An analysis of U.S. and World Corn and Grain Sorghum supply-demand factors and 2013 price prospects following the USDA’s February 8th World Agricultural Supply Demand Estimates (WASDE) report has been placed up on the KSU AgManager website (http://www.agmanager.info/default.asp).
Following is a summary of the article on Corn and Grain Sorghum market outlook – with the full analysis-article to be available shortly on the KSU AgManager website – to be found here.
On February 8, 2013 the USDA released its February World Agricultural Supply and Demand Estimates (WASDE) report for U.S. corn – projecting lower exports, increased non-ethanol food, seed and industrial use, and increased ending stocks for the “new crop” 2012/13 marketing year (i.e., “new crop” MY 2012/13). Corn use in the U.S. is projected to be down 10% from a year ago due to price rationing, with reductions forecast to occur to a larger extent for U.S. corn exports (down 42%) than for either ethanol use (down 10%), non-ethanol food, seed and industrial use (down 3%) or livestock feed and residual use (down 2%).
U.S. Corn Supply-Demand: The USDA used lower exports (900 mb) and larger non-ethanol food, seed and industrial use (1.387 bb) for “new crop” MY 2012/13 to project ending stocks of 632 mb, up 30 mb from last month, but down from 989 mb in “old crop” MY 2011/12. Projected “new crop” MY 2012/13 U.S. ending stocks-to-use of 5.6% is up from 5.3% last month, but still down from 7.9% a year ago, and is the second lowest since 5.0% S/U in MY 1995/96.
U.S. Corn Prices: The USDA lowered its projection of U.S. average farm prices for U.S. corn to the range of $6.75-$7.65, with the range midpoint being $7.20 per bushel – down $0.20 from the January WASDE report. Corn prices in 2013 are likely to continue to remain high through at least the early summer months prior to the availability of new crop feedgrain supplies in the fall – with extremely tight U.S. corn supplies poised to potentially lead to dramatically higher U.S. corn prices if the 2013 U.S. corn crop suffers any weather threats. However, with likely record large U.S. corn planted and harvested acreage in 2013, if either “trendline” or “above trendline” U.S. corn yields occur, a significant rebuilding of U.S. corn ending stocks and sharply lower U.S. corn prices would result in late summer – early fall as the 2013 U.S. corn harvest approaches. In the following analysis a 75% chance of trendline or higher U.S. corn yields is projected for 2013, with a 25% chance of a short crop occurring similar to the short U.S. corn crop of 2012.
Corn Market Possibilities for 2013: KSU projections of 2013 U.S. corn production and MY 2013/14 supply-demand and price scenarios are as follows: a) “Short Yield” Scenario: 25% prob. of 11.988 bb 2013 U.S. corn crop, 7.0% S/U, $6.10-$7.10 /bu; b) “Trendline Yield” Scenario: 65% prob. of 13.977 bb 2013 U.S. corn crop, 12.7% S/U, $3.90-$4.90 /bu; and c) “Over Trendline Yield” Scenario: 10% prob. of 14.625 bb 2013 U.S. corn crop, 13.1% S/U, $3.50-$4.50 /bu.
Grain Sorghum Market Possibilities for 2013: KSU projections of 2013 U.S. grain sorghum production and MY 2013/14 supply-demand and price scenarios are as follows: a) “Short Yield” Scenario: 35% prob. of 232 mb 2013 U.S. production, 9.1% S/U, $6.00-$7.00 /bu; b) “Average Yield” Scenario: 65% prob. of 381 mb 2013 U.S. crop, 10.0% S/U, $3.80-$4.80 /bu; and c) “High Yield” Scenario: 5% prob. of 420 mb 2013 U.S. crop, 11.6% S/U, $3.40-$4.30 /bu.
Milo Harvest in Texas, Source: http://www.king-ranch.com/
World Coarse Grains: World coarse grain supplies of 1,289 mmt in “new crop” MY 2012/13 are down from 1,319 mmt in “old crop” MY 2011/12, and also down from 1,297 mmt in MY 2010/11. Projected World coarse grain ending stocks at 146 mmt (12.8% S/U) in “new crop” MY 2012/13 are down from 164 mmt (14.2% S/U) in “old crop” MY 2011/12, and from 166 mmt (14.7% S/U) in MY 2010/11. Foreign coarse grain total supplies of 970 mmt for “new crop” MY 2012/13 are up from 960 mmt in MY 2011/12, and 916 mmt in MY 2010/11.
Tight global supplies of corn and other coarse grains increase the need for an avoidance of crop problems in 2013, sharpening the focus of World grain markets on coarse grain production prospects of major South American, North American, and Black Sea exporters throughout the coming year.