Corn rises as US demand gets a boost from Brazil’s woes

Bloomberg

Corn futures jumped after the latest U.S. government forecast for domestic inventories was less than expected, indicating that lower production in Brazil is boosting demand on the international grain market for American exports.
U.S. stockpiles will be 2.081 billion bushels as of Aug. 31, 2017, the end of the marketing year, U.S. Department of Agriculture data showed Tuesday. While that’s more than forecast by the USDA last month, it’s below the average estimate of 2.213 billion in a Bloomberg survey of analysts.
The world is awash with grains after several years of bumper crops, and U.S. stockpiles are expected to grow from the prior season. But with its latest monthly World Agricultural Supply and Demand Estimates (WASDE) report, the USDA is signaling that the U.S. is likely to remain a key supplier to global markets. Exports from the country, the biggest corn grower and shipper, are now seen at 2.05 billion bushels in the next marketing year, up from the 1.95 billion estimated last month. If the new projection is realized, it would be the largest amount shipped in nine years.
The USDA “is saying that demand for U.S. corn is improving from both U.S. livestock feeders and overseas buyers,” Don Roose, president of U.S. Commodities in West Des Moines, Iowa, said in a telephone interview. “Corn is now competitive on the world market and that puts a floor under prices.”
Corn futures for September delivery in Chicago erased losses after the report was published and closed 1.1 percent higher at $3.5225 a bushel.
The USDA slashed its estimate for corn production in Brazil during the current marketing year to 70 million metric tons, citing the adverse impact of the early end to the rainy season in much of the central region of the country. That projection is almost 10 percent less than what it had estimated last month and is close to the Conab forecast issued last week. The USDA also lowered its production estimate for the country’s next corn crop.