Corn inventories in the U.S. at the end of the next marketing year will be less than analysts forecast as dry weather in Brazil devastates its crops and boosts demand for American supplies, a government report showed.
Corn stockpiles will be 2.081 billion bushels on Aug. 31, 2017, more than forecast last month but below the average estimate of 2.213 billion in a Bloomberg survey of analysts, a U.S. Department of Agriculture report showed Tuesday in Washington. Exports from the U.S., the world’s biggest grower and shipper of the grain, will be 2.05 billion bushels, up from 1.95 billion estimated last month.
Corn futures in Chicago erased losses after the report was published and gained as much as 1.9 percent.
The USDA slashed its estimate for corn production in Brazil during the current marketing year to 70 million metric tons, almost 10 percent smaller than what it had forecast last month. Government statistics “confirm the adverse impact of this year’s early end to the rainy season in much of central Brazil,” the USDA said.
"That big drop in global corn production coming from Brazil helps to justify some of those U.S. new crop demand numbers we’re seeing for corn," Ted Seifried, chief market strategist at Zaner Group LLC in Chicago, said in a telephone interview. "Now we’re going to trade the weather."
The agency also lowered its forecast for global cotton stockpiles in 2017 to 91.3 million bales, less than the lowest forecast in a Bloomberg survey of analysts and down from 94.7 million bales estimated in June. Cotton futures in New York jumped as much as 3.2 percent.