An analysis of U.S. and World corn supply-demand factors and 2014 price prospects following the USDA’s September 11th 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 September 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_07-18-14_Corn.pdf
Since the USDA released its Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports on September 11th, DEC 2014 and MAY 2015 corn futures prices have moved sideways to higher, raising hopes of a possible end to the decline in corn prices that has occurred since mid-May 2014. With the existing market consensus that a record large 14 billion bushel (bb) plus U.S. corn crop will occur in 2014, U.S. feedgrain prices have declined steadily as grain buyers have little incentive to aggressively buy corn, leading to weaker U.S. corn prices.
Several factors may work together to lower final 2014 U.S. corn production, such as a) accounting for 2014 corn prevented planting acreage in future Crop Production reports, b) the impact of less than ideal June-July growing weather in the U.S. corn belt, and c) the effect of cool-wet weather in the later stages of the growing season. However, it is unlikely that the combined impact of these factors will cause a significant change in the “large crop-low price” scenario that is likely to occur. Corn prices are likely to be weak through fall harvest until the beginning of the coming growing season in April-May 2015.
USDA U.S. Corn Forecast for “New Crop” MY 2014/15:
The USDA forecast U.S. 2014 corn production to be a record 14.395 billion bushels (bb), based on projected of planted acreage of 91.641 million acres or ‘ma’, harvested acreage of 83.839 ma, and record 2014 U.S. corn yields of 171.7 bushels per acre. Along with a record 2014 U.S. corn crop, the USDA also projected record U.S. corn total supplies of 15.607 bb. Projected “new crop” MY 2014/15 total corn usage of 13.605 bb is also a record, with ethanol use of 5.125 bb (unchanged from MY 2013/14), non-ethanol FSI use of 1.405 bb (up 30 mb), exports of 1.750 bb (down 175 mb from last year), and feed and residual use of 5.325 bb (up 250 mb).
“New crop” ending stocks were also raised to 2.002 bb (up 194 mb from last month and up 821 mb from last year) with ending stocks-to-use of 14.72% (up from 8.58% S/U a year ago). 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 $0.40 /bu from August.
KSU U.S. Corn Forecast for “New Crop” MY 2014/15:
KSU projections for “new crop” MY 2014/15 are as follows: a) “Likely Production” Scenario: 60% prob. of 90.141 ma planted, 82.470 ma harvested, average yields of 170.5 bu/ac, 14.061 bb 2014 U.S. corn production, 15.272 bb U.S. corn supplies, 13.449 bb total use, 1.823 bb ending stocks, 13.6% S/U, & $3.70 /bu U.S. corn price; b) “High Production” Scenario (equal to USDA September forecast): 25% prob. of 91.641 ma planted, 83.839 ma harvested, yields of 171.7 bu/ac, 14.395 bb 2014 U.S. corn production, 15.607 bb U.S. corn supplies, 13.605 bb total use, 2.002 bb ending stocks, 14.7% S/U, & $3.50 /bu, and c) “Low Production” Scenario: 15% prob. of 88.641 ma planted, 81.098 ma harvested, lower yields of 168.0 bu/ac, 13.624 bb 2014 U.S. corn production, 14.845 bb U.S. corn supplies, 13.214 bb total use, 1.631 bb ending stocks, 12.3% S/U, & $4.00 /bu U.S. average corn price.Wor
World Corn Supply-Demand for 2014/15
World Corn Total Supplies of 1,161 mmt projected for “new crop” MY 2014/15 are up from 1,125 mmt in “old crop” MY 2013/14, and up from 1,003 mmt in MY 2012/13. Projected World corn ending stocks of 190 mmt (19.7% S/U) in “new crop” MY 2014/15 are up from 173 mmt (18.2% S/U) in “old crop” MY 2013/14, and from 138 mmt (16.0% S/U) in MY 2012/13. 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. Forecast Ukraine 2014 corn production of 26.0 mmt is down 4.9 mmt.
Upcoming South American and U.S. Corn Acreage Decisions for 2015 Crops
South American acreage decisions will be made for first planting of crops by Nov-Dec 2014, with subsequent plantings coming after the first of the year. With closing NOV-2015 soybean futures of $9.99 and DEC-2015 corn futures of $3.87 on 9/17/2014, the ratio of 2.58 favors soybeans. If South American farmers shift sizable acreage away from 2015 corn into 2015 soybeans, then by March-April 2015 World corn market price prospects for MY 2015/16 could be effected – impacting U.S. farmers’ 2015 planting choices in the spring.
Indian corn harvest in 2010 (Source: http://www.indianagrain.com/blog/corn-harvest-continues-to-impress)
Loading a semi-truck at field’s edge during harvest in Kansas in 2010 (Source: http://windowontheprairie.com/2010/09/10/hauling-the-corn-to-the-elevator/)