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IGC lifts US corn crop forecast - but to level well below official number


The International Grains Council hiked its forecast for the US corn harvest, but to a level well below that Washington expects, tallying with persistent market doubts over official yield and area estimates.


The intergovernmental group increased by 8m tonnes to 342m tonnes (13.5bn bushels) its forecast for the US corn harvest this year, a factor mirrored in an upgrade to 1.10bn tonnes in its estimate for world production of the grain.


Nonetheless, the raised estimate, representing a fall of 7% year on year, was still short of the US Department of Agriculture forecast of 353.1m tonnes (13.90bn bushels) revealed two weeks ago, a number which sent Chicago corn futures limit down, and has since seen them approach contract lows.


‘Still uncertain’

The IGC highlighted that “output prospects” for US corn were “still uncertain after a less-than-ideal growing season”, marred in particularly by an unusually wet Midwest spring which slowed sowings to their slowest pace in recent history.


The relatively downbeat forecast tallied with ideas of many commentators that USDA is being too optimistic both on yield prospects and the amount of planted acres likely to be harvested for grain.


Within the last 24 hours, Rabobank has said it saw “potential for yield to dial back”, while Commerzbank said that the USDA figure “seems too high”, adding that “many participants in surveys conducted by news agencies and in crop tours have expressed considerable doubts” over the official yield estimate.


Commonwealth Bank of Australia, meanwhile, has said that “the intrigue surrounding US crop planting seems to be moving in a more bullish direction,” adding that “the USDA has consistently forecast more planting than the market”.


Chicago broker RJ O’Brien on Wednesday flagged “overwhelming feedback” from a weekend conference that the USDA “is overstating corn area” and yield.


(Agrimoney’s tally of US corn forecasts can be reached by clicking here.)


Stocks dynamics

The IGC’s increased corn harvest figure was reflected in an upgrade of 11m tonnes to 284m tonnes in the forecast for world stocks of the grain at the close of 2019-20, a figure which also factored in a lower estimate for feed demand.


Corn stocks at this level would, nonetheless, represent “the least in six seasons, mostly because of anticipated falls in the US and China”, the council said.


The figure for global wheat inventories at the close of 2019-20 was nudged 1m tonnes higher to 271m tonnes, putting it ahead of the 2017-18 all-time high, thanks to a 1m-tonne upgrade to 764m tonnes in the harvest estimate.


The estimate for world production of grains overall (excluding rice) in 2019-20 was lifted by 11m tonnes to 2.159bn tonnes, and the estimate for carryout stocks by 13m tonnes to 598m tonnes, although this still shows a 27m-tonne drop year on year.


“With increased consumption, world closing stocks are expected to fall for the third successive season, with the pace of drawdown accelerating,” the IGC said.


It added that the grain stocks dip was “entirely owing to a decline for maize,” saying that “wheat stocks could reach a record level and, after dropping to their smallest in six years, inventories of barley are expected to post some recovery”.

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