BMF Cash Corn Jan '25 (XEF25)

Description

Corn is a member of the grass family of plants and is a native grain of the American continents. Fossils of corn pollen that are over 80,000 years old have been found in lake sediment under Mexico City. Archaeological discoveries show that cultivated corn existed in the southwestern U.S. for at least 3,000 years, indicating that the indigenous people of the region cultivated corn as a food crop long before the Europeans reached the New World. Corn is a hardy plant that grows in many different areas of the world. It can grow at altitudes as low as sea level and as high as 12,000 feet in the South American Andes Mountains. Corn can also grow in tropical climates that receive up to 400 inches of rainfall per year, or in areas that receive only 12 inches of rainfall per year. Corn is used primarily as livestock feed in the United States and the rest of the world. Other uses for corn are alcohol additives for gasoline, adhesives, corn oil for cooking and margarine, sweeteners, and as food for humans. Corn is the largest crop in the U.S., both in terms of dollar value and the number of acres planted.

The largest futures market for corn is at the CME Group. Corn futures also trade at the B3 exchange, the Dalian Commodity Exchange, the Euronext Derivatives Market, the JSE Securities Exchange, the MATba ROFEX exchange, and the Osaka Exchange. The CME futures contract calls for the delivery of 5000 bushels of No. 2 yellow corn at par contract price, No. 1 yellow at 1-1/2 cents per bushel over the contract price, or No. 3 yellow at 1-1/2 cents per bushel below the contract price.

Prices - CME corn futures prices (Barchart.com symbol code ZC) in 2023 posted their high for the year in January at $6.8875 per bushel. Corn prices then traded sideways to slightly lower as concern eased about global corn supplies after an extension of the Black Sea grain export deal with Russia kept Ukrainian grain supplies flowing. Also, the prospects for record-high corn production weighed on prices after the USDA, in its May WASDE report, projected global 2023/24 corn production would climb +6.0% yr/yr to a record 1,219 MMT. Corn prices jumped more than $1 a bushel into June as drought conditions intensified in the US Midwest and stressed corn plants. The condition of the US corn crop deteriorated and fell to 50% in good-to-excellent condition in June, the lowest rating in 10 years. Corn prices then fell back as much-needed rain arrived in the central US, easing drought concerns and improving the condition of the corn crop. Also, the outlook for a bumper US corn crop undercut corn prices as the USDA in its July WASDE report projected US 2023/24 corn production would climb +11.6% yr/yr to a record 15.32 million bushels. In addition, US corn supplies were abundant as the USDA estimated US 2023/24 corn ending stocks would surge +61% yr/yr to a 7-year high of 2.263 million bushels. Corn prices ratcheted lower for the remainder of 2023 and posted a 3-year low of $4.47 per bushel in November. A record US corn harvest kept the pressure on corn prices after the USDA in its November WASDE report estimated US corn production at a record 15.234 million bushels. Global corn supplies were robust as the USDA projected record global 2023/24 corn production of 1,221 MMT and global corn ending stocks at a 4-year high of 315 MMT. Corn production in Brazil also ramped up as Brazil in 2023 surpassed the US as the world's biggest corn exporter. The USDA estimated Brazil's share of global corn exports in 2023 rose to 32%, better than 23% for the US. Exports of US corn have been declining in recent years as the federal government has been incentivizing the use of domestic grown corn for ethanol, with about 40% of US corn going to supply domestic mills producing ethanol. Corn prices recovered slightly into year-end and finished 2023 down -30.5% yr/yr at $4.7125 a bushel.

Supply - World production of corn in the 2023/24 marketing year is expected to rise by +6.9% yr/yr to 1.235 billion metric tons. The world's largest corn producers are expected to be the US with 31.5% of world production, China with 23.4%, and Brazil with 10.3%. The world area harvested with corn in 2021/22 fell by -0.6% yr/yr to 342.0 million hectares. World ending stocks of corn and coarse grains in 2023/24 are expected to rise by +1.5% yr/yr to 339.5 million metric tons.

US corn production for the 2023/24 marketing year (Sep-Aug) is forecasted to rise by +11.1% yr/yr to 15.234 billion bushels. US farmers are forecasted to harvest 87.096 million acres of corn for grain usage in 2023/24, which is up by +10.0% yr/yr. The US corn yield in 2023/24 is forecasted to rise +0.3% yr/yr to 173.8 bushels per acre. US 2022/23 ending stocks decreased by -1.2% yr/yr to 1.360 billion bushels. The largest corn-producing states in the US in 2023 were Iowa with 16.5% of US production, Illinois with 14.7%, Nebraska with 10.9%, Minnesota with 9.7%, and Indiana with 7.1%.

Demand - World consumption of course grains in the 2023/24 crop year is expected to rise by +2.7% yr/yr to a record high of 1.492 billion metric tons. The largest category of usage in 2022/23, aside from animal feed, was for ethanol production (alcohol fuel) with 5.275 billion bushels, which is 78.6% of total non-feed usage. That was dowb by -1.0% yr/yr. After ethanol, the largest non-feed usage categories are high fructose corn syrup (HFCS) with 6.2% of US usage, glucose and dextrose sugars with 5.5%, corn starch with 3.6%, cereal and other corn products with 3.2%, and alcoholic beverages with 2.4%.

Trade - US exports of corn in 2023/24 are expected to rise by +26.4% yr/yr to 53.342 million metric tons. Brazil's corn exports in 2023/24 are expected to fall by -5.3% yr/yr to 54.000 million metric tons. Argentina's corn exports are expected to rise +78.3% yr/yr to 41.000 million metric tons.

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