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Grain Market Outlook

Corn Market Outlook in February 2016

February 11, 2011


Summary 

Since the USDA’s February 9th World Agricultural Supply and Demand Estimates (WASDE) report, corn futures have traded sideways-to-lower.  With a third consecutive large U.S. corn crop in the 13.6 to 14.2 billion bushel (bb) range plus along with sizable foreign coarse grain crops in the “new crop” 2015/16 marketing year, it will be difficult for corn futures prices to rise to $4.25-$4.50+ by May-June 2016 unless unexpected crop production problems occur South America, larger than expected U.S. corn usage occurs in response to low U.S. and World corn prices, or significant planting and establishment problems occur for the 2016 U.S. corn crop.  If low corn prices persist through spring 2016 – limiting corn net returns – U.S. farmers may reduce 2016 corn acreage and 2016 U.S. corn production prospects as a result.

Market factors such as a) international geopolitical conflicts, b) financial market disruptions, c) U.S. farmer resistance to selling at low February-March 2016 cash corn prices, and d) “El Nino” or “El Nino-La Nina transition”- related weather patterns in spring-summer 2016 with negative impacts on 2016 crop production, could each still impact corn market prices through summer-fall 2016. Also, low feedgrain prices have resulted in lower input costs for U.S. and Foreign livestock feeding and bioenergy users – leading to increased feedgrain usage.  The high value of the U.S. dollar and prospects for a large 2016 South American corn crop have been significant limiting factors for U.S. corn exports. 

USDA Estimate for “New Crop” MY 2015/16: The USDA estimated 2015 U.S. corn production of 13.601 bb, and for “new crop” MY 2015/16 that there would be total supplies of 15.382 bb.  Total use of 13.545 bb (down 25 million bushels or ‘mb”) – which includes ethanol use of 5.225 bb (up 25 mb over 1 month ago), non-ethanol FSI use of 1.370 bb, exports of 1.650 bb (down 50 mb from January, and 100 mb from December projections), and feed and residual use of 5.300 bb.  Ending stocks are forecast at 1.837 bb (13.56% S/U) in MY 2015/16 – up 35 mb from last month, and up from 1.731 bb (12.6% S/U) in “old crop” MY 2014/15, and 1.232 bb (9.2% S/U) in MY 2013/14.  U.S. corn average cash prices are forecast the range of $3.35-$3.85 /bu. ($3.60 midpoint) versus $3.70 in “old crop” MY 2014/15, $4.46 in MY 2013/14, and $6.89 (record) in MY 2012/13. 

USDA Forecast for “Next Crop” MY 2016/17: In their early release Agricultural Projections to 2025 the USDA provided an initial forecast of U.S. corn supply-demand and prices for the “next crop” 2016/17 marketing year beginning September 1, 2016.   The USDA projected 2016 U.S. corn plantings of 90.500 million acres (ma) – up 2.501 ma from 2015.  Forecast 2016 harvested acres of 82.700 ma would be up 1.951 ma vs 2015.  With projected yields of 168.1 bu/ac, 2016 U.S. corn production is projected to be 13.900 billion bushels (bb) – 2nd highest on record behind 14.216 bb in 2014. With forecast MY 2016/17 total use of 13.935 bb (record high), and an adjusted projection of ending stocks of 1.832 bb (13.15% S/U), U.S. corn prices are projected by the USDA to be $3.60 /bu – unchanged from the $3.60 /bu midpoint estimate for “new crop” MY 2015/16.

KSU Forecast for “Next Crop” MY 2016/17: Based on adjustments to the USDA Agricultural Projections to 2025, KSU projections are for 2016 U.S. corn plantings of 90.500 (unchanged from the USDA), but with 2016 harvested acres of 83.079 ma (91.8% harvested-to-planted, equal to MY 2015/16), with trend yields of 164.5 bu/ac, and 2016 U.S. corn production of 13.666 bb. With forecast MY 2016/17 total use of 13.760 bb, and an adjusted projection of ending stocks of 1.773 bb (12.89% S/U), U.S. corn prices are projected by KSU to be $3.70 /bu – up $0.10 /bu from the USDA’s early projection for “next crop” MY 2016/17.

KSU 2016 U.S. Corn “Short Crop Scenario – 13.000 Billion Bushels: If significant corn production problems were to occur in the U.S. in the summer of 2016 resulting in a 13.000 bb corn (156.5 bu/ac yield on 83.079 ma harvested), then all else being equal, ending stocks in “next crop” MY 2016/17 could decline to 1.107 bb (8.0% S/U), with U.S. corn prices likely to increase to $5.00-$5.50 per bushel.

World Corn Supply-Demand: World total supplies of 1,176.1 million metric tons (mmt) are projected for “new crop” MY 2015/16, down marginally from 1,183.8 mmt in “old crop” MY 2014/15, but up from 1,124.1 mmt in MY 2013/14.  Projected World corn ending stocks of 208.8 mmt (21.6% S/U) in “new crop” MY 2015/16 are up from 206.2 mmt (21.1% S/U) in “old crop” MY 2014/15, and from 174.8 mmt (18.4% S/U) in MY 2013/14. 


I. U.S. Corn Market Situation and Outlook

I-A. February 9th USDA WASDE Report

On February 9th the USDA World Agricultural Outlook Board (WAOB) released its February 9th 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 9/1/2015 and will last through 8/31/2016. 

I-B. CME MARCH & DECEMBER 2016 Corn Futures Trends

Since a low of $3.48 ½ on January 7, 2016, MARCH 2016 Chicago Mercantile Exchange (CME) corn futures prices traded up to a high of $3.73 ¾ on February 2nd, but have since declined to a close of $3.60 ¼ on Wednesday, February 10th (Figure 1).   Similarly, since a low of $3.74 ½ on January 7, 2016, MARCH 2016 Chicago Mercantile Exchange (CME) corn futures prices traded up to a high of $3.95 on February 4th, but have since declined to a close of $3.83 ½ on Wednesday, February 10th.

Figure 1. MARCH & DECEMBER 2016 CME Weekly Corn Futures Price Charts

I-C. Kansas Corn Seasonal Average Price Trends

Seasonal average price index trends for Kansas corn over the last 5, 10, and 15 years indicate definite seasonal price trends (Figure 2).    In the current “new crop” 2015/16 marketing year for U.S. corn, U.S. corn prices have followed pattern inconsistent with seasonal price patterns over the previous fifteen years in Kansas.  Steady-to-declining prices during September-December 2015 were followed by a sharp decline in January 2016, differing from the historic pattern of harvest lows in October followed by rising prices thereafter.  Corn prices in the U.S. are forecast to trade sideways through February and March 2016 by USDA futures and basis history based corn price models, but then to increase strongly through the April-August period.

Figure 2. Kansas Corn Seasonal Price Index – Last 15 Marketing Years (MY 1999/00 – “Old Crop” MY 2014/15) plus “New Crop” MY 2015/16 Estimate (Source: KSU www.AgManager.info)

 

I-D. U.S. Trade Weighted Dollar Index

Appreciation in the value of the U.S. dollar relative to the currencies of U.S. trading partner countries began in earnest in August 2014, and continued through January 2016 (Figure 3).  A moderate decline occurred in early February 2016.   

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.

Figure 3. Daily U.S. Trade Weighted Dollar Index – Major Currencies (DTWEXM)                     
(Source: St. Louis Federal Reserve Bank, FRED)

 

I-E. U.S. Corn Supply-Demand

U.S. Corn Acreage, Yield & Production

Table 1 shows the USDA U.S. corn supply-demand balance sheet for the MY 2008/09 through “new crop” MY 2015/16 period, with adjusted projections by the USDA and Kansas State University for “next crop” MY 2016/17.  United States’ corn harvested and planted acreage for the year 2000 – projected 2016 period are shown in Figure 4, with U.S. corn yields for 1973 through projected 2016 are shown in Figure 5.  U.S. corn total supplies for the 2004/05 through projected 2016/17 marketing years are shown in Figure 6.   Table 1 and Figures 4-6 show the growth in U.S. corn production and total supplies since the drought-impacted short crop year of MY 2012/13, and the expectation of even larger U.S. corn supplies in “next crop” MY 2016/17.

The USDA has preliminarily projected for year 2016 that there will be higher U.S. corn planted acres at 90.500 million acres or ‘ma’, compared to 87.999 ma in 2015 (Table 1 and Figure 4).  The USDA has also preliminarily projected that 2016 U.S. corn harvested acres will be 82.700 ma, compared to 80.749 ma in 2015 (Table 1 and Figure 4).  KSU projections for 2016 U.S. corn harvested acres are marginally higher at 83.079 ma based on a higher percent harvested-to-planted assumption.  The USDA has forecast 2016 U.S. corn average yields to be 168.4 bu/ac, unchanged from 2016 (Table 1 and Figure 5).  The KSU projection for 2016 U.S. corn average yield equals the 1973-2015 trendline projection of 164.5 bu/ac.  

Based on these assumptions, the USDA has preliminarily projected 2016 U.S. corn production to be 13.900 bb, up from 13.601 bb in 2015 (Table 1 and Figure 6).  Based on KSU assumptions, 2016 U.S. corn production would be 13.666 bb.  It is noteworthy that if 2016 U.S. corn production were to fall to 13.000 bb, that U.S. corn yields would need to decline to 156.5 bu/ac given KSU 2016 harvested acres estimates that 83.079 ma (Table 1).

able 1. U.S. Corn Supply-Demand Balance Sheet: MY 2010/11 – “Next Crop” MY 2016/17 as of February 9, 2016 USDA WASDE & KSU Forecasts, and KSU adjusted December 14th USDA Baseline Projection Tables to MY 2016/17

Item

2008/09

2009/10

2010/11

2011/12

2012/13

2013/14

2014/15

2015/16

USDA

Baseline Projections (KSU adjusted)

2016/17

KSU

Baseline Projections (KSU adjusted)

2016/17

% Probability of Occurring

 

 

 

 

 

 

 

 

 

 

Planted Area (million acres)

85.982

86.382

88.192

91.936

97.291

95.365

90.597

87.999

90.500

90.500

Harvested Area (million acres)

78.570

79.490

81.446

83.879

87.365

87.451

83.136

80.749

82.700

***83.079

% Harvested/Planted Area

91.4%

92.0%

92.4%

91.2%

89.8%

91.7%

91.8%

91.8%

91.4%

91.8%

Yield / harvested acre (bu/ac)

153.3

164.4

152.6

146.8

123.1

158.1

171.0

168.4

168.1

***164.5

 

Million Bushels

Beginning Stocks (million bushels)

1,624

1,673

1,708

1,128

989

821

1,232

1,731

**1,837

**1,837

Production (million bu.)

12,043

13,067

12,425

12,314

10,755

13,829

14,216

13,601

13,900

***13,666

Imports (million bu.)

14

8

28

29

160

36

32

50

30

30

Total Supply (million bu.)

13,681

14,749

14,161

13,471

11,904

14,686

15,479

15,382

**15,767

**15,533

 

 

Ethanol for fuel Use (million bu.)

3,709

4,591

5,019

5,000

4,641

  5,124

5,209

5,225

5,200

**5,225

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

1,316

1,370

1,407

1,424

1,397

1,369

1,359

1,370

1,385

1,385

Exports (million bu.)

1,849

1,979

1,831

1,539

730

1,920

1,864

1,650

1,900

**1,800

Feed & Residual Use (million bu.)

5,133

5,101

4,777

4,519

4,315

 5,040

5,315

5,300

5,450

**5,350

Total Use (million bu.)

12,008

13,041

13,033

12,482

11,083

13,454

13,748

13,545

13,935

13,760

 

 

Ending Stocks (million bu.)

1,673

1,708

1,128

989

821

1,232

1,731

1,837

**1,832

**1,773

% Ending Stocks-to-Use

13.94%

13.10%

8.65%

7.92%

7.41%

9.16%

12.59%

13.56%

**13.15%

**12.89%

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

$4.06

$3.55

$5.18

$6.22

$6.89

$4.46

$3.70

$3.35-$3.85 ($3.60)

$3.60

**$3.70


Figure 4. U.S. Corn Planted Acreage for 2000-2016 as of February 9, 2016

 

Figure 5. U.S. Corn Yield Trend for 1973-2016 as of February 9, 2016

 

Figure 6. U.S. Corn Total Supplies: MY 2004/05 through MY 2016/17 as of February 9, 2016

 

U.S. Corn Use by Category & Total Use

U.S. Ethanol Production and Corn Usage:  Projected U.S. corn use for ethanol production of 5.225 bb in “new crop” MY 2015/16 is up 25 mb from January 2016, and would be a record high.  That said, U.S. corn use for ethanol has been steadily in the range of 5.000 to 5.209 bb for the MY 2010/11 through MY 2014/15 period, with the exception of a decline to 4.641 bb during the “short crop / high corn price” 2012/13 marketing year.  Preliminary projections by the USDA are for 5.200 bb of U.S. corn use for “next crop” MY 2016/17.  Ethanol use (Table 1 and Figures 7 and 8). 

Figure 8 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 “new crop” MY 2015/16 has ranged from 5.142-5.526 bb on a weekly basis since early September 2015 - the beginning of the “new crop” 2015/16 marketing year.  The largest amounts of U.S. ethanol production and subsequent corn use to date in the “new crop” MY 2015/16 marketing year have occurred during the weeks ending November 20th, December 11th, and January 8th. 

To date in the “new crop” 2015/16 marketing year, corn usage for ethanol production has been on pace to reach approximately 5.255 to 5.314 bb in “new crop” MY 2015/16 – 30 to 89 mb greater than the USDA’s February 9, 2016 WASDE report estimate of 5.225 bb of corn to be used for ethanol production during this period.                

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 9 – 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 0.992-1.130 bbeqwt (billion bushels of equivalent bushel-weights of of U.S. corn) 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, 0.992 bbeqwt in MY 2013/14, 1.034 bbeqwt in “old crop” MY 2014/15, and 1.037 bbeqwt in “new crop” MY 2015/16, with a projection of 1.032 bbeqwt in “next 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 472 mbeqwt – 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, a record high 472 mbeqwt in MY 2013/14, 454 mbeqwt in “old crop” MY 2014/15, and 455 mbeqwt in “new crop” MY 2015/16, and a projection of 453 mbeqwt in “next crop” MY 2016/17. 

U.S. Corn Exports: Projected U.S. corn exports of 1.650 bb in “new crop” MY 2015/16 are down 50 mb from January USDA projections, and are down from 1.864 bb in “old crop” MY 2014/15, and 1.920 bb in MY 2013/14, but are still up sharply from 730 mb in MY 2012/13 – the 41 year low (i.e., since MY 1975/76) (Table 1, Figures 7 and 8). 

According to USDA Foreign Agricultural Service (FAS) weekly export data (http://apps.fas.usda.gov/export-sales/esrd1.html), as of February 4th, through the first 22 weeks of “new crop” MY 2015/16 (22 of 52 weeks), 490.1 mb of U.S. corn had been physically shipped for export – equal to 29.7% of the USDA’s projection of 1.650 bb for “new crop” MY 2015/16 with 42.3% (22/52 weeks) of the marketing year completed.  An additional 479.6 mb of U.S. corn had been pre-sold for future export shipments during the remainder of “new crop” 2015/16 marketing year – ending August 31, 2016 (the end of “new crop” MY 2015/16). 

Adding together 490.1 mb in past shipments plus 479.6 mb in forward sales amounts to 969.7 mb, or 58.8% of the USDA’s 1.650 bb U.S. corn export target for “new crop” MY 2015/16 in the December 9th USDA WASDE report with 42.3% (22/52 weeks) of the marketing year completed.   United States’ corn export shipments will need to average 38.7 mb per week for the remaining 30 weeks of the “new crop” 2015/16 marketing year to achieve the USDA’s 1.650 bb projection.  For the weeks ending January 28th and February 4th, U.S. corn export shipments of 26.0 mb and 20.8 mb occurred, respectively, behind the pace needed to fulfill the USDA’s February 9th export projection.  

Non-Ethanol FSI: Forecast non-ethanol food, seed and industrial (FSI) use of 1.370 bb in “new crop” MY 2015/16 – unchanged from January.  Non-ethanol FSI usage of 1.370 bb in “new crop” MY 2015/16 is projected to be greater than 1.359 bb in “old crop” MY 2014/15, and compares to 1.369 bb in MY 2013/14, and 1.397 bb in MY 2012/13 (Table 1, Figures 7 and 9).

Feed and Residual Use: Forecast U.S. feed and residual use of 5.300 bb in “new crop” MY 2015/16 is unchanged from January.  Feed and residual use of 5.300 bb in “new crop” MY 2015/16 is down from 5.315 bb for “old crop” MY 2014/15, but up from 5.040 bb in MY 2013/14, 4.315 bb in MY 2012/13, and 4.519 bb in MY 2011/12 (Table 1, Figures 7 and 9).  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 January 14th Feed Outlook Report (http://usda.mannlib.cornell.edu/usda/current/FDS/FDS-01-14-2016.pdf) 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 have been 134.8 million metric tons (mmt) in MY 2013/14 (95.0% corn), and 143.4 mmt in “old crop” MY 2014/15 (94.1% corn), and is forecast to be 145.2 mmt in “new crop” MY 2015/16 (92.6% corn).  Over this same 3 year period, total U.S. Grain Consuming Animal Units (GCAUs) are estimated to have been 90.4 million in MY 2013/14, and 92.6 million in “old crop” MY 2014/15, and are forecast to be 93.4 million in “new crop” MY 2015/16.

As a result, U.S. Energy Feeds per Grain Consuming Animal Unit is estimated to have been 1.491 metric tons per animal unit (mt/au) in MY 2013/14, and 1.549 mt/au in “old crop” MY 2014/15, and is projected to be 1.554 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 risen – 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 near record 13.545 bb (down 25 mb from January) (Table 1 and Figures 7 and 9).  This amount of total U.S. corn use is down from the previous record high of 13.748 bb in “old crop” MY 2014/15.   United States’ total corn use has varied widely in recent marketing years – following 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 record high amount of 13.748 bb in “old crop” MY 2014/15, and now the 2nd highest amount on record of 13.545 bb in “new crop” MY 2015/16. The USDA has preliminarily projected “next crop” MY 2016/17 total use of U.S. corn to be a record high 13.935 bb.   

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 1.837 bb (up 35 mb from January) (Table 1 & Figures 7 and 9).  Since MY 2004/05 U.S. corn ending stocks of 2.114 bb, ending stocks have been 1.967 bb in MY 2005/06, 1.304 bb in MY 2006/07, 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 1.731 bb in “old crop” MY 2014/15, and now are forecast to be 1.837 bb in “new crop” MY 2015/16, with a preliminary forecast of 1.832 bb in “next crop” MY 2016/17. 

Projected percent (%) ending stocks-to-use of 13.56% in “new crop” MY 2015/16 are up from 13.28% in January (Table 1 and Figures 10 and 11).  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 12.59% in “old crop” MY 2014/15 – with a projected increase to 13.56% in “new crop” MY 2015/16.  Preliminary projections are for U.S. corn ending stocks-to-use to be 13.15% in “next crop” MY 2016/17.

U.S. average corn prices for “new crop” MY 2015/16 are projected to be in the range of $3.35-$3.85 bu/ac (midpoint = $3.60) – with the midpoint of $3.60 unchanged from January but down from a projection of $3.50-$4.10 ($3.80 midpoint) by the USDA in the earlier October 9, 2015 WASDE report (Table 1 and Figures 10 and 11).  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 February 9th 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, $3.70 in “old crop” MY 2014/15, and now to a projected range of $3.35-$3.85 (midpoint = $3.60) in “new crop” MY 2015/16.  The USDA’s preliminary projection for “next crop” MY 2016/17 is $3.60 /bu.

Figure 7. U.S. Corn Use & Ending Stocks since MY 2004/05 as of February 9, 2016

 

Figure 8. Weekly U.S. Oxygenate Plant Production of Fuel Ethanol & Estimated Corn Use              

 

Figure 9. U.S. Corn Supply-Demand with DDGS Adjustments as of February 9, 2016

 

Figure 10. U.S. Corn Ending Stocks vs U.S. Avg. Cash Prices: U.S. Corn Ending Stocks vs U.S. Avg. Cash Prices: MY 2006/07 – “New Crop” MY 2015/16, adjusted USDA 2016/17 Baseline, & KSU 2016/17                              

 

Figure 11. U.S. Corn Price vs U.S. % Stocks-to-Use (MY 1973/74 through “Next Crop” MY 2016/17) as of February 9th USDA WASDE with Adjusted December 14th USDA Baseline Reports

 

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 February 11, 2016 (http://apps.fas.usda.gov/psdonline/psdQuery.aspx), and the February 9th USDA WASDE report, the USDA is forecasting that “new crop” 2015/16 marketing year World corn production will be smaller than “old crop” MY 2014/15 World corn production (Figure 12).  World corn total supplies of 1,176.3 mmt in “new crop” MY 2015/16 are projected to be down marginally (down 0.6%) from 1,183.8 mmt in “old crop” MY 2014/15, and up 4.6% from 1,124.1 mmt in MY 2013/14. 

Consequently, World corn total use is projected to be 967.45 mmt in “new crop” MY 2015/16, down 1.0% from 975.65 mmt in “old crop” MY 2014/15, and up 1.9% from 949.3 mmt in MY 2013/14.   World corn ending stocks are forecast by the USDA to increase to 208.8 mmt in “new crop” MY 2015/16, up 1.3% from 206.2 mmt in “old crop” MY 2014/15, and up 19.5% from 174.8 mmt in MY 2013/14.  

II-A. World Corn Production by Country / Region

Projected World corn production of 970.1 mmt for “new crop” MY 2015/16 would be the third highest on record, being down 3.9% from the record high of 1,009.0 mmt in “old crop” MY 2014/15, down 2.1% from 991.4 mmt in MY 2013/14, up from 869.5 mmt in “drought stricken” MY 2012/13, and from 889.8 mmt in MY 2011/12 (Table 2 & Figure 12).  Foreign (non-U.S.) corn production is projected to be 624.6 mmt in “new crop” MY 2015/16, down 3.6% from 647.9 mmt in “old crop” MY 2014/15, and down 2.4% from 640.1 mmt in MY 2013/14. 

Figure 12. World Corn Supply-Demand: MY 2007/08 thru 2015/16 (February 9, 2016 USDA WASDE)

 


II-B. World Corn Exports by Country / Region

Global corn exports in “new crop” MY 2015/16 are projected to be 119.4 mmt, down 14.6% from 139.7 mmt in “old crop” MY 2014/15, and down 8.9% from 131.1 mmt in MY 2013/14 (Table 3 and Figure 12).   Foreign (non-U.S.) corn exports are projected to be 77.5 mmt in “new crop” MY 2015/16, down 16.1% from 92.3 mmt in “old crop” MY 2014/15, and down 5.9% from 82.3 mmt in MY 2013/14. 

II-C. World Corn Imports by Country / Region

Global corn imports in “new crop” MY 2015/16 are projected to be 128.3 mmt, up 4.2% from 123.1 mmt in “old crop” MY 2014/15, and up 3.5% from 123.95 mmt in MY 2013/14 (Table 4).  Foreign (non-U.S.) corn imports are projected to be 127.0 mmt in “new crop” MY 2015/16, up 3.8% from 122.3 mmt in “old crop” MY 2014/15, and up 3.2% from 123.0 mmt in MY 2013/14. 

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

Global corn domestic feed use in “new crop” MY 2015/16 is projected to be 596.65 mmt, up 2.5% from 582.25 mmt in “old crop” MY 2014/15, and up 4.6% from 570.3 mmt in MY 2013/14 (Table 5).  Foreign (non-U.S.) corn domestic feed use is projected to be 462.0 mmt in “new crop” MY 2015/16, up 3.3% from 447.2 mmt in “old crop” MY 2014/15, and up 4.5% from 442.3 mmt in MY 2013/14. 

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 370.8 mmt, down 6.2% from 395.4 mmt in “old crop” MY 2014/15, and down 2.2% from 379.0 mmt in MY 2013/14 (Table 6).  Foreign (non-U.S.) corn FSI use is projected to be 203.3 mmt in “new crop” MY 2015/16, down 11.0% from 228.5 mmt in “old crop” MY 2014/15, and down 5.0% from 214.1 mmt in MY 2013/14. 

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

Projected World corn total use of 967.45 mmt in “new crop” MY 2015/16 is down 1.0% from 977.6 mmt for “old crop” MY 2014/15; up 1.9% from 949.3 mmt in MY 2013/14; and up from the range of 776.2-869.3 mmt during the MY 2007/08-MY 2012/13 period (Table 7 and Figure 12).  Foreign (non-U.S.) corn total use is projected to be 665.3 mmt in “new crop” MY 2015/16, down 1.5% from 675.75 mmt in “old crop” MY 2014/15, but up 1.4% from 656.4 mmt in MY 2013/14. 

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

Projected World corn ending stocks of 208.8 mmt for “new crop” MY 2015/16 represents an increase of 2.6 mmt (up 1.3%) from 206.2 mmt in “old crop” MY 2014/15, and an increase of 34.0 mmt (up 19.5%) from 174.8 mmt in MY 2013/14 (Table 8 and Figure 12).  Over the last seven years, World corn ending stocks have equaled 127.9 mmt in MY 2007/08; 143.3 mmt in MY 2008/09; 140.3 mmt in MY 2009/10; 123.1 mmt in MY 2010/11; 127.9 mmt in MY 2011/12; 132.7 mmt in MY 2012/13, 174.8 mmt in MY 2013/14; 206.2 mmt in “old crop” MY 2014/15; and are now projected to be a record high 208.8 mmt in “new crop” MY 2015/16.  

Foreign (non-U.S.) corn ending stocks are projected to be 162.1 mmt in “new crop” MY 2015/16, down marginally from 162.2 mmt in “old crop” MY 2014/15, but up 13.0% from 143.5 mmt in MY 2013/14. 

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

World corn % ending stocks-to-use are projected to be 21.6% in “new crop” MY 2015/16, up from 21.1% in “old crop” MY 2014/15, 18.4% in MY 2013/14, 15.3% in MY 2012/13, 14.7% in MY 2011/12, and 14.4% in MY 2010/11, while being greater than the top end of the range of 16.5%-18.3% 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 (14.4% S/U), MY 2011/12 (14.7% S/U), and MY 2012/13 (15.3% S/U).  Restated, recent World corn ending stocks-to-use of 14.4% in MY 2010/11 and 14.7% in MY 2011/12 are at the lowest levels recorded since 11.8% in MY 1973/74 (Table 9).  

Foreign (non-U.S.) corn ending stocks-to-use are projected to be 21.8% in “new crop” MY 2015/16, up from 21.1% in “old crop” MY 2014/15, and from 19.4% in MY 2013/14. 

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 11), 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 13). 

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 11 earlier, U.S. corn prices in Figure 13 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 14.4% in MY 2010/11 and 14.7% in MY 2011/12.   Projections are for World corn percent stocks-to-use to be 21.6% in “new crop” MY 2015/16.

Figure 13. U.S. Corn Price vs % World Corn Stocks-to-Use (MY 1973/74 through “New Crop” MY 2015/16)                   
(February 9, 2016 USDA WASDE Report)

 

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     February 2016

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

New crop 2015/16 Production:               February Less January 2015                    

New crop 2015/16 Production:                Percent (%)         February of               January 2015

February Corn Production: Old crop 2014/15          

January Corn Production: Old crop 2014/15

February Less January 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

970.08

967.93

2.15

100.2%

1,008.99

1,008.52

0.47

(38.91)

96.1%

991.38

(21.30)

97.9%

United States

345.49

345.49

0.00

100.0%

361.09

361.09

0.00

(15.60)

95.7%

351.27

(5.78)

98.4%

Total Foreign

624.59

622.45

2.14

100.3%

647.90

647.43

0.47

(23.31)

96.4%

640.11

(15.52)

97.6%

Major Exporters

118.00

115.10

2.90

102.5%

122.30

122.30

0.00

(4.30)

96.5%

120.93

(2.93)

97.6%

Argentina

27.00

25.60

1.40

105.5%

27.00

26.50

0.50

0.00

100.0%

26.00

1.00

103.8%

Brazil

84.00

81.50

2.50

103.1%

85.00

85.00

0.00

(1.00)

98.8%

80.00

4.00

105.0%

South Africa

7.00

8.00

(1.00)

87.5%

10.80

10.80

0.00

(3.80)

64.8%

14.93

(7.93)

46.9%

Major Importers

115.09

115.62

(0.53)

99.5%

134.00

134.03

(0.03)

(18.91)

85.9%

120.24

(5.15)

95.7%

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 

57.75

57.75

0.00

100.0%

75.79

75.79

0.00

(18.04)

76.2%

64.64

(6.89)

89.3%

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%

25.48

25.48

0.00

(1.98)

92.2%

22.88

0.62

102.7%

Southeast Asia

27.66

28.16

(0.50)

98.2%

26.61

26.61

0.00

1.05

103.9%

26.78

0.88

103.3%

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

13.60

13.60

0.00

100.0%

11.49

11.49

0.00

2.11

118.4%

14.19

(0.59)

95.8%

China

224.58

224.58

0.00

100.0%

215.65

215.65

0.00

8.93

104.1%

218.49

6.09

102.8%

Former Soviet Union  - 12 Countries

39.94

39.91

0.03

100.1%

43.73

43.73

0.00

(3.79)

91.3%

46.92

(6.98)

85.1%

Ukraine

23.30

26.50

(3.20)

87.9%

28.45

28.45

0.00

(5.15)

81.9%

30.90

(7.60)

75.4%

FSU-12 Less Ukraine

16.64

13.41

3.23

124.1%

15.28

15.28

0.00

1.36

108.9%

16.02

0.62

103.9%

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

Corn Exports: New crop 2015/16     February 2016

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

New crop 2015/16 Exports:               February Less January 2015                    

New crop 2015/16 Exports:                Percent (%)         February of January 2015

February Corn Exports: Old crop 2014/15          

January Corn Exports: Old crop 2014/15

February Less January Corn  Exports for Old crop 2014/15

New crop 2015/16 Exports Less Old crop 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

119.40

116.71

2.69

102.3%

139.69

137.79

1.90

(20.29)

85.5%

131.10

(11.70)

91.1%

United States

41.91

43.18

(1.27)

97.1%

47.36

47.36

0.00

(5.45)

88.5%

48.78

(6.87)

85.9%

Total Foreign

77.49

73.53

3.96

105.4%

92.33

90.43

1.90

(14.84)

83.9%

82.32

(4.83)

94.1%

Major Exporters

45.60

41.70

3.90

109.4%

52.15

50.65

1.50

(6.55)

87.4%

40.03

5.57

113.9%

Argentina

17.00

16.00

1.00

106.3%

18.50

17.50

1.00

(1.50)

91.9%

17.10

(0.10)

99.4%

Brazil

28.00

25.50

2.50

109.8%

33.00

32.50

0.50

(5.00)

84.8%

20.97

7.03

133.5%

South Africa

0.60

0.20

0.40

300.0%

0.65

0.65

0.00

(0.05)

92.3%

1.96

(1.36)

30.6%

Major Importers

2.65

2.65

0.00

100.0%

5.87

5.87

0.00

(3.22)

45.1%

4.44

(1.79)

59.7%

Egypt

0.01

0.01

0.00

100.0%

0.01

0.01

0.00

0.00

100.0%

0.00

0.01

#DIV/0!

European Union  

1.00

1.00

0.00

100.0%

4.03

4.03

0.00

(3.03)

24.8%

2.41

(1.41)

41.5%

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

1.00

1.00

0.00

100.0%

0.78

0.78

0.00

0.22

128.2%

0.50

0.50

200.0%

Southeast Asia

0.64

0.64

0.00

100.0%

1.05

1.05

0.00

(0.41)

61.0%

1.53

(0.89)

41.8%

South Korea

0.00

0.00

0.00

#DIV/0!

0.00

0.00

0.00

0.00

#DIV/0!

0.00

0.00

#DIV/0!

Canada

1.00

1.00

0.00

100.0%

0.42

0.42

0.00

0.58

238.1%

1.95

(0.95)

51.3%

China

0.05

0.05

0.00

100.0%

0.01

0.01

0.00

0.04

500.0%

0.02

0.03

250.0%

Former Soviet Union  - 12 Countries

19.50

19.43

0.07

100.4%

23.18

23.17

0.01

(3.68)

84.1%

24.81

(5.31)

78.6%

Ukraine

15.50

15.50

0.00

100.0%

19.66

19.66

0.00

(4.16)

78.8%

20.00

(4.50)

77.5%

FSU-12 Less Ukraine

4.00

3.93

0.07

101.8%

3.52

3.51

0.01

0.48

113.6%

4.81

(0.81)

83.2%

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

World Corn Imports                                                 by Major Country / Region

Corn Imports: New crop 2015/16     February 2016

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

New crop 2015/16 Imports: February Less January 2015                    

New crop 2015/16 Imports:                Percent (%)         February of January 2015

February Corn Imports: Old crop 2014/15          

January Corn Imports: Old crop 2014/15

February Less January Corn  Imports             for Old crop 2014/15

New crop 2015/16 Imports Less Old crop 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

128.30

124.59

3.71

103.0%

123.14

122.92

0.22

5.16

104.2%

123.95

4.35

103.5%

United States

1.27

1.02

0.25

124.5%

0.80

0.80

0.00

0.47

158.8%

0.91

0.36

139.6%

Total Foreign

127.03

123.58

3.45

102.8%

122.34

122.12

0.22

4.69

103.8%

123.04

3.99

103.2%

Major Exporters

3.61

2.11

1.50

171.1%

2.01

1.81

0.20

1.60

179.6%

0.86

2.75

419.8%

Argentina

0.01

0.01

0.00

100.0%

0.01

0.01

0.00

0.00

100.0%

0.00

0.01

#DIV/0!

Brazil

0.60

0.60

0.00

100.0%

0.60

0.60

0.00

0.00

100.0%

0.79

(0.19)

75.9%

South Africa

3.00

1.50

1.50

200.0%

1.40

1.20

0.20

1.60

214.3%

0.07

2.93

4285.7%

Major Importers

75.00

74.40

0.60

100.8%

67.86

67.87

(0.01)

7.14

110.5%

76.07

(1.07)

98.6%

Egypt

8.00

8.00

0.00

100.0%

7.83

7.83

0.00

0.17

102.2%

8.73

(0.73)

91.6%

European Union  

16.00

16.00

0.00

100.0%

8.76

8.76

0.00

7.24

182.6%

15.95

0.05

100.3%

Japan

14.70

14.70

0.00

100.0%

14.66

14.66

0.00

0.04

100.3%

15.12

(0.42)

97.2%

Mexico

11.30

11.00

0.30

102.7%

11.27

11.27

0.00

0.03

100.3%

10.95

0.35

103.2%

Southeast Asia

10.90

10.60

0.30

102.8%

11.33

11.33

0.00

(0.43)

96.2%

10.72

0.18

101.7%

South Korea

10.00

10.00

0.00

100.0%

10.17

10.18

(0.01)

(0.17)

98.3%

10.41

(0.41)

96.1%

Canada

1.00

1.00

0.00

100.0%

1.56

1.56

0.00

(0.56)

64.1%

0.51

0.49

196.1%

China

2.50

2.50

0.00

100.0%

5.52

5.52

0.00

(3.02)

45.3%

3.28

(0.78)

76.2%

Former Soviet Union  - 12 Countries

0.49

0.49

0.00

100.0%

0.49

0.49

0.00

0.00

100.0%

0.44

0.05

111.4%

Ukraine

0.05

0.05

0.00

100.0%

0.03

0.03

0.00

0.02

166.7%

0.07

(0.02)

71.4%

FSU-12 Less Ukraine

0.44

0.44

0.00

100.0%

0.46

0.46

0.00

(0.02)

95.7%

0.37

0.07

118.9%

Table 5. World Corn Domestic Feed Use for "New Crop" MY 2015/16, “Old Crop” MY 2014/15, and MY 2013/14

World Corn Feed Use                                                 by Major Country / Region

Corn Feed Use: New crop 2015/16     February 2016

Corn Feed Use: January 2015 New crop 2015/16                   (1 month ago)

New crop 2015/16 Feed Use: February Less January 2015                    

New crop 2015/16 Feed Use: Percent (%)         February of January 2015

February Corn Feed Use: Old crop 2014/15          

January Corn Feed Use: Old crop 2014/15

February Less January Corn  Feed Use             for Old crop 2014/15

New crop 2015/16 Feed Use Less Old crop 2014/15

% New crop 2015/16 Feed Use of Old crop 2014/15

Corn Feed Use: 2013/14                           (2 years ago)

New crop 2015/16 Feed Use             Less 2013/14

% New crop 2015/16 Feed Use of 2013/14

 

mmt

mmt

mmt

Percent (%)