Porto Alegre, September 14, 2020 – The USDA’s September report must not bring additional news. However, the storm that occurred in Iowa in August brought some expectations of cuts due to the losses of local crops. In this report, USDA updated its production forecast, cut demand, and increased exports due to increased purchases from China. China, which also has a weather problem in the northeast of the country, its main corn-producing region, and depending on the assessment of losses may even increase corn imports for the 2020/21 cycle. With the current high U.S. stocks, this Chinese picture may have a discreet effect on global prices.
The strong storm that hit Iowa, the largest U.S. corn-producing state, on August 10, brought several expectations to the international corn market. Even with the position of USDA itself, days after the event, and with the crop tour pointing to potential losses of 100 to 500 million bushels, the market focused on creating a certain speculative environment for this cut in production. In other words, the exacerbation of an isolated weather event.
USDA corrected production according to expectations, that is, a cut from 388 to 378.5 million tons. As a large part of this corn ‘lying’ in the fields can be used for silage, there was also a cut in the demand for corn grain, which allowed stocks not to fall in the same production as the cut in production. Stocks dropped from 70 million tons, projected in August, to 63.6 million tons. In other words, they are still large stocks that guarantee supply to the United States and an increase in exports.
Agência SAFRAS Latam
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