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Market Outlook

Editor’s Note: Reports in this month’s Corn South are from Mark Welch, Texas AgriLife Extension economist, and Scott Stiles, agriculture Extension economist with the University of Arkansas. The opinions and recommendations expressed are solely those of the authors and are intended for educational purposes only. The respective universities assume no liability for the use of this information. The final report is from the USDA’s National Agricultural Statistics Service.

SDA surprisingly lowered its estimate of the 2014 U.S. corn yield in the World Agricultural Supply and Demand Estimates released Nov. 10. The October estimate was a national average yield of 174.2 bushels per acre with traders expecting an increase to 175.2 bushels. Instead, USDA lowered the yield to 173.4 bushels per acre. No changes were made to planted or harvested area, so this change lowered the U.S. corn production estimate from 14.475 billion bushels last month to 14.407 billion bushels.

On the demand side of the balance sheet, domestic use increased five million bushels and exports were unchanged. Ending stocks decreased by a total of 73 million bushels. The U.S. stocks-to-use ratio is 14.70 percent, down from 15.24 percent last month.
World corn supplies were little changed as increases in the European Union, Mexico and Ukraine were offset by a decrease in China. Estimated world days of use on hand at the end of the marketing year increased from a 71.5 day supply last month to 71.9 days.

Crop Progress
The first major winter storm of the season moved across the United States this week with USDA reporting in mid-November that corn harvest was 80 percent complete. In the major corn-producing states in and around the Upper Midwest, the area hardest hit by the storm system, about 2.4 billion bushels were still in the field.

Outside Markets
The October employment report released by the Bureau of Labor Statistics last Friday showed gains in nonfarm payrolls of 214,000 and a drop in the unemployment rate to 5.8 percent. A broader measure of unemployment that includes workers employed part time for economic reasons fell to 11.5 percent. The spread between these unemployment numbers is 5.7 percent compared to a pre-recession average of 3.9 percent.

Screen Shot 2014-11-20 at 10.27.32 PM2015 Corn Marketing Plan
My marketing plan calls for pricing the first portion of the 2015 crop this winter. I am waiting until we have a better handle on the size of the 2014 crop, both final numbers in the United States and projected numbers in South America, before making this sale. The next World Agricultural Supply and Demand Estimates report will be released by USDA on Dec. 10.

Scott Stiles: USDA’s World Ag Supply/Demand Estimate
This month’s corn estimates contained the only surprises for traders. Pre-report guesses leaned toward higher corn production. However, the USDA reduced the national average corn yield by .8 bushels to 173.4 bushels per acre. Month-to-month yield reductions were made in the key corn-producing states of Iowa, Minnesota, Kansas, Ohio and Michigan. Collectively, these five states account for 37 percent of total corn acreage.

Yield Projections
No adjustments to planted or harvested acreage were made this month. Total production was reduced by 68 million bushels to 14.407 billion bushels. Total demand was increased by 5 million bushels. Ending stocks were reduced by 73 million bushels to a total of 2.008 billion.

The November ending stocks estimate is up sharply from last year’s 1.236 billion and is the highest level seen since 2004. Average producer prices for the 2014/15 marketing year were placed in the range of $3.20 to $3.80 per bushel.
Note: This month’s U.S. corn yield and production estimates are both records.

USDA NASS Crop Production Report
The Nov.10 Crop Production Report from USDA’s National Agricultural Statistics Service (NASS) forecast area harvested for grain at 83.1 million acres, unchanged from the October forecast, but down five percent from 2013. The Nov. 1 corn objective yield data indicated the highest number of ears on record for the combined 10 objective yield states (Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin).

Later Harvest
At 14.4 billion bushels, corn production is forecast to be the high- est production on record for the United States. The forecasted yield, at 173.4 bushels per acre, is also expected to be a new record high for the United States. Twenty-two states expect a record-high corn yield for 2014.

However, corn harvest is slightly behind this point last season. NASS’s report sets corn harvested at 80 percent complete on Nov. 9, equal to the five-year average and slightly behind the 82 percent reached at the same point last season. Some new crop corn is stand- ing in the field longer than usual as producers cope with drying and storing a record crop.