The January WASDE report showed a record level of U.S. corn production in 2023. Mike Zuzolo, president of Global Commodity Analytics, says he expected the corn number to be higher than initially predicted. However, the boost in international corn production was surprising.
“The global corn number was something that I was expecting to drop pretty substantially because of the damage already done when it came to Brazil’s corn. On top of that, while Argentina looks like they are setting themselves up for a very good if not near-record crop in corn and beans, the ability of Argentina to offset the losses that I think have accrued from the weather that’s already occurred in Brazil is something I think the trade and the USDA have not priced in at all, and that’s where I do scrutinize those numbers.”
The increase in China’s corn production was unexpected because the Asian nation appears to be importing a large amount of corn.
“To see the USDA increase the world corn ending stocks by around 13 or 14 million metric tons, and China to be 12 of that roughly and us to be essentially the balance of that with our yield increase, that’s a real head-scratcher for me. Not only did they increase the Chinese production by 4.3 percent on a monthly basis, but they used the Chinese numbers to do that. China is importing corn, and their numbers – if they’re accurate – are going to be at a three-year high for corn imports.”
Zuzolo, a long-time market analyst, says the markets need to start paying more attention to the details in these reports.
“If you looked at USDA’s line items and the world minus China, those ending stocks did not change at all. And this is what I’m saying to the listener right now. What we learned in 2023, and will continue in 2024, is the trade does not scrutinize the commodity markets as it used to, and I think that’s an excellent example, as is the increased hostilities in the Middle East and crude oil that’s been losing value, not gaining value. This has got to change in order for us to see a different commodity trend in 2024.”