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Expectations increase in the corn market

Last week, the United States Department of Agriculture, the USDA, released its new monthly report on the supply and demand of corn worldwide. 

The figures on US corn and soybean yields and harvests is the data that is most anticipated by the private sector, amid a climate that is most favorable for crops for the 2020/2021 cycle.Corn Growers Hope for Sharp Passage of USMCA - Finance Brokerage

The US Department of Agriculture rated 71% of the US corn crop from good to excellent. The figure remains 57% above what was the previous year’s estimates. It was down one percentage point from a week ago and below the average of the trade expectations. USDAQ projects a record production of 388 million tons in the country. Even though exports and domestic demand have increased, inventories have seen a record increase of 70 million tons. 

Corn futures on the Chicago Stock Exchange vary from $3.10 to $3.45 a bushel.

Last month, the USDA estimated the corn crop would be at 381.02 million tons, and the final stock at 67.26 million tons. 

 

Brazil also raised its estimates for the grain

Conab, the National Supply Company of Brazil, dependent on the Brazilian Ministry of Agriculture, raised its estimate of the 2019/2020 corn harvest from 120.88 to 120.94 million tons. The increase is 5.1% larger than the previous year. Besides, the volume of the crop is far above the USDA estimates.

While the United States is the largest producer and exporter of corn, Brazil is a significant export competitor for the country. Most of the corn Brazil produces it consumes domestically. However, such estimates, along with the country’s currency near historic lows against the US dollar, further aid that competitiveness.

Brazil’s corn production has been increasing year after year. In 2011, the country produced 73,000 metric tons of corn. That number increased by 101,000 in 2018 and 2019. This year, the country is set to break last year’s record.

Harvested area is calculated at a record 17.5 million hectares. It remained unchanged from last month and up 5% from last year.

Corn exports in 2018-19 totaled a record 37 million tons. They were 50% higher than in the previous season. It was a result of the much higher harvest, which increased by 23% compared to 2017-2018. 

According to CONAB, almost every Brazilian state that cultivates second-crop corn observed an extended area, improved yields, and a double-digit percent increase of production volumes in 2018-19.

Brazil is the world’s third-largest corn producer after the US and China. Additionally, the country is the second-largest exporter of the commodity behind the United States. 

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