KSU Corn Market Outlook in March 2015: Adjusted USDA and KSU Forecasts for MY 2015/16

An analysis of U.S. and World corn supply-demand factors and 2014 price prospects following the USDA’s March 10th USDA Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports will be available on the KSU AgManager website on Tuesday, March 17th  (http://www.agmanager.info/default.asp).

Following is a summary of the article on “Corn Market Outlook in March 2015″ with the full article and accompanying analysis soon to be available on the KSU AgManager website at the following web address: http://www.agmanager.info/marketing/outlook/newletters/Corn.asp

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Summary

Overview

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on March 10th, corn futures prices have moved sideways-to-lower, at least temporarily diminishing farmer’s hopes that seasonal lows have occurred during January-March 2015. As of yet, U.S. corn producers have not observed enough market price strength to allow cash prices to move higher into the spring and provide eventual returns to storage for U.S. crop producers resisting sales at sub-$4.00 cash sales. 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 “current crop” 2014/15 marketing year, the likelihood of corn futures prices rallying above say $5.00 before spring planting appear limited – unless unexpected, substantial crop production or export availability problems occur in other major coarse grain production regions of the World.

USDA U.S. Corn Forecast for “Current Crop” MY 2014/15

The USDA made several significant changes in its forecast of U.S. corn usage and ending stocks in the current 2014/15 marketing year, but these adjustments resulted in only a small change in projected average corn prices. Projected record U.S. corn total supplies of 15.472 bb (billion bushels) are up 5.4% from 14.686 bb last year. Projected MY 2014/15 total corn usage of 13.695 bb (up 50 mb or million bushels from a month ago) is also a record, with ethanol use of 5.200 bb (down 50 mb – but up 66 mb from last year), non-ethanol FSI use of 1.395 bb (up 28 mb vs last year), exports of 1.800 bb (up 50 mb but down 117 mb from a year ago), and feed and residual use of 5.300 bb (up 50 mb, and up 264 mb vs last year). Ending stocks are forecast at 1.777 bb (12.98% S/U) – down 50 mb from February, and 100 mb from January, but up from 1.232 bb (9.2% S/U) in MY 2013/14, and 821 mb (7.4% S/U) in MY 2012/13. “Current crop” MY 2014/15 U.S. average cash prices are forecast the range of $3.50-$3.90 per bu. with a midpoint of $3.70 – up $0.05/bu, vs. $4.46 in MY 2013/14, and $6.89 in MY 2012/13.

USDA and KSU U.S. Corn Supply/Demand and Price Forecasts

USDA Forecast (adjusted): The USDA’s projected supply-demand, and price scenarios for “next crop” MY 2015/16 (with minor adjustments) are as follows: a) “2015 Less 1.6 Million Acre-13.6 bb Production” Scenario: 89.000 ma planted, 81.500 ma harvested, early season USDA baseline forecast yields of 166.8 bu/ac, 2015 U.S. corn production of 13.595 bb, total supplies of 15.397 bb, total use of 13.760 bb, ending stocks of 1.637 bb, 11.9% S/U, & $3.70 /bu U.S. corn MYA prices.

KSU Forecasts: Projected supply-demand and price scenarios by KSU for “next crop” MY 2015/16 are as follows: a) “2015 Less 2.5 Million Acre-13.5 bb Production” Scenario (45% prob.): 88.097 ma planted, 80.706 ma harvested, early season USDA forecast yields of 166.8 bu/ac, 2015 U.S. corn production of 13.462 bb, total supplies of 15.264 bb, total use of 13.660 bb, ending stocks of 1.604 bb, 11.74% S/U, & $3.95 /bu U.S. corn MYA prices; b) “2015 Less 2.5 Million Acre-13.1 bb Production” Scenario (55% prob.): Planted and harvested acres unchanged from the previous scenario, but with a KSU trend line yield forecast of 162.3 bu/ac, U.S. corn production of 13.095 bb, total supplies of 14.897 bb, total use of 13.510 bb, ending stocks of 1.387 bb, 10.27% S/U, & $4.25 /bu U.S. corn MYA prices.

World Corn Supply-Demand

World total supplies of 1,162 mmt are projected for “current crop” MY 2014/15, up from 1,125 mmt in MY 2013/14, and 1,000 mmt in MY 2012/13. Projected World corn ending stocks of 185.3 mmt (19.0% S/U) in “current crop” MY 2014/15 are up from 172.1 mmt (18.1% S/U) in MY 2013/14, and from 138 mmt (15.7% S/U) in MY 2012/13. With closing CME NOV-2015 soybean futures of $9.51 ¼ and CME DEC-2015 corn futures of $4.04 ¼ on 3/17/2015, the soybean/corn price ratio of 2.35 continues to be neutral for the two crops in the United States. That said, a lack of profitability for U.S. corn at expected 2015 harvest prices is likely to limit 2015 U.S. corn planted acres and 2015 corn production potential, and to provide at least a moderate amount of support for U.S. corn prices in “next crop” MY 2015/16 in the spring and early summer.

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