An analysis of U.S. and World corn supply-demand factors and 2014 price prospects following the USDA’s July 11th 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 July 2014″ with the full article and accompanying analysis will soon be available on the KSU AgManager website at the following web address: http://www.agmanager.info/marketing/outlook/newletters/archives/GRAIN-OUTLOOK_07-15-14_Corn.pdf
Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on Friday, July 11, 2014, U.S. corn market prices have responded negatively – moving sharply lower on the day of the report, and then recovering some earlier losses the following trading day (i.e., Monday, July 14).
USDA U.S. Corn Forecast for “Old Crop” MY 2013/14
Adjustments were also made to several “current” MY 2013/14 usage categories, including projected ethanol corn use (5.175 million bushels or ‘mb’ – down 25 mb), feed and residual use (5.175 billion bushels or ‘bb’ – down 125 mb), ending stocks (1.246 bb – up 100 mb), ending stocks-to-use (9.2% – up from 8.4%), and average price ($4.35-$4.55 – down $0.10 per bushel).
USDA U.S. Corn Forecast for “New Crop” MY 2014/15
The USDA used forecasts of U.S. 2014 planted (91.641 million acres or ‘ma’) and harvested (83.839 ma) from the June 30th USDA Acreage report along with internal projections of record high 2014 U.S. corn yields and production – figures that are still uncertain and subject to change in upcoming USDA reports. The USDA projected 2014 U.S. corn production of 13.860 bb – down 65 mb from a year earlier. Feed usage in “new crop” MY 2014/15 was projected to be 5.200 bb – down 75 mb from the June WASDE. “New crop” ending stocks and ending stocks-to-use were also raised to 1.801 bb (up 75 mb) and 13.5% (up from 12.9%), respectively. The USDA forecast that “new crop” MY 2014/15 average prices will be $3.65-$4.35 with a midpoint of $4.00 – down $0.20 /bu from June. As useful at these July report numbers are, it is important to remember that the first actual survey-based projection of 2014 U.S. corn production will be available in the August 12th USDA Crop Production and WASDE reports.
A Corn Field in the U.S. Cornbelt Corn in Fall 2013 (Source: http://nationalhogfarmer.com/nutrition/usda-forecasts-largest-corn-crop-record)
KSU U.S. Corn Forecast Scenarios for “New Crop” MY 2014/15
KSU projections for “new crop” MY 2014/15 are as follows:
a) “Likely Production” Scenario: 50% prob. of 91.641 ma planted, 83.839 ma harvested, trend yields of 159.4 bu/ac, 13.364 bb 2014 U.S. corn production, 14.640 bb U.S. corn supplies, 1.700 bb exports, 13.310 bb total use, 1.330 bb ending stocks, 10.0% S/U, & $4.35 /bu;
b) “High Production” Scenario: 35% prob. of 92.891 ma planted, 84.983 ma harvested, yields of 164.4 bu/ac, 13.971 bb 2014 U.S. corn production, 15.237 bb U.S. corn supplies, 1.800 bb exports, 13.585 bb total use, 1.652 bb ending stocks, 12.2% S/U, & $4.10 /bu, and
c) “Low Production” Scenario: 15% prob. of 90.391 ma planted, 82.695 ma harvested, lower yields of 149.4 bu/ac, 12.355 bb 2014 U.S. corn production, 13.651 bb U.S. corn supplies, 1.400 bb exports, 12.525 bb total use, 1.126 bb ending stocks, 9.0% S/U, & $4.90 /bu.
World Corn Supply-Demand
World Corn Total Supplies of 1,154 mmt in “new crop” MY 2014/15 are projected to be up from 1,123 mmt in “current” MY 2013/14, and up from 1,003 mmt in MY 2012/13. Projected World corn ending stocks of 118.1 mmt (19.5% S/U) in “new crop” MY 2014/15 are up from 173.4 mmt (18.3% S/U) in “current” MY 2013/14, and up from 138.2 mmt (16.0% S/U) in MY 2012/13. Combined “new crop” MY 2014/15 corn production for major export competitors Brazil (74.0 mmt – down 4.0) and Argentina (26.0 mmt – up 2.0) is projected to be down 2.0 mmt. However, with a large 2014 U.S. corn crop harvest anticipated to be available in World grain export markets in late winter-spring 2015, and no major threats having yet emerged to U.S. or foreign corn production so far in 2014, it is anticipated that World corn production and supplies will be larger and prices sharply lower in MY 2014/15 than a year ago.
Although moderate concerns about crop development have emerged in parts of the upper Midwestern states due to excessive moister, at this time these worries are not great enough to provide much support for corn prices. Absent an unforeseen major downturn in 2014 U.S. corn production and price prospects, it seems likely that U.S. corn markets are moving toward a low price period similar to the fall of 2008, a marketing year in which U.S. corn prices were at or below $4.00 per bushel for at least a moderate period of time.
Anticipating the upcoming 2014 U.S. corn harvest (Source: http://westernfarmpress.com/markets/)