WASDE: US corn production up, South America unchanged

An anticipated downward revision to 2017/18 Brazilian and Argentinian corn production failed to materialise in the January WASDE report, while US corn production, yields and stocks all rose and offered little in the way of support to prices.

While the US planted area and harvested area were moved down following a long, protracted harvest, the effect was not enough to fully redress bigger stocks and production, which once again underlined that there is no shortage of corn in the world.

US corn production rose to 14.604 billion bushels, up from 14.578 billion in December and within the range of analysts’ expectations, which on average had been braced for a 1-million bushel addition.

Area harvested planted fell 200,000 acres to 90.2 million acres, with the harvested area falling 400,000 acres to 82.7 million acres, just below the range of analyst expectations which had seen 83 million acres as the floor.

However, an increase in the yield offset the effect of less land, with the 176.6 figure a rise of 1.2 bushels per acre and above the average trade estimate, which had expected no change at 175.4 acres.

There was also no revision to corn demand for ethanol, which remained at 5.525 billion bushels.

With only modest tweaks to demand, US ending stocks also rose 40 million bushels to 2.477 billion bushels, higher than most analysts were expecting, but comfortably within a range that spanned 2.263 billion to 2.550 billion bushels.

That rise fed into an overall increase in world corn stocks, which were up by nearly 2.5 million mt to 206.57 million mt, just short of the highest expectations set by analysts ahead of the release, with China’s stocks decreased by 100,000 mt to 79.55 million.

A surprise came in the USDA resisting any revision to corn production in Brazil and Argentina, which had been hotly tipped to fall on the back of hot, dry weather and planting delays.

On average, most had expected Argentina to see a cut of 500,000 mt to 41.50 million, with Brazil seeing a trim of under 870,000 mt to 94.13 million.

In both cases, production was maintained at 42 million mt and 95 million mt.

Corn futures contracts showed initial resilience in the immediate aftermath of the data release, but slowly ebbed value with 2.5 cents/bu shaved off both the CBOT March and May futures contracts.