Fundamentally Speaking

Based on an updated census by the Chinese government, China's National Bureau of Statistics revised their corn production, domestic consumption and ending stocks for the past ten seasons going back to the 2007/08 marketing year.

The net impact was a doubling of world corn stockpiles to 307.51 million metric tons vs. the 159.35 mmt given in the October 2018 WASDE report.

The actual size of China's grain and oilseed output has been the subject of much speculation for years since the figures are a state secret.

Interestingly, corn futures ended higher by one cent the day the report was released, for regardless of what the Chinese corn situation is, it almost does not matter to the global market since China is not either a big corn importer or exporter.

The accompanying chart shows a more accurate picture of the corn situation can be made using the world less China stocks-to-use ratio, or even better, the stocks-to-use ratio of the major global exporters where both are under their respective ten-year averages.

Earlier in the year the global corn stocks-to-use ratio was pegged at close to its lowest levels ever, but that was before the Chinese revisions.

For the 2018/19 season, the world stocks-to-use ratio is 27.4% which is the lowest in five years, though in October it was 14.4% which was among the lowest ever.

The world less China stocks-to-use ratio is 11.8%, the lowest since the 2012/13 season and the stocks-to-use ratio just using the largest corn exporting nations of the U.S., South Africa, Russia, Argentina, Ukraine and Brazil is 14.5%, the lowest in three years.

These Chinese revisions along with an anticipated rebound in South American production and a better Ukrainian crop than expected means the global corn situation is not nearly as tight as foreseen a few months ago when we first generated this graphic.

(KLM)

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