An analysis of U.S. and World corn supply-demand factors and 2014 price prospects following the USDA’s December 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 “U.S. Grain Sorghum and World Coarse Grain Market Outlook” with the full article and accompanying analysis on the KSU AgManager website at the following web address: http://www.agmanager.info/marketing/outlook/newletters/Sorghum.asp
Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) reports on December 10th, MAR 2015 and DEC 2015 corn futures prices have moved higher, raising hopes of an eventual return to storage for U.S. grain sorghum producers resisting sales at sub-$4.00 cash prices. With 1) a record 2014 U.S. feedgrain crop, and 2) prospects for record World coarse grain production and ending stocks in the “current crop” 2014/15 marketing year, the possibility of a corn futures rally above $5.00 appear limited – unless serious crop production problems occur in other World coarse grain production regions such as South America or Ukraine. Absent such a foreign coarse grain production shortfall in coming months, price prospects appear to be limited until at least April-May 2015, i.e., the U.S. corn & grain sorghum planting season.
The recent strength that has occurred in U.S. grain sorghum exports and prices has been due largely to Chinese import restrictions for particular varieties of GMO corn from the U.S. – and China’s willingness to substitute grain sorghum imports to fulfill their domestic livestock feed needs. With recent news that China may be softening these GMO corn restrictions, it is possible that U.S. grain sorghum exports and prices may weaken. But evidence of this has not yet occurred in U.S. sorghum exports or in local Kansas grain sorghum basis levels.
USDA U.S. Sorghum Forecast for “Current Crop” MY 2014/15
The USDA left unchanged its forecast 2014 U.S. sorghum production to be 408 million bushels (mb), based on projected planted and harvested acreage of 7.213 million acres or ‘ma’, and 6.174 ma, respectively, and a 2014 U.S. yield of 66.1 bu/acre. The USDA projected U.S. sorghum total supplies of 442 mb, up 9.4% from 404 mb last year. Projected MY 2014/15 total sorghum usage of 405 mb (up 35 mb vs a year ago) is made up of food, seed and industrial use of 80 mb (up 10 mb from MY 2013/14), exports of 230 mb (up from 212 mb a year ago), and feed and residual use of 95 mb (up 7 mb vs last year). “Current crop” ending stocks are forecast at 37 mb (9.14% S/U) – up from 34 mb (9.19% S/U) in MY 2013/14, and from 15 mb (5.7% S/U) in MY 2012/13. The USDA raised its forecast of “current crop” MY 2014/15 U.S. average cash corn prices by $0.05 to the range of $3.20-$3.80 per bu. with a midpoint of $3.50 – down from $4.28 in MY 2013/14, and $6.33 in MY 2012/13.
KSU U.S. Sorghum S/D Forecast for “Current Crop” MY 2014/15
An alternative projection by KSU Extension to the USDA for “current crop” MY 2014/15 U.S. sorghum supply-demand and prices is as follows: “Increased Usage” Scenario: 40% prob. of 408 mb U.S. sorghum supplies (same as USDA), 417.5 mb total use (up 3.1% from USDA), 24.5 mb ending stocks, 5.9% S/U, & $4.15 /bu U.S. sorghum price (vs $3.50 /bu by the USDA).
KSU U.S. Sorghum S/D Forecast for “Next Crop” MY 2015/16
A KSU projection for “next crop” MY 2015/16 for U.S. sorghum is as follows: “2015 Less 3.3% Planted Acres” Scenario: 6.978 ma planted in 2015, 5.783 ma harvested, trend yields of 66.0 bu/ac, 2015 U.S. sorghum production of 382 mb, U.S. sorghum supplies of 419 mb, total use of 355 mb, ending stocks of 27 mb, 7.6% S/U, & $4.20 /bu U.S. sorghum season average prices.
World Coarse Grains
Forecast coarse grain total supplies of 1,485 mmt in “current crop” MY 2014/15 are up from 1,449 mmt in MY 2013/14, and 1,305 mmt in MY 2012/13. Projected World coarse grain ending stocks of 227.2 mmt (18.1% S/U) in “current crop” MY 2014/15 are up from 209.5 mmt (16.9% S/U) in MY 2013/14, and 168.9 mmt (14.9% S/U) in MY 2012/13. Chinese imports and total use of coarse grains has increased from 5.6 mmt / 209.7 mmt in MY 2012/13, to 12.5 mmt / 227.6 mmt in MY 2013/14, to 11.6 mmt / 232.2 mmt in “current crop” MY 2014/15. World imports have increased my 11.4% over the MY 2012/13-2014/15 period.
Grain Sorghum production under subsistence conditions in Africa (Source: http://www.cgiar.org/consortium-news/the-revival-of-traditional-dry-land-crops/)
Grain Sorghum Field in North Central Kansas in 2011 (Source: http://www.kssorghum.com/2012/02/top-grain-sorghum-producing-counties-in-kansas/)