Excessive international provide facilitates a drop in worldwide corn costs
16 August 2024
2 minute learn
For the reason that July WASDE report, export bids for all main exporters have elevated, in keeping with a latest USDA FAS world grain markets report. US bids skilled the least change, up simply $1/ton to $182, and are at the moment probably the most worth aggressive on expectations of plentiful provides. For the week ending August 4, NASS estimates 67% of the corn crop to be in good-to-excellent situation, in comparison with 68% every week prior and 57% a yr in the past.
Ukrainian bids have been up $19/ton to $205. Scorching, dry climate in Ukraine could also be influencing provide expectations for the upcoming crop.
Brazilian bids have been up $5/ton to $192 and Argentine bids have been up $4/ton to $184. Farmer gross sales and exports have been sluggish in each international locations.
A surge in home demand for corn in India has sharply curtailed exports and led to file imports for TY 2023/24 (Oct-Sep). Driving elements for this rise in demand embody authorities ethanol coverage and a rising poultry market. Traditionally, India has been a internet exporter that provides vital volumes of corn to South and Southeast Asia. For the primary time since 1999/00, India will import as a lot corn because it exports.
India just lately revised its 2018 Nationwide Coverage on Biofuels to incorporate corn as a feedstock, providing worth incentives for corn-based ethanol2. Sugar, India’s main feedstock for ethanol, has confronted authorities restrictions in utilization for ethanol following a number of years of low manufacturing, additional incentivising corn feedstock.
Ethanol producers’ shift to corn instead coincides with a ten% improve in feed demand from India’s rising poultry sector. For the primary time since 2019/20, India has imported overseas corn from Ukraine and Burma, the place non-GE corn cultivation meet India’s GE import restrictions. Moreover, in June, India introduced corn imports of 500,000 tons beneath a Tariff Fee Quota (TRQ) at a 15 p.c obligation to fulfill this sharp rise in demand3.
Excessive international provides have facilitated a drop in worldwide corn costs in 2023/24. This has dampened India corn exports as sturdy home costs have incentivised merchants to maintain provides in-country.
India has been a key exporter to Vietnam, Nepal, and Bangladesh, exporting 2.8 million tons of corn in 2022/23, practically 1 / 4 of the international locations’ mixed complete corn imports. Nonetheless, exports from India to those international locations declined 86 p.c within the first 8 months of 2023/24 yr over yr. In response to this drop- off, international locations shifted to different exporters or relied additional on home provides.
