless, investors have injected fresh premium into corn
futures, driving them up more than 3% in Chicago since Monday's data back above
$5.00 a bushel.
The IGC's downgrade to its US corn estimate was behind an 11m-tonne
cut to 950m tonnes in its forecast for world production of the grain in
That would represent a 15m-tonne retreat from the record
result expected in 2013-14, which still has some time to run in South America.
"Global production is expected to decrease by 2% year on
year as yields retreat from the previous year's exceptional results," the
"But stocks are likely to rise" despite the lower harvest, seen
growing by 5m tonnes to 163m tonnes next season, if a far smaller rise than the
13m-tonne increase the IGC forecast last month.
The IGC also lowered its forecast for the world wheat harvest
in 2014-15, by 3m tonnes to 697m tonnes, although this would represent a
historically strong harvest.
"While there are some persistent concerns over less than
ideal crop conditions, especially for winter wheat in the US, overall availabilities
and 2014-15 wheat crop prospects remain generally good."
A crop at this level would, nonetheless, represent a
12m-tonne decline year on year, and fail narrowly to match demand, prompting a
3m-tonne decline to 187m tonnes in year-end inventories.