An analysis of U.S. and World corn supply-demand factors and 2014 price prospects following the USDA’s November 10th 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 November 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_11-18-14_Corn.pdf
Since the USDA released its Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports on November 10th, DEC 2014 and JULY 2015 corn futures prices have moved sideways to higher, raising hopes of an eventual return to storage for U.S. crop producers resisting sales at sub-$4.00 cash prices. With 1) a record high 2014 U.S. corn crop, and 2) prospects for record or near-record World corn production and ending stocks in the “new crop” 2014/15 marketing year, “new crop” corn price prospects will be limited – unless unexpected and substantial crop production problems occur in other major coarse grain production regions of the World. Absent a shortfall in World feedgrain market supply-demand balances, price prospects are likely to be limited until April-May 2015 – the beginning of the U.S. corn planting and growing season.
USDA U.S. Corn Forecast for “New Crop” MY 2014/15
The USDA forecast 2014 U.S. corn production to be a record 14.407 billion bushels (bb), based on projected planted and harvested acreage of 91.885 million acres or ‘ma’, and 83.097 ma, respectively, and a record 2014 U.S. corn yield of 173.4 bushels per acre. The USDA also projected record U.S. corn total supplies of 15.668 bb, up 6.0% from 14.782 bb a year earlier. Projected MY 2014/15 total corn usage of 13.660 bb is also a record, with ethanol use of 5.150 bb (up 16 mb from MY 2013/14), non-ethanol FSI use of 1.385 bb (up 22 mb), exports of 1.750 bb (down 167 mb), and feed and residual use of 5.375 bb (up 243 mb). “New crop” ending stocks are forecast at 2.008 bb – up from 1.236 bb (9.1% S/U) in “old crop” MY 2013/14, and from 821 million bushels or ‘mb’ (7.4% S/U) in MY 2012/13. The USDA forecast that “new crop” MY 2014/15 U.S. average cash corn prices will be in the range of $3.20-$3.80 per bushel with a midpoint of $3.50 – down from $4.46 in “old crop” MY 2013/14, and $6.89 in MY 2012/13.
KSU U.S. Corn S/D Forecast for “New Crop” MY 2014/15
An alternative projection by KSU to the USDA for “new crop” MY 2014/15 U.S. corn supply-demand and prices is as follows: “Increased Usage” Scenario: 40% prob. of 15.668 bb U.S. corn supplies (same as USDA), 13.955 bb total use (up 2.2% from USDA), 1.713 bb ending stocks, 12.3% S/U, & $3.95 /bu U.S. corn price.
KSU U.S. Corn S/D Forecast for “Next Crop” MY 2015/16
A KSU projection for “next crop” MY 2015/16 for U.S. corn is as follows: “2015 Less 3 Million Acre” Scenario: 88.885 ma planted in 2015, 80.885 ma harvested, trend yields of 162.7 bu/ac, 2015 U.S. corn production of 13.073 bb, U.S. corn supplies of 15.106 bb, total use of 13.650 bb, ending stocks of 1.456 bb, 10.7% S/U, & $4.15 /bu U.S. corn season average prices.
World Corn Supply-Demand
World total supplies of 1,163 mmt are projected for “new crop” MY 2014/15, up from 1,127 mmt in “old crop” MY 2013/14, and up from 1,002 mmt in MY 2012/13. Projected World corn ending stocks of 191.5 mmt (19.7% S/U) in “new crop” MY 2014/15 are up from 173 mmt (18.1% S/U) in “old crop” MY 2013/14, and from 138 mmt (15.9% S/U) in MY 2012/13.
Major Export Competitors Situation
Combined “new crop” MY 2014/15 corn production for the U.S.’ major export competitors Brazil (75.0 mmt – down 4.3) and Argentina (23.0 mmt – down 2.0) is projected to be down 6.3 mmt from “old crop” MY 2013/14. Forecast Ukraine 2014 corn production of 27.0 mmt is down 3.9 mmt from a year ago. South American acreage decisions either have been or are being made now for first planting of 2015 crops in the Nov-Dec 2014 period, with subsequent additional plantings coming after the first of the year.
U.S. Corn versus Soybean Acreage Decision for 2015
With closing CME NOV-2015 soybean futures of $10.25 and CME DEC-2015 corn futures of $4.21 ½ on 11/17/2014, the ratio of 2.43 may slightly favor soybeans (i.e., being greater than the customary 2.3 breakeven level). If South American farmers shift sizable acreage away from corn into 2015 soybeans – markedly diminishing 2015 production prospects, and/or have weather-induced 2015 corn production problems, then by March-April 2015 World corn market price prospects for “next crop” MY 2015/16 could be positively effected – which could impact U.S. farmers’ 2015 spring planting choices.
U.S. Corn in Storage in 2011 (Source: http://www.indianagrain.com/blog/corn-harvest-continues-to-impress)
Corn for use in livestock feed i 2008 (Source: http://corncommentary.com/2008/09/26/tons-of-livestock-feed/)