September WASDE Reduces U.S. Corn Crop Estimates
Last month, the market was surprised by a bearish supply and demand estimates report that included bigger numbers for U.S. production of both corn and soybeans than the market was expecting. This month the report was surprisingly bullish.
The U.S. corn balance sheet included some positive adjustments to both the old and new crop figures. For 2014/15, food, seed and industrial use as well as exports were increased by a combined 40 million bushels. This increase in use pulled down 2014/15 carryover to 1.772 billion bushels. For 2015/16, the positive adjustments were on the supply side, with this year’s yield estimate pulled down by 1.3 bushels from last month to 167.5 bushels per acre. Between the lower carry-in and the smaller production estimate, total corn supply for 2015/16 looks about 140 million bushels smaller than it did in last month’s estimates. Reflecting this lower supply, the estimate of corn total use was shaved by 20 million bushels to 13.755 billion bushels. Despite the reduction, this will be – if this projection is realized – a record level of demand. Ending stocks for 2015/16 are now estimated at 1.592 billion bushels – well to the low side of pre-report expectations. This equates to a stocks-to-use ratio of 11.6 percent. This is not terribly tight by the standards of recent history, but it is likely tight enough to keep 2016 interesting. This is, of course, looking pretty far down the road, but it would not take too much of a hitch in next year’s production to bring some real volatility back to the market.
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