KSU Corn Market Outlook in November 2014: Perspectives on 2014/15 and 2015/16 Corn Market Price Prospects

An analysis of U.S. and World corn supply-demand factors and 2014 price prospects following the USDA’s November 10th USDA Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports is available on the KSU AgManager website  (http://www.agmanager.info/default.asp).

Following is a summary of the article on “Corn Market Outlook in November 2014″ with the full article and accompanying analysis will soon be available on the KSU AgManager website at the following web address: http://www.agmanager.info/marketing/outlook/newletters/archives/GRAIN-OUTLOOK_11-18-14_Corn.pdf

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Summary

Introduction

Since the USDA released its Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports on November 10th, DEC 2014 and JULY 2015 corn futures prices have moved sideways to higher, raising hopes of an eventual return to storage for U.S. crop producers resisting sales at sub-$4.00 cash prices. With 1) a record high 2014 U.S. corn crop, and 2) prospects for record or near-record World corn production and ending stocks in the “new crop” 2014/15 marketing year, “new crop” corn price prospects will be limited – unless unexpected and substantial crop production problems occur in other major coarse grain production regions of the World. Absent a shortfall in World feedgrain market supply-demand balances, price prospects are likely to be limited until April-May 2015 – the beginning of the U.S. corn planting and growing season.

USDA U.S. Corn Forecast for “New Crop” MY 2014/15

The USDA forecast 2014 U.S. corn production to be a record 14.407 billion bushels (bb), based on projected planted and harvested acreage of 91.885 million acres or ‘ma’, and 83.097 ma, respectively, and a record 2014 U.S. corn yield of 173.4 bushels per acre. The USDA also projected record U.S. corn total supplies of 15.668 bb, up 6.0% from 14.782 bb a year earlier. Projected MY 2014/15 total corn usage of 13.660 bb is also a record, with ethanol use of 5.150 bb (up 16 mb from MY 2013/14), non-ethanol FSI use of 1.385 bb (up 22 mb), exports of 1.750 bb (down 167 mb), and feed and residual use of 5.375 bb (up 243 mb). “New crop” ending stocks are forecast at 2.008 bb – up from 1.236 bb (9.1% S/U) in “old crop” MY 2013/14, and from 821 million bushels or ‘mb’ (7.4% S/U) in MY 2012/13. The USDA forecast that “new crop” MY 2014/15 U.S. average cash corn prices will be in the range of $3.20-$3.80 per bushel with a midpoint of $3.50 – down from $4.46 in “old crop” MY 2013/14, and $6.89 in MY 2012/13.

KSU U.S. Corn S/D Forecast for “New Crop” MY 2014/15

An alternative projection by KSU to the USDA for “new crop” MY 2014/15 U.S. corn supply-demand and prices is as follows: “Increased Usage” Scenario: 40% prob. of 15.668 bb U.S. corn supplies (same as USDA), 13.955 bb total use (up 2.2% from USDA), 1.713 bb ending stocks, 12.3% S/U, & $3.95 /bu U.S. corn price.

KSU U.S. Corn S/D Forecast for “Next Crop” MY 2015/16

A KSU projection for “next crop” MY 2015/16 for U.S. corn is as follows: “2015 Less 3 Million Acre” Scenario: 88.885 ma planted in 2015, 80.885 ma harvested, trend yields of 162.7 bu/ac, 2015 U.S. corn production of 13.073 bb, U.S. corn supplies of 15.106 bb, total use of 13.650 bb, ending stocks of 1.456 bb, 10.7% S/U, & $4.15 /bu U.S. corn season average prices.

World Corn Supply-Demand

World total supplies of 1,163 mmt are projected for “new crop” MY 2014/15, up from 1,127 mmt in “old crop” MY 2013/14, and up from 1,002 mmt in MY 2012/13. Projected World corn ending stocks of 191.5 mmt (19.7% S/U) in “new crop” MY 2014/15 are up from 173 mmt (18.1% S/U) in “old crop” MY 2013/14, and from 138 mmt (15.9% S/U) in MY 2012/13.

Major Export Competitors Situation

Combined “new crop” MY 2014/15 corn production for the U.S.’ major export competitors Brazil (75.0 mmt – down 4.3) and Argentina (23.0 mmt – down 2.0) is projected to be down 6.3 mmt from “old crop” MY 2013/14. Forecast Ukraine 2014 corn production of 27.0 mmt is down 3.9 mmt from a year ago. South American acreage decisions either have been or are being made now for first planting of 2015 crops in the Nov-Dec 2014 period, with subsequent additional plantings coming after the first of the year.

U.S. Corn versus Soybean Acreage Decision for 2015

With closing CME NOV-2015 soybean futures of $10.25 and CME DEC-2015 corn futures of $4.21 ½ on 11/17/2014, the ratio of 2.43 may slightly favor soybeans (i.e., being greater than the customary 2.3 breakeven level). If South American farmers shift sizable acreage away from corn into 2015 soybeans – markedly diminishing 2015 production prospects, and/or have weather-induced 2015 corn production problems, then by March-April 2015 World corn market price prospects for “next crop” MY 2015/16 could be positively effected – which could impact U.S. farmers’ 2015 spring planting choices.

 

 

http://i.guim.co.uk/static/w-620/h--/q-95/sys-images/Environment/Pix/columnists/2011/5/31/1306848749787/MDG--Biofuel-production---007.jpg

U.S. Corn in Storage in 2011 (Source: http://www.indianagrain.com/blog/corn-harvest-continues-to-impress)

http://www.zimmcomm.biz/images/corn/distillers-grains.jpg

Corn for use in livestock feed i 2008 (Source: http://corncommentary.com/2008/09/26/tons-of-livestock-feed/)

KSU Weekly Grain Market Analysis: Grains trekking into winter-spring 2015 “store-sell” mode

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to be played on Friday, November 14th will be placed up on  the Kansas State University www.AgManager.info website at the following web address within a short time: http://www.agmanager.info/news/Articles/KSRN_GrainOutlook_11-14-14.pdf

The recorded radio program will be aired at 10:03 a.m. central time, Friday, November 14th on the K-State Radio Network (here) – web player available.  At this time the program, the recording will be available for listening to via a link from the following website in the “Radio Interviews” section: http://www.agmanager.info/news/default.asp

Following are some key parts of this KSU weekly grain market update report:

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KSU Wheat Market Outlook – Prospects for U.S. Wheat Markets through Summer 2015

Following are parts of the Grain Market Outlook for 2014-2015 to be presented in the 2014 K-State Insurance Workshop in Salina, Kansas on Thursday, November 13, 2014.  This year’s workshop will focus on topics pertinent to the Kansas Crop Insurance Industry. Registration information and program details are available at the following web address: http://www.agmanager.info/events/Insurance/2014/Default.asp

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Following is the full Wheat Market portion of the “Grain Market Outlook for 2014-2015” presentation to be given by Daniel O’Brien of KSU on Thursday, November 13th, with price information current through Monday, November 10, 2014.

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KSU Soybean Market Outlook – Prospects for Soybean Markets through Fall 2015

Following are parts of the Grain Market Outlook for 2014-2015 to be presented in the 2014 K-State Insurance Workshop in Salina, Kansas on Thursday, November 13, 2014.  This year’s workshop will focus on topics pertinent to the Kansas Crop Insurance Industry. Registration information and program details are available at the following web address: http://www.agmanager.info/events/Insurance/2014/Default.asp

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Following is the full Soybean Market portion of the “Grain Market Outlook for 2014-2015” presentation to be given by Daniel O’Brien of KSU on Thursday, November 13th, with price information current through Monday, November 10, 2014.

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KSU Feedgrain Market Outlook – Prospects for Corn-Sorghum Markets through Fall 2015

Following are parts of the Grain Market Outlook for 2014-2015 to be presented in the 2014 K-State Insurance Workshop in Salina, Kansas on Thursday, November 13, 2014.  This year’s workshop will focus on topics pertinent to the Kansas Crop Insurance Industry, including

1) “Positives of the Crop Insurance Industry TO Communities” by Laurie Langstraat of NCIS,

2) “Farm Bill Program for Producers” by Art Barnaby of Kansas State University

3) “Risk Management Update – Changes for Crop Year 2015″ by Jay Wachter of the Risk Management Agency

4) “Grain Market Outlook for 2014-2015″ by Daniel O’Brien of Kansas State University

5) “Water Issues Affecting Great Plains Irrigators” by Goerge Oamek of CH2M HILL in Omaha, NE

6) “Farm Program Decisions and Analysis” by Mykel Taylor of Kansas State University

Registration information and program details are available at the following web address: http://www.agmanager.info/events/Insurance/2014/Default.asp

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Following is the full feedgrain market (corn and grain sorghum) portion of the “Grain Market Outlook for 2014-2015” presentation to be given by Daniel O’Brien of KSU on Thursday, November 13th, with price information current through Monday, November 10, 2014.

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Soybean Market Outlook – Current Markets and Prospects for 2015

Following are parts of the Grain Market Outlook for 2014-2015 to be presented in the KSU Agricultural Economics 420 Class on Thursday, August 23, 2014.  This class is for Junior-Senior level students with a strong interest in returning to agriculture – either to their family farm business or into agricultural industry.

Following is the full Soybean portion of this Grain Market Outlook Presentation.

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Wheat Market Outlook – Current Markets and Prospects for 2015

Following are parts of the Grain Market Outlook for 2014-2015 to be presented in the KSU Agricultural Economics 420 Class on Thursday, August 23, 2014.  This class is for Junior-Senior level students with a strong interest in returning to agriculture – either to their family farm business or into agricultural industry.

Following is the full Wheat portion of the Grain Market Outlook Presentation.

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