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November 18, 2014
Grain Market Outlook
CME eCorn Futures
Mar. 19 – Nov. 14, 2014
Close = $4.06 ½ on 11/17/2014
DEC 2014 CME eCorn Futures
Mar. 20 – Nov. 17, 2014
Close = $3.77 ½ on 11/17/2014
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The “new crop” JULY 2015 corn futures market contract also responded in a moderately positive manner
to the information in the November 10th USDA reports. On the day of the report – Monday, November 10th –
CME JULY 2015 corn futures prices opened at $3.94 per bushel, trading within the range of $3.93 ¾ ‐ $4.07
during the session, before settling at $3.98 ½ – up $0.02 per bushel for the day (Figure 1). Since then, JULY
2015 corn futures prices have traded in a range from a low of $3.94 ½ on Tuesday, November 11th to a high of
$4.17 on Thursday, November 13th, before closing at $4.06 ½ on Monday, November 17th.
Question: Do the prices in early October represent a fall harvest low?
In hindsight now it seems that the upward trend in DEC 2014 and JULY 2015 corn futures prices since the
$3.46 ¾ low trading price on October 1, 2014 may signal that the fall harvest market low in corn futures prices
has occurred. Of course the results of the December 2014 and the January 2015 USDA crop production and
WASDE reports and the grain market’s reaction to them as well as other possible market influencing factors
will be key determinants as to whether these price levels ultimately represent the fall harvest “lows” for this
grain marketing year.
A time of seasonal market weakness typically has occurred during the months of January‐February in large
crop – low price years. Therefore it is still possible that prices may trend lower again sometime before spring,
2015. However, the $3.46 ¾ low on October 1st will be a key point of support for CME MARCH 2015 or CME
MAY 2015 corn futures prices should such a seasonal price decline occur in coming months.
I‐C. U.S. Corn Supply‐Demand – USDA Projections for “New Crop” 2014/15
U.S. Corn Acreage, Yield & Production
The USDA projected that 2014 U.S. corn total planted acreage would be 90.885 million acres (ma) –
unchanged from October (Table 1 and Figure 2). Planted acreage of 90.885 million acres in 2014 is down from
95.365 ma in 2013, 97.291 ma in 2012 (adjusted 116,000 acres higher by the USDA), and 91.936 ma in 2011.
In addition, the USDA projected 2014 U.S. corn harvested acreage to be 83.097 ma – unchanged from October
but down from 87.668 ma in 2013, and 87.365 ma in 2012, while still being up from 81.446 ma in 2011. The
2014 proportion of harvested‐to‐planted acreage for all U.S. corn is projected to be 91.4%, down from 91.9%
in to 2013, but up from 89.8% in 2012, and equal to 91.4% in 2011.
The projected 2014 U.S. average corn yield of 173.4 bushels per acre (bu/ac) would be a record high, but is
down from the earlier USDA projection of 174.2 bu/ac in October (Table 1 and Figure 3). This projection of
173.4 bu/ac in November is up from 158.8 bu/ac in 2013, the drought affected 2012 low yield of 123.1 bu/ac.,
and up from the previous historic high of 164.7 bu/ac in 2009. Based on these 2014 acreage and yield
forecasts, the USDA projected 2014 U.S. corn production to be 14.407 billion bushels (bb) – which would be
the highest amount on record, larger than the current record high of 13.925 bb in 2013, 10.755 bb in 2012
(adjusted lower by 25 million bushels or “mb”), 12.360 bb in 2011, 12.447 bb in 2010, and 13.092 bb in 2009
(Table 1).
U.S. Corn Total Supplies
The USDA projects that total supplies of U.S. corn for “new crop” MY 2014/15 are a record high 15.668 bb
– resulting from beginning stocks of 1.236 bb, projected 2014 production of 14.407 bb, and projected imports
of 25 million bushel (mb) (Table 1 and Figure 4). Total supplies of 15.668 bb in “new crop” MY 2014/15 are
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comparable to 14.362 bb in MY 2007/08, 13.729 bb in MY 2008/09, 14.774 bb in MY 2009/10 (3rd largest),
14.182 bb in MY 2010/11 (4th largest), 13.517 bb in MY 2011/12, 11.904 bb in MY 2012/13, and 14.782 bb in
“old crop” MY 2013/14 (2nd highest).
Beginning stocks of 1.236 bb in “new crop” MY 2014/15 are unchanged from October, but down from an
early season projection of 1.246 bb by the USDA in the July 2014 WASDE report (Table 1 and Figure 4).
Projected beginning stocks of 1.236 bb in “new crop” MY 2014/15 are up sharply from 821 mb in “old crop”
MY 2013/14, and from 989 mb in MY 2012/13. This amount of beginning stocks is up considerably from the
low of 426 mb occurring in MY 1996/97. Imports of 25 mb in “new crop” MY 2014/15 are projected to be
down from 36 mb in “old crop” MY 2013/14 (the 2nd highest), and also down sharply from the record high of
160 mb in the drought‐stressed 2012/13 marketing year. These amounts of U.S. corn imports are comparable
to 29 mb in MY 2011/12, and 28 mb in MY 2010/11.
U.S. Corn Use by Category & Total Use
U.S. Ethanol Production and Corn Usage: Projected U.S. corn use for ethanol production of 5.150 bb in
“new crop” MY 2014/15 is up 25 mb from September‐October – following from expectations of low corn input
prices and a continuation of at least marginal profitability for U.S. ethanol production (Table 1 and Figures 5‐
6). This projection of 5.150 bb in “new crop” MY 2013/14 is up from 5.134 bb in “old crop” MY 2013/14 (up 4
mb), while being up from 4.641 bb in MY 2012/13, and 5.000 bb in MY 2011/12.
Figure 6 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 2.75 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 “new crop” MY 2014/15 has
ranged from 4.911‐5.278 bb on a weekly basis since early September 2014 ‐ the beginning of the “new crop”
2014/15 marketing year. Over the period of from September 1, 2014 through November 7, 2014, corn usage
for ethanol production was been on pace to reach 5.085 bb in “new crop” MY 2014/15. This estimate of 5.085
bb is less than the USDA’s adjusted November 2014 WASDE report estimate of 5.150 bb of corn to be used for
ethanol production during “new crop” MY 2014/15, with 10 of 52 weeks for 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 7 – which shows estimated a) DDGS
corn equivalent U.S. domestic livestock feeding, and b) DDGS exports as well as other categories of U.S. corn
usage since MY 1989/90.
This analysis assumes 16.00 pounds of distillers dried grains and solubles (DDGS) per 56 pound bushel of
corn used in ethanol production – following from recent ethanol industry surveys. By these estimates, since
MY 2010/11 approximately 1.049‐1.164 bb of U.S. corn equivalent bushel‐weights of DDGS are projected
either to have already been or are to be fed to U.S. livestock during each marketing year– i.e., 1.108 bb in
DDGS corn‐weight equivalents in MY 2010/11, 1.130 bb in MY 2011/12, 1.049 bb in MY 2012/13, 1.160 bb
projected for “old crop” MY 2013/14, and a projection of 1.164 bb in “new crop” MY 2014/15. Over the same
five most recent marketing years, DDGS exports in corn equivalent weights are estimated to range from 277 to
307 mb, with approximately 307 bb of DDGS‐corn equivalents projected for the “new crop” MY 2014/15 U.S.
corn marketing year.
U.S. Corn Exports: Projected U.S. corn exports of 1.750 in “new crop” MY 2014/15 are down from the
estimate of 1.917 bb in “old crop” MY 2013/14, but are up sharply from 730 mb in MY 2012/13 – the 40 year
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low since MY 1975/76 (Figures 5 and 7). According to the USDA Foreign Agricultural Service (FAS) weekly
export data (http://apps.fas.usda.gov/export‐sales/esrd1.html), as of November 11th, through the tenth week of “new crop”
MY 2014/15 (10 of 52 weeks), 295.6 mb of U.S. corn had been physically shipped for export – equal to 16.9%
of the USDA’s updated projection for “new crop” MY 2014/15 of 1.750 bb. An additional 481.0 mb of U.S. corn
had been pre‐sold for future export shipments during the “new crop” 2014/15 marketing year – prior to
August 31, 2015 (the end of “new crop” MY 2014/15).
Adding together 295.6 mb in past shipments plus 481.0 mb in forward sales amounts to 776.6 mb, or
44.4% of the USDA’s 1.750 bb U.S. corn export target for “new crop” MY 2014/15 in the November 10th USDA
WASDE report with 19.2% (10/52 weeks) of the marketing year completed. United States’ corn exports will
need to average 34.6 mb per week for the remainder of the “new crop” 2014/15 marketing year to achieve the
USDA’s 1.750 bb projection. This compares to 17.5 mb and 23.7 mb of export shipments for the weeks ending
October 30th and November 6th, respectively – behind the pace needed to meet the USDA’s export projection.
Non‐Ethanol FSI: Forecast non‐ethanol food, seed and industrial (FSI) use of 1.385 bb (down 30 mb from
October) in “new crop” MY 2014/15 is greater than 1.363 bb (down 11 mb) in “old crop” MY 2013/14, and
compares to 1.397 bb in MY 2012/13, and 1.428 bb in MY 2011/12 (Figures 5 and 7).
Feed and Residual Use: Forecast U.S. feed and residual use of 5.375 bb in “new crop” MY 2014/15 is
unchanged from October but up 25 mb from the September WASDE report (Figures 5 and 7). This projection
of 5.375 bb in “new crop” MY 2014/15 is up from 5.132 bb for “old crop” MY 2013/14 (up 8 mb), and up from
4.315 bb in MY 2012/13 (down 25 mb). These levels of corn use for livestock feeding are somewhat correlated
with the amounts of energy feeds per grain consuming animal units reported by the USDA over the same time
period as shown in what follows.
In the USDA November 13th Feed Outlook Report (http://www.http://usda.mannlib.cornell.edu/usda/current/FDS/FDS‐11‐13‐
2014.pdf) the USDA Economic Research Service (ERS) indicates that over the MY 2012/13 through “new crop”
MY 2014/15 time period, the total amount of Energy Feeds in the U.S. – including corn, sorghum, barley, oats
and wheat – was estimated to be 125.8 million metric tons (mmt) in MY 2012/13 (87.1% corn), and 137.0 mmt
in “old crop” MY 2013/14 (95.2% corn), and is projected to be 146.3 mmt in “new crop” MY 2014/15 (93.3%
corn). Over this same three year period, total U.S. Grain Consuming Animal Units were estimated to be 92.3
million in MY 2012/13, and 90.3 million in “current” MY 2013/14, and are projected to be 91.5 million in “new
crop” MY 2014/15.
As a result, U.S. Energy Feeds per Grain Consuming Animal Unit is estimated to be 1.363 metric tons per
animal unit (mt/au) in MY 2012/13, and 1.517 mt/au in “old crop” MY 2013/14, and is projected to be 1.599
mt/au in “new crop” MY 2014/15. 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 “old crop” MY 2013/14,
and now into “new crop” MY 2014/15, the amount of energy feeds fed per animal unit and total feed use of
U.S. corn has and is projected to also increase.
Total Use of U.S. Corn for “new crop” MY 2014/15 is projected to be 13.660 bb – up 5 mb from October.
This amount is up from 13.546 bb in “old crop” MY 2013/14, and up sharply from 11.083 bb (down 25 mb) in
drought‐affected MY 2012/13 (Table 1 and Figures 5 & 7). United States’ total corn use has varied based
largely on available U.S. corn supplies in recent years, trending from 12.737 bb in MY 2007/08, 12.056 bb in
MY 2008/09, 13.066 bb in MY 2009/10, 13.055 bb in MY 2010/11, 12.528 bb in MY 2011/12, 11.083 bb in MY
2012/13, the current record high of 13.546 bb in “old crop” MY 2013/14, and the projected new record high
amount of 13.660 bb in “new crop” MY 2014/15.
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U.S. Corn Ending Stocks, % Ending Stocks‐to‐Use, & Prices
U.S. corn ending stocks for “new crop” MY 2014/15 are projected to be 2.008 bb – down 73 mb from the
October WASDE report (Table 1 & Figure 4). This forecast amount of U.S. corn ending stocks of 2.008 bb in
“new crop” MY 2014/15 up from 1.236 bb in “old crop” MY 2013/14, and from 821 mb in MY 2012/13. 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, and 1.236 bb in “old crop” MY 2013/14, and are now projected to be 2.008 bb in “new crop” MY
2014/15.
Projected percent (%) ending stocks‐to‐use of 14.8% in “new crop” MY 2014/15 are up from 15.3% in the
October WASDE report (Table 1 and Figures 8‐9). United States’ corn % ending stocks‐to‐use trended
downward from 12.8% in MY 2007/08 and 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 to 7.4% in “drought stricken” MY 2012/13, before increasing for the first
time in six (6) years to 9.1% in “old crop” MY 2013/14, and now to a projected level of 14.8% in “new crop” MY
2014/15.
U.S. average corn prices for “new crop” MY 2014/15 are projected to be in the range of $3.20‐$3.80 bu/ac
(midpoint = $3.50) (Table 1 & Figures 8‐9) – up from $3.10‐$3.70 (midpoint = $3.40) in the October WASDE
report, and equal to the forecast price range in the September WASDE report.
Since the beginning of the rapid expansion in U.S. ethanol production in 2006, U.S. corn prices have moved
higher, then lower, and higher again, changing from $3.04 /bu in MY 2006/07, to $4.20 in MY 2007/08, $4.06
in MY 2008/09, $3.55 in MY 2009/10, $5.18 in MY 2010/11, $6.22 in MY 2011/12, up to the record high of
$6.89 in “drought stricken” MY 2012/13. However, if the November 10th WASDE report projection holds true,
prices will now have declined for two consecutive years since the $6.89 record high in MY 2012/13, down to
$4.46 in “old crop” MY 2013/14, and again down to $3.20‐$3.80 (midpoint = $3.50) in “new crop” MY 2014/15.
I‐D. KSU U.S. Corn Market Scenarios: “New Crop” MY 2014/15 & “Next Crop” MY
2015/16
Kansas State University forecasts of U.S. corn supply‐demand balances for “new crop” in the 2014/15 and
“next crop” 2015/16 marketing years are provided below. Given the market information available in mid‐
November 2014, these conservative price projections that follow seem reasonable – especially for the current
marketing year, i.e., “new crop” MY 2014/15. However, some marginal amount of 2014 U.S. corn production
uncertainty still remains that may be resolved in the January 12, 2015 USDA NASS Crop Production Annual
Summary report. Also, there is the possibility that the USDA is overly pessimistic in its projections of U.S. corn
usage in the “new crop” 2014/15 marketing year – which would ultimately lead to lower U.S. corn supply‐
demand balances, and at least marginally higher prices than are currently being projected for the current
marketing year.
These Kansas State University supply‐demand and price projections for “new crop” MY 2014/15 reflect
the possibility of U.S. corn usage being underestimated by the USDA in the current marketing year. However,
for “next crop” MY 2015/16, these KSU projections reflect the likelihood of a reduction in U.S. corn acreage in
2015, and how a possible return to trendline U.S. corn yields and a moderation of 2015 U.S. corn production in
would be likely affect U.S. corn supply‐demand balances and prices in the next marketing year, i.e., September
1, 2015 through August 31, 2016.
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KSU projections of 2015 U.S. corn planted and harvested acreage are found in Table 1 and Figure 2.
Projections of 2015 probability‐weighted U.S. corn yields are found in Table 1 and Figure 3. Probability‐
weighted KSU forecasts of U.S. corn average prices for “new crop” MY 2014/15 are based on projections of
U.S. corn % ending stocks‐to‐use shown in Table 1 and Figures 8‐9.
A. “New Crop” 2014/15 KSU Scenario for U.S. Corn Supply‐Demand – 40% Probability
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