Fundamentally Speaking

The 2014/15 U.S. corn balance sheet is a moving target and figures for the upcoming year even more so but suffice to say the current USDA estimate of a 1.877 billion bushel carryover is the largest since the 2005/06 season and those stocks represent 13.8% of this year's estimated demand, the highest stocks to use ratio also since the 2005/06 marketing year.

With the next big news likely to be the government's first look at prospective 2015 production of the major crops and the associated supply-demand estimates at the USDA Ag Outlook Forum next month this may be a good time to look at the 2015/16 situation.

This graphic shows the prospective 2015/16 U.S. corn ending stocks figures based on various combinations of planted acreage numbers going across the x-axis in millions and yields going down the y-axis in bushels per acre (bpa).

Assumptions include a beginning stocks figure of 1.877 billion bushels which is the last USDA estimate for this year's ending stocks given in the January 2015 WASDE report.

We estimate next year's demand at 13.855 billion bushels which is the compounded annual growth rate of corn demand over the past ten years times this year's total consumption.

The harvested acreage figure is the recent harvested/planted ratio of 92% times the planted figure.

Each cell has the figure of 1.877 billion bushels plus estimated production which is the planted area multiplied by 92% multiplied by the yield less the estimated demand of 13.855 billion bushels.

Finally those cells shaded in red are when those stocks as a percentage of the estimated total usage is less than 8.0% while those cells shaded in blue are above the current stocks to use ratio of 13.8%.

Earlier in the year there was talk that domestic 2015 corn planted area could dip to 88.0 million acres or less due to higher projected returns for other crops, particularly soybeans.

The increasingly bearish situation for soybeans based on the likely prospect of another huge South American crop about to be harvested has boosted expectations of 2015 corn acreage closer to 89 million acres.

The expected trend yield this year is seen at 166 bpa and this combination of planted acreage and yields results in a calculated ending stocks figure of 1.614 billion bushels and a stocks to use ratio of 11.6%.

(KA)

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