Global economics

World commodity forecast:

Maize

February 2022
Economist Intelligence
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Symbols for tables

“0 or 0.0” means nil or negligible; “n/a” means not available; “–” means not applicable
Maize 1

Maize
Demand Global consumption of maize has almost doubled over the past two decades,
rising by more than 3% per year on average. Growth has increased particularly
strongly in developing countries in Asia, Africa and Latin America, but has also
made solid gains in the US and Europe. Annual global consumption has
exceeded 1bn tonnes since 2015, of which about 60% is used as livestock feed,
almost 30% for industrial processing and the remainder for direct human food
use, seed or is lost in waste. Growth in global demand faltered in 2019/20 and
2020/21, rising at a slower rate than normal, partly owing to the coronavirus
pandemic and associated lockdowns. High prices and strong competition from
other feed grains, including wheat, has also limited maize consumption in some
major users. With economic recovery now under way in most developed
countries, GDP growth is expected to accelerate as immunisation rates continue
to climb. Factoring in projections for gains in feed, ethanol and maize-based
starch consumption, EIU expects world demand to increase by 2.8% in 2021/22
to 1,178m tonnes, led by China, the US and Brazil, although the pace of recovery
will vary greatly across regions. Our initial projections are for a steady rise in
demand in 2022/23, provisionally pegged at 1,200m tonnes. Our forecasts are
relatively unaffected by the apparition of the Omicron variant of covid-19,
which is assumed to be more transmissible but less severe than Delta, meaning
that the impact on global economic growth (and demand for agricultural
commodities) is expected to be short lived.
Growth in world feed use will accelerate World feed maize consumption continues to climb, with demand for animal
in 2021/22 proteins such as meat, eggs and milk underpinned by rising populations, higher
incomes and longer-term shifts in dietary preferences. Overall use often hinges
on the availability of maize and price relationships with other grains and oil
meals. However, levels of feed consumption also depend on pasture conditions
and availability, as well as desired livestock weight, the economics of the meat
industry and feed efficiency ratios. Global consumption of feed maize is set to
accelerate by 3% year on year to 701m tonnes in 2021/22, potentially a new
record high, after a period of relatively slow growth in demand due to difficult
economic conditions, rising maize prices and ongoing low demand from food
service industries. Although price considerations will continue to play an
important role in the exact feed mixes into 2022/23 (and beyond), we expect
maize to remain the most widely used feed grain in the coming years. With
meat and dairy demand continuing to trend higher, we forecast that 2022/23
feed maize consumption will rise by a further 3% to 721m tonnes.
China is the world's largest feed maize consumer, with 2021/22 use pegged at
214m tonnes, 5% higher than the previous season. Although local feed mills
have tinkered with feed formula mixes in recent years, incorporating additional
wheat, barley and sorghum, maize remains the preferred grain for many
livestock producers, offering an excellent source of energy, especially for pigs fed
with a complementary diet of soybean meal. Recent growth in feed demand
has been fuelled by the sustained recovery of China's pig herd, after massive
culls linked to African swine fever (ASF) in 2018-20. The shift away from
traditional, small, backyard operations to large-scale pig farms has also boosted

World commodity forecast February 2022 www.eiu.com © The Economist Intelligence Unit Limited 2022
2 Maize
Maize is used in a large number of
industrial applications
The US accounts for more than half of
global industrial demand
World commodity forecast February 2022
demand for feed maize, with the use of kitchen waste and other recycled feeds
now mostly eliminated. Spurred by rising domestic demand and increasingly
wide import margins, China has become the world's leading importer of maize.
High local prices, exaggerated by prohibitive transport costs from north-eastern
producing areas to the main southern consuming regions, has spurred huge
purchases from the world market in recent years, mainly sourced from the US
and Ukraine.
Processing demand typically accounts for nearly 30% of total consumption,
averaging 299m tonnes in the five years to 2020/21. About half of this is for the
production of fuel ethanol, with the remainder used for myriad other industrial
products, including starches, sweeteners, industrial alcohol, adhesives and
bio-based plastics. The US is the largest single industrial processor of maize,
followed by China, the EU, Brazil, Canada, India and Argentina. As economic
activity recovers and covid-19 restrictions are eased, growth in global industrial
maize consumption will accelerate in 2021/22, to reach 307m tonnes, up by 3%
year on year.
The US is by far the leading processor, with demand projected to reach
163m tonnes in 2021/22. Processors are expected to use 133m tonnes of maize for
the manufacture of fuel ethanol in 2021/22, up by 4% on the previous season,
but still down by 6% from its 2017/18 peak. US ethanol production plunged in
the immediate aftermath of the pandemic, as stay at home orders restricted
movement, cutting demand for road fuels. Amid changing travel habits, the
pace of recovery has been slow, with nationwide ethanol production only
recently climbing back above pre-pandemic levels. The delayed recovery was
also partly linked to high maize prices during the summer of 2021, which
squeezed profit margins and encouraged blenders to draw down existing
ethanol stocks. Following a post-harvest pullback in maize values, combined
with ongoing strength in gasoline prices, ethanol production margins have
subsequently widened, resulting in a sharp spike in output since October, with
weekly production climbing to near-record highs. Assuming that there are no
further lockdown measures in response to new coronavirus variants, we expect
ethanol production to stay high in the coming months, especially if blenders
look to rebuild stocks. However, remote working opportunities, advances in fuel
efficiency and the increased adoption of electric vehicles could continue to be a
limiting factor in the longer term. Although there are opportunities to expand
ethanol exports, including to China, we do not expect a significant uptick in
sales over the next few years. Domestic processing demand is expected to rise
by only 1% in 2022/23, to about 170m tonnes.
US biofuel policy remains highly divisive, with powerful lobby groups from
ethanol producer groups and the oil industry quick to issue legal challenges in
response to planned policy changes. Reflecting covid-19-related shocks, latest
proposals from the Environmental Protection Agency included retroactive
adjustments to biofuel blending requirements for 2020 and proposed 2021
volumes set in line with projected use this year. The conventional renewable
fuel requirement (mainly maize-based) for 2022 is proposed to be set back at the
statutory volume of 15bn gallons. Ethanol is an important octane booster and is
now the primary oxygenate used in gasoline. With 10% ethanol (E-10) blends
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Maize 3

Trade is on an upward trajectory,
with China now a major buyer
now accounting for more than 95% of the fuel consumed in US motor vehicles,
we would not expect the proposed policy tweaks to have too much of an
impact on absolute levels of ethanol consumption. Blending economics are
instead likely to remain the main driver of ethanol production in the short term.
Mainly because of a projected drop in Chinese import demand, trade is forecast
to contract by 2% in 2021/22 (basis July-June), to 185m tonnes, potentially mark-
ing the first year-on-year contraction in more than a decade. Latest price
movements and expectations of a large domestic crop suggest that Chinese
imports could drop by about 19% year on year to 22m tonnes, which is still
enough to be the largest single buyer. Maize shipments to the EU are also
forecast to be smaller, dropping to a five-year low of 14.7m tonnes, owing to an
expected large domestic harvest and the availability of rain-damaged, lower-
quality wheat in France. In contrast, imports to other leading destinations,
including Mexico, Vietnam, South Korea, Iran and Egypt, are forecast to be
higher year on year. The outlook for 2022/23 remains tentative and depends on
market dynamics. However, given an anticipated rise in world feed use,
imports are likely to remain at elevated levels of about 185m tonnes.

Maize: consumptiona
(m tonnes unless otherwise indicated)
2018/19 2019/20 2020/21 2021/22 2022/23
US 310.5 309.5 304.1 313.2 318.0
China 274.0 278.0 289.0 296.2 305.1
Japan 16.0 16.1 16.1 16.2 16.2
Other East Asia 110.2 111.4 117.0 120.2 122.0
Brazil 66.0 69.0 70.5 73.0 76.0
Mexico 44.0 43.8 43.5 43.8 44.4
Other Latin America 48.7 49.8 49.3 51.3 52.0
EU 88.0 83.4 76.3 80.3 78.0
Sub Saharan Africa 75.9 76.4 77.0 78.2 80.1
North Africa 25.5 27.0 27.7 27.0 27.5
Others 72.0 73.2 75.6 79.0 81.0
Total 1,130.8 1,137.6 1,146.1 1,178.4 1,200.3
% change 3.2 0.6 0.7 2.8 1.9
a Local marketing years.
Sources: US Department of Agriculture (USDA); EIU; national statistics agencies.

Supply Despite sustained improvements in agronomic practices and developments in

seed technology, world production has stagnated in recent years, with spells of
difficult weather curtailing output in some countries. Although there were
unusual back-to-back declines in world production in 2019/20 and 2020/21,
cumulative output stayed above 1.1bn tonnes, higher than the averages of the
previous five years. With bumper crops already harvested in the US, China,
Ukraine and the EU, global production in 2021/22 will be the largest on record.
Although there remains much uncertainty about the impact of a second
successive La Niña weather event on final outcomes in the southern
hemisphere, cumulative world output is forecast to increase by 8.6%, to
1,202m tonnes, an annual gain of 95m tonnes, marking the fastest year-on-year
growth in five seasons. We have raised our forecast by 1.2m tonnes, with
increases for the EU, Ukraine and South Africa more than offsetting a

World commodity forecast February 2022 www.eiu.com © The Economist Intelligence Unit Limited 2022
4 Maize
US production is expected to increase
in 2021/22
Acreage in China is beginning to
increase again
Production in Brazil is forecast to
rebound sharply in 2021/22
World commodity forecast February 2022
downgrade for Brazil, where dry weather lingered across southern producing
regions. Although solid gains in production are anticipated, world supplies are
only projected to rise by about 4% year on year, constrained by relatively tight
carry-on stocks. Looking ahead to the 2022/23 season, plantings are provisionally
expected to remain high, potentially lifting output to 1,204m tonnes. However,
competition for available farmland could be particularly stiff in the next season,
especially in the US and Ukraine. Seeding intentions could also be complicated
by the recent surge in fertiliser prices, which could incentivise some shifting
into other crops.
Despite disparities across a number of producing states, results from the 2021/22
US harvest mostly exceeded earlier expectations, with production forecast to be
7% higher year, at 382.6m tonnes, the highest in five seasons. The good overall
performance amid mediocre mid-summer weather is not only a testament to
the latest technologically advanced seed varieties and efficient farming
techniques, but also partially reflects good early planting conditions, which led
to successful crop in the spring and timely rains in a number of previously dry
states. We continue to expect a slight increase in plantings for the 2022/23
season, with production 1% higher, at a record 385m tonnes. However, as maize
requires relatively intensive use of fertilisers, herbicides and pesticides
compared with alternatives, including soybeans, much may depend on
whether the recent rally in input prices is sustained over the coming months.
Buoyed by high prices and additional government subsidies, 2021/22 maize
plantings in China increased for a second consecutive season. Although much
of the additional area stemmed from switching away from less-profitable
soybeans, the high prices also reportedly spurred plantings on previously idled
agricultural land. Latest official data confirmed production in line with our
estimate of 273m tonnes, a gain of 5% year on year. Plentiful rains ensured good
yields in the main north-eastern growing provinces, but with some
accompanying concerns about possible quality losses. As subsidies are
expected to continue into the next season, output for 2022/23 could edge higher,
to 275m tonnes. Recent regulatory changes and planned safety approvals of
new varieties of genetically modified (GM) maize seeds developed by domestic
companies have paved the way for the eventual commercialisation of GM
technology in China. Although China allows imports of certain GM grains and
oilseeds for animal feed, the cultivation of GM crops has long been prohibited.
The latest traits reportedly include varieties with a strong insect resistance,
including fall armyworm, which has resulted in localised crop losses in recent
years. There is much uncertainty about the potential timeline for the
introduction of GM crops, but the new technology is expected to play an
important role in maintaining domestic food security in the coming years.
In Brazil, sowings of 2021/22 full-season (first) maize crops, used primarily to
meet local feed needs in southern regions, were almost finished by early
December, as usual. Early rains in Rio Grande do Sul, usually the main
producing state, gave way to much drier conditions in November and
December, which coincided with the main pollination period in some areas.
Drought has also spread into Parana, with conditions particularly concerning in
the western parts of the state. A drier pattern in southern Brazil is fairly typical
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Maize
Production is set to remain high in
Argentina
Maize yields in Ukraine have been
volatile in recent years
World commodity forecast February 2022
5
under a La Niña weather event, which materialised for a second successive year
in September. Planting of the safrinha 2021/22 crop, which typically accounts for
about 75% of national output, will begin shortly, once soybean crops are
harvested. Current high prices are expected to incentivise additional plantings
in the main central growing region, where soil moisture reserves are currently
good. Assuming that the soybean harvest proceeds normally, there is a good
chance that the safrinha plantings will be completed within the optimal
timeframe, supporting 2021/22 yield potential. However, in the light of the surge
in fertiliser prices and tight world availabilities, it seems likely that producers
will opt to apply fewer farm inputs, which could cap productivity. Factoring in
downgraded forecast for the first crop, we have lowered our 2021/22 production
estimate by 2.6m tonnes, to 115m tonnes, which would still be an all-time time
and 30m tonnes more than the previous season, when a combination of overly
dry and cold weather severely affected yields.
Farmers in Argentina have been incorporating more complex acreage mixes in
recent years, with many moving away from soybean monocropping. This has
been partly facilitated by the most recent late season maize varieties, which
have been offering good results, even under comparatively dry conditions.
Maize crops in Argentina are particularly susceptible to the dry weather that
usually accompanies a La Niña weather event. As farmers are especially wary
of the potential of damaging heat in December and January, a much larger than
normal proportion of the 2021/22 crop will be sown to late season varieties,
which are typically lower yielding but may benefit from cooler, potentially
wetter conditions later in the year. Given strong prices, potentially solid profit
margins and the latest advances in seed technology, farmers are likely to
expand acreage in the current season. Although much will depend on the
weather, we forecast that production will reach a record 54m tonnes, 11% higher
year on year. As part of ongoing efforts to limit rampant inflation, the govern-
ment recently published new proposals aimed at decoupling domestic grain
prices from the global market. The latest strategy includes a formal limit on
maize (and wheat) exports, with volumes determined by the government's
supply and demand projections. Although the maize quota for the 2020/21
marketing year was not especially prohibitive, set at 41.6m tonnes, local farmers
are generally opposed to the interventionist policy, arguing that the potential
drop in farmgate prices could threaten future agricultural investment, as well as
altering future planned crop rotations.
Owing to increasingly expensive mechanical drying costs, many farmers in
Ukraine opted to dry 2021/22 crops down in the field, resulting in a much later
harvest than normal. Although early yields were disappointing, productivity
has trended higher since October, with production now forecast to reach
40m tonnes—1m tonnes higher than our previous forecast and 10m tonnes
higher than the previous year. Given expectations for only a modest rise in
domestic demand, most of the additional surplus will probably be channelled
into exports, which we expect to rise by 36% year on year to 32.5m tonnes.
Factoring in potentially lower yields and the likelihood of strong competition
for land from oilseeds, the 2022/23 harvest could dip slightly, to 36m tonnes,
which will still be large enough for a substantial exportable surplus.
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6 Maize

Maize: productiona
(m tonnes unless otherwise indicated)
2018/19 2019/20 2020/21 2021/22 2022/23
US 364.3 346.0 358.5 382.6 385.0
China 257.3 260.8 260.7 273.0 275.0
Other East Asia 76.5 78.4 79.9 81.0 81.5
Brazil 100.0 102.0 85.0 115.0 119.0
Argentina 51.0 50.0 48.5 54.0 54.0
Mexico 27.6 26.5 27.0 28.5 29.0
Other Latin America 31.0 29.0 28.7 30.2 30.3
EU 64.4 66.7 64.0 70.4 66.0
Ukraine 35.8 35.9 30.0 40.0 36.0
Other CIS 17.2 19.8 19.1 20.8 21.0
South Africa 11.8 15.8 17.0 17.0 16.5
Other Africa 68.5 66.0 70.0 70.8 71.3
Others 16.8 17.5 18.2 18.5 19.0
Total 1,122.2 1,114.4 1,106.5 1,201.7 1,203.6
% change 4.0 -0.7 -0.7 8.6 0.2
a Mainly harvested July-December (in the southern hemisphere early the following year).
Sources: Sources: US Department of Agriculture (USDA); EIU; national statistics agencies.

Stocks and prices After four years of tightening, global maize stocks are forecast to increase by about
9% year on year to 287m tonnes in 2021/22, but still 9% lower than the average in
2016/17-2020/21. Chinese maize stocks account for 70% of the global total, but
with so much uncertainty surrounding the true level of grain inventories in China,
it is perhaps more useful to focus on cumulative inventories in the major suppliers
such as Argentina, Brazil, Ukraine and the US. We forecast that end-season stocks
in these four countries will increase by 20% to 49.9m tonnes, still 23% below the
previous five-year average.

Maize: supply and demand

(m tonnes unless otherwise indicated)
2018/19 2019/20 2020/21 2021/22 2022/23
Productiona 1,122 1,114 1,107 1,202 1,204
Consumption 1,131 1,138 1,146 1,178 1,200
Balance -9 -23 -40 23 3
Tradeb 165 174 189 185 185
% change 8 6 8 -2 0
Stocksc 326 303 263 287 290
Main exporters 69 60 41 50 53
Stocks ratiod 105 97 84 89 88
a Mainly harvested July-December. b Excluding intra-EU trade. c World stocks; end of respective
crop years. d Stocks in terms of days of consumption.
Sources: IGC; EIU.

The unusually low level of exporter inventories is mainly linked to a recent

steady drawdown in US stocks, with carryovers projected to stay relatively tight
in 2021/22, at 38.1m tonnes, compared with an average of 49.8m tonnes over the
past five years. Given recent production woes, combined with strong domestic
and overseas demand, Brazil's maize stocks are also expected to remain tight.
Inventories in Ukraine and Argentina are typically small, each averaging about
2m tonnes in a normal year. Our initial analysis of 2022/23 supply and demand

World commodity forecast February 2022 www.eiu.com © The Economist Intelligence Unit Limited 2022
Maize 7

drivers shows a similar outlook for the following marketing year. Although
world and exporter stocks are both forecast to increase, inventories are set to
remain smaller than average, including in the US. This could offer sustained
price support, especially in the event of a large weather shock to a major
exporter or importer.
Average export prices (Argentina, Brazil, Ukraine and the US) strengthened by
about 4% in December, about 13% higher than a year earlier. The upside was
mainly driven by heightened concerns about dry cropping weather in southern
Brazil, with traders mindful of the situation last year, when production fell well
short of early season expectations. Worries about the current La Niña weather
event and risks for unfavourably dry weather in parts of Argentina lent further
support. The US market also drew support from strong demand from domestic
ethanol producers and concerns that rising fertiliser costs could potentially
restrict planting decisions next year. Day-to-day trading activity in CME futures
markets was also often shaped by reactions to the new Omicron variant of
covid-19. Uncertainty about the impact of the new variant initially weighed on
futures at times, before sentiment became generally more optimistic on ideas
that the variant could mark the transition of covid-19 towards endemicity.
Supply-side fundamentals are likely to more than offset the large economic risks
associated with the ongoing pandemic. With little margin for production
shortfalls, the current weather premium built into markets is likely to persist
into 2022, especially given the potential for another La Niña. Unless crops are
significantly larger than currently anticipated, exporter stocks are expected to
remain relatively tight throughout the forecast period. Owing to tight supplies
and a strong demand outlook, the downside is likely to be limited, especially if
China is again a major buyer. Export prices (US 3 Yellow Corn fob Gulf) are set
to stay strong and are estimated to be more than 50% higher on average year on
year in 2021. Prices are expected to fall in 2022-23 as the market reacts to easing
supply concerns. Assuming some gradual rebuilding of stocks, we expect a 2%
fall in prices in 2022, and about a 5% drop in 2023.

Maize: stocks and prices

2020 2021 2022 2023 2024
Stocksa
1 Qtr 202 195 202 209 210
2 Qtr 127 104 115 120 -
3 Qtr 49 31 38 43 -
4 Qtr 287 298 306 306 -
% changeb -13.6 -35.6 21.2 13.1 -
Pricesc
1 Qtr 174 251 275 255 250
2 Qtr 155 295 270 255 -
3 Qtr 175 274 265 255 -
4 Qtr 219 269 260 250 -
Year 181 274 264 254 -
% change 2.8 51.4 -3.6 -3.8 -
a US domestic stocks; m tonnes. b Year on year at September 30th. c Export prices of US No.3 Yellow
Corn fob Gulf; US$/tonne.
Sources: Sources: US Department of Agriculture (USDA); EIU; national statistics agencies.

World commodity forecast February 2022 www.eiu.com © The Economist Intelligence Unit Limited 2022
8 Maize

Maize: stocks and prices

US domestic stocks (m tonnes); Export prices of US No.3 Yellow Corn fob Gulf
left scale (US$/tonne); right scale
350 350

300 300

250 250

200 200

150 150

100 100

50 50

0 0
2015 16 17 18 19 20 21 22 23 24
Sources: US Department of Agriculture; International Grains Council; EIU.

Editors: Sanjeeban Sarkar (analyst); Matthew Sherwood (consulting analyst)

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