An analysis of U.S. and World corn supply-demand factors and 2015/16 price prospects following the USDA’s November 10, 2015 USDA Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports will be available on the KSU AgManager website on Wednesday, December 2nd (http://www.agmanager.info/default.asp).
Following is a summary of the article on “Corn Market Outlook in Early December 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
When the USDA released its November 10th Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports, corn futures prices fell sharply, but have since traded sideways to marginally higher. With expectations of a 13.654 billion bushel (bb) U.S. corn crop, and sizable foreign coarse grain crops forecast in the “new crop” 2015/16 marketing year, corn futures prices are unlikely to rise to $4.50-$5.00+ by spring 2016 unless larger than expected corn usage occurs in response to low U.S. and World corn prices. If low corn prices persist through spring 2016, corn enterprise net returns will be limited, making it likely that South American and U.S. farmers will reduce 2016 corn acreage and production prospects as a result.
It is possible that factors such as a) international geopolitical conflicts, b) financial market disruptions, 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 in spring 2016 with negative impacts on 2016 crop production, could each still impact corn market price direction and volatility in the later part of “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, leading to increased feedgrain usage. Over time these factors are likely to cause a change in the prevailing “large crop – low price” market scenario in U.S. and World coarse grain markets that currently exists.
USDA U.S. Corn Market Forecast
In the 11/10/2015 WASDE report, the USDA raised its forecast of 2015 U.S. corn production and ending stocks estimates – leading to a moderate decrease in projected U.S. corn prices for “new crop” MY 2015/16. Projected 2015 U.S. corn production of 13.654 billion bushels (bb) is up 99 million bushels (mb) from October, but still down from the record high 14.216 bb in 2014. Total supplies of 15.415 bb in MY 2015/16 are also up 99 mb from October, but down from the record of 15.479 bb in “old crop” MY 2014/15.
Forecast MY 2015/16 total corn usage of 13.655 bb (down 100 mb) includes ethanol use of 5.175 bb (up 34 mb vs year ago), non-ethanol FSI use of 1.380 bb (up 21 mb vs year ago), exports of 1.800 bb (down 50 mb from Oct. and down 64 mb vs year ago) and feed and residual use of 5.300 bb (up 25 mb from Oct., but down 15 mb vs year ago). Ending stocks are forecast at 1.760 bb (12.89% S/U) in MY 2015/16 – up 199 mb from last month, and up from 1.731 bb (12.6% S/U) in MY 2014/15.
“New crop” MY 2015/16 U.S. average cash prices are forecast $0.15 lower from a month ago in the range of $3.35-$3.95 /bu. ($3.65 midpoint) versus $3.70 in “old crop” MY 2014/15, $4.46 in MY 2013/14, and the record high $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) “USDA S/D Estimates” Scenario (80% prob.): All supply-demand assumptions equal to the USDA’s, but with $3.75 /bu U.S. corn MYA prices;
b) “2015 Smaller Crop” Scenario (10% prob.): U.S. corn yield of 167.0 bu/ac, 2015 U.S. corn production of 13.470 bb, total supplies of 15.232 bb, total use of 13.655 bb, ending stocks of 1.577 bb, 11.6% S/U, & $4.00 /bu U.S. corn MYA prices; and
c) “2015 Economic Problems” Scenario (10% prob.): U.S. corn production and supplies equal to the USDA estimates, but lower total use of 13.460 bb, ending stocks of 1.955 bb, 14.5% S/U, & $3.25 /bu U.S. corn MYA prices.
World Corn Supply-Demand
World total supplies of 1,183.1 million metric tons (mmt) are projected for “new crop” MY 2015/16, down marginally from 1,183.6 mmt in “old crop” MY 2014/15, but up from 1,124.3 mmt in MY 2013/14.
Projected World corn ending stocks of 211.9 mmt (21.8% S/U) in “new crop” MY 2015/16 are up from 208.2 mmt (21.3% S/U) in “old crop” MY 2014/15, and from 174.9 mmt (18.4% S/U) in MY 2013/14.
Downward adjustments by the USDA in the November WASDE report in Chinese corn feeding for the last three marketing years had a marked impact on World corn supply-demand balances relative to a month earlier.
Storing and Handling the 2015 U.S. Corn Harvest in the Dakotas (Source: http://dakotafire.net/newspapers/harvest-roundup-in-dakotafire-region-early-and-surprisingly-good/2328/)
Corn Production in South Africa (Source: http://www.democraticunderground.com/112714070)