KSU Corn Market Outlook – September 2013

An analysis of U.S. and World corn supply-demand factors and 2013 price prospects following the USDA’s September 12th Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports can be found on the KSU AgManager website (http://www.agmanager.info/default.asp).

Following is a summary of the article on Corn Market Outlook – with the full article and accompanying analysis available on the KSU AgManager website at the following web address http://www.agmanager.info/marketing/outlook/newletters/Corn.asp



On September 12, 2013 the USDA released its monthly Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports. Several increases were made in “old crop” 2012/13 marketing year U.S. corn usage – leading to tighter U.S. corn “old crop” 2012/13 ending stocks and % ending stocks-to-use for.  This led to lower beginning stocks of corn for the “new crop” 2013/14 marketing year, which combined with an increase in projected 2013 U.S. corn production led to a small increase in “new crop” 2013/14 ending stocks and % ending stocks-to-use.  U.S. corn supply-demand projections for “new crop” MY 2013/14 are subject to change, as the USDA plans to make downward adjustments in 2013 U.S. corn acreage in the upcoming October 11th USDA Crop Production and WASDE reports.  Although it is anticipated that these downward adjustments in U.S. corn acreage will lead to significant reductions in projected 2013 U.S. corn production and tighter U.S. corn supply-demand balances for “new crop” MY 2013/14, a sharp increase in U.S. corn ending stocks is still anticipated, along with a sizable reduction in U.S. corn prices from “old crop” MY 2012/13.


2013 Corn Planting Problems in South Dakota (source: http://sdcornblog.org/archives/3760)

USDA Corn Forecast: The USDA projected that 2013 U.S. corn production would be a record high 13.843 billion bushels (bb) – up 80 million bushels (mb) – and 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 155.3 bu/ac.  The USDA raised its forecast of “new crop” MY 2013/14 total supplies (14.530 bb – up 18 mb) while leaving use (12.675 bb) unchanged, leading to projected ending stocks of 1.855 bb – up 18 mb from August, and from 661 mb last year.  Projected ending stocks-to-use of 14.6% is up from 5.9% for “old crop” MY 2012/13.  U.S. average corn prices for “new crop” MY 2013/14 are forecast to be $4.40-$5.20 bu/ac, down from a record high $6.90 the previous year.  For “old crop” MY 2012/13 the USDA raised its estimate of U.S. corn usage for ethanol, exports, and feed and residual use, leading to a drop in ending stocks to 661 mb (down 58 mb), with % ending stocks-to-use projected to be 5.9% (down from 6.4% in August).

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: 25% prob. of 93.8 ma planted, 85.9 ma harvested, 149.0 bu/ac yields, a 12.794 bb U.S. corn crop, 9.7% S/U, & $5.60-$6.60 /bu;  b) “Likely Yield-Production” Scenario: 70% prob. of 94.7 ma planted, 86.7 ma harvested, 153.0 bu/ac yields, a 13.267 bb U.S. corn crop, 12.1% S/U, & $5.00-$6.00 /bu; and c) “High Yield-Production” Scenario: 5% prob. of 97.4 ma planted, 89.1 ma harvested, 156.0 bu/ac yields, a 13.905 bb 2013 U.S. corn crop, 14.8% S/U, & $4.25-$5.25 /bu.


2013 Kansas Corn Harvest Just Underway – Article from the Wichita Eagle (source: http://www.kansas.com/2013)

World Corn: World corn total supplies of 1,079 mmt in “new crop” MY 2013/14 are down 1.0 mmt from August, but up from both 992 mmt in “old crop” MY 2012/13, and from 1,013 mmt in MY 2011/12.  Projected World corn ending stocks of 151.4 mmt (16.3% S/U) in “new crop” MY 2013/14 are up from 122.6 mmt (14.1% S/U) in “old crop” MY 2012/13, and from 131.8 mmt (15.0% S/U) in MY 2011/12. Corn production in South American is projected to be lower in the coming year in favor of increased soybean production.  Conversely, corn production in China and Ukraine are projected to be higher in the coming year.

Market Perspective: Extremely tight “old crop” 2012/13 corn supplies in summer-early fall 2013 have supported U.S. corn prices, but are expected to give way to markedly lower prices once the 2013 U.S. corn harvest becomes available in quantity.  The likelihood of a 14 billion bushel U.S. corn crop has diminished due to 2013 planting problems and dry conditions in parts of the central and northern Corn Belt to complement early season drought problems in the central and southern plains.   As indicated by KSU projections, it seems likely that some combination of lower than currently projected U.S. corn acreage and/or lower corn yields will cause U.S. corn production to be in the 13.0-13.5 billion bushel range or less, with moderately higher corn prices than the USDA is currently projecting for “new crop” MY 2013/14.


Source: http://farmfutures.com/


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