The USDA World Agricultural Supply and Demand Estimates (WASDE) Report released on May 12 was regarded as mainly neutral for the corn market and bearish for the soybean market in the coming months. The May report showed slightly higher corn ending stocks for 2014-15, and slightly lower soybean ending stocks, as compared to the April Report. Corn stocks are expected to decline slightly by the end of the 2015-16 marketing year, while the ending stocks for soybeans are expected to increase by 43% during that time. The 2015-16 marketing year runs from September 1, 2015 to August 31, 2016.
According to the May 12 USDA WASDE Report, the projected corn ending stocks for the 2014-2015 year are estimated at 1.851 billion bushels, which was increased by 24 million bushels compared to the April report. The 2014-15 level of corn ending stocks would be at the highest level since the carryover of 1.97 billion bushels for 2005-06. The 2014-15 ending stocks level is considerably higher than the 2013-14 corn ending stocks of 1.232 billion bushels, or the 2012-13 ending stocks of 821 million bushels. USDA is projecting that total U.S. corn use for 2013-2014 will be 13.622 billion bushels for livestock feed, ethanol, food products, seed, exports, etc., which is up slightly from 13.454 billion bushels in 2013-14. The rapid growth in the corn supply in the 2014-15 marketing year has put downward pressure on corn market prices, and has prevented a significant price rallies in the corn market thus far in 2015.
Based on the most recent report, USDA is projecting the corn ending stocks to be 1.746 billion bushels by the end of the 2015-16 marketing year, which is a decrease of 105 million bushels compared to 2014-15 levels. The important ending stocks-to-use ratio for corn is projected to increase from a level of 9.2% in 2013-14 to 13.6% for 2014-15, before declining slightly to 12.7% for 2015-16. USDA is projecting total corn usage for 2015-16 at 13.760 billion bushels, which is an increase of 138 million bushels from 2014-15 usage levels, mainly driven by an expected increase in feed usage and export demand. Corn use for ethanol production for both years is estimated at 5.2 billion bushels.
USDA is estimating total U.S. corn production for 2015 to be at 13.63 billion bushels, which would be a decline from a total U.S. production of 14.216 billion bushels in 2014. The report indicated an estimated 89.2 million acres planted to corn in 2015, which is down from 90.6 million planted acres in 2014, and much lower than the 95.4 million corn acres in 2013, or 97.2 million acres in 2012. USDA is estimating an average U.S. corn yield of 166.8 bushels per acre in 2015, compared to the record U.S. corn yield of 171.0 bushels per acre in 2014, and a yield of 158.1 bushels per acre in 2013. Some analysts feel that the 2015 yield projection may be understated a bit, given the earlier-than-normal corn planting dates and favorable early season growing conditions in most regions of the Midwest.
USDA is now estimating the average U.S on-farm corn price for the 2015-16 marketing year in a range of $3.20-3.80 per bushel, or an average price of $3.50 per bushel. This is a decrease from the current 2014-15 estimated average on-farm price of $3.65 per bushel, and would be a major decline from the 2013-14 final U.S. average corn price of $4.46 per bushel, or the 2012-13 final average corn price of $6.89 per bushel.
According to the May 12 USDA WASDE Report, the projected soybean ending stocks for 2014-15 are estimated at 350 million bushels, which is a decrease of 20 million bushels from the April soybean carryover estimate. The projected 2014-15 soybean ending stock level compares to carryover levels of 92 million bushels for 2013-14, and 141 million bushels in 2012-13.
Based on the recent report, soybean ending stocks for 2015-16 are expected to increase to 500 million bushels, which would be an would be an increase of 150 million bushels above the estimated 2014-15 ending stocks. The soybean ending stocks-to-use ratio for 2015-16 is projected to increase to approximately 13.4%, which would be at the highest level in many years. This estimate is based on increased soybean acreage and slight decline in production in 2015, with a small decrease in total soybean demand in 2015-16, mainly due to lower projected export levels, and the large 2014-15 carry-over level.
Total U.S. soybean production in 2015 is estimated at 3.850 billion bushels, which compares to 3.969 billion bushels in 2014 and 3.358 billion bushels in 2013. Planted soybean acres for 2015 are estimated at 84.6 million acres, compared to 83.7 million acres in 2014, and 76.8 million acres in 2013. USDA is estimating a national average soybean yield of 46.0 bushels per acre in 2015, which compares to the record U.S. soybean yield 47.8 bushels per acre in 2014, and a yield of 44.0 bushels per acre in 2013.
USDA is estimating the U.S on-farm soybean price for the 2015-16 marketing year in a range from $8.25-9.75 per bushel, or an average price of $9 per bushel, which compares to a current estimated average farm price of $10.05 per bushel for 2014-15, and a final U.S. average soybean price of $13 per bushel for 2013-14.
Grain market impacts
The large levels of corn and soybean ending stocks projected for both the 2014-15 and 2015-16 years in the latest WASDE report will likely continue to hold down corn and soybean market prices. The large projected grain supplies at the end of 2014-15 will likely prevent any significant market rallies for old-crop corn and soybeans. There is still a significant amount of 2014 corn stored in bins on the farm that has not been sold at this point. Local basis levels remain fairly tight in some locations, which may create some temporary limited cash marketing opportunities for remaining 2014 corn and soybeans in the next few months.
The projected fairly large 2015 corn and soybean crop, and the associated the large carryover levels for the 2015-16 marketing year, is likely to put continued downward pressure on new-crop corn and soybean prices in the coming months. Since the May 12 report, new-crop Chicago Board of Trade corn futures prices have been near $3.75-3.85 per bushel, and new-crop soybean futures near $9.30-9.40 per bushel. It will also be interesting to see if USDA increases the 2015 U.S. corn and soybean yield projections in the coming months, if favorable weather continues in the primary growing regions of the Midwest. Given the current level of corn and soybean ending stocks and the very good start to the 2015 growing season, we are not likely to see substantial price increases during the growing season in 2015, unless we have some type of major weather event later this year.