May 14, 2016

Global corn production, use seen to rise sharply

The US Department of Agriculture (USDA) projects global corn production in 2016-17 to increase sharply from last year, driven by larger crops in the US, Argentina, South Africa and the EU.

The US crop is expected to reach a record, while Argentina, EU, India, South Africa, Russia and Ukraine are seen to rebound from last year's levels.

However, global stocks are forecast to slightly decrease as a drawdown in China more than offsets a build-up in the US and other countries. China's import demand for corn, along with barley and sorghum, is expected to fall as it ends its corn stockpiling scheme to promote domestic corn use.

The change in China's corn policy has led to a sharp drop in domestic corn prices, thus encouraging domestic corn use and drawing down stocks piled up under the stockpiling scheme, which had resulted in the artificial rise of corn prices by 30% to 50% above those of the global markets. 

Global corn consumption is also expected to rise to a record level, reflecting growth in feed use in China and the EU, USDA said.

U.S. corn exports are projected to surge by 5.5 million tonnes to 49 million on record supplies and less competition from Brazil, whose exports are forecast to plunge about 30% from 2015-16, or 11.5 million tonnes, to 25 million on tightening domestic supplies.

Global import demand is projected to marginally lower with reductions in China, EU, and Vietnam more than offsetting growth in Egypt, Iran, Mexico, South Korea and Turkey, according to USDA.