US corn stocks, already the second lowest in eight years, will shrink further in 2022/23. That will fuel further price increases in a broad range of food products, from soda pop to chicken wings.
US farmers intend to plant 4 million fewer acres of corn this year, for a total of 89.6 million acres, because of soaring fertilizer costs. The low planting intentions number, which could change before seeds actually go in the ground, would mean a smaller corn harvest this year even if growing conditions are ideal. The acreage report marks only the second time in history that US farmers have planted more soybeans than corn.
In addition, US corn exports are increasing due to stalled shipments from war-ravaged Ukraine and declines in South American production. US corn total sales commitments are currently the second highest in history, and new crop sales also remain strong. The US is the No. 1 exporter of corn worldwide.
December corn futures prices are posting new contract highs. US corn ending stocks for the current year are forecast at 36.6 million tonnes. Gro predicts 2022/23 corn ending stocks will decline by a double-digit percentage.
The impact of higher corn prices is likely to be broad based given corn’s versatility. Corn touches a large number of products, from cornmeal and corn flour to high fructose corn syrup. Further, corn is the primary feed grain in the U.S. feeding chicken, hogs and cattle, likely prompting higher prices across the protein supply chain as well as for dairy products.
Although early growing conditions for Brazil’s current “safrinha” corn crop have been mostly favorable, one-third of this second corn crop is being planted in a region that suffered dry conditions earlier this year. Gro’s Brazil Corn Yield Forecast Model is currently projecting a sizable jump in yield, following last year’s drought-induced crop, but conditions should be monitored.
In neighboring Argentina, corn yields have stabilized from early season dryness, according to Gro’s Yield Forecast Model. Still, yields are expected to come in below last year’s levels.
Brazil’s first corn crop, planted in September and harvested in February, suffered severe yield losses due to drought. While the first crop corn is typically used domestically, Brazil’s second crop, which is harvested starting in June, is heavily exported.
As a result, Brazil’s corn stocks are likely to remain tight at least through June, putting the US in a good position to gain additional export sales.