January 21, 2013


IGC cuts world corn stocks forecast


The bar on estimates for world corn stocks was lowered by the International Grains Council (IGC) due to higher estimates for consumption, but the downgrade failed to prevent corn's rally losing traction after eight days of gains.


The IGC lowered by three million tonnes to 113 million tonnes, a nine-year low, its forecast for world corn inventories at the close of 2012-13.


"The market is particularly tight," the intergovernmental group said, flagging that inventories in the four main exporting countries were now set to end the season at 25 million tonnes, three million tonnes below the previous forecast, and down 46% on average levels.


Stocks in major exporters - Argentina, Brazil, Ukraine and the US - are viewed as particularly significant as they are available to for trade, unlike the inventories in countries such as China, the second-ranked producer, which rarely sells supplies abroad.


The IGC lifted by 15 million tonnes to 845 million tonnes, citing upgrades to official estimates for the Chinese and US crops, and "brighter prospects for Argentina".

However, the revision was more than offset by a hike to 865 million tonnes in the forecast for consumption over 2012-13, with the council flagging the USDA's higher estimate for domestic feed use, as revealed in a slew of data last Friday (Jan 11).


The IGC's estimate for world corn stocks at the close of 2012-13, of 113 million tonnes, was lower than the USDA's downgraded 116 million-tonne estimate on Friday, which has helped prolong a rally in corn futures to eight successive sessions.

And, it represents less than 48 days' of consumption - the thinnest level of cover for 39 years.


However, Chicago corn futures looked set to break their winning streak despite the IGC report, and separate USDA data showing US weekly export sales of the grain at 393,341 tonnes - up from 12,622 the week before and a figure beaten only once before this season. The sales, which came during the week that corn futures set a six-month low of US$6.78 a bushel, were largely to China, Japan and Mexico.

Nonetheless, corn for March stood 0.4% lower at US$7.28 a bushel, for March delivery, in midday deals, with traders citing rally fatigue.


US Commodities said that corn for delivery in 2012-13 was "overbought 1.2 times", terming the market as "mature" and "awaiting a catalyst of the next technical move".