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February 17, 2014
Grain Market Outlook
March 2014 CME eCorn Futures
Aug. 26, 2013 – Feb. 14, 2014
Close of $4.45 ¼ on Fri., Feb. 14th
December 2014 CME eCorn Futures
Aug. 26, 2013 – Feb. 14, 2014
Close of $4.59 ¾ on Fri., Feb. 14th
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I‐D. USDA U.S. Corn Supply‐Demand for the 2013/14 Marketing Year
U.S. Corn 2013 Acres, Yield & Production
The USDA left unchanged its projection of 2013 U.S. corn production of 13.925 billion bushels (bb), up
from a drought‐affected short crop of 10.780 bb in 2012. This USDA projection is based on record high planted
acreage of 95.365 million acres (ma), and harvested acreage of 87.668 ma (Table 1 and Figure 2). The USDA
also maintained its projection of an average U.S. corn yield of 158.8 bushels per acre (bu/ac). The January‐
February USDA 2014 projection of 158.8 bu/ac in average 2013 U.S. corn yields is down from the initial USDA
projection of 163.6 bu/ac at the February 22, 2013 USDA Outlook Forum (Table 1 and Figure 3).
Projected 2013 U.S. corn production of 13.925 bb is a record high, being up 3.145 bb ( 29%) from 10.780
bb in 2012, and up 13% from 12.360 bb in 2011 (Table 1). If any further changes are eventually to be made in
the projection of 2013 U.S. corn production by the USDA, they may not be done until the 2014 Crop
Production Summary in January 2015 if the USDA follows its usual procedures for making such adjustments.
U.S. Corn Total Supplies in “Current” MY 2013/14
The USDA estimates that total supplies of U.S. corn for “current” MY 2013/14 are 14.781 bb – resulting
from beginning stocks of 821 mb, projected 2013 production of 13.925 bb, and projected imports of 35 mb
(Table 1). Total supplies of 14.781 bb in MY 2013/14 would be a record high, comparable to 14.362 bb in MY
2007/08, 13.729 bb in MY 2008/09, 14.774 bb in MY 2009/10 (2nd largest), 14.182 bb in MY 2010/11 (3rd
largest), 13.517 bb in MY 2011/12, and 11.932 bb in “Last year’s” MY 2012/13. Beginning stocks of 821 mb are
the lowest since 426 mb in MY 1996/97, and substantiate the tightness of U.S. corn supplies during June‐
August 2013.
U.S. Corn Total Use & Use by Category in “Current” MY 2013/14
Total Use of U.S. corn for “current” MY 2013/14 is projected to be 13.300 bb – up 150 from January, up
250 mb from the December WASDE, and up 350 mb from November, while being up 19.7% from 11.111 bb in
“last year’s” MY 2012/13 (Table 1 and Figures 4 & 6). United States’ total corn use of 13.300 bb in “current”
MY 2013/14 would be the highest on record, comparable to 12.737 bb in MY 2007/08 (4th highest), 12.056 bb
in MY 2008/09, 13.066 bb in MY 2009/10 (2nd highest), 13.055 bb in MY 2010/11 (3rd highest), 12.528 bb in MY
2011/12, and 11.111 bb in “last year’s” MY 2012/13.
U.S. Ethanol Production and Corn Usage: Projected U.S. corn use for ethanol production of 5.000 bb in
“current” MY 2013/14 is up from 4.648 bb in “last year’s” MY 2012/13, while being equal to 5.000 bb in MY
2011/12. Figure 5 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 by Kansas State
University. Assuming 2.75 gallons of ethanol produced per bushel of corn, these calculations indicate that the
equivalent projected annual rate of U.S. corn used for ethanol production for “current” MY 2013/14 has
ranged from 4.64‐5.26 bb on a weekly basis since early September 2013 ‐ the beginning of the “current”
2013/14 marketing year – averaging a projection of 4.996 bb for MY 2013/14 over the September 2013 –
February 7, 2014 time period. This projection of 4.996 bb is consistent to USDA’s February 2014 WASDE report
estimate of 5.000 bb of corn to be used for ethanol production during the “current” 2013/14 marketing year.
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 6 – which shows estimated a) DDGS
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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 17.75 pounds of distillers dried grains and solubles (DDGS) per 56 pound bushel of
corn used in ethanol production. By these estimates, approximately 1.2‐1.3 bb of U.S. corn equivalent bushel‐
weights of DDGS are projected either to have been or are to be fed to U.S. livestock each marketing year since
MY 2010/11 – i.e., 1.265 bb in DDGS corn‐weight equivalents in MY 2010/11, 1.286 bb DDGS corn‐weight
equivalents in MY 2011/12, 1.196 bb in MY 2012/13, and 1.286 bb projected for MY 2013/14. Over the same
four most recent marketing years, DDGS exports in corn equivalent weights are estimated to range from 277
to 326 mb.
U.S. Corn Exports: Projected U.S. corn exports of 1.600 in MY 2013/14 are up 150 million bushels (mb)
from January, and up 118.8% from 731 mb a year ago in MY 2012/13 – the 39 year low since MY 1975/76. As
of February 6st, with 27 of 52 weeks (51.9%) of “current” MY 2013/14 complete, 618.7 mb of U.S. corn had
been shipped for export – equal to 38.7% of the USDA’s updated projection for “current” MY 2013/14 of 1.600
bb. An additional 743.2 mb of U.S. corn had been sold for future export sales in “current” marketing year.
Adding together 618.7 mb in past shipments plus 743.2 mb in forward sales amounts to 1.362 bb, or 85.1%
of the USDA’s 1.600 bb U.S. corn export target for “current” MY 2013/14 in the February 10th USDA WASDE
report with 51.9% (27/52 weeks) of the marketing year completed. The strong pace of combined shipments
and sales motivated the USDA to increase its U.S. corn export projection in the February 10th WASDE report.
Non‐Ethanol FSI: Forecast non‐ethanol food, seed and industrial (FSI) use of 1.400 bb in “current” MY
2013/14 compares to 1.396 bb in “last year’s” MY 2012/13, and 1.428 bb in MY 2011/12.
Feed and Residual Use: Forecast U.S. feed and residual use of 5.300 bb for “current” MY 2013/14 is
unchanged from January, but up 100 mb from November‐December and up 200 mb from August‐September
WASDE projections. Feed and residual use of 5.300 bb is up 22.3% from 4.335 bb in “last year’s” MY 2012/13,
while being up 16.3% from 4.557 bb in MY 2011/12.
U.S. Corn Ending Stocks, % Ending Stocks‐to‐Use, & Prices in “Current” MY 2013/14
U.S. corn ending stocks for “current” MY 2013/14 are projected to be 1.481 bb, down 150 mb from
January, down 311 mb from December and down 4066 mb from November 2013. However, the February
2014 projection of 1.481 bb is still up 660 mb (+80%) from 821 mb ending stocks in “last year’s” MY 2012/13
(Table 1 & Figure 4). “Current” MY 2013/14 U.S. corn ending stocks of 1.481 bb are comparable to 1.673 bb of
U.S. corn ending stocks for MY 2008/09, and 1.708 bb in MY 2009/10 – and above the recent downtrending
ending stocks of 1.128 bb in MY 2010/11, 989 mb in MY 2011/12, and 821 mb in MY 2012/13.
Projected percent (%) ending stocks‐to‐use of 11.1% in “current” MY 2013/14 is down from the January
WASDE projection of 12.4%, the December 2013 WASDE projection of 13.7%, and also down from the
September‐November 2013 forecasts of 14.6%‐14.7%. However, the February 2014 projection of 11.4% S/U
for “current” MY 2013/14 is still up significantly from 7.4% in “last year’s” MY 2012/13 (Table 1 & Figures 7‐8).
Over the last six (6) years, U.S. corn % ending stocks‐to‐use declined from 13.9% in MY 2008/09, to 13.1% in
MY 2009/10, 8.6% in MY 2010/11, 7.9% in MY 2011/12, and 7.4% in “last year’s” MY 2012/13, before being
projected now for the first time in five (5) years to increase to 11.1% in “current” MY 2013/14.
U.S. average corn prices for “current” MY 2013/14 are projected to be $4.20‐$4.80 bu/ac (midpoint =
$4.50) – up $0.10 on both ends of the range from January, but down from the record high of $6.89 /bu in “last
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year’s” MY 2012/13 (Table 1 & Figures 9‐10). Since the beginning of the rapid expansion in U.S. ethanol
production in 2006, U.S. corn prices have generally risen, 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, up to the
record high of $6.89 in “last year’s” MY 2012/13 – with a decline now forecast to the price range midpoint
projection of $4.40 in “current” MY 2013/14.
I‐E. KSU U.S. Corn Supply‐Demand Scenarios for “Next Crop” MY 2014/15
The USDA and the Tendency To Project Full Production in Early Season Market Forecasts
The initial formal USDA projection of 2014 U.S. corn production along with supply‐demand and price
prospects will be given at the 2014 USDA Agricultural Outlook Forum, February 20‐21, 2014 in Arlington,
Virginia (www.usda.gov/oce/forum). Since at least the winter of 2006/07 there has been a tendency for early
season projections of U.S. corn production by the USDA, private industry analysts, and University Extension
Grain Marketing Specialists to be for “full production”, i.e., assuming trend line U.S. corn yields or better and
generally large corn crops.
On Thursday, February 13th the USDA released its Agricultural Projections to 2023 available at the
following website: http://www.ers.usda.gov/publications/oce‐usda‐agricultural‐projections/oce141.aspx.
Based on relative grain prices and USDA WASDE projections in November 2013, the forecast of U.S. corn
supply/demand and prices for “next crop” MY 2014/15 contained in the USDA report will face a number
adjustments before they are released in the February 20‐21, 2014 USDA Outlook Forum.
An adjusted version of the “next year” MY 2014/15 projected from the Agricultural Baseline is provided in
Table 1, with lower beginning stocks of 1.481 bb to match the February 2014 WASDE projection of ending
stocks projection for “current” MY 2013/14. All other changes in total supplies, ending stocks, and percent
ending stocks‐to‐use follow from the change in beginning stocks. With the reduction in projected percent
ending stocks‐to‐use (i.e., down to 16.04% versus 19.22% in the USDA baseline projection), the USDA’s price
projection was adjusted upward by $0.20 per bushel up to $3.85 per bushel. The USDA has stated publically
since the release of these Agricultural Projections to 2013 that changes in projected 2014 corn acreage may
occur in the upcoming February 20‐21, 2014 USDA Outlook Forum forecasts. But at this time, it seems likely
that the record high projection of a 2014 U.S. corn yield of 165.6 bu/ac maybe retained.
This tendency on the part of both the USDA and University grain market economists to project full
production and marked increases has been especially the case beginning in the winter of 2010 when preseason
U.S. pre‐season corn production forecasts have been markedly larger than what final U.S. corn crop production
totals have ended up being each year. A combination of drought and poor crop development conditions lead
to lower than originally expected U.S. corn production in 2010, 2011, and 2012. And although the 2013 U.S.
corn crop has ended up being record large, still it is markedly lower than original early 2013 production of
14.5+ bb.
Projections for 2014 U.S. corn production by the USDA and Kansas State University may very well follow
this same pattern of being overly optimistic – implicitly discounting the possibility of 2014 U.S. corn crop
production problems. Such early season forecasts for 2014 as these by KSU given below are decidedly
conservative in terms of projected U …
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May 15, 2014
Grain Market Outlook
high 165.3 bu/ac yields, a 13.935 billion bushel (bb) 2014
U.S. corn crop, 15.111 bb total supplies, 1.700 bb exports, 13.385 bb total use, 1.726 bb ending stocks, 12.9%
ending stocks‐to‐use, and $4.20 average price per bu. ($3.85 to $4.55). If 2014 U.S. corn wheat production
prospects decline from these “top end” projections, then price prospects could improve considerably from
these conservative 2014/15 price forecasts.
KSU U.S. Corn Forecast for “New Crop” MY 2014/15: KSU projections of “next crop” MY 2014/15 supply‐
demand balances and prices are as follows: a) “Likely Production” Scenario: 60% prob. of 91.7 ma planted,
91.9% harvested‐to‐planted acres, trend yields of 159.4 bu/ac, 13.437 bb 2014 U.S. corn production, 14.613 bb
U.S. corn supplies, 1.600 bb exports, 13.210 bb total use, 1.403 bb ending stocks, 10.6% S/U, & $4.40 /bu; b)
“Low Production” Scenario: 20% prob. of 89.9 ma planted, 91.9% harv.‐to‐plntd. acres, low yields of 149.4
bu/ac, 12.355 bb 2014 U.S. corn production, 13.551 bb U.S. corn supplies, 1.400 bb exports, 12.575 bb total
use, 976 mb ending stocks, 7.76% S/U, & $6.00 /bu; and c) “High Production” Scenario: 20% prob. of 93.4 ma
planted, 91.9% harv.‐to‐plntd. acres, yields of 164.4 bu/ac, 14.122 bb 2014 U.S. corn production, 15.288 bb
U.S. corn supplies, 1.700 bb exports, 13.535 bb total use, 1.753 bb ending stocks, 12.95% S/U, & $4.15 /bu.
World Corn Total Supplies of 1,148 mmt in “new crop” MY 2014/15 are up from 1,117 mmt in “current year”
MY 2012/13, and up from 1,003 mmt in MY 2011/12. Projected World corn ending stocks of 181.7 mmt
(18.8% S/U) in “new crop” MY 2014/15 are up from 168.4 mmt (17.8% S/U) in “current year” MY 2013/14, and
up from 138.2 mmt (16.0% S/U) in MY 2011/12. Forecast total MY 2014/15 corn production for major export
competitors Brazil (74.0 mmt – down 1.0) and Argentina (26.0 mmt – up 2.0) is projected to be 1.0% higher in
the coming year – with harvests available for use in the early months of 2015 to compete with the U.S. in
World grain export markets. However, these projections are still uncertain given the possibility of a strong El
Nino event beginning in mid‐2014. Ongoing geopolitical problems in the Black Sea region is reported to have
not had an appreciable impact on the availability of Ukraine corn to World markets, but would be a disrupting
market factor in World corn and coarse grain markets if it did so. …
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