What is behind the ideas of conflict on Brazilian shrinking corn stock?: Braun

(The opinion expressed here is the author, a market analyst for Reuters.)

Naperville, Illinois, March 13 (Reuters) – According to its own statistics agency, Brazilian’s corn supply a few weeks ago reached the lowest level in at least one -fourth century.

But the US Department of Agriculture does not expect such a scenario until the beginning of next year.

The USDA-Versus-Conb Storyline is not new. The highly different estimates of two agencies for Brazilian soybean and corn harvesting were disputed last year.

On a broader scale, the explanation is straightforward. The USDA and its Brazilian counterparts differences in the Balance Sheet, which are spread in both production and demand. This means that there is no “correct” answer.

But after the available world corn supply, the end of this year is estimated to fall near the three decades of climb compared to demand, the trend in Brazil may be worth unpacking.

Before discussing forecasts, it is important to understand the relevant time limit. For Conb, Brazil’s 2024–25 corn marketing year ends on 31 January 2026, while the USDA ends after one month.

This march-February Brazilian marketing year plays on the world corn balance sheet of USDA, which reflects the aggregation of local marketing years. Therefore, the estimate of the USDA’s world corn stock is not point-in-time, but extends to several months of deadline.

This is different from how the USDA handles its global soybean laser, where Brazil and Argentina are transferred to the October-September marketing year.

The USDA on Tuesday retained the 2024-25 Brazilian corn crop at 126 million metric tons, although it reduced the 2023–24 crop from 3 million to 119 million tonnes.

Conb on Thursday increased the 2024-25 crop from one million tonnes to 122.76 million and left unchanged at 115.7 million last year.

These changes brought the agencies closer together. In both the years, the USDA is now estimated to be a corn output, which is 6.5 million tonnes higher than the Conb, below 10.3 million last month.

However, the figures never have to converge, as for recent four years, the production number of USDA is at least 2.5% above the Conb. 2022–23 deviations for crops, which both agencies agree, still sits at 3.9%, Brazil’s largest.

Conb says the supply is now tight, while the USDA hopes that they will be quite tight after one year from now.

Conb’s data shows Brazil’s corn shares about 2 million tonnes for 2023–24, which ended six weeks ago. Both that figures and related stock-to-use are the lowest in the history of the 24% Conb till 1999-00.

The Brazilian agency views a recovery of 5.5 million tonnes and 4.6%by January next January. It compares to an average of about 10.5 million tonnes and 11%.

By the end of February, the USDA believes that Brazilian’s corn shares had a total of 7.5 million tonnes, below 10 million in 2022–23 and similar to a decade-average. But it drops 2024–25 shares at a 23-year low of less than 3 million tonnes.

It coincides with a 2.2% stock-to-use ratio, which will be 42 years lower in the USDA database. The average of 10 years recently is 7.8%.

The marketing of both agencies may understand part of the differences of one month between years. Brazil generally exports no more than 4% of its annual volume in February, the month in question, although domestic consumption accounts for a lot of use.

Brazil’s corn export is more optimistic than USDA conab. On an average, more than 2023–24 and more than 2024–25, the US agency is exporting about one-third of what has been produced by the US agency over the conception of the Conb with 30%.

Recent exports do not give abundant supply appearance as the monthly Brazilian shipment is slightly reduced by average. Future export capacity depends on the upcoming corn crop in the United States along with the newly sown crop of Brazil, top exporter.

While the time is slightly different, the two agencies have called the corn to the corn supply of Bello-Aushew Brazil at some points within a period of the year, of course exposing the recent market concerns about the declining stockpiles, pressurizing this year’s crops to put pressure on the crops. Karen is a market analyst for Braun Reuters. The above thoughts are his own.

(Writing by Karen Braun Editing by Matthew Lewis)