With USDA’s latest acreage and stocks reports unlikely to significantly shift production forecasts, the market is now turning its attention to the upcoming July World Agricultural Supply and Demand Estimates report, due next week.
Until then, analysts and traders are running through various “what-if” scenarios to anticipate potential changes in the U.S. and global corn balance sheets for the 2024-25 and 2025-26 marketing years.
Watch the yield forecasts
One key variable in these projections is yield.
- If the national average corn yield comes in at 181 bushels per acre and exports rise to 2.675 billion bushels, the July 11 WASDE could show 2025-26 ending stocks falling from 1.750 billion to around 1.636 billion bushels—assuming all other factors remain constant.
- Will yield forecasts move higher? Early next week, several yield forecasts are expected following Monday’s crop progress and conditions report. The USDA recently reported that 8% of the corn crop is silking, and crop conditions are strong—73% rated good to excellent, which is 9 percentage points above the five-year average. This could lead to upward revisions in yield estimates.
Weigh export data
Exports are another critical factor and an important variable in any analyst’s “what-if” scenarios, especially now that old crop exports have been following a strong pace.
- Last week’s export inspections showed 53.9 million bushels of corn inspected for export—down from 59.2 million the previous week, but still above the 48.7 million weekly pace needed to meet USDA’s current 2024-25 export estimate of 2.650 billion bushels.
- The most recent export sales report, released July 3, continued to show strong sales of 21.0 mbu, and year-to-date exports of 2,213 mbu, which is 83.5% of the expected total for the 2024-25 marketing year (versus 75.9% a year ago). If we add to that the strong outstanding sales of 467.8 mbu, an upward revision in old crop export estimates would not be surprising.
- Increasing export competition from South America is another key factor affecting marketing expectations. Brazilian exports (and production) have been a constant topic of discussion among analysts. As the world’s second-largest corn exporter, Brazil typically ramps up shipments in August following its second corn harvest, known as the safrinha.
- Safrinha harvest is lagging—only 17% complete as of June 28, compared to the five-year average of 28.2%. Higher domestic prices and a stronger real also make Brazilian corn less competitive globally.
Pay attention to Brazil’s domestic use
Brazil’s corn exports are expected to pick up in the coming months, but current projections are modest. June exports are estimated at 0.50 million metric tons, with July’s lineup at 1.94 MMT—well below last year’s 3.55 MMT and the five-year average of 3.57 MMT. August shipments are also off to a slow start, with just 190,000 metric tons scheduled so far, compared to 6.06 MMT last year.
While Brazil’s delayed harvest may benefit U.S. old crop exports in the short term, it could create headwinds for new crop exports later this year—particularly from September through November. As more Brazilian corn becomes available and soybean exports slow, Brazil’s grain export program is expected to accelerate, increasing competition with U.S. corn.
Current estimates by local agencies looking at Brazil’s total corn production for 2024-25 is around 133 MMT—slightly above the USDA’s 130 MMT forecast. However, production estimates range anywhere from 128-150.3 MMT, which still shows potential for a record high crop this year, surpassing the previous 137 MMT from 2022-23.
Contrasting high production forecasts, export estimates are more conservative, ranging from 34 to 44.5 MMT, compared to the USDA’s 43 MMT. This suggests USDA may be overestimating Brazil’s export potential, especially given rising domestic demand for feed and ethanol.
Notably, Brazil recently announced an increase in the mandatory ethanol blend in gasoline from 27% to 30%, effective Aug. 1. This policy shift is expected to boost corn demand for ethanol production in the coming months.
More “what-ifs” on the horizon
Next week’s WASDE report will provide more clarity on U.S. and global corn supply and demand. But even after its release, market participants will continue to explore a range of “what-if” scenarios—factoring in variables like ethanol usage, feed demand, geopolitical trade developments and global demand.
In times of market uncertainty, it’s essential for producers and traders to develop flexible risk management strategies. These can help navigate price volatility and protect financial stability heading into the next crop year.
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