An analysis of U.S. and World corn supply-demand factors and 2014 price prospects following the USDA’s June 11th USDA Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports will be available on the KSU AgManager website (http://www.agmanager.info/default.asp).
Following is a summary of the article on “Corn Market Outlook in June 2014″ with the full article and accompanying analysis will be available on the KSU AgManager website at the following web address http://www.agmanager.info/marketing/outlook/newletters/Corn.asp
Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on June 11, 2014, U.S. corn market prices have moved sideways-to-lower. After trading as low as $4.39 ¼ /bu on June 11th, “old crop” July 2014 corn futures traded as low as $4.35 ½ on June 17 – down to the lowest level since January 21st. “New crop” December 2014 corn futures traded as low as $4.39 /bu on June 11th, and traded down to $4.36 ¼ on June 17th – down to the lowest level since January 10th.
The USDA made no changes in its projected U.S. corn supply-demand balance sheets for the “new crop” 2014/15 marketing year. The USDA continued to use U.S. 2014 planted acreages from the March 31st USDA Prospective Plantings report along with staff projections of record high 2014 U.S. corn yields and production – figures that are still uncertain. For “new crop” MY 2014/15, the USDA projected record high U.S. and World corn production, moderating usage, higher ending stocks, and lower prices versus a year earlier. The June 30th USDA Acreage and Quarterly Stocks reports are likely to cause changes in U.S. corn supply-demand estimates in the upcoming July 11th WASDE report. Even then, the first survey-based projection of 2014 U.S. corn production will not be available until the August 12th USDA NASS Crop Production and WASDE reports.
Wet Soils Conditions in Indiana for Corn in 2014 (Source: http://www.hoosieragtoday.com/farmers-should-scout-wet-soils/)
USDA U.S. Corn Forecast for “New Crop” MY 2014/15
The USDA left unchanged is forecast “new crop” MY 2014/15 U.S. supply-demand balances and prices. The USDA projected 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).
KSU U.S. Corn Forecast for “New Crop” MY 2014/15
KSU projections for “new crop” MY 2014/15 are as follows: a) “Likely Production” Scenario: 60% prob. of 91.7 ma planted, 91.9% harvested 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: 15% prob. of 89.9 ma planted, 91.9% harvested acres, lower 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: 25% prob. of 93.4 ma planted, 91.9% harvested 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 Situation
World Corn Total Supplies of 1,150 mmt in “new crop” MY 2014/15 are up from 1,120 mmt in MY 2012/13, and up from 1,003 mmt in MY 2011/12. Projected World corn ending stocks of 182.7 mmt (18.9% S/U) in MY 2014/15 are up from 169.1 mmt (17.8% S/U) in MY 2013/14, and up from 138.1 mmt (16.0% S/U) in MY 2011/12. Combined “new crop” MY 2014/15 corn production for major export competitors Brazil (74.0 mmt – down 2.0) and Argentina (26.0 mmt – up 2.0) is projected to be unchanged – with harvests with the U.S. in World grain export markets in late winter-spring 2015. However, these projections are still uncertain given the possibility of a strong El Nino event beginning in mid-2014.
Current Corn Market Unknowns & Potential Sources of Volatility
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, as well as in the Middle East. Escalating conflict in the Middle East could impact World oil and U.S. bioenergy market prices, and have a corresponding impact on feedgrain markets.
Brazil Corn Exports in 2012 (Source: http://farmfutures.com/story-brazil-cover-corn-shortage-17-61949)