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Corn Market Outlook in July 2015

July 21, 2015


Summary

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on July 10th, corn futures prices first rose and then have declined.  With 1) a record high 2014 U.S. corn crop of 14.216 billion bushels (bb), 2) prospects for another large 2015 U.S. corn crop in the 13.2-13.8 bb range, and c) sizable 2015 foreign corn and other coarse grain crops, the likelihood of corn futures prices having a strong rally to the $4.75-$5.00 or above is limited.  This situation could change if crop production or export availability problems occur in major World production and exporting regions (i.e., U.S., South America, the Black Sea Region) in coming months.  IF major geopolitical conflicts and/or financial market problems occur in 2015-2016, grain markets could be extremely volatile, but the direction of potential grain price changes is difficult to predict.

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.  Low feedgrain prices – resulting in lower input costs for U.S. and Foreign livestock feeding and bioenergy users - have helped to increase profitability of corn-using industries and led to increased feedgrain usage.  A combination of these production and demand impacts in the future are likely to eventually bring about a change in the current World-wide “large crop – low price” market scenario faced in coarse grain and other agricultural markets. 

USDA U.S. Corn Market Forecast: The USDA projected lower production, higher usage, moderately tighter ending stocks and stocks-to-use, and marginally higher U.S. prices for “new crop” MY 2015/16 than for the “current” 2014/15 marketing year. Projected 2015 U.S. corn production of 13.530 bb is down from 14.216 bb a year earlier, with total supplies of 15.334 bb in “new crop” MY 2015/16 down from 15.474 bb in “current” MY 2014/15.  Projected MY 2015/16 total corn usage of 13.735 bb is a record (up from 13.696 bb in MY 2014/15), with ethanol use of 5.225 bb (up 25 mb vs a year earlier), non-ethanol FSI use of 1.360 bb (up 14 mb), exports of 1.875 bb (up 25 mb), and feed and residual use of 5.275 bb (down 25 mb).  Ending stocks are forecast at 1.599 bb (11.6% S/U) in “new crop” MY 2015/16 – down from 1.779 bb (13.0% 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 $3.45-$4.05 per bu. (midpoint of $3.75) versus to $3.60-$3.80 /bu ($3.70 midpoint) 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:  a) “2015 ‘Normal Crop’ 13.382 bb Production” Scenario (30% prob.): 88.897 ma planted, 81.101 ma harvested, yield of 165.0 bu/ac, 2015 U.S. corn production of 13.382 bb, total supplies of 15.186 bb, total use of 13.710 bb, ending stocks of 1.476 bb, 10.77% S/U, & $4.25 /bu U.S. corn MYA prices;  b) “2015 ‘Smaller Normal Crop’ 13.163 bb Production” Scenario (55% prob.): 88.897 ma planted, 81.101 ma harvested, KSU long term trend yield of 162.25 bu/ac, 2015 U.S. corn production of 13.163 bb, total supplies of 14.967 bb, total use of 13.625 bb, ending stocks of 1.342 bb, 9.84% S/U, & $4.35 /bu U.S. corn MYA prices; and c) “2015 ‘Short Crop’ 12.571 bb Production” Scenario (15% 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 12.571 bb, total supplies of 14.375 bb, total use of 13.405 bb, ending stocks of 970 mb, 7.24% S/U, & $6.90 /bu U.S. corn MYA prices.

World Corn Supply-Demand: World total supplies of 1,181 mmt are projected for “new crop” MY 2015/16, up from 1,176 mmt in “current” MY 2014/15, and 1,128 mmt in MY 2013/14.  Projected World corn ending stocks of 190.0 mmt (19.2% S/U) in “new crop” MY 2015/16 are down marginally from 194.0 mmt (19.7% S/U) in “current” MY 2014/15, but up from 174.7 mmt (18.3% S/U) in MY 2013/14.

I. U.S. Corn Market Situation and Outlook

I-A. July USDA Reports & “New Crop” MY 2015/16 Projections

On July 10th the USDA World Agricultural Outlook Board (WAOB) released its July 2015 World Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World corn supply-demand and price projections for the 2013/14, “current” 2014/15, as well as the “new crop” 2015/16 marketing years.  The 2014/15 marketing year will end on August 31, 2015, while the “new crop” 2015/16 U.S. corn marketing year will begin on September 1, 2015 and will last through August 31, 2016.  

In the July 10th WASDE report the USDA released projections for the “new crop” 2015/16 marketing year for corn, grain sorghum, wheat, soybeans and other major crops.  Projections of 2015 crop size for corn are based on WAOB estimates of crop acreage and yields.  However, the first projection of 2015 U.S. corn production by the USDA National Agricultural Statistics Service (NASS) that will be based on actual farmer surveys and field trials will be in the August 12, 2015 Crop Production and WASDE reports.

I-B. Corn Futures Trends for the December 2014 – mid-July 2015 Period

The CME SEPTEMBER 2015 corn contract is now the “lead” corn futures contract, representing current grain market price prospects through late August 2015, when the CME DECEMBER 2015 corn contract will then assume the lead contract role in the market.  Local basis adjustments are currently being made off SEPTEMBER 2015 corn futures for spot cash corn and grain sorghum price bids in North America as well as other World grain markets.  The “current crop” SEPTEMBER 2015 corn futures market contract initially responded in a “positive” manner to the information in the July 10th USDA reports, and in the days afterward trended first higher then back lower. 

On the day of the report – Friday, July 10th – Chicago Mercantile Exchange (CME) SEPTEMBER 2015 corn futures prices opened at $4.28 per bushel, and traded in a range of $4.24 ¼ - $4.39 ½ during the session, before settling at $4.34 ¾ – UP $0.06 for the day (Figure 1).   The USDA report findings were publicly released at approximately mid-session, i.e., 12:00 noon eastern time (11:00 a.m. central) that day.   Since then, SEPTEMBER 2015 Corn has traded from a high of $4.43 ¼ on Tuesday, July 14th to a low of $4.04 ½ on Monday, July 20th before closing at $4.05 on that same day.   

The CME DECEMBER 2015 corn contract is now the lead “new crop” corn futures contract, representing U.S. corn market price prospects for the mid-October through late-November 2015 time period.  DEC 2015 is the futures contract which local basis adjustments are made off of for “fall harvest 2015” corn and grain sorghum forward contract price bids or hedges here in the United States. The “new crop” DECEMBER 2015 corn futures market contract also initially responded “positively” to the information in the July 10th USDA reports, and since then has trended first higher and then downward.   

On the day of the report CME DECEMBER 2015 corn futures prices opened at $4.38 ¼ per bushel, trading within the range of $4.34 ¼ - $4.49 during the session, before settling at $4.45 – up $0.06 per bushel for the day (Figure 1).   Since then, DECEMBER 2015 Corn has traded from a high of $4.54 ¼ on Tuesday, July 14th to a low of $4.15 ¼ on Monday, July 20th before closing at $4.16 on that same day. 

Figure 1. SEPTEMBER 2015 & DECEMBER 2016 CME Corn Futures Price Charts (electronic trade)

The Trade Weighted U.S. Dollar Index has been generally trending higher from mid-July 2011 through early July 2014 (Figure 2).  After an index value of 75.69 on July 1, 2014 the calculated U.S. trade weighted dollar index trended up to a high of 93.37 on Friday, February 13, 2015 – an increase of 23.4%.  The latest recorded value of the Trade Weighted U.S. Dollar Index was 90.78 on July 10, 2015 – moving sideways to lower from the July 2014 highs.

Figure 2. Daily U.S. Trade Weighted Dollar Index (Source: St. Louis Federal Reserve Bank, FRED)

This trend in the value of the U.S. trade weighted dollar index is significant to the U.S. corn and other U.S. grain markets, because a higher U.S. dollar exchange rate relative to other major currencies generally makes it more expensive for foreign buyers of U.S. grains to exchange their country’s currencies for U.S. dollars – which they would then in turn use to purchase U.S. grain exports (i.e., which are denominated or “priced” in U.S. dollars).  Although this is not the only factor negatively impacting U.S. grain exports, it is a very important one – working against U.S. corn being an affordable, competitive alternative export seller in World grain trade.

I-C. U.S. Corn Supply-Demand – Focus on “New Crop” 2015/16 Projections

U.S. Corn Acreage, Yield & Production

The USDA’s projections of 2015 U.S. corn planted and harvested acres from the June 30th Acreage report were used without adjustment in the July 10th USDA Crop Production and WASDE reports.   In the June 30, 2015 USDA Acreage report the USDA projected that 2015 U.S. corn total planted acreage would be 88.897 million acres (ma), down 302,000 acres from 89.199 ma projected earlier in the March 31st USDA Prospective Plantings report. This projection of 88.897 ma of U.S. corn planted in 2015 is down 1.700 ma (-1.9%) from 90.597 ma in 2014, down 6.468 ma (-6.8%) from 95.365 ma in 2013, down 8.394 ma (-8.6%) from the record high of 97.291 ma in 2012, and down from 91.921 ma in 2011 (Table 1 and Figure 3).  

The USDA projected that 2015 U.S. corn total harvested acreage would be 81.101 million acres (ma), nearly equal to the USDA WAOB projection in the June 10th WASDE report. This projection of 81.101 ma of U.S. corn harvested in 2015 is down 2.035 ma (-2.4%) from 83.136 ma in 2014, down 6.350 ma (-7.3%) from the record high of 87.451 ma in 2013, down 6.534 ma (-7.2%) from 87.365 ma in 2012, and down from 83.981 ma in 2011. (Table 1 and Figure 3).  The USDA implicitly projected that the proportion of harvested-to-planted acreage in 2015 is 91.2%, down from 91.8% in 2014, and 91.7% in 2013, but up from 89.9% in drought-stricken 2012.   

The 2014 U.S. average corn yield of 171.0 bushels per acre (bu/ac) is a record high and unchanged from the January-June 2015 USDA reports, and is higher than the 166.8 bu/ac estimate for 2015 in the July 10th WASDE report (Table 1 and Figure 4).  Although this early 2015 USDA projection of 166.8 bu/ac is down from 171.0 bu/ac in 2014, it would still be the second highest U.S. corn yield on record, being up from 158.1 bu/ac in 2013, the drought affected 2012 low yield of 123.1 bu/ac., 147.2 bu/ac in 2011, 152.8 bu/ac in 2010, and up from the previous historic record high of 164.7 bu/ac in 2009.  

Based on this combination of USDA projections for 2015 planted acreage (88.897 ma), harvested acreage (81.101 ma), and yield (166.8 ma – USDA), projected 2015 U.S. corn production would be 13.530 billion bushels (bb) – down from the record high of 14.216 bb in 2014, and the previous record high of 13.829 bb in 2013 – but up from 10.755 bb in 2012, 12.314 bb in 2011, 12.425 bb in 2010, and 13.067 bb in 2009 (Table 1).   

U.S. Corn Total Supplies

The USDA projects that total supplies of U.S. corn for “new crop” MY 2015/16 are 15.334 bb – down 197 million bushels (mb) from the June 10th WASDE report.  This projection of 15.334 bb for “new crop” MY 2015/16 results from beginning stocks of 1.779 bb, projected 2015 production of 13.530 bb, and projected imports of 25 million bushel (mb) (Table 1 and Figure 5).  Total supplies of near 15.334 bb in “new crop” MY 2015/16 would be the second highest on record, being comparable to 14.362 bb in MY 2007/08, 13.729 bb in MY 2008/09, 14.749 bb in MY 2009/10, 14.161 bb in MY 2010/11, 13.471 bb in MY 2011/12, 11.904 bb in “short crop” MY 2012/13, 14.686 bb in MY 2013/14, and the record high of 15.474 bb in “current” MY 2014/15.  

The USDA forecast of beginning stocks of 1.779 bb in “new crop” MY 2015/16 is down 97 mb from the June 10th WASDE report, but up substantially from 1.232 bb in beginning stocks in “current crop” MY 2014/15, 821 mb in MY 2013/14, 989 mb in MY 2012/13, and 1.128 bb in MY 2011/12 – while being up at least moderately from 1.708 bb in MY 2010/11, 1.673 bb in MY 2009/10, and 1.624 bb in MY 2008/09.  This amount of beginning stocks in “new crop” MY 2015/16 of 1.779 bb is up considerably from the low of 426 mb that occurred in MY 1996/97, and is the highest since 1.967 bb in MY 2006/07 and 2.114 bb in MY 2005/06 (Table 1 and Figure 5). 

Projected imports of 25 mb in “current crop” MY 2015/16 are equal to “current” MY 2014/15, but down from 36 mb in MY 2013/14 (the 2nd highest on record), and are also down sharply from the record high of 160 mb in the drought-stressed 2012/13 marketing year.  These amounts of U.S. corn imports are comparable to 29 mb in MY 2011/12, and 28 mb in MY 2010/11.

U.S. Corn Use by Category & Total Use

U.S. Ethanol Production and Corn UsageProjected U.S. corn use for ethanol production of 5.225 bb in “new crop” MY 2015/16 (up 25 mb from June) is up from 5.200 bb in “current” MY 2014/15 (up 25 mb from May), and up from 5.134 bb in MY 2013/14, 4.641 bb in MY 2012/13, and 5.000 bb in MY 2011/12 (Table 1 and Figures 6-7). 

Figure 7 shows weekly U.S. oxygenated plant production of fuel ethanol as reported by the U.S. Energy Information Administration (www.eia.gov) with a calculated estimate of corn use developed by Kansas State University.  Assuming 2.83 gallons of ethanol produced per bushel of corn (equaling the calculated conversion of U.S. corn into ethanol in January 2015), these calculations indicate that the equivalent projected annual rate of U.S. corn used for ethanol production for “current crop” MY 2014/15 has ranged from 4.830-5.449 bb on a weekly basis since early September 2014 - the beginning of the “current crop” 2014/15 marketing year.  Over the period of September 1, 2014 through July 10, 2015, corn usage for ethanol production was been on pace to reach 5.200 bb in “current crop” MY 2014/15.  This estimate of 5.200 bb is equal to the USDA’s July 10, 2015 WASDE report estimate of 5.200 bb of corn to be used for ethanol production during “current crop” MY 2014/15, with 45 of 52 weeks (86.5%) of the marketing year completed.               

U.S. Corn Use as Distillers Grains:  An estimate of the U.S. corn equivalent amounts of distillers grains (DDGS) use for direct livestock feeding and exports is provided in Figure 8 – which shows estimated a) DDGS corn equivalent U.S. domestic livestock feeding, and b) DDGS exports as well as other categories of U.S. corn usage since MY 1989/90.

This analysis assumes 16.00 pounds of distillers dried grains and solubles (DDGS) per 56 pound bushel of corn used in ethanol production – following from recent ethanol industry surveys.  According to these KSU estimates, since MY 2010/11 approximately 0.993-1.130 bb of U.S. corn equivalent bushel-weights of DDGS are projected either to have already been or are to be fed to U.S. livestock during each marketing year – i.e., 1.108 bb in DDGS corn-weight equivalents in MY 2010/11, 1.130 bb in MY 2011/12, 1.004 bb in MY 2012/13, 993 mb in MY 2013/14, 1.006 bb in both “current crop” MY 2014/15, and 1.011 bb in “new crop” MY 2015/16.  Over the five most recent marketing years, DDGS exports in corn equivalent weights are estimated to range from 299 to 482 mb, – i.e., 326 mb in DDGS corn-weight equivalents in MY 2010/11, 299 mb in MY 2011/12, 322 mb in MY 2012/13, 473 mb in MY 2013/14, a near record 479 mb in “current crop” MY 2014/15, and a record high 482 mb in “new crop” MY 2015/16. 

U.S. Corn Exports: Projected U.S. corn exports of 1.875 bb in “new crop” MY 2015/16 (down 25 mb from June) is up from 1.850 bb (up 25 mb from June) in “current” MY 2014/15, less than 1.917 bb in MY 2013/14, and up sharply from 730 mb in MY 2013/14 – the 41 year low (i.e., since MY 1975/76) (Table 1, Figures 6 and 8). 

According to USDA Foreign Agricultural Service (FAS) weekly export data (http://apps.fas.usda.gov/export-sales/esrd1.html), as of July 9th, through the 45th week of “current crop” MY 2014/15 (45of 52 weeks), 1,508.3 mb of U.S. corn had been physically shipped for export – equal to 81.5% of the USDA’s projection of 1.850 bb for “current crop” MY 2014/15.  An additional 313.7 mb of U.S. corn had been pre-sold for future export shipments during the “current crop” 2014/15 marketing year – prior to August 31, 2015 (the end of “current crop” MY 2014/15). 

Adding together 1,508.3 mb in past shipments plus 313.7 mb in forward sales amounts to 1,832.0 mb, or 99.0% of the USDA’s 1.850 bb U.S. corn export target for “current crop” MY 2014/15 in the July 10th USDA WASDE report with 86.5% (45/52 weeks) of the marketing year completed.   United States’ corn export shipments will need to average 48.8 mb per week for the remaining 7 weeks of the “current crop” 2014/15 marketing year to achieve the USDA’s 1.850 bb projection.  This compares to 38.0 mb and 44.6 mb of export shipments for the weeks ending July 2nd and July 9th, respectively – i.e., each being behind of the pace needed to meet the USDA’s most recent export projection.    

Non-Ethanol FSI: Forecast non-ethanol food, seed and industrial (FSI) use of 1.360 bb in “new crop” MY 2015/16 is greater than 1.346 bb in “current” MY 2014/15 (down 1 mb from May-June, but reduced 48 mb from the April WASDE), and compares to 1.369 bb in MY 2013/14, and 1.397 bb in MY 2012/13 (Table 1, Figures 6 and 8).

Feed and Residual Use: Forecast U.S. feed and residual use of 5.275 bb in “new crop” MY 2015/16 (down 25 mb from June) is down 25 from 5.300 bb for “current” MY 2014/15 (up 50 mb from June), 5.034 bb in MY 2013/14, 4.315 bb in MY 2012/13, and 4.520 bb in MY 2011/12 (Table 1, Figures 6 and 8).  These levels of corn use for livestock feeding are somewhat correlated with the amounts of energy feeds per grain consuming animal units (GCAUs) reported by the USDA over the same time period as illustrated in the following information.   

In the USDA July 14th Feed Outlook Report (http://usda.mannlib.cornell.edu/usda/current/FDS/FDS-07-14-2015.pdf) the USDA Economic Research Service (ERS) indicates that over the MY 2013/14 through “new crop” MY 2015/16 time period, the total amount of Energy Feeds in the U.S. – including corn, sorghum, barley, oats and wheat – is estimated to be 134.3 million metric tons (mmt) in MY 2013/14 (95.2% corn), and 144.6 mmt in “current” MY 2014/15 (93.1% corn), and 143.5 mmt in “new crop” MY 2015/16 (93.4% corn).  Over this same 3 year period, total U.S. Grain Consuming Animal Units (GCAUs) are estimated to be 91.0 million in MY 2013/14, 93.2 million in “current” MY 2014/15, and 95.1 million in “new crop” MY 2015/16.

As a result, U.S. Energy Feeds per Grain Consuming Animal Unit is estimated to be 1.476 metric tons per animal unit (mt/au) in MY 2013/14, and 1.552 mt/au in “current” MY 2014/15, and is projected to be 1.509 mt/au in “new crop” MY 2015/16.  As the availability of feed grain and other energy feeds has increased or is expected to increase from the drought stricken “short crop” year of MY 2012/13 to the record “large crop” years of MY 2013/14 and “current” MY 2014/15, and now into the expected third consecutive large crop year in “new crop” MY 2015/16 for corn and other aggregated feedgrains, the amount of energy feeds fed per animal unit and total feed use of U.S. corn has increased – contributing to downward pressure on the prices of U.S. corn and other feedgrains.

Total Use of U.S. Corn for “new crop” MY 2015/16 is projected to be a record high 13.735 bb (down 25 mb from June) – up from the current record highs of 13.696 bb in “current” MY 2014/15 (up 99 mb from June) (Table 1 and Figures 6 and 8).   United States’ total corn use has varied widely in recent marketing years – due largely to changes in available U.S. corn supplies.  Corn use in the U.S. over time has changed from 12.737 bb in MY 2007/08, to 12.008 bb in MY 2008/09, 13.041 bb in MY 2009/10, 13.033 bb in MY 2010/11, 12.482 bb in MY 2011/12, 11.083 bb in MY 2012/13, the one time record high of 13.454 bb in MY 2013/14, the previous record high amount of 13.696 bb in “current crop” MY 2014/15, and now the new projected record high of 13.735 bb in “new crop” MY 2015/16. 

U.S. Corn Ending Stocks, % Ending Stocks-to-Use, & Prices

U.S. corn ending stocks for “new crop” MY 2015/16 are projected to be 1.599 bb (down 172 mb from June), which is down 180 mb from 1.779 bb in “current” MY 2014/15 (also down 97 mb from June) (Table 1 & Figure 9).  Since MY 2006/07 (1.304 bb), U.S. corn ending stocks have been 1.624 bb in MY 2007/08, 1.673 bb in MY 2008/09, 1.708 bb in MY 2009/10, 1.128 bb in MY 2010/11, 989 mb in MY 2011/12, 821 mb in “drought stricken” MY 2012/13, 1.232 bb in MY 2013/14, 1.779 bb in “current crop” MY 2014/15, and now are forecast to be 1.599 bb in “new crop” MY 2015/16. 

Projected percent (%) ending stocks-to-use of 11.64% in “new crop” MY 2015/16 is down from 12.87% in the June WASDE report, and down from 13.00% in “current” MY 2014/15 (Table 1 and Figures 9 and 10).  On a year-by-year basis, U.S. corn % ending stocks-to-use trended downward from 12.75% in MY 2007/08 and 13.94% in MY 2008/09, to 13.10% in MY 2009/10, 8.65% in MY 2010/11, 7.92% in MY 2011/12, and then down to 7.41% in “drought stricken” MY 2012/13, before increasing for the first time in six (6) years to 9.16% in MY 2013/14, and then to 12.99% in “current” MY 2014/15 – with a projected decline to 11.64% in “new crop” MY 2015/16. 

U.S. average corn prices for “new crop” MY 2015/16 are projected to be in the range of $3.45-$4.05 bu/ac (midpoint = $3.75) – up from a projection of $3.20-$3.80 ($3.50 midpoint) (Table 1 and Figures 9 and 10).  Since the beginning of the rapid expansion in U.S. ethanol production in 2006, U.S. corn prices have moved from $3.04 /bu in MY 2006/07, to $4.20 in MY 2007/08, $4.06 in MY 2008/09, $3.55 in MY 2009/10, $5.18 in MY 2010/11, $6.22 in MY 2011/12, and then up to the record high of $6.89 in “drought stricken” MY 2012/13.  However, if the July 10th WASDE projection holds true, prices will now have declined since the $6.89 record high in MY 2012/13, down to $4.46 in MY 2013/14, $3.60-$3.80 (midpoint = $3.70) in “current crop” MY 2014/15, and to $3.45-$4.05 (midpoint = $3.75) in “new crop” MY 2015/16.  

I-D. KSU Corn Market Scenarios for “New Crop” MY 2015/16

Kansas State University Research and Extension has provided forecasts of U.S. corn supply-demand balances and prices for the “new crop” 2015/16 marketing year to complement and expand upon those of the USDA, with details provided below.   Three probability-weighted Kansas State University (KSU) projections are provided. 

The first scenario is based on USDA reported U.S. corn acreage with a yield of 165.0 bu/ac – given a 30% probability of occurring in 2015.  The second scenario is based on the USDA’s most recent projections of planted and harvested 2015 U.S. corn planted acreage, along with a normal crop “trend yield” of 162.25 bu/ac – given a 55% probability of occurring in 2015.  The third scenario is based on USDA planted acreage projections and a short crop “low yield” of 155.0 bu/ac – given a 15% probability of occurring in 2015. 

KSU Scenario #1 – A “Normal Crop” of 13.382 bb with 30% Likelihood of Occurring

For “new crop” MY 2015/16, this “normal crop” yield KSU projection reflects the likelihood of a reduction in U.S. corn planted acreage in 2015 (equal to June 30th USDA Acreage report projections), and how U.S. corn yields that are at least moderately lower than USDA’s most recent July 10th WASDE projection would impact 2015 U.S. corn production, supply-demand balances and prices in the coming “new crop” 2015/16 marketing year, i.e., September 1, 2015 through August 31, 2016.  This scenario is thought to have approximately a 30% probability of occurring (i.e., 3 out of 10) at this point in time.

Specifically, this KSU U.S. corn supply-demand scenario assumes that 2015 U.S. corn planted acreage will be down 1.700 million acres (ma) to 88.897 ma (equal to the USDA’s June 30th Acreage Report projection), with 2015 U.S. corn harvested acreage down 2.035 ma to 81.101 ma (also equal to the USDA’s June 30th Acreage Report projection) (Table 1 and Figure 3).  Forecast 2015 U.S. corn yields of 165.0 bu/ac in this scenario are down from the USDA’s July 10th forecast of 166.8 bu/ac, but still up from the long term (1973-2014) trend line U.S. corn yields of 162.3 bu/ac.  Taking these forecasts of 2015 U.S. corn acreage and yields together, 2015 U.S. corn production is forecast to be 13.382 bb.  

Following these projections of corn production for “new crop” MY 2015/16, U.S. total corn usage is then estimated to be a record high 13.710 – down marginally from the USDA’s July 10th projection of 13.735 bb for “new crop” MY 2015/16 (Table 1 and Figure 6). 

In this scenario, KSU estimates are for U.S. corn ending stocks to be 1.476 bb, and for % ending stocks-to-use of 10.77% for “new crop” MY 2015/16.   Marketing year average U.S. corn prices would be projected to average near $4.25 /bu for “new crop” MY 2015/16 (Table 1 and Figures 9 and 10). 

Following is the KSU “normal crop / trend yield” U.S. corn supply-demand and price scenario for “new crop” MY 2015/16 – given a 30% probability of occurring. 

1st KSU Scenario for “New Crop” MY 2015/16 U.S. Corn Supply/Demand & Prices

Estimated Probability of Occurring = 30%     Þ “Normal crop / yields less than USDA”

ò 1.700 million acres planted & 165.0 bu/ac yields

- 2015 U.S. Planted Acres       = 88.897 million acres                        Less 1.700 million acres (ma) vs 2014

- 2015 U.S. Harvested Acres   = 81.101 million acres                        Less 2.035 ma vs 2014

- 2015 U.S. Corn Yield (KSU)   = 165.0 bushels/acre              Less 6.0 bu/ac. vs 2014

- 2015 U.S. Corn Production             = 13.382 billion bushels         Less 834 million bushels (mb) vs 2014

- Total Supplies                       = 15.186 bb                             Less 288 mb vs “current” MY 2014/15

- Total Use                               = 13.710 bb                             Up 14 mb vs “current” MY 2014/15

- Ending Stocks                        =   1.476 bb                             Less 303 mb vs “current” MY 2014/15                                                                                                                     

- Ending Stocks/Use                = 10.77% S/U                           vs 13.80% S/U in “current” MY 2014/15

- U.S. Corn Price                     = $4.25 per bushel                 vs $3.70 /bu in MY 2014/15 (ñ$0.55 /bu)

KSU Scenario #2 – A “Smaller Normal Crop” of 13.163 bb with 55% Likelihood of Occurring

For “new crop” MY 2015/16, this “smaller normal crop” trend line yield KSU projection reflects the likelihood of a return to long term trend line U.S. corn yields in 2015 and an even greater “moderation” of 2015 U.S. corn production (i.e., less than KSU Scenario #1 above).  Supply-demand balances and prices would likely adjust accordingly to such a combination of U.S. corn supply factors. This scenario is thought to have approximately a 55% probability of occurring (i.e., 5.5 out of 10) at this point in time.

Specifically, this KSU U.S. corn supply-demand scenario assumes that 2015 U.S. corn planted acreage will be down 1.847 million acres (ma) to 88.750 ma, with 2015 U.S. corn harvested acreage also down 1.841 ma to 81.715 ma (Table 1).  With a return to long term (1973-2014) trend line U.S. corn yields of 162.25 bu/ac, 2015 U.S. corn production is forecast to be 13.190 bb.  

Following these projections of corn production for “new crop” MY 2015/16, U.S. total corn usage is then estimated to still be a record high 13.730 – identical to scenario #1 above (Table 1 and Figure 6). 

Kansas State University (KSU) estimates are for U.S. corn ending stocks to be 1.361 bb for “new crop” MY 2015/16, and for % ending stocks-to-use of 9.91%.   U.S. corn average prices would be projected to average near $4.35 /bu for “new crop” MY 2015/16 (Table 1 and Figures 9 and 10) – up marginally (+$0.10 /bu) from KSU Scenario #1. 

Following is the KSU “smaller normal crop / trend yield” U.S. corn supply-demand and price scenario for “new crop” MY 2015/16 – given a 55% probability of occurring. 

2nd KSU Scenario for “New Crop” MY 2015/16 U.S. Corn Supply/Demand & Prices

Estimated Probability of Occurring = 55%     ÞSmaller normal crop / trend yields”

ò 1.700 million acres planted & 162.25 bu/ac yields

- 2015 U.S. Planted Acres       = 88.897 million acres                        Less 1.700 million acres (ma) vs 2014

- 2015 U.S. Harvested Acres   = 81.101 million acres                        Less 2.035 ma vs 2014

- 2015 U.S. Corn Yield (KSU)   = 162.3 bushels/acre              Less 8.7 bu/ac. vs 2014

- 2015 U.S. Corn Production             = 13.163 billion bushels         Less 1.053 billion bushels (bb) vs 2014

- Total Supplies                       = 14.967 bb                             Less 507 mb vs “current” MY 2014/15

- Total Use                               = 13.625 bb                             Less 71 mb vs “current” MY 2014/15

- Ending Stocks                        =   1.342 bb                             Less 437 mb vs “current” MY 2014/15                                                                                                                     

- Ending Stocks/Use                = 9.84% S/U                             vs 12.99% S/U in “current” MY 2014/15

- U.S. Corn Price                     = $4.35 per bushel                 vs $3.70 /bu in MY 2014/15 (ñ$0.65 /bu)

KSU Scenario #3 – A “Short Crop” with 15% Likelihood of Occurring

For “new crop” MY 2015/16, this “short crop” low yield KSU projected scenario reflects the likelihood of sharply reduced U.S. corn yields in 2015, and much lower 2015 U.S. corn production than in 2013 and 2014.  This scenario is thought to have approximately a 15% probability of occurring (i.e., 1.5 out of 10) at this point in time.

Specifically, just as with the earlier “normal crop / trend yield” scenarios above, this KSU U.S. corn supply-demand scenario assumes that 2015 U.S. corn planted acreage will be down 1.700 million acres (ma) to 88.897 ma from 2014, with 2015 U.S. corn harvested acreage also down 2.035 ma to 81.101 ma (Table 1 and Figure 3).  However, should such crop production problems as drought, excessive moisture, late crop development, early frost, widespread disease, or other crop-damaging conditions happen in 2015, “short crop / low yield” U.S. corn yields of 155.0 bu/ac are assumed to occur, with 2015 U.S. corn production forecast to be 12.571 bb.  

Following these projections of corn production for “new crop” MY 2015/16, U.S. total corn usage is then estimated to be 13.405 bb – down 2.1% from the USDA’s projection of 13.696 bb for “current crop” MY 2014/15 (Table 1 and Figure 6). 

In this scenario, KSU estimates are for U.S. corn ending stocks to be 970 million bushels (mb), and for % ending stocks-to-use of 7.24% for “new crop” MY 2015/16.   U.S. corn average prices would be projected to average near $6.90 /bu for “new crop” MY 2015/16 under this “short crop” scenario (Table 1). 

Following is the “short crop / low yield” U.S. corn supply-demand and price scenario for “new crop” MY 2015/16 – given a 15% probability of occurring. 

3rd KSU Scenario for “New Crop” MY 2015/16 U.S. Corn Supply/Demand & Prices

Estimated Probability of Occurring = 15%     Þ “Short crop / low yields”

ò 1.398 million acres planted & 155.0 bu/ac yields

- 2015 U.S. Planted Acres       = 88.897 million acres                        Less 1.700 million acres (ma) vs 2014

- 2015 U.S. Harvested Acres   = 81.101 million acres                        Less 2.035 ma vs 2014

- 2015 U.S. Corn Yield (KSU)   = 155.0 bushels/acre              Less 16.0 bu/ac. vs 2014

- 2015 U.S. Corn Production             = 12.571 billion bushels         Less 1.645 billion bushels (bb) vs 2014

- Total Supplies                       = 14.357 bb                             Less 1.117 bb vs “current” MY 2014/15

- Total Use                               = 13.405 bb                             Down 291 mb vs “current” MY 2014/15

- Ending Stocks                        =      970 mb                            Less 809 mb vs “current” MY 2014/15                                                                                                                     

- Ending Stocks/Use                = 7.24% S/U                             vs 12.99% S/U in “current” MY 2014/15

- U.S. Corn Price                     = $6.90 per bushel                 vs $3.70 /bu in MY 2014/15 (ñ$3.20 /bu)

 

II. World Corn Supply-Demand Trends

Based on USDA Foreign Agricultural Service (FAS) estimates from PSD Online – standing for “Production, Supply, and Distribution Online” as of July 15, 2015 (http://apps.fas.usda.gov/psdonline/psdQuery.aspx), and the USDA July 10th WASDE report, the USDA is forecasting that “new crop” 2015/16 marketing year World corn production will be “marginally smaller” than “current” MY 2014/15 production.  World corn total supplies of 1,181.1 mmt in “new crop” MY 2015/16 are projected to be up 100.4% of 1,176.3 mmt in “current” MY 2014/15, and 104.7% of 1,127.9 mmt in MY 2013/14.  Consequently, World corn total use is projected to be 991.1 mmt in “new crop” MY 2015/16, 100.9% of 982.5 mmt in “current” MY 2014/15, and 104.0% of 953.1 mmt in MY 2013/14.   World corn ending stocks are forecast by the USDA to decline moderately, with the USDA projecting ending stocks of 189.95 mmt in “new crop” MY 2015/16 down 0.2% from 194.0 mmt in “current” MY 2014/15, but still up 8.7% from 174.7 mmt in MY 2013/14.  

World Corn Market Factors That Have Caused Lower Prices  

The situation in World corn markets that currently exists, i.e., that of growing supplies, usage and ending stocks, continues to be a result of a number of events that have worked together over the 2013-early 2015 period.  First, a historically large South American coarse grain crop (primarily corn, with some grain sorghum, and minor amounts of barley and oats) was harvested in the first half of 2013 – that was then followed by a then record large 2013 corn crop in the United States that was harvested in fall 2013.  These developments in 2013 led to growth in U.S. and World corn supplies, ending stocks, and % ending stocks-to-use by the end of MY 2013/14.  Then second, a second consecutive large South American corn crop was harvested in early 2014 (though less than in 2013), that was then followed by another record large U.S. corn crop in fall 2014.  In perspective, growth in available World corn supplies in “current crop” MY 2014/15 has been driven by both record high 2014 U.S. production and growing foreign supplies.  Third, another or third consecutive set of large Brazilian and U.S. corn crops are expected in “new crop” MY 2015/16, which is likely to further extend the period of “large supplies – low prices” in U.S. and World corn markets. 

Other factors have also influenced the corn market, including a) at least marginal growth (+1.3%) in U.S. use of corn for ethanol production from MY 2013/14 into “current crop” MY 2014/15, and b) a resurgence in the quantity of corn in U.S. livestock feed usage (+5.3% in “current” 2014/15 vs 2013/14).   Taking all these factors together, with larger “current” MY 2014/15 World corn supply-demand balances, U.S. and World corn prices are expected to remain relatively low (by recent market standards) on into the summer-fall of 2015. 

That said, lower prices in fall 2014 associated with reduced profitability prospects for corn in “current crop” 2014/15 led to a small “moderation” in South American corn plantings through the December 2014-February 2015 period, and to at least moderately lower U.S. corn plantings in spring 2015.   These actions – even absent any U.S. corn production problems that could occur in late July-September 2015 – are likely to eventually lead to reduced World corn supplies, lower ending stocks, and at least moderately higher corn prices by the first quarter (September-November 2015) in “new crop” MY 2015/16 and/or thereafter.   

II-A. World Corn Production by Country / Region

Projected World corn production of 987.1 mmt for “new crop” MY 2015/16 would be the second highest on record, being down 1.5% from the record high of 1,001.7 mmt in “current” MY 2014/15.  Projected production of 987.1 mmt in “new crop” MY 2015/16 is also down from 990.7 mmt in MY 2013/14, but up from the range of 795.6-888.2 mmt during the MY 2007/08-MY 2012/13 period (Table 2 & Figure 11).  Foreign (non-U.S.) corn production is projected to be 643.4 mmt in “new crop” MY 2015/16, up 0.4% from 640.6 mmt in “current” MY 2014/15, and up 0.6% from 639.4 mmt in MY 2013/14. 

Table 2 provides a projected list of the major corn producing countries or regions in the World in the “new crop” 2015/16 marketing year.  Production estimates are also provided for these major World corn producers for “current” MY 2014/15 and MY 2013/14.  Year-over-year increases in corn production are projected in “new crop” MY 2015/16 in South Africa (up 2.2 to 13.5 mmt), Southeast Asia (up 1.24 to 28.9 mmt), Canada (up 0.8 to 12.3 mmt), and China (up 13.3 to 229.0 mmt).  Year-over-year decreases are projected in “new crop” MY 2015/16 in the United States (down 17.4 to 343.7 mmt), Brazil (down 5.0 to 77.0 mmt), the European Union (down 9.3 to 65.8 mmt), Mexico (down 0.5 to 23.5 mmt), and Ukraine (down 2.45 to 26.0 mmt).  Egypt (up 0.04 to 6.0 mmt) is essentially unchanged from a year earlier, as is Argentina (unchanged at 25.0 mmt).

The United States (343.7 mmt) is projected to be the largest producer of corn in “new crop” MY 2015/16, followed by China (229.0 mmt), Brazil (77.0 mmt), the European Union (65.8 mmt), Southeast Asia (28.9 mmt), Ukraine (26.0 mmt), Argentina (25.0 mmt), Mexico (23.5 mmt), the Former Soviet Union* (less Ukraine) (16.66 mmt), South Africa (13.5 mmt), Canada (12.3 mmt), and Egypt (6.0 mmt). 

II-B. World Corn Exports by Country / Region

Global corn exports in “new crop” MY 2015/16 are projected to be 122.6 mmt, down 2.0% from 125.7 mmt in “current” MY 2014/15, and down 7.8% from 131.0 mmt in MY 2013/14 (Table 3).  Foreign (non-U.S.) corn exports are projected to be 74.9 mmt in “new crop” MY 2015/16, down from 78.1 mmt in “current” MY 2014/15, and down from 82.3 mmt in MY 2013/14. 

Table 3 provides a projected list of the major corn exporting countries or regions in the World in the “new crop” 2015/16 marketing year.  Export estimates are also provided for these major World corn exporters for “current” MY 2014/15 and MY 2013/14.  Marginal year-over-year increases in corn exports in “new crop” MY 2015/16 are projected for the United States (up 0.6 mmt), and South Africa (up 0.8 mmt).  Decreases are forecast for Brazil (down 3.0 mmt), the European Union (down 1.0 mmt), Southeast Asia (down 0.15 mmt), and Ukraine (down 2.0 mmt).  Marginal-to-no changes are projected for Argentina (unchanged), China (up 0.02 mmt), Mexico (unchanged), and Canada (unchanged).

The United States (47.6 mmt) is the projected leader in World corn exports in “new crop” MY 2015/16, followed by Brazil (23.0 mmt), Ukraine (16.0 mmt), Argentina (15.5 mmt), the European Union (2.5 mmt), South Africa (1.5 mmt), Southeast Asia (0.6 mmt), and Mexico and Canada (0.5 mmt).  

II-C. World Corn Imports by Country / Region

Global corn imports in “new crop” MY 2015/16 are projected to be a 120.8 mmt, up 3.7% from 116.5 mmt in “current” MY 2014/15, but down 2.4% from 123.8 mmt in MY 2013/14 (Table 4).  Foreign (non-U.S.) corn imports are projected to be 120.2 mmt in “new crop” MY 2015/16, up from 115.8 mmt in “current” MY 2014/15, but down from 122.9 mmt in MY 2013/14. 

Table 4 provides a projected list of the major corn importing countries or regions in the World in the “new crop” 2015/16 marketing year, along with “current” MY 2014/15 and MY 2013/14.  Year-over-year increases in corn imports in “new crop” MY 2015/16 are projected for Egypt (up 0.5 mmt), the European Union (up 5.5 mmt), Mexico (up 0.3 mmt), and South Korea (up 0.4 mmt).  However, decreased imports are projected for South Africa (down 0.2 mmt) and Southeast Asia (down 0.75 mmt).  Projected corn imports by the United States, Japan, Canada, China, and the Former Soviet Union Region-12 countries (including Ukraine) were either unchanged or only changed marginally.

Japan (15.0 mmt) is projected to be the largest World corn importer in “new crop” MY 2015/16, followed by the European Union (14.0 mmt), Mexico (10.3 mmt), South Korea (10.0 mmt), Southeast Asia (9.3 mmt), Egypt (8.0 mmt), China (3.0 mmt), Canada (1.5 mmt), Brazil (0.8 mmt), the United States (0.64 mmt), and the Former Soviet Union Region-12 countries (0.49 mmt), including Ukraine (0.05 mmt). 

II-D. World Corn Feed Use by Country / Region

Global corn domestic feed use in “new crop” MY 2015/16 is projected to be 609.5 mmt, up 5.2% from 579.5 mmt in “current” MY 2014/15, and up 6.2% from 573.8 mmt in MY 2013/14 (Table 5).  Foreign (non-U.S.) corn domestic feed use is projected to be 475.7 mmt in “new crop” MY 2015/16, up 2.7% from 462.9 mmt in “current” MY 2014/15, and up 6.6% from 445.95 mmt in MY 2013/14. 

Table 5 provides a projected list of the major countries or regions in the World in terms of corn domestic feed use in the “new crop” 2015/16 marketing year, along with “current” MY 2014/15 and MY 2013/14.  Year-over-year increases in corn feed use in “new crop” MY 2015/16 are projected for Argentina (up 0.4 mmt), Brazil (up 2.0 mmt), South Africa (up 0.1 mmt), Egypt (up 0.6 mmt), the European Union (up 1.0 mmt), Mexico (up 0.35 mmt), Southeast Asia (up 1.5 mmt), South Korea (up 0.1 mmt), Canada (up 0.5 mmt), and the Former Soviet Union-12 countries (up 0.9 mmt) – including Ukraine (unchanged).   A decrease is forecast for the United States (down 0.6 mmt), with no change in feed use is projected for Japan and China.

China (158.0 mmt) is projected to be the largest World user of corn for domestic feeding in “new crop” MY 2015/16, followed by the United States (140.0 mmt), the European Union (61.0 mmt), Brazil (50.0 mmt), Southeast Asia (29.7 mmt), Mexico (17.15 mmt), Egypt (12.1 mmt), the Former Soviet Union (less Ukraine) (11.84 mmt), Japan (10.5 mmt), Ukraine (9.0 mmt), South Korea (8.1 mmt), Canada (8.0 mmt), Argentina (6.5 mmt), and South Africa (5.5 mmt). 

II-E. World Corn Food, Seed, & Industrial (FSI) Use by Country / Region

Global corn Food, Seed and Industrial (FSI) use in “new crop” MY 2015/16 is projected to be 381.6 mmt, down 5.3% from 403.0 mmt in “current” MY 2014/15, but up marginally from 379.3 mmt in MY 2013/14 (Table 6).  Foreign (non-U.S.) corn FSI use is projected to be 214.4 mmt in “new crop” MY 2015/16, down 2.0% from 218.7 mmt in “current” MY 2014/15, and up marginally from 214.1 mmt in MY 2013/14. 

Table 6 provides a projected list of the major countries or regions in the World in terms of corn FSI use in the “new crop” 2015/16 marketing year, along with “current” MY 2014/15, and MY 2013/14.  Year-over-year increases in corn FSI use in “current crop” MY 2015/16 are projected for the United States (up 1.0 mmt) Argentina (up 0.2 mmt), Mexico (up 0.05 mmt), Southeast Asia (up 0.1 mmt), Canada (up 0.05 mmt), China (up 4.0 mmt), and the Former Soviet Union Countries (less Ukraine) (up 0.05 mmt).  “No change” is forecast for Brazil, Egypt, the European Union, Japan, South Korea, and Ukraine.  A decrease is forecast for South Africa (down 0.1 mmt).

The United States (167.3 mmt) is projected to be the largest World user of corn for FSI use in “new crop” MY 2015/16, followed by China (62.0 mmt), the European Union (19.0 mmt), Mexico (16.80 mmt), Brazil (9.0 mmt), Southeast Asia (8.1 mmt), South Africa (5.9 mmt), Canada (5.35 mmt), Japan (4.5 mmt), Argentina (3.5 mmt), Egypt (2.4 mmt), South Korea (2.1 mmt), the Former Soviet Union (less Ukraine) (1.47 mmt), and Ukraine (1.40 mmt). 

II-F. World Corn Total Use by Country / Region

Projected World corn total use of 991.1 mmt in “new crop” MY 2015/16 is up 0.9% from 982.5 mmt for  “current” MY 2014/15; 953.1 mmt in MY 2013/14; and the range of 774.8-869.2 mmt during the MY 2007/08-MY 2012/13 period (Table 7 and Figure 10).  Foreign (non-U.S.) corn total use is projected to be 689.8 mmt in “new crop” MY 2015/16, up 1.2% from 681.6 mmt in “current” MY 2014/15, and up 4.5% from 660.1 mmt in MY 2013/14. 

Table 7 provides a projected list of the major countries or regions in the World in terms of corn total use in the “new crop” 2015/16 marketing year, along with “current” MY 2014/15 and MY 2013/14.  Year-over-year increases in corn total use in “new crop” MY 2015/16 are projected for the United States (up 0.36 mmt), Argentina (up 0.6 mmt), Brazil (up 2.0 mmt), Egypt (up 0.6 mmt), the European Union (up 2.0 mmt), Mexico (up 0.4 mmt), Southeast Asia (up 1.6 mmt), South Korea (up 0.1 mmt), Canada (up 0.55 mmt), China (up 4.0 mmt), and the Former Soviet Union (up 1.0 mmt).  No change is projected for Japan, South Africa, and Ukraine.

The United States (301.3 mmt) is projected to be the largest World user of corn in “new crop” MY 2015/16, followed by the China (220.0 mmt), the European Union (80.0 mmt), Brazil (59.0 mmt), Southeast Asia (37.8 mmt), Mexico (33.95 mmt), Japan (15.0 mmt), Egypt (14.5 mmt), Canada (13.35 mmt), the Former Soviet Union (less Ukraine) (13.3 mmt), South Africa (11.4 mmt), Ukraine (10.4 mmt), South Korea (10.2 mmt), and Argentina (10.0 mmt). 

II-G. World Corn Ending Stocks by Country / Region

Projected World corn ending stocks of 189.95 mmt for “new crop” MY 2015/16 is a decrease of 4.0 mmt (down 2.1%) from 193.95 mmt in “current” MY 2014/15.  Over the last seven years, World corn ending stocks have equaled 129.9 mmt in MY 2007/08; 145.35 mmt in MY 2008/09; 144.1 mmt in MY 2009/10; 127.7 mmt in MY 2010/11; 132.4 mmt in MY 2011/12; 137.1 mmt in MY 2012/13, 174.7 mmt in MY 2013/14; 193.95 mmt in “current” MY 2014/15; and are projected to be 189.95 mmt in “new crop” MY 2015/16.   

The record high amounts of World corn ending stocks occurred in MY 1986/87 (204.9 mmt, 46.0% S/U) and MY 1987/88 (197.7 mmt, 43.3% S/U), with levels of 191.4 mmt (32.9% S/U) during MY 1998/99 and 194.4 mmt (32.4% S/U) during MY 1999/2000.   Foreign (non-U.S.) corn ending stocks are projected to be 149.35 mmt in “new crop” MY 2015/16, up 0.4% from 148.8 mmt in “current” MY 2014/15, and up 4.1% from 143.4 mmt in MY 2013/14. 

Table 8 provides a projected list of the major countries or regions in the World in terms of corn ending stocks in the “new crop” 2015/16 marketing year, along with “current” MY 2014/15 and MY 2013/14.  Year-over-year increases in corn ending stocks in “new crop” MY 2015/16 are projected for South Africa (up 0.6 mmt), China (up 11.95 mmt), and the Former Soviet Union (less Ukraine) (up 0.11 mmt).  Decreases are projected for the United States (down 4.6 mmt), Argentina (down 0.5 mmt), Brazil (down 4.2 mmt), Egypt (down 0.5 mmt), the European Union (down 2.7 mmt), Mexico (down 0.65 mmt), Southeast Asia (down 0.3 mmt), South Korea (down 0.1 mmt), Canada (down 0.05 mmt), and Ukraine (down 0.35 mmt).  No change is projected for Japan.  

China (90.9 mmt) is projected to be the largest World holder of corn ending stocks in “new crop” MY 2015/16, followed by the United States (40.6 mmt), Brazil (14.6 mmt), the European Union (6.1 mmt), Southeast Asia (4.3 mmt), South Africa (2.3 mmt), Mexico (2.0 mmt), Ukraine (2.0 mmt), Egypt (1.4 mmt), South Korea (1.3 mmt), Canada (1.25 mmt), Argentina (1.0 mmt), and Japan (0.55 mmt). 

II-H. World Corn Ending Stocks-to-Use by Country / Region

World corn % ending stocks-to-use are projected to be 19.2% in “new crop” MY 2015/16, down from 19.7% in “current” MY 2014/15, but up from 18.3% in MY 2013/14, 15.8% in MY 2012/13, 15.3% in MY 2011/12, and 15.0% in MY 2010/11, while being greater than the top end of the range of 16.8%-18.6% in the MY 2007/08 through MY 2009/10 period.   Historically, the minimum levels of World corn % ending stocks-to-use since the early-1970s have occurred in MY 1972/73 (12.3%), MY 1973/74 (11.8% S/U), MY 2006/07 (15.0% S/U), and in the recent marketing years of MY 2010/11 (15.0% S/U), MY 2011/12 (15.3% S/U), and MY 2012/13 (15.8% S/U). 

Restated, World corn ending stocks-to-use of 15.0% in MY 2006/07 and MY 2010/11 are the lowest level since 11.8% in MY 1973/74 (Table 9).  Foreign (non-U.S.) corn ending stocks-to-use are projected to be 19.5% in “new crop” MY 2015/16, down marginally from 19.6% in “current” MY 2014/15, and up from 19.3% in MY 2013/14. 

Table 9 provides a projected list of the major countries or regions in the World in terms of corn percent (%) ending stocks-to-use in the “new crop” 2015/16 marketing year, along with “current” MY 2014/15 and MY 2013/14.  Year-over-year increases in corn % ending stocks-to-use in “current crop” MY 2015/16 are projected for South Africa and ChinaDecreased ending stocks-to-use are projected for the United States, Argentina, Brazil, Egypt, the European Union, Mexico, Southeast Asia, South Korea, Canada, and the Former Soviet Union including Ukraine.   No change in percent ending stocks-to-use is forecast for Japan.

China (41.8%) is projected to be the largest World holder of corn in terms of relative usage (i.e., percent ending stocks-to-use) in “new crop” MY 2015/16, followed by South Africa (18.1%), Brazil (17.8%), South Korea (12.9%), the United States (11.6%), Southeast Asia (11.2%), Egypt (9.9%), Canada (9.0%), Ukraine (7.6%), the European Union (7.4%), Mexico (5.8%), Argentina (4.0%), and Japan (3.7%). 

II-I. Relationship Between World Corn % Ending Stocks-to-Use & U.S. Corn Prices

Similar to the relationship between U.S. corn ending stocks-to-use and U.S. average corn prices (see Figure 10), since MY 1973/74 a negative relationship has generally existed between U.S. corn season average cash prices and World corn % ending stocks-to-use – but with an adjustment or “jump” after MY 2007/08 (Figure 12). 

Larger World corn supply-demand balances relative to use (i.e., higher percent ending stocks-to-use) are typically associated with lower U.S. and World corn prices.  Conversely, smaller supply-demand balances are usually associated with higher corn prices – all else being equal.  As in Figure 10 earlier, U.S. corn prices in Figure 12 are reported on a nominal basis (i.e., not adjusted for inflation).  

Whereas the minimum U.S. corn percent stocks-to-use since MY 1973/74 was 5.0% in the historic tight stocks year of MY 1995/96, the historic minimum in World corn percent stocks-to-use of 11.8% occurred in that same marketing year (i.e., MY 1973/74).  Since 2007/08, World corn ending stocks-to-use have not fallen below 15.0% in MY 2010/11 and 15.3% in MY 2011/12.   “New crop” projections are for World corn percent stocks-to-use to be 19.2% in “new crop” MY 2015/16.

****************************

Table 1. U.S. Corn Supply-Demand Balance Sheet: MY 2009/10 – “New Crop” MY 2015/16 (July 10, 2015 USDA WASDE & KSU Forecasts)

Item

2009/10

2010/11

2011/12

2012/13

2013/14

2014/15

USDA

2015/16

KSU

High Yield

165 bu/ac

2015/16

KSU

Trend Yield

162.3 bu/ac

2015/16

KSU

Low Yield

155 bu/ac

2015/16

% Probability of Occurring

 

 

 

 

 

 

 

30%

55%

15%

Planted Area (million acres)

86.382

88.192

91.921

97.291

95.365

90.597

88.897

ò1.7 88.897

ò1.7 88.897

ò1.7 88.897

Harvested Area (million acres)

79.490

81.446

83.981

87.365

87.451

83.136

81.101

ò2.0 81.101

ò2.0 81.101

ò2.0 81.101

% Harvested/Planted Area

92.0%

92.4%

91.4%

89.9%

91.7%

91.8%

91.2%

91.2%

91.2%

91.2%

Yield / harvested acre (bu/ac)

164.7

152.8

147.2

123.1

158.1

171.0

166.8

  USDA 165.0

   KSU 162.3

KSU 155.0

 

Million Bushels

Beginning Stocks (million bushels)

1,673

1,708

1,128

989

821

1,232

1,779

1,779

1,779

1,779

Production (million bu.)

13,067

12,425

12,314

10,755

13,829

14,216

13,530

13,382

13,163

12,571

Imports (million bu.)

8

28

29

160

36

27

25

25

25

25

Total Supply (million bu.)

14,749

14,161

13,471

11,904

14,686

15,474

15,334

15,186

14,967

14,375

 

 

Ethanol for fuel Use (million bu.)

4,591

5,019

5,000

4,641

5,134

5,200

  5,225

5,200

5,180

5,140

Non-ethanol Food, Seed, & Industrial Use (million bu.)

1,370

1,407

1,421

1,397

1,369

1,346

1,360

1,360

1,355

1,340

Exports (million bu.)

1,979

1,831

1,541

730

1,917

1,850

1,875

1,875

1,830

1,750

Feed & Residual Use (million bu.)

5,101

4,777

4,520

4,315

5,034

5,300

 5,275

5,275

5,260

5,175

Total Use (million bu.)

13,041

13,033

12,482

11,083

13,454

13,696

13,735

13,710

13,625

13,405

 

 

Ending Stocks (million bu.)

1,708

1,128

989

821

1,232

1,779

1,599

1,476

1,342

970

% Ending Stocks-to-Use

13.10%

8.65%

7.92%

7.41%

9.16%

12.99%

11.64%

10.77%

9.84%

7.24%

U.S. Corn Average Farm Price ($/bushel)

$3.55

$5.18

$6.22

$6.89

$4.46

$3.60-$3.80

($3.70)

$3.45-$4.05

($3.75)

$4.25

 

$4.35

 

$6.90


 

Figure 3. U.S. Corn Planted Acreage for 2000-2015

Figure 4. U.S. Corn Yield Trend for 1973-2014 Plus 2015 USDA & KSU Trend Line Projections

Text Box: 1973-2014 U.S. Corn Yield Trend
Yield (bu/ac) = 83.31 bu + 1.836 bu/year
 
KSU Trend Yield for 2015 = 162.25 bu/acre

Figure 5. U.S. Corn Total Supplies since MY 2004/15 (July 10, 2015 USDA WASDE)

Figure 6. U.S. Corn Use & Ending Stocks since MY 2004/05 (July 10, 2015 USDA WASDE)

Figure 7. Weekly U.S. Oxygenate Plant Production of Fuel Ethanol & Estimated Corn Use              

Text Box: 2015/16
Text Box: 2014/15
Text Box: 2013/14
Text Box: 2011/12
Text Box: 2010/11
Text Box: 6/4/2010 to 
 7/10/2015
U.S. DOE-EIA data
Text Box: 2009/10

Figure 8. U.S. Corn Supply-Demand with DDGS Adjustments (July 10, 2015 USDA WASDE)

 

Figure 9. U.S. Corn Ending Stocks vs U.S. Avg. Cash Prices: MY 2006/07 through USDA & KSU MY 2015/16 Forecasts                                

Figure 10. U.S. Corn Price vs U.S. % Stocks-to-Use (MY 1973/74 through projected “New Crop” MY 2015/16)    
(July 10th USDA WASDE Report & KSU Forecast)

Text Box: USDA: “Current” 2014/15
13.0% S/U, $3.70 /bu
Text Box: KSU: “Next Year” 2015/16 (50% prob)
9.8% S/U, $4.25 /bu
Text Box: 1995/96
Text Box: 2010/11

Figure 11. World Corn Supply-Demand: MY 2007/08 thru 2015/16 (July 10, 2015 USDA WASDE)

Text Box: 15 year stocks high in “Current” 2014/15 
@ 194.0 mmt 
(19.9% Stx/Use)
Versus
“New Crop” 2015/16 @ 190.0 mmt
(19.2% S/U) in
 
Text Box: World Corn Exports in “New Crop” 2015/16 of 122.6 mmt 
 
Down 2.0% from 
125.1 mmt in 2014/15 
 
Down 6.5% from 
131.0 mmt in 2013/14
Text Box: Usage ñ3.5%/yr since 2007/08 
Text Box: Production
ñ3.0%/yr since 2007/08

Figure 12. U.S. Corn Price vs % World Corn Stocks-to-Use (MY 1973/74 through MY 2015/16)                    
(July 10, 2015 USDA WASDE Report)

Text Box: 1973/74

 

Table 2. World Corn Production Projections for "New Crop" MY 2015/16, “Current” MY 2014/15, and MY 2013/14

World Corn Production                                                 by Major Country / Region

Corn Production: New crop 2015/16     July 2015

Corn Production: June 2015 New crop 2015/16                   (1 month ago)

New crop 2015/16 Production:               July Less June 2015                    

New crop 2015/16 Production:                Percent (%)         July of               June 2015

July Corn Production: Old Crop 2014/15          

June Corn Production: Old Crop 2014/15

July Less June Corn  Production             for Old Crop 2014/15

New crop 2015/16 Production             Less Current 2014/15

% New crop 2015/16 Production of                         Old Crop 2014/15

Corn Production: 2013/14                           (2 years ago)

New crop 2015/16 Production             Less 2013/14

% New crop 2015/16 Production       of 2013/14

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

987.11

989.30

(2.19)

99.8%

1,001.74

999.45

2.29

(14.63)

98.5%

990.69

(3.58)

99.6%

United States

343.68

346.22

(2.54)

99.3%

361.09

361.09

0.00

(17.41)

95.2%

351.27

(7.59)

97.8%

Total Foreign

643.43

643.08

0.35

100.1%

640.64

638.06

2.58

2.79

100.4%

639.41

4.02

100.6%

Major Exporters

115.50

113.50

2.00

101.8%

118.30

117.30

1.00

(2.80)

97.6%

120.98

(5.48)

95.5%

Argentina

25.00

25.00

0.00

100.0%

25.00

25.00

0.00

0.00

100.0%

26.00

(1.00)

96.2%

Brazil

77.00

75.00

2.00

102.7%

82.00

81.00

1.00

(5.00)

93.9%

80.00

(3.00)

96.3%

South Africa

13.50

13.50

0.00

100.0%

11.30

11.30

0.00

2.20

119.5%

14.98

(1.48)

90.1%

Major Importers

124.34

126.91

(2.57)

98.0%

132.79

131.73

1.06

(8.45)

93.6%

120.27

4.07

103.4%

Egypt

6.00

6.00

0.00

100.0%

5.96

5.96

0.00

0.04

100.7%

5.80

0.20

103.4%

European Union 

65.77

68.14

(2.37)

96.5%

75.03

73.67

1.36

(9.26)

87.7%

64.66

1.11

101.7%

Japan

0.00

0.00

0.00

#DIV/0!

0.00

0.00

0.00

0.00

#DIV/0!

0.00

0.00

#DIV/0!

Mexico

23.50

23.50

0.00

100.0%

24.00

24.00

0.00

(0.50)

97.9%

22.88

0.62

102.7%

Southeast Asia

28.86

29.06

(0.20)

99.3%

27.62

27.91

(0.29)

1.24

104.5%

26.78

2.08

107.8%

South Korea

0.08

0.08

0.00

100.0%

0.08

0.08

0.00

0.00

100.0%

0.08

0.00

100.0%

Canada

12.30

12.30

0.00

100.0%

11.50

11.50

0.00

0.80

107.0%

14.19

(1.89)

86.7%

China

229.00

228.00

1.00

100.4%

215.67

215.67

0.00

13.33

106.2%

218.49

10.51

104.8%

Former Soviet Union  - 12 Countries

42.66

42.66

0.00

100.0%

43.47

43.47

0.00

(0.81)

98.1%

46.90

(4.24)

91.0%

Ukraine

26.00

26.00

0.00

100.0%

28.45

28.45

0.00

(2.45)

91.4%

30.90

(4.90)

84.1%

 

Table 3. World Corn Export Projections for "New Crop" MY 2015/16, “Current” MY 2014/15, and MY 2013/14

World Corn Exports                                                 by Major Country / Region

Corn Exports: New crop 2015/16     July 2015

Corn Exports: June 2015 New crop 2015/16                   (1 month ago)

New crop 2015/16 Exports:               July Less June 2015                    

New crop 2015/16 Exports:                Percent (%)         July of June 2015

July Corn Exports: Old Crop 2014/15          

June Corn Exports: Old Crop 2014/15

July Less June Corn  Exports for Old Crop 2014/15

New crop 2015/16 Exports Less Current 2014/15

% New crop 2015/16 Exports of Old Crop 2014/15

Corn Exports: 2013/14                           (2 years ago)