KSU Corn Market Outlook – Updated Corn Market Scenarios for “New Crop” MY 2015/16

An analysis of U.S. and World corn supply-demand factors and 2015/16 price prospects in mid-late May 2015, following the USDA’s June 10th USDA Crop Production and World Agricultural Supply Demand Estimates (WASDE) report, will be available on the KSU AgManager website  (http://www.agmanager.info/default.asp).

Following is a summary of the article on “Corn Market Outlook in June 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_06-15-15_Corn.pdf



Overall Situation

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on June 10th, corn futures prices have declined. With 1) a record high 2014 U.S. corn crop of 14.216 billion bushels (bb), 2) prospects for another large U.S. crop in the 13.2-13.8 bb range in 2015, and c) large 2015 foreign corn and other coarse grain crops, the likelihood of corn futures prices having a strong rally to $5.00 or above in coming months is limited.

This situation could change if substantial crop production or export availability problems occur in either the U.S. or in other major coarse grain production and exporting regions of the World in coming months. As a caveat, IF major geopolitical conflicts and/or financial market problems occur, grain markets could be extremely volatile, but the direction of such potential grain price changes is difficult to predict.

USDA U.S. Corn Market Forecast

The USDA made it second official WASDE forecast of U.S. corn supply-demand and prices for the “new crop” 2015/16 marketing year in the June 10th report. The USDA maintained its projection of lower production and marginally lower ending stocks, stocks-to-use, and U.S. prices for “new crop” MY 2015/16 than for the “current” 2014/15 marketing year. Projected 2015 U.S. corn production of 13.630 bb is down from 14.216 bb a year earlier, but total supplies of 15.531 bb in “new crop” MY 2015/16 are up from 15.472 bb in “current” MY 2014/15.

Projected MY 2015/16 total corn usage of 13.760 bb is a record (up from 13.597 bb in MY 2014/15), with ethanol use of 5.200 bb (vs 5.175 bb a year earlier), non-ethanol FSI use of 1.360 bb, exports of 1.900 bb (up 75 mb vs last year), and feed and residual use of 5.300 bb (up 50 mb vs last year). Ending stocks are forecast at 1.771 bb (12.87% S/U) in MY 2015/16 – down from 1.876 bb (13.80% S/U) in “current” MY 2014/15, but still up from 1.232 bb (9.2% S/U) in MY 2013/14, and 821 mb (7.4% S/U) in MY 2012/13.

“New crop” MY 2015/16 U.S. average cash prices are forecast to be in the range of $3.20-$3.80 per bu. (midpoint of $3.50) versus to $3.65 /bu in “current” MY 2014/15, and $4.46 in MY 2013/14.

KSU U.S. Corn Market Forecasts

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

Scenario A) “2015 ‘Normal Crop’ 13.262 bb Production” Scenario (40% prob.): 89.199 ma planted, 81.715 ma harvested, KSU long term trend yield of 162.25 bu/ac, 2015 U.S. corn production of 13.262 bb, total supplies of 15.163 bb, total use of 13.730 bb, ending stocks of 1.433 bb, 10.44% S/U, & $4.25 /bu U.S. corn MYA prices;

Scenario B) “2015 ‘Smaller Normal Crop’ 13.190 bb Production” Scenario (45% prob.): 88.750 ma planted, 81.295 ma harvested, KSU long term trend yield of 162.25 bu/ac, 2015 U.S. corn production of 13.190 bb, total supplies of 15.031 bb, total use of 13.730 bb, ending stocks of 1.361 bb, 9.91% S/U, & $4.35 /bu U.S. corn MYA prices;

Scenario C) “2015 ‘Short Crop’ 12.666 bb Production” Scenario (15% prob.): Planted and harvested acres unchanged from scenario (a) above, but with a KSU low yield forecast of 155.0 bu/ac, U.S. corn production of 12.666 bb, total supplies of 14.567 bb, total use of 13.450 bb, ending stocks of 949 mb, 7.06% S/U, & $6.90 /bu U.S. corn MYA prices.

World Corn Supply-Demand

World total supplies of 1,186 mmt are projected for “new crop” MY 2015/16, up from 1,174 mmt in “current” MY 2014/15, and 1,127 mmt in MY 2013/14. Projected World corn ending stocks of 195.2 mmt (19.7% S/U) in “new crop” MY 2015/16 are down marginally from 197.0 mmt (20.2% S/U) in “current” MY 2014/15, but up from 174.5 mmt (18.3% S/U) in MY 2013/14.

With closing CME NOV-2015 soybean futures of $9.04 ¼ and CME DEC-2015 corn futures of $3.69 ½ on 6/12/2015, the soybean/corn price ratio of 2.45 still favors the planting of soybeans in the U.S. in 2015.

The development of volatile weather patterns in 2015 such as “El Nino” may cause production problems for corn and other coarse grains in parts of the U.S., South America, Australia, India, and elsewhere in the next 6-12 months, and eventually bring about a change in the current World-wide “large crop – low price” market scenario faced in coarse grain and other agricultural markets. World grain markets are also vulnerable to financial market volatility in 2015/2016.


Wet Corn fields in Iowa in early June, 2013 (Source: http://lubbockonline.com/agriculture/2013-06-09/delayed-planting-forces-tough-decisions)


Sidedress fertilizer time in the U.S. Corn Belt (http://www.agweb.com/article/sidedress_solutions/)


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