IGC boosts ideas of global corn glut, after US crop upgrade

31.10.2016

Record US corn production will leave the world market 12m tonnes in surplus in 2016-17, the International Grain Council said.

Global corn production this year is seen at 1.035bn tonnes, compared to 1.027bn tonnes estimated last month, the IGC said, an increase of 64m tonnes year on year.

Consumption estimates were also boosted, but not enough to outweigh the higher production.

Global 2016-17 corn ending stocks are now forecast at a record 221m tonnes.

Record US production

The upgrade to production came thanks to higher production in the US, Argentina, India and Thailand.

In the US, production was seen at 382.5m, an increase of 3.6m tonnes from last month's estimates, and in line with USDA figures.

The IGC said updated reports showed an 8% increase in the US harvested area, while average yields are seen rising by 3% year on year.

Larger crops are also expected in each of the top five producing US states, which account for approximately 60% of national output.

This would leave production up 37m tonnes from 2015-16.

The IGC also boosted its production forecast for Argentina by 2.3m tonnes, to 42.5m tonnes.

La Nina

But the IGC said concerns of La Nina effect on the South American crop being sown have returned.

The US Climate Prediction Centre (CPC) re-issued its La Nina watch in October, witnessing a 79% chance of La Nina conditions developing in the northern hemisphere during autumn.

Some indicators used by Australia's Bureau of Meteorology have shifted closer to La Nina thresholds, while the Japan Meteorological Agency considers conditions already present in the equatorial Pacific.

"Depending on its strength and timing, a La Nina weather event, characterised by cooler than normal surface water temperatures in the eastern Pacific Ocean could have potential ramifications for cropping weather in the coming months," said IGC.

La Nina usually brings warm and dry conditions in South America's corn and soybean growing areas, while tending to cause heavier rainfall in southern Africa.


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