December 11, 2003

US Corn Stocks Down To  1.273 Billion Bushels As China Halt Export

U.S. corn ending stocks are projected to shrink to about 1.273 billion bushels today, which would be published in the U.S. Department of Agriculture's December supply and demand report, attributed largely to China shying away from the corn export market, according to a survey of industry analysts.

With China's retreat from the market as an exporter and the U.S. being left as virtually the only game in town, world demand for corn has gravitated toward the abundant U.S. supply, analysts said. Consequently, the U.S. corn export figure is likely to expand by about 50 million to 75 million bushels to make up for China's shortfall.

"It's a reaction to the absence of China in the export market," said Shawn McCambridge, grains analyst for Prudential Securities in Chicago. "Even if they do come back after the first of the year (as an exporter), they will be exporting at a much lower level than earlier."

Reports have suggested that China will halt or sharply curb corn exports due to low stocks and low corn production this year, which would open the door for more U.S. exports to Asian importers. "We have the quality and quantity of crop here in U.S. because of our record production," said Tim Hannagan, head grain analyst at Alaron Trading in Chicago.

Currently, though, "corn is waiting," said Hannagan said. "We're not guaranteed that the Asian business is coming. China has not come out and said, 'We're in trouble and need to buy corn.' They've just backed away."

Estimates in the survey for the new corn ending stocks figure ranged from 1.200 billion to 1.300 billion bushels. Last month, the ending stocks number was pegged at 1.349 billion bushels. Conversely, the export figure is anticipated to be adjusted upward to about 1.925 billion to 1.950 billion bushels. In the November report, the USDA forecast exports to be 1.875 billion bushels.