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Corn prices are expected to drop in 2024 due to lower global exports, offsetting reduced production in major countries. USDA and BMI forecast prices below $4.50 per bushel, with current futures contracts indicating further declines. Higher ending stocks and increased feed grain supply contribute to the bearish outlook. Key producers like the US, Brazil, and Argentina will see decreased output, but overall global corn utilization is expected to rise slightly.

Highlights

Bearish Corn Price Outlook for 2024: Corn prices expected to be lower in 2024 due to reduced global exports, which will offset a decline in production in key countries. Higher ending stocks also contribute to this outlook.

Price Forecasts: The USDA's Economic Research Service (ERS) and BMI, a unit of Fitch Solutions, forecast corn prices below $4.50 per bushel ($177.20/tonne). Current July contracts on the CBOT are at $4.46 a bushel, while December futures are at $4.65.

Indian Corn Production: The USDA ERS projects India's corn production to remain flat at around 35 million tonnes in 2024-25, assuming a favorable south-west monsoon.

Feed Grain Stocks and Supply: Corn is driving an increase in feed grain stocks and overall supply, with record production in 2023-24. Ending stocks for 2024-25 are projected to be 56.4 million tonnes, up 2.3 million from the previous year.

2024-25 Corn Prices: The USDA ERS projects corn prices at $4.40 per bushel for 2024-25. BMI forecasts an average price of $4.30 per bushel, marking a 22.3% decline from the 2023 average price of $5.54.

Market Trends: Up to June 10, corn contracts averaged $4.51 per bushel. Analysts anticipate further price declines in the second half of 2024.

US Ending Stocks: ING Think predicts US ending stocks will rise in 2024-25 to the highest level since 2018-19, though still below market expectations of close to 2.3 billion bushels.

Global Corn Production: The FAO's Agricultural Marketing Information System (AMIS) forecasts a 1.3% decline in global corn production in 2024, with decreases in Brazil, South Africa, Ukraine, and the US. Increases are expected in Argentina and the EU.

Corn Production in Key Exporting Countries: Production in Argentina, Brazil, and the US is expected to be lower in 2024 compared to 2023 but will still be the second-highest on record.

US Corn Production: The USDA expects a 3% year-on-year decline in US corn production in 2024-25 as farmers switch to soybeans.

World Corn Exports:  Both the USDA and the International Grains Council (IGC) forecast a decline in world corn exports in the 2024-25 marketing year, which is expected to weigh on prices.

China's Corn Imports: FAO's AMIS expects a 2.7% drop in trade for 2024-25, primarily due to smaller purchases by China and lower exports from Brazil and Ukraine.

Global Corn Utilization: Utilization is forecast to expand by 1.1% in 2024-25, driven by growth in feed use, especially in China, Brazil, and the Russian Federation.

Global Ending Stocks:  ING Think, citing USDA, projects global ending stocks for 2024-25 at 312.3 million tonnes, down 0.8 million from 2023-24, but still below market expectations.

Regional Stock Increases:  FAO's AMIS anticipates a 3.5% rise in stocks by the end of 2025, with significant increases in the EU, Brazil, China, and the US.

Market Surplus Outlook: BMI expects the global corn market to remain in surplus until MY2027-28, though the annual surplus will not surpass the large surplus seen in 2021-22.

Impact of Monsoons on Indian Corn: The USDA ERS notes that timely rains for India's kharif corn crop could help mitigate high temperatures and improve soil moisture conditions, stabilizing production.

Conclusion

Despite a decrease in production, corn prices are projected to decline in 2024 due to lower global exports and higher ending stocks. The market will experience increased feed grain supply, driven by record production in previous years, leading to higher ending stocks for 2024-25. Key exporters, including the US, Brazil, and Argentina, will see reduced output, but global utilization will grow, particularly in China and Brazil. This complex interplay of factors suggests a challenging market environment for corn, with prices remaining subdued in the coming year.

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