The USDA raised its estimates for 2020/21 corn demand in the April WASDE report released today. But Gro forecasts the USDA will need to make even more upward revisions for corn usage as exports and ethanol production ramp higher.
US corn ending stocks are now seen at 1.352 billion bushels (34 million tonnes), a 10% decline from 1.502 billion bushels the USDA reported in March and the smallest ending-stocks level in seven years.
The USDA’s biggest adjustment to corn demand was an increase of 75 million bushels in exports to 2.675 billion bushels (68 million tonnes). But this figure is still only slightly above current corn export sales commitments, and there are still five months left to the marketing year.
Gro’s export pace model, which uses export sales commitments to estimate demand for the full year, currently projects corn exports of 3.2 billion bushels (81.3 million tonnes) for 2020/21. While not all sales commitments necessarily turn into actual shipments, the sharp difference in projected exports underscores the likelihood that the USDA is still underestimating old crop corn demand.
US corn exports are extremely competitive globally, as shown by FOB prices. US corn's strong basis price underlines the high domestic demand for supplies. And Gro’s Futures Spread app, which is showing nearby spreads inverted, reflects the tightness in old crop supplies.
Weather in South America remains a bullish concern for corn with very warm conditions and little chance for rain over the next two weeks in Brazil's safrinha area. Gro users should track the crop with our Brazil Corn Yield Forecast Model, as any shortfall will translate into higher demand out of the US.
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