Harvest for the 2020/21 corn crop is underway around the world. Preliminary data from early harvest indicates that production is smaller than the initial assessment in May but is still at record levels.
The downward revision is primarily driven by the U.S. crop. U.S. planted area in the June Acreage report was significantly lower than the March Prospective Plantings report. Moreover, persistent hot and dry weather, plus severe storms over the summer across the Corn Belt following a generally favorable July has lowered yield prospects leading to a smaller crop forecast this month.
Worldwide, crops for Canada, the European Union (EU), and Ukraine are also forecast smaller than the initial assessment, while crops for Brazil, India, Russia, and several African countries have grown larger than the May projection.
Global consumption is projected to be marginally bigger than the May assessment, driven largely by higher feed and residual use for Brazil, China, the EU, and Russia. For Brazil, strong meat exports are expected to stimulate animal production and to boost corn use. China’s rebuilding of the hog sector since the outbreaks of African Swine Fever a few years ago has been faster than prior expectations and has been fueling feed demand.
For the EU, corn use is larger on expectations that feed mills would turn to competitively priced feedstuffs amid tighter supplies of feed-quality wheat. Larger use in Russia reflects abundant supplies in the Central District, where production is primarily used in the domestic market.
As countries turn to the world market for competitively priced feedstuffs, global corn trade inches up from the initial assessment. Of the major exporters, forecasts for the United States and Brazil are up while the forecast for Argentina remains the same. The forecast for Ukraine is lower reflecting smaller exportable supplies impacted by hot and dry weather over the past several weeks.
Forecast ending stocks at the world level are lower than the initial assessment with reductions for Argentina, China, the EU, and the United States. Nevertheless, U.S. ending stocks are forecast to be abundant relative to use. Stocks in Brazil are somewhat improved since the May projection. The availability of these stocks will help boost the competitiveness of corn relative to other grains.
Burma’s Corn Exports Surge in 2019/20
Burma corn exports are expected to reach 2.2 million tons in 2019/20 (Oct-Sep), hitting a historical high. Corn production and exports have grown substantially in Burma over the last decade; in the recent past, corn demand in China in particular has been a primary driver for this growth.
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However, in 2018/19, news outlets reported that China would be making efforts to secure the China-Burma border against unregistered trade. The border trade enforcement appeared to affect registered trade noticeably as well; relative to the first half of TY 2018/19, corn exports to China in the second half dropped by nearly 85 percent as reported by Burma’s Central Statistical Organization.
The bottleneck at the China-Burma border was further exacerbated by COVID-19. Truck drivers from Burma are not allowed to enter China and the government has implemented a system where Chinese drivers take over from Burmese drivers at the border, but lack of personnel has reportedly caused back-ups for many commodities, including corn.
Relief for Burma’s corn farmers has come from Thailand’s demand, which has essentially picked up where China left off. Corn exports to Thailand surged in the second half of 2018/19 just as Chinese demand was tapering off. The border between Burma and Thailand has also seen more restrictions as a result of COVID-19, but trade disruptions appear to be much less severe.
With China-Burma trade limited for political and pandemic reasons and millions of tons of U.S. corn sold and on the books for delivery to China in 2020/21, Burma’s corn farmers may find themselves turning more to Thailand and other ASEAN countries as trading partners. While down from the historic high of 2019/20, the Burma corn export forecast for 2020/21 remains favorable.