An analysis of U.S. and World corn supply-demand factors and 2014 price prospects following the USDA’s May 9th USDA 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 in May 2014″ 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 Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports on May 9, 2014, U.S. corn market prices initially responded negatively after having been trending sharply higher since January 10, 2014. On May 9th the USDA made its first projections of “new crop” 2014/15 marketing year supply-demand and price projections for U.S. and World corn, and also made several important changes in “current” 2013/14 marketing year U.S. and World corn supply-demand estimates. The USDA used U.S. 2014 planted acreages from the March 31st USDA Prospective Plantings report along with projections of record high 2014 U.S. corn yields and production – figures that will need “good” 2014 production conditions this year to be attainable. In these “new crop” MY 2014/15 forecasts, the USDA projected record high U.S. and World corn production, moderating usage, increasing ending stocks, and lower prices versus a year earlier.
A number of key corn market factors in “new crop” MY 2014/15 are still unknown, including a) final 2014 U.S. corn planted acreage, b) uncertainty regarding 2014 U.S. and World corn production prospects should an El Nino-related weather patterns occur in 2014 as is now forecast, and c) the potential impact of ongoing and escalating geopolitical conflicts in the Black Sea Region between major World coarse grain and wheat exporters Russia and the Ukraine.
U.S. Corn Planting Progress in 2014 (Source: http://www.startribune.com/business/258657011.html)
USDA U.S. Corn Forecast for “New Crop” MY 2014/15
The USDA projected marginally larger U.S. corn production, reduced usage, an increase in U.S. corn stocks-to-use, and lower prices in “new crop” MY 2014/15. The projected MY 2014/15 supply-demand and price scenario is: 91.7 million acres (ma) planted, 84.3 ma harvested, 91.9% harvested-to-planted acres, record high 165.3 bu/ac yields, a 13.935 billion bushel (bb) 2014 U.S. corn crop, 15.111 bb total supplies, 1.700 bb exports, 13.385 bb total use, 1.726 bb ending stocks, 12.9% ending stocks-to-use, and $4.20 average price per bu. ($3.85 to $4.55). If 2014 U.S. corn wheat production prospects decline from these “top end” projections, then price prospects could improve considerably from these conservative 2014/15 price forecasts.
KSU U.S. Corn Forecast for “New Crop” MY 2014/15
KSU projections of “next crop” MY 2014/15 supply-demand balances and prices are as follows: a) “Likely Production” Scenario: 60% prob. of 91.7 ma planted, 91.9% harvested-to-planted acres, trend yields of 159.4 bu/ac, 13.437 bb 2014 U.S. corn production, 14.613 bb U.S. corn supplies, 1.600 bb exports, 13.210 bb total use, 1.403 bb ending stocks, 10.6% S/U, & $4.40 /bu; b) “Low Production” Scenario: 20% prob. of 89.9 ma planted, 91.9% harv.-to-plntd. acres, low yields of 149.4 bu/ac, 12.355 bb 2014 U.S. corn production, 13.551 bb U.S. corn supplies, 1.400 bb exports, 12.575 bb total use, 976 mb ending stocks, 7.76% S/U, & $6.00 /bu; and c) “High Production” Scenario: 20% prob. of 93.4 ma planted, 91.9% harv.-to-plntd. acres, yields of 164.4 bu/ac, 14.122 bb 2014 U.S. corn production, 15.288 bb U.S. corn supplies, 1.700 bb exports, 13.535 bb total use, 1.753 bb ending stocks, 12.95% S/U, & $4.15 /bu.
World Corn Supply-Demand & Mitigating Market Factors
World corn total supplies of 1,148 mmt in “new crop” MY 2014/15 are up from 1,117 mmt in “current year” MY 2012/13, and up from 1,003 mmt in MY 2011/12. Projected World corn ending stocks of 181.7 mmt (18.8% S/U) in “new crop” MY 2014/15 are up from 168.4 mmt (17.8% S/U) in “current year” MY 2013/14, and up from 138.2 mmt (16.0% S/U) in MY 2011/12. Forecast total MY 2014/15 corn production for major export competitors Brazil (74.0 mmt – down 1.0) and Argentina (26.0 mmt – up 2.0) is projected to be 1.0% higher in the coming year – with harvests available for use in the early months of 2015 to compete with the U.S. in World grain export markets. However, these projections are still uncertain given the possibility of a strong El Nino event beginning in mid-2014. Ongoing geopolitical problems in the Black Sea region is reported to have not had an appreciable impact on the availability of Ukraine corn to World markets, but would be a disrupting market factor in World corn and coarse grain markets if it did so.
Farmers drying corn in China in 2011 (Source: http://www.chinadaily.com.cn/cndy/2011-09/)