Yesterday, the International Grains Council delivered pretty stunning number that didn’t get much attention. In fact, Brennan pinged me in the middle of the night to tell me that this number couldn’t be right. It’s so crazy, if I hadn’t read it, I’d thought I was lying…
Brennan dove deeper into the numbers this morning. The IGC hiked global corn ending stocks by a staggering 50%. I know that I say the world is awash in corn, but we’ve just filled the bathtub up by half.
IGC pegged global stocks at 206 MMT in November. Yesterday, that figure hit 322 MMT.
Where has all this corn been hiding? Because, when I was five, I used to try to hide broccoli in milk at the dinner table, and it was easily detected. If someone’s been hiding 50% more corn, finicky children want to know the secret.
Well, it’s pretty obvious. China’s state buying program pushed corn reserves up above 250 MMT. There are two important elements to this trend. First, a lot of corn that has been in reserves is past its prime. The country has been cycling out “old, old” crop (well before 2016/17) for newer corn. Second, China is gearing up for its massive ethanol mandate.
We’ve discussed all the moving parts around China’s ethanol mandate and how it will affect corn producers here in the U.S. Read more about China’s corn reserves, right here.
IGC revises corn stocks up 50%, soy production nears all-time high
The International Grain Council has revised sharply upwards its estimates for global corn stocks to 322 million mt, up from 206 million mt from its November update, as the not-for-profit organisation revised its estimates of China’s enormous corn stocks.
The figures, which meant overall grain stocks including wheat and barley were increased to 617 million mt from 496 million mt, still represent a decline of 1.2%, or 5 million mt, year on year as the IGC also revised upwards it historical figures.
The figures come amid speculation about the size of China’s huge stockpile of corn following years of state purchases of the grain, with 250 million mt seen as the absolute minimum the world’s biggest consumer has warehoused, according to some local analysts.
“Mainly because of adjustments to historical figures for maize in China, the forecast for world total grains stocks is boosted sharply from before,” the Council said.
In terms of production, total grains production was revised upwards by 1% on its previous estimate to 2.1 billion mt, although that figure still represents a 2% decline on last year’s record production figure.
Most of the change is in wheat and corn, which were up 1% on higher production in Russia, Canada, Argentina and Australia for wheat and the EU, US, China, Nigeria and Ethiopia for corn.
Soybean production was also revised slightly upwards – by 1 million mt to 349 million mt – from its previous estimate, but the 2017/2018 crop will fall 1 million mt short of last year’s record harvest.
“With improving prospects for Brazil’s outturn more than offsetting marginal downgrades for Argentina and the USA, the 2017/18 world soybean production forecast is lifted by 1 million mt, to 349 million mt, fractionally short of the previous year.
Soybean futures have been seesawing for months on the back of expectations of the impact of La Nina weather that could cut production of soybean in Latin America.