Corn Price Projected Higher in the 2018-19 Marketing Year

By Sampath Jayasinghe
Decision Innovation Solutions
http://www.decision-innovation.com/

The USDA’s Economic Research Service (USDA-ERS) released its May 2018 Feed Outlook on May 14. This report examines supply, use, prices, and trade for corn including supply and demand prospects in major importing and exporting countries in the 2018-19 marketing year. 2018-19 corn planted acreage in the United States is projected at 88.026 million acres compared to 90.167 million acres in the 2017-18 marketing year, which is approximately a two-percent decrease as shown in Figure 1.

Figure 1: U.S. Corn and Soybean Planted Acreage 2018-19 (Source: Prospective Plantings, USDA-NASS) 

The U.S. average corn yield is projected at 174.0 bushels per acre in the 2018-19 marketing year, compared to 176.6 bushels per acre in the 2017-18 marketing year, down 2.6 bushels. The USDA’s corn yield projection is primarily based on a weather-adjusted trend estimated from 1988 to 2017. This projection assumed normal planting progress and normal weather during the 2018 summer growing season. According to the most recent Crop Progress report released by the USDA’s National Agricultural Statistics Service (USDA-NASS), 81 percent of the national corn crop was planted as of May 20, 2018. This is similar to the five-year average. A detailed analysis of crop planting progress by state can be found here. 

U.S. corn production during the 2018-19 marketing year is forecast at 14.040 billion bushels, compared to 14.604 billion bushels in the 2017-18 marketing year, a drop of nearly four percent. The total U.S. corn disappearance is projected to be 14.590 billion bushels, a decrease of 175 million bushels from the 2017-18 marketing year. Feed and residual use is projected to be 5.375 billion bushels during the 2018-19 marketing year, a drop of 125 million bushels from the 2017-18 marketing year. Food, seed, and industrial use is forecast at 7.115 billion bushels, an increase of 75 million bushels from the 2017-18 marketing year. Under the food, seed, and industrial use category, corn grind for fuel ethanol is projected to increase by 50 million bushels to 5.625 billion bushels from the estimated 2017-18 marketing year. Total U.S. corn exports are forecast at 2.1 billion bushels, compared to 2.225 billion bushels in the 2017-18 marketing year. This approximately six-percent projected decline in exports is mainly due to the increased competition from Argentina, Ukraine, and Russia. 

Ending stocks during the 2018-19 marketing year are forecast at 1.682 million bushels compared to 2.182 million bushels during the 2017-18 marketing year. This significant drop in the projected ending stocks results in 11.5 percent in the stocks-to-use ratio for the 2018-19 marketing year. This is a drop of 3.2 points from the 2017-18 marketing year. As a result, the projected average price received by U.S. farmers for the 2018-19 marketing year is projected at a range from $3.30 per bushel to $4.30 per bushel, with a midpoint of $3.80 per bushel. The estimated midpoint corn price received by farmers during the 2017-18 marketing year was recorded at $3.40 per bushel. Average corn price received by farmers is forecast to increase by approximately 11 percent during the 2018-19 marketing from the 2017-18 marketing year.

World corn production is projected at 1,056.07 million metric tons during the 2018-19 marketing year, compared to 1,306.66 million metric tons, a two-percent increase. The world ending stocks during the 2018-19 marketing year is projected at 159.15 million metric tons, compared to 194.85 million metric tons, a decrease of 18 percent.

Brazil’s corn production is projected to increase 96 million metric tons during the 2018-19 marketing year from an estimated 87 million metric tons in the 2017-18 marketing year, a nearly 10 percent increase. Corn production in Argentina is forecast to be 41 million metric tons during the 2018-19 marketing year, up from an estimated 33 million metric tons in the 2017-18 marketing year, a significant 24 percent increase. Ukraine corn production is projected at 30 million metric tons during the 2018-19 marketing year, up from the estimated 24.12 million metric tons in the 2017-18 marketing year, a significant increase of 24 percent. Russia corn production is projected at 53.5 million metric tons during the 2018-19 marketing year, up from the estimated 42.04 million metric tons in the 2017-18 marketing year, a significant 27 percent increase.

Conclusion

U.S. corn production is forecast to be lower in the 2018-19 marketing year with a substantial decline in corn ending stocks. As a result, average corn price received by farmers is forecast to increase by approximately 11 percent during the 2018-19 marketing from the 2017-18 marketing year. 2018-19 world corn production is projected to increase by two-percent during the 2018-19 marketing year from the 2017-18 marketing year. Argentina, Brazil, Ukraine and Russia have projected to significantly increase their corn production in the 2018-19 marketing year resulting in tough competition for the U.S. corn exports.

Recommended Citation

Jayasinghe, Sampath. 2018. “Corn Price Projected Higher in the 2018-19 Marketing Year." Renewable Energy Report, Agricultural Marketing Resource Center, Iowa State University. May 2018.