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Corn Market Outlook in May 2015

May 18, 2015


Summary

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on May 12th, corn futures prices have moved sideways-to-higher. This is a temporary change from the downtrend in corn futures prices since January that had resulted in lows during late April-early May.  With 1) a record high 2014 U.S. corn crop of 14.216 billion bushels (bb), and 2) prospects for another large U.S. crop in the 13.2-13.7 bb range in 2015, the likelihood of corn futures prices having a strong rally to $5.00 or above in coming months appear limited – unless unexpected, 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 occurred, it would could cause grain markets to be extremely volatile, but the direction of such potential price changes is difficult to predict.

USDA U.S. Corn Market Forecast: The USDA made it first official WASDE forecast of U.S. corn supply-demand and prices for the “new crop” 2015/16 marketing year in the May 12th report.  The USDA projected 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 and total supplies of 15.506 bb (billion bushels) in “new crop” MY 2015/16 are both down from record high levels of 14.216 bb production and 15.472 bb total supplies in “current” MY 2014/15.  Projected MY 2015/16 total corn usage of 13.760 bb is a record (up from 13.622 bb in MY 2014/15), with ethanol use of 5.200 bb (same as a year ago), non-ethanol FSI use of 1.360 bb, exports of 1.900 bb (up 100 mb vs last year), and feed and residual use of 5.300 bb (up 50 mb vs last year).  Ending stocks are forecast at 1.746 bb (12.69% S/U) – down from 1.851 bb (13.59% 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 2012/133.  “New crop” MY 2015/16 U.S. average cash prices are forecast the range of $3.20-$3.80 per bu. (midpoint of $3.50) - which compares 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:  a) “2015 “Normal Crop” 13.262 bb Production” Scenario (55% 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 15.138 bb, total use of 13.730 bb, ending stocks of 1.408 bb, 10.25% S/U, & $4.25 /bu U.S. corn MYA prices;  b “2015 “Smaller Normal Crop” 13.190 bb Production” Scenario (25% 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 15.006 bb, total use of 13.730 bb, ending stocks of 1.336 bb, 9.73% S/U, & $4.35 /bu U.S. corn MYA prices; c) “2015 “Short Crop” 12.666 bb Production” Scenario (20% prob.): Planted and harvested acres unchanged 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 14.542 bb, total use of 13.450 bb, ending stocks of 924 mb, 6.87% S/U, & $6.75 /bu U.S. corn MYA prices.

World Corn Supply-Demand: World total supplies of 1,182 mmt are projected for “new crop” MY 2015/16, up from 1,170 mmt in “current” MY 2014/15, and 1,007 mmt in MY 2013/14.  Projected World corn ending stocks of 191.9 mmt (19.4% S/U) in “new crop” MY 2015/16 are down marginally from 195.5 mmt (19.7% S/U) in “current” MY 2014/15, but up from 173.8 mmt (18.2% S/U) in MY 2013/14.  With closing CME NOV-2015 soybean futures of $9.34 ½ and CME DEC-2015 corn futures of $3.82 ¾ on 4/30/2015, the soybean/corn price ratio of 2.44 still favors the planting of soybeans in the U.S. in 2015.  A lack of profitability for both currently with the 2014 crop, and in 2015 at current fall 2015 harvest contract prices is likely to limit U.S. corn planted acres and corn production potential.  Lower 2015 production eventually may provide at least moderate support for U.S. corn prices in “new crop” MY 2015/16 in the spring and early summer of next year.

I. U.S. Corn Market Situation and Outlook

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

On May 9th the USDA World Agricultural Outlook Board (WAOB) released its May 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 May 12th 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-May 2015 Period

During December 2014-May 2015 U.S. corn futures prices have generally declined, with the lowest prices coming in mid-May.  After a low on December 3rd of $3.86, the CME MAY 2015 corn contract climbed to a high of $4.29 ¼ on December 29th (corresponding to a high of $4.31 ½ for the CME JULY 2015 corn contract that same day) before declining to a low of $3.73 ¾ by January 30th.  Then after trading higher to $4.00 on February 9th and $3.98 ½ on March 31st, the CME MAY 2015 corn contract trended lower – closing at $3.61 on May 14th.   During this same period of time the CME JULY 2015 corn futures contract traded as high as to $4.07 ¼ on February 9th and $4.06 on March 31st before trending as low as $3.55 ¾ on May 5th – before closing at closing at $3.68 on May 14th.  After the December 9th highs, neither the APRIL 2015 nor the MAY 2015 corn futures contracts have traded above $4.07 ¼ per bushel – at least through Thursday, May 15th.    

The CME JULY 2015 corn contract is now the “lead” corn futures contract, representing current grain market price prospects through late June 2015, when the CME SEPTEMBER 2015 corn contract will assume market leadership.  Local basis adjustments are currently being made off JULY 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” JULY 2015 corn futures market contract initially responded in a “neutral” manner to the information in the May 12th USDA reports, but since then has trended “sideways-to-higher”.  On the day of the report – Tuesday, May 12th – Chicago Mercantile Exchange (CME) JULY 2015 corn futures prices opened at $3.59 ½ per bushel, and traded in a range of $3.57 ¼ - $3.56 ¾ during the session, before settling at $3.61 – up $0.00 ½ 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, JULY 2015 Corn has traded from a low of $3.57 ¼ on Wednesday, May 13th to a high of $3.71 ½ on Friday, May 15th before closing at $3.65 ½ on that same day.   

The CME DECEMBER 2015 corn contract is now the “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 in North American and other World grain markets. The “new crop” DECEMBER 2015 corn futures market contract also initially responded in a “neutral” manner to the information in the May 12th USDA reports, but since then has trended “sideways-to-higher”.   On the day of the report CME DECEMBER 2015 corn futures prices opened at $3.74 ½ per bushel, trading within the range of $3.72 ¼ - $3.80 ¼ during the session, before settling at $3.76 – up $0.00 ½ per bushel for the day (Figure 1).   Since then, DECEMBER 2015 corn futures prices has traded from a low of $3.73 ½ on Wednesday, May 13th to a high of $3.88 ½ on Friday, May 15th before closing at $3.82 ¾ that same day.   

Figure 1. JULY 2015 and DECEMBER 2015 CME Corn Futures Price Charts (electronic trade)

The Trade Weighted U.S. Dollar Index has been generally trending higher since mid-July 2011, but has trended all that much more sharply higher since 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 – and increase of 23.4%.  The latest recorded value of the Trade Weighted U.S. Dollar Index was 88.58 on May 8, 2015.

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. corn, grain sorghum, wheat and soybean 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

In the March 31, 2015 USDA Prospective Plantings report the USDA projected that 2015 U.S. corn total planted acreage would be 89.199 million acres (ma), down 2.398 ma (-1.5%) from 90.597 ma in 2014, down 6.166 ma (-6.5%) from 95.365 ma in 2013, down 8.092 ma (-8.3%) from 97.291 ma in 2012, and down from 91.921 ma in 2011 (Table 1 and Figure 3).

Given the USDA’s implicit assumption of an average harvested-to-planted acreage of 91.6%, 2015 U.S. corn harvested acreage would be approximately 81.715 ma, down 1.421 ma (-1.7%) from 83.136 ma in 2014, down 5.736 ma (-6.6%) from 87.451 ma in 2013, down 5.650 ma (-6.5%) from 87.365 ma in 2012, and down from 83.981 ma in 2011.   

The 2014 U.S. average corn yield of 171.0 bushels per acre (bu/ac) is a record high and unchanged from the January-May USDA reports, and is higher than the 166.8 bu/ac estimate for 2015 in the May 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 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 projections for 2015 planted acreage (89.199 ma – from the USDA), harvested acreage (81.715 ma – a KSU assumption calculated by dividing the USDA’s 2015 production forecast by the 2015 yield projection), and yield (166.8 ma – USDA), 2015 U.S. corn production would be 13.630 billion bushels (bb) – down from the record high of 14.216 bb 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 a record high 15.506 bb – resulting from beginning stocks of 1.851 bb, projected 2015 production of 13.630 bb, and projected imports of 25 million bushel (mb) (Table 1 and Figure 5).  Total supplies of near 15.506 bb in “new crop” MY 2015/16 would be a record high, 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 previous record high of 15.472 bb in “current” MY 2014/15.  

The USDA forecast of beginning stocks of 1.851 bb in “new crop” MY 2015/16 is 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, and at least moderately larger than 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 1.851 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 2005/07 (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 5.200 bb in “new crop” MY 2015/16 is unchanged from 5.200 bb in “current” MY 2014/15, but 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 4.830-5.438 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 May 8, 2015, corn usage for ethanol production was been on pace to reach 5.170 bb in “current crop” MY 2014/15.  This estimate of 5.170 bb is only 30 mb less than the USDA’s May 12, 2015 WASDE report estimate of 5.200 bb of corn to be used for ethanol production during “current crop” MY 2014/15, with 36 of 52 weeks (69.2%) 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 these 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, and 1.006 bb in both “current crop” MY 2014/15 and “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 479 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, and a record high 479 mb in both “current crop” MY 2014/15 and in “new crop” MY 2015/16. 

U.S. Corn Exports: Projected U.S. corn exports of 1.900 bb in “new crop” MY 2015/16 is up from 1.825 bb (up 25 mb) 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 (since MY 1975/76) (Table 1, Figures 6 and 8). 

According to the USDA Foreign Agricultural Service (FAS) weekly export data (http://apps.fas.usda.gov/export-sales/esrd1.html), as of May 7th, through the 36th week of “current crop” MY 2014/15 (36 of 52 weeks), 1.145 bb of U.S. corn had been physically shipped for export – equal to 69.2% of the USDA’s updated projection for “current crop” MY 2014/15 of 1.825 bb.  An additional 498.8 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 1,145.1 mb in past shipments plus 498.8 mb in forward sales amounts to 1,634.9 mb, or 89.6% of the USDA’s 1.825 bb U.S. corn export target for “current crop” MY 2014/15 in the May 12th USDA WASDE report with 69.2% (36/52 weeks) of the marketing year completed.   United States’ corn exports will need to average 42.5 mb per week for the remainder of the “current crop” 2014/15 marketing year to achieve the USDA’s 1.825 bb projection.  This compares to 44.7 mb and 43.7 mb of export shipments for the weeks ending April 30th and May 7th, respectively – i.e., each being ahead of the pace needed to meet the USDA’s export projection, respectively.    

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 1.347 bb in “current” MY 2014/15 (reduced 48 mb from the April WASDE), and compares to 1.369 bb in MY 2013/14 (up 2 mb), 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 5.300 bb in “new crop” MY 2015/16 is up from 5.250 bb for “current” MY 2014/15, 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 May 14th Feed Outlook Report (http://usda.mannlib.cornell.edu/usda/current/FDS/FDS-05-14-2015.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 141.8 mmt in “current” MY 2014/15 (94.1% corn), and is projected to be 144.3 mmt in “new crop” MY 2015/16 (93.36% corn).  Over this same 3 year period, total U.S. Grain Consuming Animal Units (GCAUs) are estimated to be 110.8 million in MY 2013/14, 93.2 million in “current” MY 2014/15, and 94.7 million in “new crop” MY 2015/16.

As a result, U.S. Energy Feeds per Grain Consuming Animal Unit is estimated to be 1.212 metric tons per animal unit (mt/au) in MY 2013/14, and 1.521 mt/au in “current” MY 2014/15, and is projected to be 1.524 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 – helping to bring 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 13.760 bb – up from the current record highs of 13.622 bb in “current” MY 2014/15, and 13.454 bb in MY 2013/14, and up sharply from 11.083 bb in drought-affected MY 2012/13 (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 2013/14, the one time record high of 13.454 bb in MY 2013/14, the previous record high amount of 13.622 bb in “current crop” MY 2014/15, and now the new projected record high of 13.760 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 1.746 bb – down 105 mb from 1.851 bb in “current” MY 2014/15, but up from 1.232 bb in MY 2013/14 (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, 1.851 bb in “current crop” MY 2014/15, and now 1.746 bb in “new crop” MY 2015/16. 

Projected percent (%) ending stocks-to-use of 12.69% in “new crop” MY 2015/16 is down from 13.59% 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 13.49% in “current” MY 2014/15 – with a projected decline to 12.69% 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 $3.20-$3.80 bu/ac (midpoint = $3.50) (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 first higher, then lower, and then higher again, changing 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 2013/14.  However, if the May 12th WASDE projection holds true, prices will now have declined for three consecutive years since the $6.89 record high in MY 2012/13, down to $4.46 in MY 2013/14, down to $3.55-$3.75 (midpoint = $3.65) in “current crop” MY 2014/15, and now down to $3.20-$3.80 in “new crop” MY 2015/16.  

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

Kansas State University 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 normal crop “trend yield” of 162.25 bu/ac – given a 55% probability of occurring in 2015.  The second scenario is based on lower U.S. corn planted acreage in 2015 than projected by the USDA, again coupled with a normal crop “trend yield” of 162.25 bu/ac – given a 25% 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 20% probability of occurring in 2015). 

KSU Scenario #1 – A “Normal Crop” of 13.262 bb with 55% Likelihood of Occurring

For “new crop” MY 2015/16, this “normal crop” trend line yield KSU projection reflects the likelihood of a reduction in U.S. corn planted acreage in 2015, and how a possible return to long term trend line U.S. corn yields in 2015 along with a moderation of 2015 U.S. corn production, would likely affect U.S. corn 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 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 1.398 million acres (ma) to 89.199 ma (equal to the USDA’s May WASDE projection), with 2015 U.S. corn harvested acreage also down 1.421 ma to 81.715 ma (also equal to the USDA May WASDE projection) (Table 1 and Figure 3).  With a return to long term (1973-2014) trend line U.S. corn yields of 162.3 bu/ac, 2015 U.S. corn production is forecast to be 13.262 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 13.730 – but down from the USDA’s May 2015 projection of 13.760 bb for “new crop” MY 2015/16 (Table 1 and Figure 6). 

KSU estimates are for U.S. corn ending stocks to be 1.408 bb, and for % ending stocks-to-use of 10.25% for “new crop” MY 2015/16.   United State’s corn average 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 “normal crop / trend yield” U.S. corn supply-demand and price scenario for “new crop” MY 2015/16 – given a 55% probability of occurring. 

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

Estimated Probability of Occurring = 55%     Þ “Normal crop / long term trend yields”

ò 1.398 million acres planted & 162.25 bu/ac yields

- 2015 U.S. Planted Acres       = 89.199 million acres                        Less 1.398 million acres (ma) vs 2014

- 2015 U.S. Harvested Acres   = 81.715 million acres                        Less 1.421 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             = 13.262 billion bushels         Less 954 million bushels (mb) vs 2014

- Total Supplies                       = 15.138 bb                             Less 334 mb vs “current” MY 2014/15

- Total Use                               = 13.730 bb                             Up 108 mb vs “current” MY 2014/15

- Ending Stocks                        = 1.408 bb                               Less 443 mb vs “current” MY 2014/15                                                                                                                     

- Ending Stocks/Use                = 10.25% S/U                           vs 13.59% S/U in “current” MY 2014/15

- U.S. Corn Price                     = $4.25 per bushel                 vs $3.65 /bu, ñ$0.60 /bu vs MY 2014/15

KSU Scenario #2 – A “Smaller Normal Crop” of 13.190 bb with 25% Likelihood of Occurring

For “new crop” MY 2015/16, this “smaller normal crop” trend line yield KSU projection reflects the likelihood of a greater reduction in U.S. corn planted acreage in 2015 than in scenario #1 (i.e., below the USDA May WASDE projection), combined with 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), and how supply-demand balances and prices would likely adjust to such a combination of market factors. This scenario is thought to have approximately a 25% probability of occurring (i.e., 1 out of 4) 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). 

KSU estimates are for U.S. corn ending stocks to be 1.336 bb for “new crop” MY 2015/16, and for % ending stocks-to-use of 9.73%.   United State’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 “smaller normal crop / trend yield” U.S. corn supply-demand and price scenario for “new crop” MY 2015/16 – given a 25% probability of occurring. 

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

Estimated Probability of Occurring = 25%     ÞSmaller normal crop / trend yields”

ò 1.847 million acres planted & 162.25 bu/ac yields

- 2015 U.S. Planted Acres       = 88.750 million acres                        Less 1.847 million acres (ma) vs 2014

- 2015 U.S. Harvested Acres   = 81.295 million acres                        Less 1.841 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             = 13.190 billion bushels         Less 1.026 billion bushels (bb) vs 2014

- Total Supplies                       = 15.006 bb                             Less 466 mb vs “current” MY 2014/15

- Total Use                               = 13.730 bb                             Up 108 mb vs “current” MY 2014/15

- Ending Stocks                        = 1.336 bb                               Less 515 mb vs “current” MY 2014/15                                                                                                                      

- Ending Stocks/Use                = 9.73% S/U                             vs 13.59% S/U in “current” MY 2014/15

- U.S. Corn Price                     = $4.35 per bushel                 vs $3.65 /bu, ñ$0.70 /bu vs MY 2014/15

KSU Scenario #3 – A “Short Crop” with 20% Likelihood of Occurring

For “new crop” MY 2015/16, this “short crop” low yield KSU projected scenario reflects the likelihood of both a reduction in U.S. corn planted acreage in 2015 to equals equal to the USDA May WASDE forecast, a possible return to 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 20% probability of occurring (i.e., 1 out of 5) at this point in time.

Specifically, just as with the earlier “normal crop / trend yield” scenario, this KSU U.S. corn supply-demand scenario assumes that 2015 U.S. corn planted acreage will be down 1.398 million acres (ma) to 89.199 ma from 2014, with 2015 U.S. corn harvested acreage also down 1.421 ma to 81.715 ma (Table 1 and Figure 3).  However, should drought or other crop damaging conditions occur, “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 12.666 bb.  

Following these projections of corn production for “new crop” MY 2015/16, U.S. total corn usage is then estimated to be 13.450 – down moderately from the USDA’s May 2015 projection of 13.622 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 924 million bushels (mb), and for % ending stocks-to-use of 6.87% for “new crop” MY 2015/16.   U.S. corn average prices would be projected to average near $6.75 /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 20% probability of occurring.   

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

Estimated Probability of Occurring = 20%     Þ “Short crop / low yields”

ò 1.398 million acres planted & 155.0 bu/ac yields

- 2015 U.S. Planted Acres       = 89.199 million acres                        Less 1.847 million acres (ma) vs 2014

- 2015 U.S. Harvested Acres   = 81.715 million acres                        Less 1.421 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             = 12.666 billion bushels         Less 1.550 billion bushels (bb) vs 2014

- Total Supplies                       = 14.542 bb                             Less 930 mb vs “current” MY 2014/15

- Total Use                               = 13.450 bb                             Down 210 mb vs “current” MY 2014/15

- Ending Stocks                        =  924 mb                                Less 822 mb vs “current” MY 2014/15                                                                                                                     

- Ending Stocks/Use                = 6.87% S/U                             vs 13.59% S/U in “current” MY 2014/15

- U.S. Corn Price                     = $6.75 per bushel                 vs $3.65 /bu, ñ$3.10 /bu vs MY 2014/15

 

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 May 12, 2015 (http://apps.fas.usda.gov/psdonline/psdQuery.aspx), and the USDA May 12th 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 1,182.3 mmt in “new crop” MY 2015/16 are projected to be up 1.1% over 1,169.9 mmt in “current” MY 2014/15, and up 17.4% over 1,007.2 mmt in MY 2013/14.  Consequently, World corn total use is projected to be 990.4 mmt in “new crop” MY 2015/16, up 1.3% over 977.4 mmt in “current” MY 2014/15, and up 3.9% over 864.7 mmt in MY 2013/14.   World corn ending stocks are forecast by the USDA to decline marginally, with the USDA projecting ending stocks of 191.9 mmt in “new crop” MY 2015/16, down 0.3% from 192.5 mmt in “current” MY 2014/15, and up 10.4% from 173.8 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 in MY 2013/14.  Then 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.  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. 

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 (+4.3% 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 spring-early summer of 2015. 

That said, lower prices in fall 2014 that were associated with reduced profitability prospects for corn in “current crop” 2014/15 led to a “moderation” in South American corn plantings through the December 2014-February 2015 period, and may ultimately lead to reduced U.S. corn plantings to some degree in April-May 2015.   These actions – even absent any U.S. corn production problems in the summer of 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 989.8 mmt for “new crop” MY 2015/16 would be the second highest on record, being down 0.6% from the record high of 996.1 mmt in “current” MY 2014/15; from 990.6 mmt in MY 2013/14; and the range of 795.5-888.1 mmt during the MY 2007/08-MY 2012/13 period (Table 2 & Figure 11).  Foreign (non-U.S.) corn production is projected to be 643.6 mmt in “new crop” MY 2015/16, up 1.4% from 635.0 mmt in “current” MY 2014/15, and up 0.7% 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 in MY 2013/14.  Year-over-year increases in corn production are projected in “new crop” MY 2015/16 in Argentina (up 0.5 to 25.0 mmt), South Africa (up 2.2 to 13.5 mmt), Southeast Asia (up 1.15 to 29.1 mmt), Canada (up 0.8 to 12.3 mmt), and China (up 12.3 to 228.0 mmt).  Year-over-year decreases are projected in “new crop” MY 2015/16 in the United States (down 14.9 to 346.2 mmt), the European Union (down 5.3 to 68.3 mmt), Brazil (down 3.0 to 75.0 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. 

The United States (346.2 mmt) is projected to be the largest producer of corn in “new crop” MY 2015/16, followed by China (228.0 mmt), Brazil (75.0 mmt), Southeast Asia (29.1 mmt), Ukraine (26.0 mmt), Argentina (25.0 mmt), Mexico (23.5 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 120.9 mmt, down 0.1% from 121.0 mmt in “current”MY 2014/15, while being down 7.8% from 131.1 mmt in MY 2013/14 (Table 3).  Foreign (non-U.S.) corn exports are projected to be 72.5 mmt in “new crop” MY 2015/16, down from 74.7 mmt in “current” MY 2014/15, and down from 82.4 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 “current crop” MY 2015/16 are projected for the United States (up 1.9 mmt), Argentina (up 0.5 mmt), and South Africa (up 0.8 mmt). Decreases are forecast Brazil (down 1.5 mmt), the European Union (down 0.5 mmt), Southeast Asia (down 0.15 mmt), and Ukraine (down 2.0 mmt).  Marginal to no changes are projected for China (up 0.02 mmt), and Canada (unchanged).

The United States (48.3 mmt) is the projected leader in World corn exports in “new crop” MY 2015/16, followed by Brazil (22.0 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 Canada and Mexico (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 118.8 mmt, up 2.9% from 115.45 mmt in “current” MY 2014/15, and down 4.0% from 99.4 mmt in MY 2013/14 (Table 4).  Foreign (non-U.S.) corn imports are projected to be 118.1 mmt in “new crop” MY 2015/16, up from 114.8 mmt in “current” MY 2014/15, but down from 122.85 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 4.4 mmt), Mexico (up 0.3 mmt), and South Korea (up 0.4 mmt).  However, decreased imports are projected for Japan (down 0.2 mmt), and Southeast Asia (up 0.7 mmt).  Projected corn imports by the United States, Canada, China, and the Former Soviet Union Region-12 countries (including Ukraine) were either unchanged or only changed marginally.

Japan (15.2 mmt) is projected to be the largest World corn importer in “new crop” MY 2015/16, followed by the European Union (12.0 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 U.S (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 610.3 mmt, up 2.2% from 597.2 mmt in “current” MY 2014/15, and up 6.4% from 573.7 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 2.6% from 463.9 mmt in “current” MY 2014/15, and up 6.7% from 445.85 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 the United States (up 1.3 mmt), Argentina (up 0.4 mmt), Brazil (up 2.0 mmt), South Africa (up 0.3 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), China (up 2.0 mmt), and the Former Soviet Union-12 countries (up 0.3 mmt) – including Ukraine (unchanged).  Decreased feed use is projected for Japan (down 0.2 mmt).

China (160.0 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 (134.6 mmt), the European Union (59.5 mmt), Brazil (50.0 mmt), Southeast Asia (29.7 mmt), Mexico (17.15 mmt), Egypt (12.1 mmt), Japan (10.7 mmt), Ukraine (9.0 mmt), South Korea (8.1 mmt), Canada (8.0 mmt), Argentina (6.1 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 380.1 mmt, down marginally from 380.2 mmt in “current” MY 2014/15, and up marginally from 379.6 mmt in MY 2013/14 (Table 6).  Foreign (non-U.S.) corn FSI use is projected to be 213.4 mmt in “new crop” MY 2015/16, down 0.2% from 213.9 mmt in “current” MY 2014/15, but up 0.5% from 214.45 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 0.5 mmt) Argentina (up 0.2 mmt), Mexico (up 0.05 mmt), Southeast Asia (up 0.1 mmt), Canada (up 0.05 mmt), and the Former Soviet Union Countries (up 0.05 mmt).  “No change” is forecast for Brazil, Japan, China, and Ukraine.  Decreases are forecast for South Africa (down 0.1 mmt). No changes are expected for Brazil, Egypt, the European Union, and Ukraine.

The United States (166.8 mmt) is projected to be the largest World user of corn for FSI use in “new crop” MY 2015/16, followed by China (60.0 mmt), the European Union (19.0 mmt), Mexico (16.80 mmt), Brazil (9.0 mmt), Southeast Asia (8.1 mmt), South Africa (5.9mt), Canada (5.35 mmt), Japan (4.5 mmt), Argentina (3.5 mmt), Egypt (2.4 mmt), South Korea (2.1 mmt), and Ukraine (1.4 mmt). 

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

Projected World corn total use of 990.4 mmt in “new crop” MY 2015/16 is up 1.3% from 977.4 mmt for  “current” MY 2014/15; 953.25 mmt in MY 2013/14; and the range of 777.5-869.4 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 689.1 mmt in “new crop” MY 2015/16, up 1.7% from 677.8 mmt in “current” MY 2014/15, and up 4.4% from 660.3 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 1.8 mmt), Argentina (up 0.6 mmt), Brazil (up 2.0 mmt), South Africa (up 0.2 mmt), Egypt (up 0.6 mmt), the European Union (up 1.0 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 0.4 mmt) – including Ukraine (unchanged).  A decrease is projected for Japan (down 0.2 mmt).

The United States (301.5 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 (78.5 mmt), Brazil (59.0 mmt), Southeast Asia (37.8 mmt), Mexico (33.95 mmt), Japan (15.2 mmt), Egypt (14.5 mmt), Canada (13.35 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 191.9 mmt for “new crop” MY 2015/16 is a decrease of 0.6 mmt (down 0.3%) from 192.5 mmt in “current” MY 2014/15 – and if attained would be the largest amount of World corn ending stocks since at least MY 2007/08.  Over the last seven years, World corn ending stocks have equaled 129.9 mmt in MY 2007/08; 145.3 mmt in MY 2008/09; 144.2 mmt in MY 2009/10; 127.6 mmt in MY 2010/11; 132.1 mmt in MY 2011/12; 136.5 mmt in MY 2012/13, 173.8 mmt in MY 2013/14; 192.5 mmt in “current” MY 2014/15; and are projected now to be 191.9 mmt in “new crop” MY 2015/16.   Foreign (non-U.S.) corn ending stocks are projected to be 147.6 mmt in “new crop” MY 2015/16, up 1.4% from 145.5 mmt in “current” MY 2014/15, and up 3.6% from 142.5 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 10.95 mmt), and the Former Soviet Union (12 countries) (up 0.6 mmt).  Decreases are projected for the United States (down 2.7 mmt), Argentina (down 0.5 mmt), Brazil (down 5.2 mmt), Egypt (down 0.5 mmt), the European Union (down 0.7 mmt), Mexico (down 0.65 mmt), Southeast Asia (down 0.1 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 (44.35 mmt), Brazil (12.1 mmt), the European Union (7.3 mmt), Southeast Asia (4.7 mmt), South Africa (2.2 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 19.4% in “new crop” MY 2015/16, down from 19.7% in “current” MY 2014/15, but up from 18.2% in MY 2013/14, 15.7% in MY 2012/13, 15.2% 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 (15.3% S/U), and in the recent marketing years of MY 2010/11 (15.0% S/U), MY 2011/12 (15.2% S/U), and MY 2012/13 (15.7% S/U). 

Restated, World corn ending stocks-to-use of 15.0% in MY 2010/11 is 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 19.4% in “new crop” MY 2015/16, up marginally from 19.3% in “current” MY 2014/15, and up from 19.2% 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 Argentina, South Africa, Japan, Canada, and China.  Decreased ending stocks-to-use are projected for the United States, Brazil, Egypt, the European Union, Mexico, Southeast Asia, South Korea, and the Former Soviet Union including Ukraine.  

China (41.3%) 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 (17.1%), Brazil (14.9%), South Korea (12.9%), the United States (12.7%), Southeast Asia (12.3%), Egypt (9.9%), the European Union (9.0%), Canada (9.0%), Ukraine (7.6%), Mexico (5.8%), Argentina (4.0%), and Japan (3.6%). 

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 19.4% in “new crop” MY 2015/16.

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

Table 1. U.S. Corn Supply-Demand Balance Sheet: MY 2009/10 – “New Crop” MY 2015/16 (May 12, 2015 USDA WASDE & KSU Forecasts)

Item

2009/10

2010/11

2011/12

2012/13

2013/14

2014/15

USDA

2015/16

KSU

Trend Yield

2015/16

KSU

Trend Yield

Lower Acres

2015/16

KSU

Low Yield

2015/16

% Probability of Occurring

 

 

 

 

 

 

 

55%

25%

20%

Planted Area (million acres)

86.382

88.192

91.921

97.291

95.365

90.597

89.199

ò1.4 89.199

ò1.9 88.750

ò1.4 89.199

Harvested Area (million acres)

79.490

81.446

83.981

87.365

87.451

83.136

81.715

ò1.4 81.715

ò1.8 81.295

ò1.4 81.715

% Harvested/Planted Area

92.0%

92.4%

91.4%

89.9%

91.7%

91.8%

91.6%

91.6%

91.6%

91.6%

Yield / harvested acre (bu/ac)

164.7

152.8

147.2

123.1

158.1

171.0

166.8

  USDA 162.3

  USDA 162.3

KSU 155.0

 

Million Bushels

Beginning Stocks (million bushels)

1,673

1,708

1,128

989

821

1,232

1,851

1,851

1,851

1,851

Production (million bu.)

13,067

12,425

12,314

10,755

13,829

14,216

13,630

13,262

13,190

12,666

Imports (million bu.)

8

28

29

160

36

25

25

25

25

25

Total Supply (million bu.)

14,749

14,161

13,471

11,904

14,686

15,472

15,506

15,138

15,006

14,542

 

 

Ethanol for fuel Use (million bu.)

4,591

5,019

5,000

4,641

5,134

5,200

  5,200

5,200

5,200

5,150

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

1,370

1,407

1,421

1,397

1,369

1,347

1,360

1,360

1,360

1,350

Exports (million bu.)

1,979

1,831

1,541

730

1,917

1,825

1,900

1,900

1,900

1,750

Feed & Residual Use (million bu.)

5,101

4,777

4,520

4,315

5,034

5,250

 5,300

5,270

5,270

5,200

Total Use (million bu.)

13,041

13,033

12,482

11,083

13,454

13,622

13,760

13,730

13,730

13,450

 

 

Ending Stocks (million bu.)

1,708

1,128

989

821

1,232

1,851

1,746

1,408

1,336

924

% Ending Stocks-to-Use

13.10%

8.65%

7.92%

7.41%

9.16%

13.59%

12.69%

10.25%

9.73%

6.87%

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

$3.55

$5.18

$6.22

$6.89

$4.46

$3.55-$3.75

($3.65)

$3.20-$3.80

($3.50)

$4.25

 

$4.35

 

$6.75


 

Figure 3. U.S. Corn Planted Acreage for 2000-2014 Plus 2015 USDA Projection

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 (May 12, 2015 USDA WASDE)

Figure 6. U.S. Corn Use & Ending Stocks since MY 2004/05 (May 12, 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: 6/4/2010 to 
 5/8/2015
U.S. DOE-EIA data
Text Box: 2011/12
Text Box: 2009/10
Text Box: 2010/11

Figure 8. U.S. Corn Supply-Demand with DDGS Adjustments (May 12, 2015 USDA WASDE)

 

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

Figure 10. U.S. Corn Price vs U.S. % Stocks-to-Use (MY 1973/74 through projected “New Year” MY 2015/16)    
(May 12th USDA WASDE Report & KSU Forecast)

Text Box: USDA: “Current Crop” 2014/15
13.6% S/U, $3.65 /bu
Text Box: KSU: “Next Year” 2015/16 (55% prob)
10.25% 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 (May 12, 2015 USDA WASDE)

Text Box: 15 year stocks high in “Current” 2015/16 
@ 192.5 mmt 
(19.8% Stx/Use)
Versus
“New Crop” 2015/16 @ 191.9 mmt
(19.4% S/U) in
 
Text Box: Lower World Corn Exports in “New Crop” 2015/16 to 120.9 mmt 
 
Down 7.75% in 
“New Crop” 2015/16 
from 131.1 mmt
from MY 2014/15 
Text Box: Usage ñ3.4%/yr since 2007/08 
Text Box: Production
ñ3.1%/yr since 2007/08

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

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

New crop 2015/16 Production:               May Less April 2015                    

New crop 2015/16 Production:                Percent (%)         May of               April 2015

May Corn Production: Old Crop 2014/15          

April Corn Production: Old Crop 2014/15

May Less April Corn  Production             for Old Crop 2014/15

New crop 2015/16 Production             Less Last year’s 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

989.83

na

#VALUE!

#VALUE!

996.12

991.92

4.20

(6.29)

99.4%

990.64

(0.81)

99.9%

United States

346.22

na

#VALUE!

#VALUE!

361.09

361.09

0.00

(14.87)

95.9%

351.27

(5.05)

98.6%

Total Foreign

643.61

na

#VALUE!

#VALUE!

635.03

630.83

4.20

8.58

101.4%

639.36

4.25

100.7%

Major Exporters

113.50

na

#VALUE!

#VALUE!

113.80

110.30

3.50

(0.30)

99.7%

120.98

(7.48)

93.8%

Argentina

25.00

na

#VALUE!

#VALUE!

24.50

24.00

0.50

0.50

102.0%

26.00

(1.00)

96.2%

Brazil

75.00

na

#VALUE!

#VALUE!

78.00

75.00

3.00

(3.00)

96.2%

80.00

(5.00)

93.8%

South Africa

13.50

na

#VALUE!

#VALUE!

11.30

11.30

0.00

2.20

119.5%

14.98

(1.48)

90.1%

Major Importers

127.11

na

#VALUE!

#VALUE!

131.73

132.22

(0.49)

(4.62)

96.5%

120.27

6.84

105.7%

Egypt

6.00

na

#VALUE!

#VALUE!

5.96

5.96

0.00

0.04

100.7%

5.80

0.20

103.4%

European Union 

68.34

na

#VALUE!

#VALUE!

73.67

74.16

(0.49)

(5.33)

92.8%

64.66

3.68

105.7%

Japan

0.00

na

#VALUE!

#VALUE!

0.00

0.00

0.00

0.00

#DIV/0!

0.00

0.00

#DIV/0!

Mexico

23.50

na

#VALUE!

#VALUE!

24.00

24.00

0.00

(0.50)

97.9%

22.88

0.62

102.7%

Southeast Asia

29.06

na

#VALUE!

#VALUE!

27.91

27.91

0.00

1.15

104.1%

26.78

2.28

108.5%

South Korea

0.08

na

#VALUE!

#VALUE!

0.08

0.08

0.00

0.00

100.0%

0.08

0.00

100.0%

Canada

12.30

na

#VALUE!

#VALUE!

11.50

11.50

0.00

0.80

107.0%

14.19

(1.89)

86.7%

China

228.00

na

#VALUE!

#VALUE!

215.67

215.50

0.17

12.33

105.7%

218.49

9.51

104.4%

Former Soviet Union  - 12 Countries

41.66

na

#VALUE!

#VALUE!

43.47

43.47

0.00

(1.81)

95.8%

46.90

(5.24)

88.8%

Ukraine

26.00

na

#VALUE!

#VALUE!

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     May 2015

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

New crop 2015/16 Exports:               May Less April 2015                    

New crop 2015/16 Exports:                Percent (%)         May of April 2015

May Corn Exports: Old Crop 2014/15          

April Corn Exports: Old Crop 2014/15

May Less April Corn  Exports for Old Crop 2014/15

New crop 2015/16 Exports Less Last year’s 2014/15

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

Corn Exports: 2013/14                           (2 years ago)

New crop 2015/16 Exports             Less 2013/14

% New crop 2015/16 Exports       of 2013/14

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

120.90

na

#VALUE!

#VALUE!

121.03

117.69

3.34

(0.13)

99.9%

131.07

(10.17)

92.2%

United States

48.26

na

#VALUE!

#VALUE!

46.36

45.72

0.64

1.90

104.1%

48.70

(0.44)

99.1%

Total Foreign

72.46

na

#VALUE!

#VALUE!

74.67

71.97

2.70

(2.21)

97.0%

82.36

(9.90)

88.0%

Major Exporters

39.00

na

#VALUE!

#VALUE!

39.20

36.20

3.00

(0.20)

99.5%

40.07

(1.07)

97.3%

Argentina

15.50

na

#VALUE!

#VALUE!

15.00

15.00

0.00

0.50

103.3%

17.10

(1.60)

90.6%

Brazil

22.00

na

#VALUE!

#VALUE!

23.50

20.50

3.00

(1.50)

93.6%

20.97

1.03

104.9%

South Africa

1.50

na

#VALUE!

#VALUE!

0.70

0.70

0.00

0.80

214.3%

2.00

(0.50)

75.0%

Major Importers

3.65

na

#VALUE!

#VALUE!

4.30

3.80

0.50

(0.65)

84.9%

4.44

(0.79)

82.2%

Egypt

0.01

na

#VALUE!

#VALUE!

0.01

0.01

0.00

0.00

100.0%

0.00

0.01

#DIV/0!

European Union   

2.50

na

#VALUE!

#VALUE!

3.00

2.50

0.50

(0.50)

83.3%

2.40

0.10

104.2%

Japan

0.00

na

#VALUE!

#VALUE!

0.00

0.00

0.00

0.00

#DIV/0!

0.00

0.00

#DIV/0!

Mexico

0.50

na

#VALUE!

#VALUE!

0.50

0.50

0.00

0.00

100.0%

0.50

0.00

100.0%

Southeast Asia

0.64

na

#VALUE!

#VALUE!

0.79

0.79

0.00

(0.15)

81.0%

1.53

(0.89)

41.8%

South Korea

0.00

na

#VALUE!

#VALUE!

0.00

0.00

0.00

0.00

#DIV/0!

0.00

0.00

#DIV/0!

Canada

0.50

na

#VALUE!

#VALUE!

0.50

0.50

0.00

0.00

100.0%

1.95

(1.45)

25.6%

China

0.05

na

#VALUE!

#VALUE!

0.03

0.10

(0.07)

0.02

166.7%

0.02

0.03

250.0%

Former Soviet Union  - 12 Countries

18.68

na

#VALUE!

#VALUE!

20.72

20.76

(0.04)

(2.04)

90.2%

24.81

(6.13)

75.3%

Ukraine

16.00

na

#VALUE!

#VALUE!

18.00

18.00

0.00

(2.00)

88.9%

20.00

(4.00)

80.0%

 

Table 4. World Corn Import Projections for "New Crop" MY 2015/16, “Current” MY 2014/15, and MY 2013/14

World Corn Imports                                                 by Major Country / Region

Corn Imports: New crop 2015/16     May 2015

Corn Imports: April 2015 New crop 2015/16                   (1 month ago)

New crop 2015/16 Imports: May Less April 2015                    

New crop 2015/16 Imports:                Percent (%)         May of April 2015

May Corn Imports: Old Crop 2014/15          

April Corn Imports: Old Crop 2014/15

May Less April Corn  Imports             for Old Crop 2014/15

New crop 2015/16 Imports Less Last year’s 2014/15

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

Corn Imports: 2013/14                           (2 years ago)

New crop 2015/16 Imports Less 2013/14

% New crop 2015/16 Imports       of 2013/14

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

118.76

na

#VALUE!

#VALUE!

115.45

114.62

0.83

3.31

102.9%

123.76

(5.00)

96.0%

United States

0.64

na

#VALUE!

#VALUE!

0.64

0.64

0.00

0.00

100.0%

0.91

(0.27)

70.3%

Total Foreign

118.12

na

#VALUE!

#VALUE!

114.81

113.99

0.82

3.31

102.9%

122.85

(4.73)

96.1%

Major Exporters

0.83

na

#VALUE!

#VALUE!

0.83

0.84

(0.01)

0.00

100.0%

0.80

0.03