KSU Corn Market Outlook – “Normal” vs “Short” Crop Scenarios for MY 2015/16

An analysis of U.S. and World corn supply-demand factors and 2014 price prospects in late April 2015, following the USDA’s April 9th USDA Crop Production and World Agricultural Supply Demand Estimates (WASDE) report, and ahead of its May 12th 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 Late April 2015″ 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_04-30-15_Corn.pdf

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Summary

Overview

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on April 9th, corn futures prices have moved sideways-to-lower, leading to the lowest futures prices that have occurred during the January-April 2015 period. 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 some important changes in its forecast of U.S. corn usage and ending stocks in the current 2014/15 marketing year, but these adjustments resulted in no major 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 13.645 bb (down 50 mb or million bushels from a month ago) is also a record, with ethanol use of 5.200 bb, non-ethanol FSI use of 1.395 bb (up 28 mb vs last year), exports of 1.800 bb, and feed and residual use of 5.250 bb (down 50 mb, and up 214 mb vs last year).

Ending stocks are forecast at 1.827 bb (13.39% S/U) – up 50 mb from March, and 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 $3.55-$3.85 per bu. with a midpoint of $3.70 vs. $4.46 in MY 2013/14, and $6.89 in MY 2012/13.

https://bunge.s3.amazonaws.com/categories/images/000/000/029/content/AnimalFeed-CORNFEED_iStock_000019403998Medium_pw_v1.jpg?1357859290

Corn being fed to beef cattle (source: https://www.bungenorthamerica.com/products/categories/29-corn-feed)

USDA U.S. Corn S/D and Price Forecast for “New Crop” MY 2015/16

The USDA’s projected supply-demand, and price scenarios for “new crop” MY 2015/16 (with minor adjustments) are as follows: a) “2015 Less 1.4 Million Acre-13.6 bb Production” Scenario: 89.199 ma planted, 81.706 ma harvested, early season USDA baseline forecast yields of 166.8 bu/ac, 2015 U.S. corn production of 13.629 bb, total supplies of 15.481 bb, total use of 13.750 bb, ending stocks of 1.731 bb, 12.6% S/U, & $3.85 /bu U.S. corn MYA prices.

KSU U.S. Corn S/D and Price Forecast for “New Crop” MY 2015/16

Projected supply-demand and price scenarios by KSU for “new crop” MY 2015/16 are as follows:

a) “2015 “Normal Crop” 13.3 bb Production” Scenario (80% prob.): 88.199 ma planted, 81.706 ma harvested, KSU long term trend yield of 162.3 bu/ac, 2015 U.S. corn production of 13.261 bb, total supplies of 15.113 bb, total use of 13.700 bb, ending stocks of 1.413 bb, 10.31% S/U, & $4.30 /bu U.S. corn MYA prices;

b) “2015 “Short Crop” 12.7 bb Production” Scenario (20% prob.): Planted and harvested acres unchanged from the previous scenario, but with a KSU low yield forecast of 155.0 bu/ac, U.S. corn production of 12.664 bb, total supplies of 14.516 bb, total use of 13.550 bb, ending stocks of 966 mb, 7.13% S/U, & $6.75 /bu U.S. corn MYA prices.

World Corn Supply-Demand

World total supplies of 1,163 mmt are projected for “current crop” MY 2014/15, up from 1,124 mmt in MY 2013/14, and 1,000 mmt in MY 2012/13. Projected World corn ending stocks of 188.5 mmt (19.3% S/U) in “current crop” MY 2014/15 are up from 170.8 mmt (17.9% S/U) in MY 2013/14, and from 135.4 mmt (15.7% S/U) in MY 2012/13.

With closing CME NOV-2015 soybean futures of $9.53 and CME DEC-2015 corn futures of $3.83 ¼ on 4/30/2015, the soybean/corn price ratio of 2.48 favors the planting of soybeans in the United States in 2015. 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 “new crop” MY 2015/16 in the spring and early summer.

https://i0.wp.com/www.agweb.com/assets/1/6/4-20-12_planting_corn_2012.png

Late corn planting in 2012 (Source: http://www.agweb.com/article/odds_for_a_late-planted_corn_crop_NAA_University_News_Release/)

 

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