KSU Corn Market Outlook – November 2013

An analysis of U.S. and World corn supply-demand factors and 2013 price prospects following the USDA’s November 8th 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 – 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

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Summary

On November 8, 2013 the USDA released its monthly Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports. Several reductions were made in “old crop” 2012/13 marketing year U.S. corn usage – leading to larger U.S. corn “old crop” 2012/13 ending stocks and % ending stocks-to-use.  In turn this change led to larger 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 moderate increase in “new crop” 2013/14 total supplies, total use, ending stocks, and % ending stocks-to-use.  The USDA made downward adjustments in 2013 U.S. corn planted and harvested acres, but a sizable increase in U.S. corn yield prospects more than offset the acreage decline – leading to an increase in projected 2014 U.S. corn production.

USDA Corn Forecast: For “old crop” MY 2012/13 the USDA made marginal downward adjustments in its projections of ethanol, non-ethanol FSI, and exports, (down 1 mb – 17 mb from a month ago), but a larger downward adjustment of 142 mb in its projection for feed and residual use, leading to higher ending stocks 824 mb (up from 661 mb), with % ending stocks-to-use projected to be 7.4% (versus 5.9% in September).

The USDA projected that 2013 U.S. corn production would be a record high 13.989 billion bushels (bb) – up 146 million bushels (mb) from September – and up from the drought-ravaged crop of 10.780 bb in 2012.  This 2013 forecast was based on planted and harvested acreage of 95.3 and 87.2 million acres (ma), respectively, with both figures down 1.9-2.0 ma from September.  U.S. corn yields were projected to be 160.4 bu/ac, up from 155.3 bu/ac in September.  The USDA raised its forecast of “new crop” MY 2013/14 total supplies (14.837 bb – up 307 mb) and raised projected total use (12.950 bb – up 275 mb), leading to projected ending stocks of 1.887 bb – up 32 mb from September, and up from 661 mb in “old crop” 2012/13.

Projected U.S. corn ending stocks-to-use of 14.6% is up sharply from 7.4% for “old crop” MY 2012/13, while U.S. average corn prices for “new crop” MY 2013/14 are forecast to be $4.10-$4.90 bu/ac (midpoint of $4.50). These USDA price projections for “new crop” 2013/14 are down $0.30 from September, and down from a record high $6.89 the previous year.

https://ksugrains.files.wordpress.com/2013/11/a13db-dsc00153.jpg

U.S. Corn Fields in Fall 2012 (Source: http://www.griggsdakota.com/2012)

KSU Corn Forecast: KSU projections of 2013 U.S. corn production and “new crop” MY 2013/14 supply-demand and price scenarios are:  a) “Lower Yield-Production” Scenario: 10% prob. of 95.7 ma planted, 87.2 ma harvested, 156.5 bu/ac yields, a 13.653 bb U.S. corn crop, 13.8% S/U, & $4.25-$5.25 /bu;  b) “Likely Yield-Production” Scenario: 80% prob. of 95.7 ma planted, 87.2 ma harvested, 160.4 bu/ac yields, a 13.989 bb U.S. corn crop, 14.6% S/U, & $3.75-$4.75; and c) “Higher Yield-Production” Scenario: 10% prob. of 95.3 ma planted, 87.2 ma harvested, 164.2 bu/ac yields, a 14.325 bb 2013 U.S. corn crop, 16.0% S/U, & $3.50-$4.50 /bu.

World Corn: World corn total supplies of 1,098 mmt in “new crop” MY 2013/14 are up 18.4 mmt from September, and up from both 995 mmt in “old crop” MY 2012/13, and 1,015 mmt in MY 2011/12.  Projected World corn ending stocks of 164.3 mmt (17.6% S/U) in “new crop” MY 2013/14 are up from 134.9 mmt (15.1% S/U) in “old crop” MY 2012/13, and from 132.5 mmt (15.1% S/U) in MY 2011/12.  At this time, corn production prospects in South America and the U.S. are projected to be lower in 2014 in favor of increased soybeans.  Conversely, 2014 corn production in China and Ukraine are projected to be higher than a year earlier.

https://i1.wp.com/farmfutures.com/cdfm/Faress1/author/2/2012/7/brazil_cover_corn_shortage_1_634789949782629830.jpg

The competitive interplay of Brazil & the USA  in World Corn Export Markets (Source: http://farmfutures.com/)

Market Perspective: With the USDA November Crop and WASDE reports, U.S. corn total supply projections for “new crop” MY 2013/14 have become known with greater certainty.  This change in focus which will ultimately cause the U.S. and world corn market to shift its attention from U.S. 2013 production to upcoming South American corn production prospects through next spring, and then to U.S. production prospects and the amount of U.S. corn use throughout the balance of year 2014.

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