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Grain Market Outlook

Corn Market Outlook in Early September 2015

September 1, 2015


Summary

When the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on August 12th, DEC 2015 corn futures prices dropped sharply, but have since traded in the $3.65-$3.85 /bu range.  With prospects for a 13.2-13.8 billion bushel 2015 U.S. corn crop, and sizable 2015 foreign coarse grain crops, the likelihood of corn futures prices rising to $4.50-$5.00 or above in coming months is limited unless yield and/or maturity problems develop in late summer-early fall with the 2015 U.S. corn crop.  Corn prices in the U.S. are likely to remain low relative to recent years – limiting U.S. corn enterprise profits in 2015.  It is likely that current low prices will impact 2016 crop corn planting decisions of both South American and the U.S. farmers.  Also, IF major geopolitical conflicts in key World ag production and usage areas and/or major financial market problems occur in late 2015-2016, grain markets could be volatile, with price direction uncertain 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 6-18 months.  Low feedgrain prices – resulting in lower input costs for U.S. and Foreign livestock feeding and bioenergy users - have helped to increase profitability for corn-using industries, and led to increased feedgrain usage.  A combination of these production and demand impacts over time are likely to eventually cause a change in the prevailing “large crop – low price” market scenario in U.S. and World coarse grain markets. 

USDA U.S. Corn Market Forecast: The USDA projected lower U.S. corn production, higher usage, moderately tighter ending stocks and stocks-to-use, and marginally lower U.S. corn prices for “new crop” MY 2015/16 than for “old crop” MY 2014/15.  Projected 2015 U.S. corn production of 13.686 billion bushels (bb) is up 156 million bushels (mb) from July, but still down from 14.216 bb in 2014, with total supplies of 15.488 bb in “new crop” MY 2015/16 being up from 15.477 bb in “old crop” MY 2014/15.  Record forecast MY 2015/16 total corn usage of 13.775 bb (up from 13.705 bb in MY 2014/15), includes ethanol use of 5.250 bb (up 50 mb vs MY 2014/15), non-ethanol FSI use of 1.375 bb (up 20 mb vs last year), exports of 1.850 bb, and feed and residual use of 5.300 bb.  Ending stocks are forecast at 1.713 bb (12.4% S/U) in “new crop” MY 2015/16 – down from 1.772 bb (12.9% S/U) in “old crop” MY 2014/15, but still up from 1.232 bb (9.2% S/U) in MY 2013/14, and 821 mb (7.4% S/U) in MY 2012/13.  “New crop” MY 2015/16 U.S. avg. cash prices are forecast in the range of $3.35-$3.95 /bu. (midpoint of $3.65) versus to $3.65-$3.75 /bu ($3.70 midpoint) in 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 13.568 bb Production” Scenario (40% prob.): 88.897 ma planted, 81.000 ma harvested, yield of 167.5 bu/ac, 2015 U.S. corn production of 13.568 bb, total supplies of 15.370 bb, total use of 13.775 bb, ending stocks of 1.595 bb, 11.6% S/U, & $4.25 /bu U.S. corn MYA prices;  b) “2015 Smaller Normal Crop 13.365 bb Production” Scenario (50% prob.): 88.897 ma planted, 81.000 ma harvested, yield of 165.0 bu/ac, 2015 U.S. corn production of 13.365 bb, total supplies of 15.167 bb, total use of 13.700 bb, ending stocks of 1.467 bb, 10.7% S/U, & $4.35 /bu U.S. corn MYA prices; and c) “2015 Short Crop 12.555 bb Production” Scenario (10% prob.): Planted / harvested acres same as scenarios (a) & (b), but with a KSU low yield of 155.0 bu/ac, U.S. corn production of 12.555 bb, total supplies of 14.317 bb, total use of 13.415 bb, ending stocks of 902 mb, 6.72% S/U, & $6.90 /bu U.S. corn MYA prices.

World Corn Supply-Demand: World total supplies of 1,183 million metric tons (mmt) are projected for “new crop” MY 2015/16, up from 1,181 mmt in “old crop” MY 2014/15, and 1,128 mmt in MY 2013/14.  Projected World corn ending stocks of 195.1 mmt (19.8% S/U) in “new crop” MY 2015/16 are down marginally from 197.4 mmt (20.1% S/U) in “old crop” MY 2014/15, but up from 175.0 mmt (18.4% S/U) in MY 2013/14.  


I. U.S. Corn Market Situation and Outlook

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

On August 12th the USDA National Agricultural Statistics Service (NASS) in its Crop Production report made its’ first projection of 2015 U.S. corn production as of August 1, 2015 that was based on actual farmer surveys and field trials.  On the same day the USDA World Agricultural Outlook Board (WAOB) released its August 2015 World Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World corn supply-demand and price projections for the 2013/14, “old crop” 2014/15, as well as the “new crop” 2015/16 marketing years.  The “new crop” 2015/16 marketing year for U.S. corn began on September 1, 2015 and will last through August 31, 2016.  

I-B. CME DEC 2015 & MAY 2016 Corn Futures Trends

The CME DECEMBER 2015 corn contract is now the “lead” corn futures contract – representing “new crop” 2015 corn market price prospects.  Local basis adjustments are now being made off DEC 2015 corn futures for spot cash corn and grain sorghum price bids in North America as well as other World grain markets.  The “new crop” DECEMBER 2015 corn futures market contract initially responded in a “very negative” manner to the information in the August 12th USDA reports, but in the days afterward have trended “first higher then sideways”.  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.  

On the day of the report – Wednesday, August 12th – Chicago Mercantile Exchange (CME) DECEMBER 2015 corn futures prices opened at $3.87 ¾ per bushel, and traded in a range of $3.57 ½ - $3.93 ½ during the session, before settling at $3.68 – down $0.19 ½ for the day (Figure 1).   Since then, DECEMBER 2015 Corn has traded from a low of $3.65 ½ on Monday, August 24th to a high of $3.86 ¾ on Tuesday, August 25th to before closing at $3.75 ¼ on Monday, August 31st.  

Figure 1. DECEMBER 2015 & MAY 2016 CME Corn Futures Price Charts

 The CME MAY 2016 corn contract represents price prospects during March – April, 2016 – including the anticipated beginning of the key U.S. corn planting period of April through May, 2016.  MAY 2016 is the futures contract which local basis adjustments are made off of for “spring 2015” corn and grain sorghum forward contract price bids or hedges here in the United States. The MAY 2015 corn futures market contract also initially responded “negatively” to the information in the August 12th USDA reports, and since then has trended first higher and then mostly sideways.   

On the day of the report CME MAY 2016 corn futures prices opened at $4.04 ¾ per bushel, trading within the range of $3.75 ¾ - $4.10 ¾ during the session, before settling at $3.86 ¼ – down $0.18 ½ per bushel for the day (Figure 1).   Since then, MAY 2016 Corn has traded from a low of $3.83 ½ on Monday, August 24th to a high of $4.03 ¾ on Tuesday, August 25th before closing at $3.92 ¾ on Monday, August 31st.

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%.  After moving lower for a period of time, the index rose again to a high of 93.09 on August 5, 2015. The latest recorded value of the Trade Weighted U.S. Dollar Index was 90.93 on August 21, 2015 – moving sideways to lower from the early August 2015 high.

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 in U.S. grain markets).  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

U.S. Corn Acreage, Yield & Production

The USDA’s projections of 2015 U.S. corn planted acres from the March 31st Prospective Plantings report were adjusted downward in the USDA June 30th Acreage report, and have since been used without adjustment in the July 10th and August 12th USDA Crop Production and WASDE reports.   In the June 30, 2015 USDA Acreage report and subsequent July and August Crop Production reports 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 2015 U.S. corn planted 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 also down from 91.921 ma in 2011 (Table 1 and Figure 3).  

The USDA projected that 2015 U.S. corn harvested acreage would be 81.101 million acres (ma), 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 from 91.7% in 2013, but up from 89.9% in drought-stricken 2012.   

The USDA forecast 2015 U.S. average corn yields to be 168.8 bushels per acre (bu/ac) – up 2.0 bu/ac from the USDA’s July projection, but still less than the record high of 171.0 bu/ac in 2014 (Table 1 and Figure 4).  Although this August 2015 USDA projection of 2015 U.S. corn yields of 168.8 bu/ac is down from the record 171.0 bu/ac in 2014, it would still be the second highest U.S. corn yield to date, 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 still 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 (168.8 ma – USDA), projected 2015 U.S. corn production would be 13.686 billion bushels (bb) – up 156 million bushels (mb) from the USDA’s July projections, but down from the record high of 14.216 bb in 2014, and the previous record high of 13.829 bb in 2013.  However, this projection of 13.686 bb in 2015 would still be 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 15.488 bb – up 154 million bushels (mb) from the July 10th WASDE report.  This projection of 15.488 bb for “new crop” MY 2015/16 results from beginning stocks of 1.772 bb, projected 2015 production of 13.686 bb, and projected imports of 30 million bushel (mb) (Table 1 and Figure 5).  Since the beginning of the expansion in U.S. ethanol production in 2006-2007, total supplies of U.S. corn have been 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, the estimated 2nd highest amount on record of 15.477 bb in “old crop” MY 2014/15, and the forecast record high of 15.488 bb in “new crop” MY 2015/16.  

The USDA forecast of beginning stocks of 1.772 bb in “new crop” MY 2015/16 is down 7 mb from the July 10th WASDE report, but up substantially from 1.232 bb in beginning stocks in “old 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 1.772 bb is up considerably from the low of 426 mb that occurred in MY 1996/97, and is the highest amount since 1.967 bb in MY 2006/07 and 2.114 bb in MY 2005/06 (Table 1 and Figure 5). 

Projected imports of 30 mb in “new crop” MY 2015/16 are up 5 mb from July, equal to 30 mb in “old crop” MY 2014/15, down from 36 mb in MY 2013/14 (the 2nd highest on record), and are 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, but up from 8 mb in MY 2009/10.

U.S. Corn Use by Category & Total Use

U.S. Ethanol Production and Corn UsageProjected U.S. corn use for ethanol production of 5.250 bb in “new crop” MY 2015/16 (up 25 mb from June and up 50 mb from July) is up from 5.200 bb in “old crop” MY 2014/15, 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 “old crop” MY 2014/15 has ranged from 4.830-5.449 bb on a weekly basis since early September 2014 - the beginning of the “old crop” 2014/15 marketing year.  Over the period of September 1, 2014 through August 21, 2015, corn usage for ethanol production was been on pace to reach 5.214 bb in “old crop” MY 2014/15.  This estimate of 5.214 bb is marginally larger than the USDA’s August 12, 2015 WASDE report estimate of 5.200 bb of corn to be used for ethanol production during “old crop” MY 2014/15, with 50.5 of 52 weeks (97.1%) 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 the estimated amount of 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 0.995-1.130 of U.S. corn equivalent bushel-weights (bbeqwt) 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 bbeqwt in DDGS corn-weight equivalents in MY 2010/11, 1.130 bbeqwt in MY 2011/12, 1.004 bbeqwt in MY 2012/13, 0.995 bbeqwt in MY 2013/14, 1.008 bbeqwt in both “old crop” MY 2014/15, and 1.017 bbeqwt in “new crop” MY 2015/16. 

Over the five most recent marketing years, DDGS exports in million bushels of corn equivalent weights (mbeqwt) are estimated to range from 299 to 483 mb, – i.e., 326 mbeqwt in DDGS corn-weight equivalents in MY 2010/11, 299 mbeqwt in MY 2011/12, 322 mbeqwt in MY 2012/13, 472 mbeqwt in MY 2013/14, a near record 478 mbeqwt in “old crop” MY 2014/15, and a projected record high 483 mbeqwt in “new crop” MY 2015/16. 

U.S. Corn Exports: Projected U.S. corn exports of 1.850 bb in “new crop” MY 2015/16 (down 25 mb from July) is unchanged from 1.850 bb in “old crop” MY 2014/15, less than 1.920 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 August 20th, through the 50th week of “old crop” MY 2014/15 (50 of 52 weeks), 1,737.2 bb of U.S. corn had been physically shipped for export – equal to 93.6% of the USDA’s projection of 1.850 bb for “Old Crop crop” MY 2014/15.  An additional 125 mb of U.S. corn had been pre-sold for future export shipments during the remainder of “old crop” 2014/15 marketing year – prior to August 31, 2015 (the end of “Old Crop crop” MY 2014/15). 

Adding together 1,737.2 mb in past shipments plus 125 mb in forward sales amounts to 1.862 bb, or 100.7% of the USDA’s 1.850 bb U.S. corn export target for “old crop” MY 2014/15 in the August 12th USDA WASDE report with 97.1% (50.5/52 weeks) of the marketing year completed.   United States’ corn export shipments will need to average 75.2 mb per week for the remaining 1.5 weeks of the “old crop” 2014/15 marketing year to achieve the USDA’s 1.850 bb projection.  This compares to 32.3 mb of export shipments for the week ending August 20th – i.e., being behind of the pace needed to meet the USDA’s most recent export projection.  

It is likely that a number of these remaining “old crop” MY 2014/15 U.S. corn export sales will be cancelled and “rolled over” into the “new crop” 2015/16 marketing year beginning on September 1, 2015.  It is also likely that the USDA will reduce its estimate of “old crop” 2014/15 corn exports in the upcoming September 11th USDA WASDE report – an adjustment by itself that would also bring about an increase in U.S. corn ending stocks in “old crop” MY 2015/16.   

Non-Ethanol FSI: Forecast non-ethanol food, seed and industrial (FSI) use of 1.375 bb in “new crop” MY 2015/16 is up 15 mb from July, and greater than 1.355 bb in “old crop” MY 2014/15 (up 1 mb from July), 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 5.300 bb in “new crop” MY 2015/16 (up 25 mb from July) is unchanged from 5.300 bb for “old crop” MY 2014/15, but up from 5.030 bb in MY 2013/14, 4.315 bb in MY 2012/13, and 4.519 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 August 14th Feed Outlook Report (http://usda.mannlib.cornell.edu/usda/Old Crop/FDS/FDS-08-14-2015.pdf) and other online resources the USDA Economic Research Service (ERS) indicates that over the MY 2012/13 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 or have been 125.7 million metric tons (mmt) in MY 2012/13 (87.2% corn), 134.3 mmt in MY 2013/14 (95.2% corn), and 144.5 mmt in “old crop” MY 2014/15 (93.1% corn), and 144.5 mmt in “new crop” MY 2015/16 (93.1% corn).  Over this same 3 year period, total U.S. Grain Consuming Animal Units (GCAUs) are estimated to be or have been 92.3 million in MY 2012/13, 91.0 million in MY 2013/14, 93.2 million in “old crop” MY 2014/15, and 95.2 million in “new crop” MY 2015/16.

As a result, U.S. Energy Feeds per Grain Consuming Animal Unit is estimated to be or have been 1.362 metric tons per animal unit (mt/au) in MY 2012/13, 1.477 mt/au in MY 2013/14, and 1.551 mt/au in “old crop” MY 2014/15, and is projected to be 1.517 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 successive record “large crop” years of MY 2013/14, “old crop” 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 13.775 bb (up 40 mb from July) – up from the previous record high of 13.706 bb in “old crop” MY 2014/15 (up 9 mb from July) (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 13.705 bb in “old crop” MY 2014/15, and now the new projected record high of 13.775 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 1.713 bb (up 114 mb from July), which is down 59 mb from 1.772 bb in “old crop” MY 2014/15 (also down 9 mb from July) (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, and 1.772 bb in “old crop” MY 2014/15, and now are forecast to be 1.713 bb in “new crop” MY 2015/16. 

Projected percent (%) ending stocks-to-use of 12.44% in “new crop” MY 2015/16 is up from 11.64% in the July WASDE report, and down from 12.93% in “old crop” 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. Then U.S. corn ending stocks-to-use increased for the first time in six (6) years to 9.16% in MY 2013/14, and then increased again to 12.93% in “old crop” MY 2014/15 – with a projected decline to 12.44% 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 $3.35-$3.95 bu/ac (midpoint = $3.65) – down marginally from a projection of $3.45-$4.05 ($3.70 midpoint) by the USDA in last month’s July 10th WASDE report (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 August 12th WASDE projection holds true, prices will now have declined year-by-year since the $6.89 record high in MY 2012/13, down to $4.46 in MY 2013/14, $3.65-$3.75 (midpoint = $3.70) in “old crop” MY 2014/15, and now to a projected range of $3.35-$3.95 (midpoint = $3.65) 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” MY 2015/16  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 2015 U.S. corn planted acreage with a 101 ma reduction from the USDA’s forecast of 2015 U.S. harvested acres, and with a 2015 U.S. corn yield of 167.5 bu/ac and 13.568 bb of 2015 U.S. corn production – and is given a 40% probability of occurring in 2015.  The second scenario is based on the same U.S. corn acreage estimates as in the first scenario, but with a lower U.S. corn yield of 165.0 bu/ac and 13.356 bb of 2015 U.S. corn production – and is given a 50% probability of occurring in 2015.  The third scenario is based on the same USDA planted acreage projections as the first two scenarios, but with a more pronounced short crop “low yield” of 155.0 bu/ac and 12.555 bb of 2015 U.S. corn production – and is given a 10% probability of occurring in 2015. 

KSU Scenario #1 – A “Normal Crop” of 13.568 bb with 40% 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 harvested acreage in 2015 (down approximately 100 ma from current USDA projections), and how U.S. corn yields that are marginaly lower than USDA’s most recent August 12th NASS Crop Production report 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 40% probability of occurring (i.e., 4 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 and the August 12th Crop Production report forecast), with 2015 U.S. corn harvested acreage down 2.136 ma to 81.000 ma (down 101 ma from the USDA’s August 12th Crop Production report projection) (Table 1 and Figure 3).  Forecast 2015 U.S. corn yields of 167.5 bu/ac in this scenario are down from the USDA’s August 12th forecast of 168.8 bu/ac, but still would be the second highest on record, and 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 13.568 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 13.775 – equal to the USDA’s August 12th projection 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 1.595 bb, and for % ending stocks-to-use of 11.58% 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” U.S. corn supply-demand and price scenario for “new crop” MY 2015/16 – given a 40% probability of occurring (4 out of 10 odds). 

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

Estimated Probability of Occurring = 40%     Þ “Normal crop” of 13.568 billion bushels

ò 1.700 million acres planted & 167.5 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   = 81.000 million acres                        Less 2.136 ma vs 2014

- 2015 U.S. Corn Yield (KSU)   = 167.5 bushels/acre              Less 3.5 bu/ac. vs 2014

- 2015 U.S. Corn Production             = 13.568 billion bushels         Less 648 million bushels (mb) vs 2014

- Total Supplies                       = 15.370 bb                             Less 107 mb vs “old crop” MY 2014/15

- Total Use                               = 13.775 bb                             Up 70 mb vs “old crop” MY 2014/15

- Ending Stocks                        =   1.595 bb                             Less 177 mb vs “old crop” MY 2014/15                                                                                                                     

- Ending Stocks/Use                = 11.58% S/U                           vs 12.93% S/U in “old crop” MY 2014/15

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

KSU Scenario #2 – A “Smaller Normal Crop” of 13.365 bb with 50% Likelihood of Occurring

For “new crop” MY 2015/16, this “smaller normal crop” yield KSU projection reflects the likelihood of at least moderately lower 2015 U.S. corn yields and an even greater “moderation” of 2015 U.S. corn production than is reflected in the August 12th USDA Crop Production and WASDE reports.  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 50% probability of occurring (i.e., 5 out of 10) at this point in time.

This KSU U.S. corn supply-demand scenario #2 assumes the same 2015 U.S. corn planted and harvested acreage amounts as in Scenario #1 above (Table 1 and Figure 3).  However, the forecast 2015 U.S. corn yields of 165.0 bu/ac in this scenario reflect recent independent crop reports and crop tour results that have occurred since August 1st – the target date for the August 12th Crop Production report crop assessment.  This yield level would still be the second highest on record, and 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 13.365 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 13.700 – the second highest on record following 13.705 bb in “old crop” MY 2014/15 (Table 1 and Figure 6). 

In this scenario, Kansas State University (KSU) estimates are for U.S. corn ending stocks to be 1.467 bb for “new crop” MY 2015/16, and for % ending stocks-to-use of 10.71%.   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” U.S. corn supply-demand and price scenario for “new crop” MY 2015/16 – given a 50% probability of occurring. 

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

Estimated Probability of Occurring = 50%     ÞSmaller normal crop” of 13.365 bln bu

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   = 81.000 million acres                        Less 2.136 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             = 13.365 billion bushels         Less 851 million bushels (mb) vs 2014

- Total Supplies                       = 15.167 bb                             Less 310 mb vs “old crop” MY 2014/15

- Total Use                               = 13.700 bb                             Less 5 mb vs “old crop” MY 2014/15

- Ending Stocks                        =   1.467 bb                             Less 305 mb vs “old crop” MY 2014/15                                                                                                                     

- Ending Stocks/Use                = 10.71% S/U                           vs 12.93% S/U in “old crop” MY 2014/15

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

KSU Scenario #3 – A “Surprise Short Crop” with 10% 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 10% probability of occurring (i.e., 1 out of 10) at this point in time.

This scenario assumes the same 2015 U.S. corn planted and harvested acreage amounts as the previous two scenarios (Table 1 and Figure 3).  However, should such crop production problems as extreme late season drought, excessive moisture, late crop development, early frost, widespread disease, or other significant 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 12.555 bb.  

Following these projections of corn production for “new crop” MY 2015/16, U.S. total corn usage is then estimated to be 13.415 bb – down 290 mb or 2.1% from the USDA’s estimate of 13.705 bb for “old crop” MY 2014/15 (Table 1 and Figure 6). 

In this scenario, KSU estimates are for U.S. corn ending stocks to be 902 million bushels (mb), and for % ending stocks-to-use of 6.72% 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 “surprise short crop / low yield” U.S. corn supply-demand and price scenario for “new crop” MY 2015/16 – given a 10% probability of occurring (1 out of 10) at this point in time. 

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

Estimated Probability of Occurring = 10%     Þ “Surprise short crop” of 12.555 bln bu

ò 1.700 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   = 81.000 million acres                        Less 2.136 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             = 12.555 billion bushels         Less 1.661 billion bushels (bb) vs 2014

- Total Supplies                       = 14.317 bb                             Less 1.160 bb vs “old crop” MY 2014/15

- Total Use                               = 13.415 bb                             Down 290 mb vs “old crop” MY 2014/15

- Ending Stocks                        =      902 mb                            Less 870 mb vs “old crop” MY 2014/15                                                                                                                     

- Ending Stocks/Use                =   6.72% S/U                           vs 12.93% S/U in “old crop” MY 2014/15

- U.S. Corn Price                     = $6.90 per bushel                 vs $3.65 /bu in MY 2014/15 (ñ$3.25 /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 August 28, 2015 (http://apps.fas.usda.gov/psdonline/psdQuery.aspx), and the August 12th USDA WASDE report, the USDA is forecasting that “new crop” 2015/16 marketing year World corn production will be “moderately smaller” than “old crop” MY 2014/15 World corn production.  World corn total supplies of 1,183.0 mmt in “new crop” MY 2015/16 are projected to be up marginally from 1,181.2 mmt in “old crop” MY 2014/15, and up 4.7% from 1,128.0 mmt in MY 2013/14.  

Consequently, World corn total use is projected to be 987.9 mmt in “new crop” MY 2015/16, up 0.4% from 983.8 mmt in “old crop” MY 2014/15, and up 3.7% from 953.0 mmt in MY 2013/14.   World corn ending stocks are forecast by the USDA to decline moderately, with the USDA projecting ending stocks of 195.1 mmt in “new crop” MY 2015/16 down 1.2% from 197.4 mmt in “old crop” MY 2014/15, but still up 11.5% from 175.0 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, is the result of a number of events that have worked together over the 2013-mid 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 what was at that time a record large 2013 corn crop in the United States 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 on August 31, 2014. 

Second, a second consecutive large South American corn crop was harvested in early 2014 (now recognized by the USDA to be larger than in the previous record crop of 2013), that was then followed by another record large U.S. corn crop in harvested in the fall of 2014.  In perspective, growth in available World corn supplies in “old crop” MY 2014/15 was driven by both record high 2014 U.S. corn production and growing foreign supplies. 

Third, a third consecutive set of large set of corn crops were harvested in early-mid 2015 in Argentina and Brazil, with along with another historically large corn crop expected in the United States in fall 2015.  These three consecutive years of large World corn crops have extended the period of “large supplies – low prices” in U.S. and World corn markets through at least the summer of 2015, with the growing possibility of extremely low U.S. and World corn prices occurring in the later months of 2015.

Other factors have also influenced the U.S. and World corn market, including a) at least marginal growth (+1.3%) in U.S. use of corn for ethanol production from MY 2013/14 into “old crop” MY 2014/15, with further increases forecast for “new crop” MY 2015/16, and b) a resurgence in the quantity of corn in U.S. livestock feed usage (+5.3% in “old crop” 2014/15 vs 2013/14 – with projections for these increases to hold into the “new crop” 2015/16 marketing year.   Taking all these factors together, with larger “old crop” MY 2014/15 World corn supply-demand balances, U.S. and World corn prices are expected to remain relatively low (by recent market standards) from fall-winter of late 2015 into at least late winter – early spring of 2016. 

That said, lower prices in summer and likely fall 2015 is associated with reduced profitability prospects for corn in “new crop” 2015/16 may lead 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 2016.   These actions – even absent any unanticipated major U.S. corn production problems that could occur in September-October 2015 – are likely to eventually lead to reduced World corn supplies, lower ending stocks, and at least moderately higher corn prices – possibly in the later part of “new crop” MY 2015/16 and later market periods.   

II-A. World Corn Production by Country / Region

Projected World corn production of 985.6 mmt for “new crop” MY 2015/16 would be the third highest on record.  Forecast production of 985.6 mmt in “new crop” MY 2015/16 is down 2.1% from the record high of 1,006.2 mmt in “old crop” MY 2014/15, down from 990.8 mmt in MY 2013/14, up from 869.3 mmt in “drought stricken” MY 2012/13, but down from 888.2 mmt in MY 2011/12 (Table 2 & Figure 11).  Foreign (non-U.S.) corn production is projected to be 638.0 mmt in “new crop” MY 2015/16, up 1.1% from 645.15 mmt in “old crop” MY 2014/15, but down 0.2% from 639.5 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 “old crop” 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), China (up 9.3 to 225.0 mmt), and the Former Soviet Union 12 Countries less Ukraine (up 1.9 to 17.0 mmt). 

Year-over-year decreases are projected in “new crop” MY 2015/16 in the United States (down 13.45 to 347.6 mmt), Argentina (down 1.5 to 25.0 mmt), Brazil (down 5.0 to 79.0 mmt), the European Union (down 15.9 to 62.25 mmt), Mexico (down 1.5 to 23.5 mmt), and Ukraine (down 1.45 to 27.0 mmt).  Egypt (up 0.04 to 6.0 mmt) is essentially unchanged from a year earlier.

The United States (347.6 mmt) is projected to be the largest producer of corn in “new crop” MY 2015/16, followed by China (225.0 mmt), Brazil (79.0 mmt), the European Union (62.25 mmt), Southeast Asia (28.9 mmt), Ukraine (27.0 mmt), Argentina (25.0 mmt), Mexico (23.5 mmt), the Former Soviet Union 12 Countries (less Ukraine) (17.0 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 123.4 mmt, down 4.4% from 129.1 mmt in “old crop” MY 2014/15, and down 5.9% from 131.1 mmt in MY 2013/14 (Table 3).  Foreign (non-U.S.) corn exports are projected to be 76.4 mmt in “new crop” MY 2015/16, down from 82.1 mmt in “old crop” 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 “Old Crop” MY 2014/15 and MY 2013/14.  Marginal year-over-year increases in corn exports in “new crop” MY 2015/16 are projected for South Africa (up 0.8 mmt) and the Former Soviet Union 12 Countries less Ukraine countries (up 1.0 mmt).  

Decreases are forecast for Argentina (down 1.5 mmt), Brazil (down 3.0 mmt), the European Union (down 1.8 mmt), Southeast Asia (down 0.15 mmt), and Ukraine (down 1.5 mmt).  Marginal-to-no changes are projected for the United States (unchanged), China (up 0.02 mmt), Mexico (unchanged), and Canada (unchanged).

The United States (47.0 mmt) is the projected leader in World corn exports in “new crop” MY 2015/16, followed by Brazil (24.0 mmt), Ukraine (17.5 mmt), Argentina (15.5 mmt), the European Union (2.0 mmt), South Africa (1.5 mmt), Southeast Asia (0.6 mmt), Mexico and Canada (0.5 mmt), and China (0.05 mmt).  

II-C. World Corn Imports by Country / Region

Global corn imports in “new crop” MY 2015/16 are projected to be a 121.7 mmt, up 2.6% from 118.6 mmt in “old crop” MY 2014/15, but down 1.8% from 123.9 mmt in MY 2013/14 (Table 4).  Foreign (non-U.S.) corn imports are projected to be 120.9 mmt in “new crop” MY 2015/16, up from 117.8 mmt in “old crop” MY 2014/15, but down from 123.0 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 “old crop” 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), and the European Union (up 6.0 mmt).  However, decreased imports are projected for South Africa (down 0.2 mmt), Japan (down 0.1 mmt), Southeast Asia (down 0.75 mmt), and China (down 1.3 mmt).  Projected corn imports by the United States, the Former Soviet Union Region-12 Countries (including Ukraine), Mexico, South Korea, and Canada, were either unchanged or only changed marginally.

The European Union (15.0 mmt) is projected to be the largest World corn importer in “new crop” MY 2015/16, followed by Japan (14.8 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 (0.76 mmt), and the Former Soviet Union Region-12 Countries less Ukraine (0.44 mmt), and 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 605.55 mmt, up 1.4% from 596.9 mmt in “old crop” MY 2014/15, and up 5.5% from 573.7 mmt in MY 2013/14 (Table 5).  Foreign (non-U.S.) corn domestic feed use is projected to be 470.9 mmt in “new crop” MY 2015/16, up 1.9% from 462.3 mmt in “old crop” MY 2014/15, and up 5.6% from 446.0 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 “old crop” 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), Southeast Asia (up 1.4 mmt), Canada (up 0.5 mmt), China (up 1.0 mmt), and the Former Soviet Union-12 countries less Ukraine (up 1.0 mmt).   Decreases are forecast for Japan (down 0.1 mmt), Mexico (down 0.15 mmt), and Ukraine (down 0.2 mmt).  No change in feed use is projected for the United States, the European Union, and South Korea.

China (157.0 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 (59.0 mmt), Brazil (50.0 mmt), Southeast Asia (29.5 mmt), Mexico (17.15 mmt), Egypt (12.1 mmt), the Former Soviet Union 12 Countries (less Ukraine) (11.7 mmt), Japan (10.5 mmt), Ukraine (8.1 mmt), South Korea (8.0 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 382.4 mmt, down 1.2% from 386.9 mmt in “old crop” MY 2014/15, but up 0.8% from 379.25 mmt in MY 2013/14 (Table 6).  Foreign (non-U.S.) corn FSI use is projected to be 214.1 mmt in “new crop” MY 2015/16, down 2.8% from 220.4 mmt in “old crop” 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 “old crop” MY 2014/15, and MY 2013/14.  Year-over-year increases in corn FSI use in “old crop” MY 2015/16 are projected for the United States (up 1.8 mmt), Argentina (up 0.2 mmt), Mexico (up 0.05 mmt), Southeast Asia (up 0.1 mmt), Canada (up 0.05 mmt), China (up 2.0 mmt), and the Former Soviet Union Countries 12 countries (less Ukraine) (up 0.05 mmt).  A decrease is forecast for South Africa (down 0.1 mmt). “No change” is forecast for Brazil, Egypt, the European Union, Japan, South Korea, and Ukraine.  

The United States (168.3 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 (4.3 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 987.9 mmt in “new crop” MY 2015/16 is up 0.4% from 983.8 mmt for  “old crop” MY 2014/15; 953.0 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 685.0 mmt in “new crop” MY 2015/16, up 0.3% from 682.7 mmt in “old crop” MY 2014/15, and up 3.8% from 660.0 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 “old crop” 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), Egypt (up 0.6 mmt), Southeast Asia (up 1.5 mmt), Canada (up 0.55 mmt), China (up 3.0 mmt), and the Former Soviet Union 12 Countries less Ukraine (up 1.1 mmt).   Decreases are projected for Mexico (down 0.1 mmt), and Ukraine (down 0.2 mmt).  No change is projected for South Africa, the European Union, and Japan.

The United States (302.9 mmt) is projected to be the largest World user of corn in “new crop” MY 2015/16, followed by the China (219.0 mmt), the European Union (78.0 mmt), Brazil (59.0 mmt), Southeast Asia (37.6 mmt), Mexico (33.95 mmt), Japan (14.8 mmt), Egypt (14.5 mmt), Canada (13.35 mmt), the Former Soviet Union 12 Countries (less Ukraine) (13.2 mmt), South Africa (11.4 mmt), South Korea (10.1 mmt), Ukraine (9.5 mmt), and Argentina (10.0 mmt). 

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

Projected World corn ending stocks of 195.1 mmt for “new crop” MY 2015/16 is a decrease of 2.3 mmt (down 1.2%) from 197.4 mmt in “old crop” MY 2014/15.  Over the last seven years, World corn ending stocks have equaled 129.9 mmt in MY 2007/08; 145.4 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; 137.2 mmt in MY 2012/13, 175.0 mmt in MY 2013/14; 197.4 mmt in “old crop” MY 2014/15; and are projected to be 195.1 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 151.6 mmt in “new crop” MY 2015/16, down 0.6% from 152.4 mmt in “old crop” MY 2014/15, and up 5.5% from 143.7 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 “old crop” 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), and China (up 8.95 mmt).   Decreases are projected for the United States (down 1.5 mmt), Argentina (down 0.5 mmt), Brazil (down 3.2 mmt), Egypt (down 0.5 mmt), the European Union (down 2.75 mmt), and Mexico (down 0.65 mmt).   No change or marginal changes are projected for Japan, Southeast Asia (down 0.08 mmt), South Korea (down 0.02 mmt), Canada (down 0.05 mmt), Ukraine (up 0.05 mmt), and the Former Soviet Union 12 Countries (less Ukraine) (up 0.01 mmt). 

China (90.2 mmt) is projected to be the largest World holder of corn ending stocks in “new crop” MY 2015/16, followed by the United States (43.5 mmt), Brazil (16.6 mmt), the European Union (6.4 mmt), Southeast Asia (4.6 mmt), Mexico (2.8 mmt), South Africa (2.3 mmt), Ukraine (2.3 mmt), South Korea (1.8 mmt), Egypt (1.4 mmt), Canada (1.25 mmt), the Former Soviet Union 12 Countries less Ukraine (1.1 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 19.7% in “new crop” MY 2015/16, down from 20.1% in “old crop” MY 2014/15, but up from 18.4% 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 20.6% in “new crop” MY 2015/16, down marginally from 19.9% in “old crop” MY 2014/15, and up from 19.4% 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 “old crop” MY 2014/15 and MY 2013/14.  Year-over-year increases in corn % ending stocks-to-use in “old crop” MY 2015/16 are projected for South Africa, Japan, Mexico, South Korea, China, and UkraineDecreased ending stocks-to-use are projected for the United States, Argentina, Brazil, Egypt, the European Union, Southeast Asia, Canada, and the Former Soviet Union 12 Countries excluding Ukraine.  

China (41.2%) 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 (20.0%), South Korea (18.0%), the United States (12.4%), Southeast Asia (12.0%), Egypt (9.9%), Canada (9.0%), Ukraine (8.5%), the Former Soviet Union 12 Countries less Ukraine (8.4%), Mexico (8.1%), the European Union (8.0%), 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 “outward 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 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 19.7% in “new crop” MY 2015/16.

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

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

Item

2009/10

2010/11

2011/12

2012/13

2013/14

2014/15

USDA

2015/16

KSU

High Yield

167.5 bu/ac

2015/16

KSU

Moderate Yield

165 bu/ac

2015/16

KSU

Low Yield

155 bu/ac

2015/16

% Probability of Occurring

 

 

 

 

 

 

 

40%

50%

10%

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

ò2.1 81.000

ò2.1 81.000

ò2.1 81.000

% 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

168.8

   KSU 167.5

   KSU 165.0

KSU 155.0

 

Million Bushels

Beginning Stocks (million bushels)

1,673

1,708

1,128

989

821

1,232

1,772

1,772

1,772

1,772

Production (million bu.)

13,067

12,425

12,314

10,755

13,829

14,216

13,686

13,568

13,365

12,555

Imports (million bu.)

8

28

29

160

36

30

30

30

30

40

Total Supply (million bu.)

14,749

14,161

13,471

11,904

14,686

15,477

15,488

15,370

15,167

14,317

 

 

Ethanol for fuel Use (million bu.)

4,591

5,019

5,000

4,641

5,134

5,200

  5,250

5,250

5,225

5,150

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

1,370

1,406

1,424

1,397

1,369

1,355

1,375

1,375

1,365

1,340

Exports (million bu.)

1,979

1,831

1,539

730

1,920

1,850

1,850

1,850

1,830

1,750

Feed & Residual Use (million bu.)

5,101

4,777

4,519

4,315

5,030

5,300

 5,300

5,300

5,280

5,175

Total Use (million bu.)

13,041

13,033

12,482

11,083

13,454

13,705

13,775

13,775

13,700

13,415

 

 

Ending Stocks (million bu.)

1,708

1,128

989

821

1,232

1,772

1,713

1,595

1,467

902

% Ending Stocks-to-Use

13.10%

8.65%

7.92%

7.41%

9.16%

12.93%

12.44%

11.58%

10.71%

6.72%

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

$3.55

$5.18

$6.22

$6.89

$4.46

$3.65-$3.75

($3.70)

$3.35-$3.95

($3.65)

$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 (August 12, 2015 USDA WASDE)

Figure 6. U.S. Corn Use & Ending Stocks since MY 2004/05 (August 12, 2015 USDA WASDE)

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

Text Box: 2014/15
Text Box: 2013/14
Text Box: 2012/13
Text Box: 2011/12
Text Box: 2010/11
Text Box: 6/4/2010 to 
 8/21/2015
U.S. DOE-EIA data
Text Box: 2009/10

Figure 8. U.S. Corn Supply-Demand with DDGS Adjustments (August 12, 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)    
(August 12th USDA WASDE Report & KSU Forecast)

Text Box: USDA: “Old Crop” 2014/15
12.9% S/U, $3.70 /bu
Text Box: KSU: “New Crop” 2015/16 (55% prob)
10.7% S/U, $4.00 /bu
Text Box: 1995/96
Text Box: 2010/11

Figure 11. World Corn Supply-Demand: MY 2007/08 thru 2015/16 (August 12, 2015 USDA WASDE)

Text Box: 15 year high in stocks in “Old Crop” 2014/15 
@ 197.4 mmt 
(20.3% Stx/Use)
Versus
“New Crop” 2015/16 @ 195.1 mmt
(19.8% S/U) in
 
Text Box: World Corn Exports in “New Crop” 2015/16 of 123.4 mmt 
 
Down 4.4% from 
129.1 mmt in 2014/15 
 
Down 5.9% from 
131.1 mmt in 2013/14
Text Box: Usage ñ3.4%/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)                    
(August 12, 2015 USDA WASDE Report)

Text Box: 1973/74

 

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

World Corn Production                                                 by Major Country / Region

Corn Production: New crop 2015/16     August 2015

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

New crop 2015/16 Production:               August Less July 2015                    

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

August Corn Production: Old crop 2014/15          

July Corn Production: Old crop 2014/15

August Less July Corn  Production             for Old crop 2014/15

New crop 2015/16 Production             Less Old crop 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

985.61

987.11

(1.50)

99.8%

1,006.24

1,001.74

4.50

(20.63)

97.9%

990.78

(5.17)

99.5%

United States

347.64

343.68

3.96

101.2%

361.09

361.09

0.00

(13.45)

96.3%

351.27

(3.63)

99.0%

Total Foreign

637.97

643.43

(5.46)

99.2%

645.15

640.64

4.51

(7.18)

98.9%

639.50

(1.53)

99.8%

Major Exporters

117.50

115.50

2.00

101.7%

121.80

118.30

3.50

(4.30)

96.5%

120.98

(3.48)

97.1%

Argentina

25.00

25.00

0.00

100.0%

26.50

25.00

1.50

(1.50)

94.3%

26.00

(1.00)

96.2%

Brazil

79.00

77.00

2.00

102.6%

84.00

82.00

2.00

(5.00)

94.0%

80.00

(1.00)

98.8%

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

120.82

124.34

(3.52)

97.2%

133.90

132.79

1.11

(13.08)

90.2%

120.27

0.55

100.5%

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 

62.25

65.77

(3.52)

94.6%

78.13

75.03

3.10

(15.88)

79.7%

64.66

(2.41)

96.3%

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%

25.00

24.00

1.00

(1.50)

94.0%

22.88

0.62

102.7%

Southeast Asia

28.86

28.86

0.00

100.0%

27.62

27.62

0.00

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

225.00

229.00

(4.00)

98.3%

215.67

215.67

0.00

9.33

104.3%

218.49

6.51

103.0%

Former Soviet Union  - 12 Countries

43.96

42.66

1.30

103.0%

43.47

43.47

0.00

0.49

101.1%

46.90

(2.94)

93.7%

Ukraine

27.00

26.00

1.00

103.8%

28.45

28.45

0.00

(1.45)

94.9%

30.90

(3.90)

87.4%


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

World Corn Exports                                                 by Major Country / Region