An analysis of U.S. and World corn supply-demand factors and 2015/16 price prospects following the USDA’s October 9, 2015 USDA Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports will be available on the KSU AgManager website on Wednesday, October 28th (http://www.agmanager.info/default.asp).
Following is a summary of the article on “Corn Market Outlook in Late October 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
Overview of Corn Market Outlook
When the USDA released its October 9th Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports, DEC 2015 corn futures prices fell sharply, and have since traded in the $3.72-$3.86 ¾ /bu range. With current prospects for a 13.3-13.7 billion bushel U.S. corn crop, and sizable foreign coarse grain crops forecast in the “new crop” 2015/16 marketing year, the possibility of corn futures prices rising to $4.50-$5.00+ by spring 2016 is limited unless yield and/or maturity problems develop this fall with the U.S. corn crop. If low U.S. and World corn prices do 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” or “El Nino-La Nina transition”-related weather patterns with negative impacts on 2016 crop production, could each still 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 10/9/2015 WASDE report, the USDA lowered is forecast of 2015 U.S. corn production as well as ending 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 13.555 billion bushels (bb) is down 30 million bushels (mb) from September, and 131 mb from August, but still down from 14.216 bb in 2014. Total supplies of 15.316 bb in MY 2015/16 are down 31 mb from September, and down 163 mb from “old crop” MY 2014/15. Forecast MY 2015/16 total corn usage of 13.755 bb includes ethanol use of 5.250 bb (up 43 mb vs year ago), non-ethanol FSI use of 1.380 bb (up 21 mb vs year ago), exports of 1.850 bb (down 14 mb vs year ago) and feed and residual use of 5.275 bb (down 42 mb vs year ago).
Ending stocks are forecast at 1.561 bb (11.35% S/U) in MY 2015/16 – down 31 mb from last month, and down from 1.731 bb (12.6% S/U) in 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 $0.05 higher in the range of $3.50-$4.10 /bu. (midpoint of $3.80) versus to $3.70 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 13.555 bb Production” Scenario (60% prob.): USDA 2015 U.S. corn production of 13.568 bb, with USDA supply-demand estimates of total supplies (15.316 bb), total use (13.775 bb), ending stocks (1.561 bb), and 11.35% S/U – but with $3.85 /bu U.S. corn MYA prices;
b) “2015 Smaller Normal Crop 13.310 bb Production” Scenario (35% prob.): 88.381 ma planted, 80.664 ma harvested, yield of 165.0 bu/ac, 2015 U.S. corn production of 13.310 bb, total supplies of 15.071 bb, total use of 13.655 bb, ending stocks of 1.416 bb, 10.4% S/U, & $4.05 /bu U.S. corn MYA prices; and
c) “2015 Low Yield 13.068 bb Production” Scenario (5% prob.): Planted / harvested acres same as scenarios (a) & (b), but with a KSU low yield of 162.0 bu/ac, U.S. corn production of 13.068 bb, total supplies of 14.834 bb, total use of 13.534 bb, ending stocks of 1.300 bb, 9.61% S/U, & $6.00 /bu U.S. corn MYA prices.
World Corn Supply-Demand
World total supplies of 1,168.6 million metric tons (mmt) are projected for “new crop” MY 2015/16, down from 1,184.6 mmt in “old crop” MY 2014/15, and 1,129.3 mmt in MY 2013/14.
Projected World corn ending stocks of 187.8 mmt (19.2% S/U) in “new crop” MY 2015/16 are down from 196.0 mmt (19.8% S/U) in “old crop” MY 2014/15, but up from 175.9 mmt (18.4% S/U) in MY 2013/14.
A Nonirrigated Corn Field in Kansas Being Harvested in 2015 (Source: https://www.youtube.com/watch?v=NqjiwrjXVw0)
Harvesting Corn in Minnesota in 2015 (Source: http://www.allamericancoop.com/news)