High global supply causes international corn prices to fall
16 August 2024
2 minutes reading time
Since the July WASDE report, export bids from all major exporters have increased, according to a recent U.S. Department of Agriculture FAS report on global grain markets. U.S. bids have changed the least, rising only $1/ton to $182, and are currently the most price competitive due to expectations of plentiful supplies. For the week ending August 4, NASS estimates that 67% of the corn crop will be in good to excellent condition, compared to 68% the previous week and 57% a year ago.
Ukrainian bids rose $19/ton to $205. Hot, dry weather in Ukraine could affect supply expectations for the coming crop.
Brazilian bids rose $5/ton to $192 and Argentine bids rose $4/ton to $184. Farmer sales and exports were sluggish in both countries.
A surge in domestic demand for maize in India has severely limited exports and led to record imports for the 2023/24 marketing year (October-September). The driving factors for this increase in demand include the government’s ethanol policy and a growing poultry market. Historically, India has been a net exporter, supplying significant quantities of maize to South and Southeast Asia. For the first time since 1999/00, India will import as much maize as it exports.
India recently revised its 2018 national biofuel policy to include maize as a feedstock and offers price incentives for maize ethanol.2 Sugar, India’s main feedstock for ethanol, is subject to government restrictions on the use of ethanol after several years of low production, further encouraging the use of maize as a feedstock.
The shift by ethanol producers to maize as an alternative coincides with a 10% increase in feed demand from India’s growing poultry sector. For the first time since 2019-20, India has imported foreign maize from Ukraine and Burma, where the cultivation of non-GMO maize circumvents India’s import restrictions on genetically modified maize. In addition, in June, India announced maize imports of 500,000 tonnes under a tariff rate quota (TRQ) with a 15% tariff to meet this sharp increase in demand3.
High global stocks have led to a decline in international maize prices in 2023/24. This has dampened India’s maize exports as strong domestic prices have prompted traders to keep their stocks in the country.
India was a major exporter for Vietnam, Nepal and Bangladesh, exporting 2.8 million tonnes of maize in 2022/23, almost a quarter of these countries’ total maize imports. However, India’s exports to these countries fell by 86 per cent year-on-year in the first eight months of 2023/24. In response to this decline, countries shifted to other exporters or relied more heavily on domestic supplies.
