March 9, 2004



Little Change Expected In US Corn Estimates


The USDA are not anticipating major changes in its U.S. corn stock estimate, after trimming about 400 million bushels off its projection over the last two months, analysts said.


On average, U.S. grain analysts' estimate for U.S. 2003/04 ending corn stocks was 901 million bushels, even with USDA's February estimate. Since the end of 2003, USDA has increased its domestic and export corn demand projections by roughly 235 million bushels and cut its supply estimate by 165 million bushels.


"I'd be surprised with there were any major changes," said Dale Gustafson, an analyst with Citigroup.


U.S. corn prices have rallied to 6-1/2 year highs this winter on good demand for U.S. corn from exporters, livestock producers and corn-based ethanol manufacturers.


The Chicago Board of Trade May corn contract <CK4> is expected to hover near $3.00 per bushel until USDA releases its U.S. quarterly stocks and planting intentions reports on March 31. The stocks report will give the trade a better indication of 2003/04 domestic use, while planting intentions will be a gauge for 2004/05 supply.


However, one potential revision in Wednesday's U.S. supply-and-demand data could be a cut in projected exports, currently estimated at 2.0 billion bushels, analysts said. But the government raised its export estimate last month by 25 million bushels, making it less likely to see a downward revision just a month later.


"I don't know if they do it now just because sales have remained so strong -- but you're just not seeing the actual shipments," said Randy Mittelstaedt, a grains analyst with R.J. O'Brien.


The U.S. corn export sales tally through Feb. 26 was up about 30 percent from a year before, while shipments lagged last year's pace. But USDA reported on Monday a healthy export pace for last week at over 53 million bushels.


"It was a good strong number this week, but one week doesn't change multiple months of disappointing exports (shipments)," Mittelstaedt added.


Few changes are also anticipated in the world corn stocks, now at a 25-year low. Uncertainty remains about the size of South America's corn crop along with South Africa's due to weather concerns in both areas. But the general consensus among analysts was that USDA's 2003/04 world stock estimate would remain about the same at 67.23 million tonnes until the corn harvest was further along in Brazil and Argentina.


Going forward through the end of the marketing year, China's stance in the world grain market will be the focal point, analysts said.


USDA currently estimates China's exports at 8.0 million tonnes. Most analysts believe the world's second largest corn exporter last year following the United States is limiting its corn export program to meet domestic demand after a smaller crop in 2003. Even China's top customer South Korea has returned to the United States for corn.


"I do expect China to come back into the market but as a very, very minor participant. Basically, small vessel stuff going into the Asian market. That leaves the U.S. as the dominant player in the world markets," said Shawn McCambridge, an analyst with Prudential Securities.

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