Global Corn Market Update - MY 2020/21

Published 2021년 6월 28일

Corn exports from India have increased to an 8-year high owing to the country’s competitive corn prices amid global price hikes. Increased Chinese demand has caused global corn supplies to dwindle, leading to a surge in global corn prices. Unfavorable weather conditions have caused leading corn producers, US and Brazil, to suffer reduced production forecasts for the current season.

Indian Corn Exports Surge to 8-Year High

India has increased its corn exports significantly and taken advantage of the surge in global corn prices at their highest level since 2013. Rising global prices have made Indian corn exports highly competitive as the South Asian country has lower corn prices than other major exporters. During June and July, Indian exporters have committed to export deals amounting to around 400K tonnes of corn to animal feed producers in Vietnam, Malaysia, Bangladesh, and Sri Lanka. Indian corn exports are forecast to reach approximately 2.6M tonnes in 2021, the highest in seven years.

India has been a regular corn supplier to Asian countries. However, rising domestic animal feed consumption curbed sales in recent years. Cheaper corn supplies from India are expected to reduce the cost of animal feed for consumers of meat and chicken in Asia. These consumers are vulnerable to inflation of food prices.

Global corn prices rise

Indian corn prices were higher than global prices until mid-2020, when global corn prices began to sour. Since August, Chicago Board Of Trade (CBOT) futures have doubled due to rising Chinese demand and declining production in Brazil, the world’s third-leading corn supplier. CBOT futures have reached the highest level in May 2021 since March 2013, reaching over USD 7 a bushel. Indian corn is currently being shipped to Southeast Asia at USD 295-300 a tonne, including cost and freight (CFR), while South American corn is being quoted at USD 330 a tonne, C&F.

While China did not import much corn for several years under the Trump administration, global corn prices began rising in early 2020 due to substantial purchases from Chinese buyers. The increased demand from China has put pressure on global corn supplies and caused corn prices to surge. Corn prices have risen close to 142% over the past year, the highest in eight years.

Poor weather conditions deplete the US and South American corn production

According to AgRural, a Brazilian agribusiness consultancy, Brazil's second corn crop forecast has been reduced due to severe drought in the country, with yields now expected to drop to a five-year low. The US, the world's leading corn supplier, is currently facing a similar production crisis as Brazil due to unfavorably hot temperatures and dry weather conditions. These deteriorating crop conditions in the US have caused Chicago corn futures to rise by more than 40%.

According to the World Agricultural Supply and Demand Estimates (WASDE) report, 2020/21 corn stocks hit a seven-year low of 1.352 billion bushels. According to Safras and Mercado, a crop forecaster, Brazil's 2020/2021 total corn crop estimate was lowered by nearly 8% to 104.1M tonnes due to the dry weather conditions. Declining supply and rising demand, coupled with a drought in Brazil, have caused global corn prices to spike. Based on the current crop estimates, the situation is expected to persist throughout the current season.