KSU Corn Market Outlook in Mid-September 2015: Waiting for Answers to 2015 U.S. Corn Crop Questions

An analysis of U.S. and World corn supply-demand factors and 2015/16 price prospects following the USDA’s September 11th USDA Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports 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 Mid-September 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_09-17-15_Corn.pdf



Overview of Market Trends & Influences

When the USDA released its September 11th Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports, DEC 2015 corn futures prices rose sharply, and have since traded in the $3.83-$3.92 ¾ /bu range through September 16th. With prospects for a 13.2-13.8 billion bushel 2015 U.S. corn crop, and with prospects for sizable 2015 foreign coarse grain crops, the possibility of corn futures prices rising to $4.50-$5.00+ in coming months is limited unless yield and/or maturity problems develop this fall with the 2015 U.S. corn crop. If low U.S. and World corn prices persist through spring 2016, corn enterprise profits will be limited, making it likely that South American and U.S. farmers will reduce 2016 corn acreage as a result.

It is also possible that factors such as a) major geopolitical conflicts in key World crop supply-demand regions, b) major financial market problems in late 2015-2016, c) U.S. farmer resistance to selling grain at low fall 2016 harvest prices, and d) “El Nino” related weather patterns with negative impacts on 2016 crop production, could each impact corn market price direction and volatility in the “new crop” 2015/16 marketing year. Also, low feedgrain prices have resulted in lower input costs and improved profitability for U.S. and Foreign livestock feeding and bioenergy users, and led to increased feedgrain usage. A combination of these production and demand impacts over time are likely to eventually cause a change in the prevailing “large crop – low price” market scenario in U.S. and World coarse grain markets.

USDA U.S. Corn Market Forecast

In the 9/11/2015 WASDE report, the USDA lowered is forecast of 2015 U.S. corn production as well as corn usage and end stocks estimates – leading to a marginal increase in projected U.S. corn prices for “new crop” MY 2015/16. Projected 2015 U.S. corn production of 13.585 billion bushels (bb) is down 101 million bushels (mb) from August, but still down from 14.216 bb in 2014, with total supplies of 15.347 bb in “new crop” MY 2015/16 being down 141 mb from “old crop” MY 2014/15. Record high forecast MY 2015/16 total corn usage of 13.755 bb (up 10 mb vs MY 2014/15), includes ethanol use of 5.250 bb (up 45 mb vs year ago), non-ethanol FSI use of 1.380 bb (up 15 mb vs year ago), with exports of 1.850 bb and feed and residual use of 5.275 bb (both down 25 mb vs year ago).

Ending stocks are forecast at 1.592 bb (11.6% S/U) in “new crop” MY 2015/16 – down from 1.732 bb (12.6% S/U) in “old crop” 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 in the range of $3.45-$4.05 /bu. (midpoint of $3.75) versus to $3.68 in “old crop” MY 2014/15, $4.46 in MY 2013/14, and $6.89 in MY 2012/13.

KSU U.S. Corn Market Forecasts

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

a) “2015 Normal Crop 13.568 bb Production” Scenario (45% prob.): 88.897 ma planted, 81.000 ma harvested, yield of 167.5 bu/ac, 2015 U.S. corn production of 13.568 bb, total supplies of 15.330 bb, total use of 13.775 bb, ending stocks of 1.597 bb, 11.6% S/U, & $3.85 /bu U.S. corn MYA prices;

b) “2015 Smaller Normal Crop 13.365 bb Production” Scenario (50% prob.): 88.897 ma planted, 81.000 ma harvested, yield of 165.0 bu/ac, 2015 U.S. corn production of 13.365 bb, total supplies of 15.127 bb, total use of 13.655 bb, ending stocks of 1.472 bb, 10.8% S/U, & $4.05 /bu U.S. corn MYA prices; and

c) “2015 Short Crop 12.555 bb Production” Scenario (5% prob.): Planted / harvested acres same as scenarios (a) & (b), but with a KSU low yield of 155.0 bu/ac, U.S. corn production of 12.555 bb, total supplies of 14.327 bb, total use of 13.240 bb, ending stocks of 1.087 bb, 8.21% S/U, & $6.00 /bu U.S. corn MYA prices.

World Corn Supply-Demand

World total supplies of 1,175 million metric tons (mmt) are projected for “new crop” MY 2015/16, down from 1,183 mmt in “old crop” MY 2014/15, and 1,129 mmt in MY 2013/14. Projected World corn ending stocks of 189.7 mmt (19.2% S/U) in “new crop” MY 2015/16 are down marginally from 197.2 mmt (20.0% S/U) in “old crop” MY 2014/15, but up from 175.9 mmt (18.5% S/U) in MY 2013/14.



Corn Harvest in Mississippi in 2011-2012 (Source: http://www.mississippi-crops.com/2012/07/21/when-is-the-best-time-to-start-corn-harvest/)


A corn harvest scene coming soon to Kansas  (Source: http://fsa.blogs.govdelivery.com/2015/03/11/record-harvests-bring-out-the-best-in-fsas-grain-storage-oversight/)


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