An analysis of U.S. and World corn supply-demand factors and 2013 price prospects following the USDA’s July 11th World Agricultural Supply Demand Estimates (WASDE) report can be found on the KSU AgManager website by tomorrow afternoon, Wednesday, July 16th (http://www.agmanager.info/default.asp).
Following is a summary of the article on Corn Market Outlook – with the full analysis-article to be available on the KSU AgManager website – to be found at http://www.agmanager.info/marketing/outlook/newletters/Corn.asp
On June 28, 2013 the USDA released its 2013 Acreage and June Quarterly Stocks reports, followed on July 11th by the release of the July Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports. The June 28th reports were characterized by higher than expected 2013 U.S. corn planted acres, lower harvested-to-planted acreage (due to planting delays in the Corn Belt), and strength in “old crop” corn usage during the March-May 2013 period. The July 11th reports projected higher total “old crop” corn usage than a month earlier, along with tighter “old crop” 2012/13 ending stocks of U.S. corn. This forecast of lower beginning stocks of corn for the “new crop” 2013/14 marketing year combined with a reduced forecast of 2013 U.S. corn production, as well as lower export and feed+residual use, to leave projected “new crop” 2013/14 ending stocks and % ending stocks-to-use slightly higher and projected prices unchanged.
Center Pivot Irrigation Systems – 2004 Trego County, Kansas (Source: Kansas Secretary of State)
USDA Corn Forecast: The USDA projected that 2013 U.S. corn production would be a record high 13.950 billion bushels (bb) – down 55 mb – but up from 10.780 bb in 2012. This forecast was based on record high planted and harvested acreage of 97.4 and 89.1 million acres (ma), respectively, and U.S. corn yields of 156.5 bu/ac – up from 123.4 bu/ac in 2012. The USDA lowered its forecast of “new crop” MY 2013/14 total supplies (14.709 bb – down 90 million bushels, ‘mb’) and use (12.750 bb – down 100 mb), leading to new crop projected ending stocks of 1.959 bb – up 10 mb and up from 729 mb last year. Projected % ending stocks-to-use of 15.4% are up from 15.2% in June, and up from 6.5% for “old crop” MY 2012/13. The USDA projected U.S. average corn prices for “new crop” MY 2013/14 of $4.40-$5.20 bu/ac, down from $6.75-$7.15 in “old crop” MY 2012/13.
KSU Corn Forecast: KSU projections of 2013 U.S. corn production and “new crop” MY 2013/14 supply-demand and price scenarios are: a) “Low Yield-Production” Scenario: 20% prob. of 94.9 ma planted, 86.8 ma harvested, 140.0 bu/ac yields, a 12.159 bb U.S. corn crop, 9.7% S/U, & $5.85-$6.85 /bu; b) “Likely Yield-Production” Scenario: 45% prob. of 96.4 ma planted, 88.2 ma harvested, 150.0 bu/ac yields, a 13.233 bb U.S. corn crop, 11.6% S/U, & $5.15-$6.15 /bu; and c) “High Yield-Production” Scenario: 35% prob. of 97.4 ma planted, 89.1 ma harvested, 156.5 bu/ac yields, a 13.950 bb 2013 U.S. corn crop, 14.0% S/U, & $4.50-$5.50 /bu.
World Corn: World corn total supplies of 1,083 mmt in “new crop” MY 2013/14 are down 3.5 mmt in June, but up from both 855 mmt in “old crop” MY 2012/13, and from 1,012 mmt in MY 2011/12. Projected World corn ending stocks of 151.0 mmt (16.2% S/U) in “new crop” MY 2013/14 are up from 124 mmt (14.3% S/U) in “old crop” MY 2012/13, and from 132 mmt (15.1% S/U) in MY 2011/12.
Colorado, USA Irrigation System (Source: USGS, Colorado Water Resources)
Market Perspective: U.S. corn crop and market prospects for the “new crop” 2013/14 marketing year remain uncertain. Questions remain concerning final 2013 U.S. corn planted and harvested acreage, yield, and production levels – as delayed spring planting progress and concerns about U.S. corn crop development and 2013 yield prospects continue. Extremely tight “old crop” 2012/13 corn supplies in June-August will likely continue to provide strength in U.S. corn basis levels and cash markets through the summer months.
Prospects for fall 2013 U.S. corn prices are still uncertain in as much as questions about 2013 U.S. corn crop prospects remain. If a large “14 billion bushel” 2013 U.S. corn crop occurs then periods of extreme weakness in U.S. corn prices would be likely to occur at fall harvest, with available supplies rationed by opportunities for returns to storage through the winter and following spring. But as indicated in the KSU projections reported above, it seems likely that some combination of lower than currently projected U.S. corn acreage and/or lower than currently projected corn yields will cause U.S. corn production to be in the 13.0-13.5 billion bushel range, with moderately higher corn prices than the USDA is currently projecting for “new crop” MY 2013/14. The risk of a weather induced extremely short U.S. crop also exists through the remainder of July and August.
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