An analysis of U.S. and World corn supply-demand factors and 2014 price prospects following the USDA’s February 10th World Agricultural Supply Demand Estimates (WASDE) reportsis available on the KSU AgManager website (http://www.agmanager.info/default.asp).
Following is a summary of the article on Corn Market Outlook in mid-February with info current through Friday, February 14th- with the full article and accompanying analysis is available on the KSU AgManager website at the following web address http://www.agmanager.info/marketing/outlook/newletters/Corn.asp
When the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on February 10, 2014, U.S. corn market prices initially responded in a neutral manner. Although the USDA raised its projections of “current” 2013/14 marketing year exports for U.S. corn and subsequently lower projected U.S. corn ending stocks – it is likely that these changes were in accord with market pre-report expectations, and that market trends prior to the report fully reflected USDA export and ending stocks changes.
Since January 21st the upward move in March 2014 corn futures has reflected both a) demand for exports, ethanol production, and feed use induced by lower corn prices, and b) the unwillingness of many U.S. corn producers to yet sell their 2013 corn crop at current prices. Recent moderate strength in corn futures may be difficult to maintain through late February-March if U.S. corn producers beginning selling cash corn in earnest. Although it is early to make concrete judgments on the expectations for 2014 U.S. corn planted acreage, growing season weather patterns, crop development prospects, and expected demand factors for the upcoming 2014/15 marketing year, the first USDA projections for U.S. corn markets in the 2014/15 will be made at the USDA Agricultural Outlook Forum on February 20-21, 2014.
U.S. Corn Supply-Demand for “Current” 2013/14: The USDA left unchanged if forecast 2013 U.S. corn production at a record high 13.925 billion bushels (bb) – up from 10.780 bb in 2012. The forecast of “current” MY 2013/14 total supplies of 14.781 bb was also unchanged, while forecasts exports of 1.600 bb and total use of 13.300 bb were both raised 150 mb due to strong export shipments and forward sales to date in the current marketing year. Together these changes led to projected “current” MY 2013/14 ending stocks of 1.481 bb – down 150 mb from January and down 311 mb from December, but still up from 821 mb in “last year’s” MY 2012/13. Projected ending stocks-to-use of 11.1% for “current” MY 2013/14 has trended lower since a projection of 14.7% in the November 2013 WASDE, but is still up sharply from 7.4% for “last year’s” MY 2012/13 and 7.9% in MY 2011/12. U.S. average corn prices for “current” MY 2013/14 are forecast to be in the range of $4.20-$4.80 / bu, down from a record high $6.89 /bu in “last year’s” MY 2012/13.
KSU U.S. Corn Forecasts for “Next Crop” MY 2014/15: KSU projections of 2014 U.S. corn production and “next crop” MY 2014/15 supply-demand and price scenarios are: a) KSU “Low Yield, Acres & Production” Scenario: 20% prob. of 90.0 ma planted, 81.9 ma harvested, 154.4 bu/ac yields, a 12.645 bb 2014 U.S. corn crop, 10.9% S/U, & $4.60-$5.60 /bu; b) KSU “Likely Trend Yield, Acres & Production” Scenario: 60% prob. of 92.5 ma planted, 84.2 ma harvested, 159.4 bu/ac yields, a 13.421 bb 2014 U.S. corn crop, 12.5% S/U, & $3.55-$4.55 /bu; and c) KSU “High Yield, Acres & Production” Scenario: 20% prob. of 95.0 ma planted, 86.5 ma harvested, 164.4 bu/ac yields, a 14.221 bb 2014 U.S. corn crop, 15.1% S/U, & $3.15-$4.15 /bu. An adjusted “next crop” MY 2014/15 projection in the February 13th USDA Agricultural Projections for 2023 with updates made by KSU for beginning stocks and prices would indicate the following for the coming year: 93.5 ma planted, 87.2 ma harvested, a record high 165.6 bu/ac yields, a 14.260 bb 2014 U.S. corn crop, 16.0% S/U, & and approximate price of $3.85 /bu. These initial USDA 2014 acreage and production estimates are subject to change.
World Corn: World corn total supplies of 1,101 mmt in “current” MY 2013/14 are up from 997 mmt in “last year’s” MY 2012/13, and from 1,015 mmt in MY 2011/12. Projected World corn ending stocks of 157.3 mmt (16.7% S/U) in “current” MY 2013/14 are up from 134.0 mmt (15.6% S/U) in “last year’s” MY 2012/13, and from 132.8 mmt (15.0% S/U) in MY 2011/12. Corn production in major export competitors Brazil and Argentina 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 sharply higher in the coming year – injecting a degree of caution on U.S. market prospects for both “current” MY 2013/14 and “next crop” MY 2014/15.
A Kansas corn field in 2013. (Source: http://www.ksal.com/kansas-corn-forecast-38-percent-above-last-year/)