Brazil’s corn supplies have hit a 25-year low according to Conab, while the USDA predicts potential shortages beginning next year. Differences in estimates stem from varying balance sheets and marketing years between the two agencies. With expectations of below-average corn supplies, both agencies highlight the pressing need for successful crop production this year.
As of late February, Brazil reported its corn supplies at the lowest levels in 25 years, according to its statistics agency, Conab. However, the U.S. Department of Agriculture (USDA) does not foresee a similar situation until the following year, raising a critical question about the accuracy of these forecasts. This discrepancy between USDA and Conab is not unprecedented, as notable differences have also occurred in estimates related to Brazilian soybean and corn harvests in the previous year.
The USDA and Conab possess variations in their operational balance sheets, affecting both production and demand estimates. Consequently, the absence of a definitive “right” answer is evident. With global corn supplies predicted to reach near three-decade lows later this year in relation to demand, a close examination of trends in Brazil becomes essential. Furthermore, the two agencies operate on different marketing year timelines, with Conab’s 2024-25 marketing year ending on January 31, 2026, while USDA’s concludes one month later. This difference affects how world corn stock estimates are perceived, as USDA’s insights cover an aggregated timeframe of several months.
The USDA maintained its 2024-25 Brazilian corn crop estimate at 126 million metric tons but lowered the 2023-24 harvest estimate to 119 million tons. Conversely, Conab adjusted its 2024-25 crop estimate slightly upward to 122.76 million tons, leaving last year’s estimate unchanged. This recent alignment has narrowed the gap between the two agencies, with USDA’s combined output estimate for both crop years being 6.5 million tons higher than Conab’s. However, a historical trend shows USDA’s figures generally remain at least 2.5% above Conab’s estimates in recent years.
These opposing views reveal key differences about the current and future availability of corn stocks in Brazil. Conab reports a severe shortage, noting corn stocks for 2023-24 as only 2 million tons, the lowest since records began in 1999, forecasting a modest recovery to 5.5 million tons by January. Conversely, USDA estimates Brazil’s current stock at 7.5 million tons, though it anticipates a significant shortfall in 2024-25, projecting stocks to dip below 3 million tons, the lowest in 23 years.
Additionally, the discrepancy is partially attributed to the timing of each agency’s marketing year. USDA appears to take a more favorable view on Brazil’s corn export potential, suggesting that Brazil could export one-third of its production on average over the two crop years, while Conab estimates closer to 30%. Recent shipping data implies that supply is limited, as Brazilian exports have been slightly below average. The future export scenario heavily relies on Brazil’s forthcoming crop and the harvest outcomes in the U.S., the leading corn exporter. Overall, both agencies’ projections of below-average Brazilian corn supplies underscore the market’s anxieties regarding dwindling stockpiles and emphasize the critical need for this year’s crops to succeed.
In summary, the significant divergence between USDA and Conab estimates regarding Brazil’s corn stocks highlights underlying complexities in agricultural forecasting. While Conab indicates a critical shortage now, USDA sees challenges looming in the near future. Both agencies’ differing marketing year assessments and export projections further complicate the narrative, indicating that Brazil’s corn supply situation warrants close observation, especially as global demands impact crop yields moving forward.
Original Source: www.livemint.com
