In his “Feed Grain Outlook” marketing newsletter, Mark Welch, Texas A&M AgriLife Extension economist, says U.S. corn production decreased by 118 million bushels, according to the November World Agricultural Supply and Demand Estimates. The national average corn yield declined from 168.4 bushels per acre to 167 bushels, 3% below trend.
Harvested acreage was unchanged. That number would have been more bullish if not for adjustments on the demand side of the balance sheet: feed use down 25 million bushels; ethanol down 25 million bushels; exports down 50 million bushels.
The net impact on projected ending stocks was a modest decline of 19 million bushel or down about 1%. The 2019/20 marketing year season average farm price is now projected at $3.85, above the $3.70 reference price that would generate a Price Loss Coverage payment. Grain sorghum production increased 9 million bushels on a 2-bushel increase in average yield. Offsetting this was an increase of 10 million bushels in exports.
The WASDE reported a greater reduction in global corn supplies with ending stocks down about 2%. Supplies were down 6 million metric tons (229 million bushels) and use up 1 million metric tons (31 million bushels). Stocks are projected lower by 6.6 million metric tons (259 million bushels) and days of use on hand at the end of the marketing year was down by two days.
Removing China from the equation of world stocks-to-use calculation leads the days of use on hand to drop from a 46-day supply to 43 days, the lowest since 2012.
Corn harvest was significantly behind normal. The top 18 producing corn states are projected to account for 12.8 billion bushels of the total 13.7 billion bushels this year. Using November crop production estimates and harvest percentages at the same time, about 3 billion bushels were still in the field.
The seasonal price pattern for the December corn contract shows that prices tend to have some upward momentum early in the year before trading below the yearly average in July. Relatively speaking, prices were lower than normal the first half of the year but peaked and bottomed about normal.