USDA cut the US stocks of corn to 38.2 million tons


         Porto Alegre, February 17, 2021 – USDA cut the US stocks from 39.2 to 38.2 million tons, which are still good and comfortable stocks until the arrival of the 2021 season next September. However, this decrease in stock requires a good planted area in 2021 in the Midwest. If the United States keeps the 2020 area of 91 million acres, even with good production, stocks will not recover in 2022. If the Chinese demand really grows, the 21/22 cycle will become bullish. Therefore, corn needs to gain acres but also has a strong competitor with high prices: soybeans. Soybeans necessarily need an area with gains of 3 to 4 million acres to keep stocks still low. If the soybean area does not rise, 21/22 can be explosive in terms of prices even with a normal crop. Therefore, the planting intention report to be released by USDA on March 31st must increase the area of both commodities. If this does not happen, one of them will have a price shock.

         In turn, after the planted area is disclosed, we will have the US climate picture. La Nina has little or no influence in the Midwest. The first meteorological forecasts point to above-normal rain in April and normal rain in May. If this is confirmed, the planting will occur normally. A larger ?? area corn in the planting intentions and normal planting development may suggest good production this year. It is important to note that high prices are the reason for planting anywhere in the world, that is, the United States, Brazil, Argentina, Paraguay, Europe, and China. Expecting larger crops from the second semester seems natural, but with a strong focus on the climate. A more nervous than usual ‘weather market’ can be expected this year.

         The surprise of the report ended up with the data on Europe, with cuts in demand and imports compared to last year. Owing to high corn prices, there is a greater use of wheat in feedstuff. Besides, African swine fever, which hit Eastern Europe, affected livestock and consumption. Perhaps this profile may change over the course of the year, but for now it retracts the target of corn imports by Europe.

         Agência SAFRAS Latam

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