Global corn stocks will reach their highest level in five years later in 2024, which would be the largest annual expansion in seven years. But after last summer's record harvest, the U.S. contributed much more than normal to that growth.
This typically spurs more U.S. demand than is currently projected in 2023-24, although the abundance of rival exporters** has weakened U.S. market dominance, suggesting that the huge U.S. corn acreage was too large last year.
This anomaly is likely to be corrected in 2024-25, starting on September 1 of the current year in the United States.
The USDA estimates that global corn ending stocks in 2023-24 will increase by 7% year-on-year, but US stocks will surge by 60%. This is the most uneven, US-dominated growth since 2004-05, when US corn production surged by 120% and global corn production increased by 25%.
The 2004 and 2023 U.S. corn production surplus is the most plausible explanation, as excluding the U.S.**, global corn stocks fell by more than 3% in 2004-05 and rose slightly in 2023-24.
The only recent anomaly between global corn stocks and U.S. corn stocks was in 2012-13, when a historic drought in the U.S. led to a 17% year-on-year decline in domestic corn stocks. However, after record-breaking periods of the last two years** spurred production growth in other corn exporting countries, global maize carryovers increased by 17% that year.
The USDA preliminarily expects U.S. corn ending stocks in 2024-25 to hit a 37-year high and increase another 17% from this year, even with smaller productions. But at this rate, global corn stocks in 2024-25 are likely to be flat from that year and still in line with "normal" trends, so it is unlikely that US corn stocks will be abnormal for the second year in a row.
19 years apart
There are similarities between 2004-05 and 2023-24, especially in terms of production. In 2004, U.S. corn acreage increased by 3 percent to a 19-year high of 80.9 million acres. Last year's acre count hit a 10-year high of 94.6 million acres, up 7% from 2022.
The biggest factor in 2004 was 160 per acreThe staggering 3-bushel yield, about 18 more than the previous year's high1 barrel day. USDA's trendline production for the year is 145 barrels per day, which would also be a record high.
Production in 2023 is 1773 barrels per day, also a record high, surpassing the 176 in 20217 barrels. But the USDA's initial trend yield for 2023 is 1815, so last year's record was nowhere near as impressive as in 2004.
Corn's use of ethanol is the biggest difference between current and 2004-05 balance sheets, as the latter precedes the development of the Renewable Fuel Standard (RFS), which requires corn ethanol to be blended in U.S. fuel**.
In 2004-05, ethanol production accounted for 12% of total corn use in the United States, compared to 37% today. With a share of 14% in exports in 2023-24, compared to 17% in 2004-05, total corn use is now more than a third higher.
This significant shift in domestic corn use is why many analysts have been assessing potential corn since 2007, especially demand outcomes, meaning that there is no post-RFS scenario to compare with the current situation.
In the mid-2000s, the United States accounted for more than 60 percent of global corn exports, with Brazil averaging about 6 percent. They expect to hold around 27% in 2023-24.
U.S. corn** was at multi-year lows starting in 2005 and then experienced a typical summer**, peaking in mid-July. At the end of 2005, corn fell back to lower levels, and it wasn't until September 2006 that corn began to shift upwards to the RFS era.
The last time Chicago's most active corn **CV1 showed $2 per bushel was on October 13, 2006.
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