Welch on Grain: Corn Ending Stocks Predictions Continue to Decline

    Market Situation

    Corn Use. In last week’s World Agricultural Supply and Demand Estimates USDA once again narrowed the margin by which corn production in the 2013/2014 marketing year exceeds estimated use.

    ky-cornIn the August through November WASDE’s, production was estimated to outpace use by over a billion bushels. In the most recent report that margin has narrowed to 600 million bushels. Estimated corn ending stocks have fallen from 1.887 billion bushels in November to 1.456 billion in March.

    Most of that change has occurred in the export category, up 400 million bushels since the low estimate of the current marketing year in September. In that same time frame, corn for feed and residual use is up 200 million bushels, fuel use is up 100 million bushels, and food, seed, and industrial use other than fuel is down 50 million bushels.

    World per capita grain use continues to increase as well. Since breaking upwards from the 333 kg/person average from 1978 to 2002 (734 lbs), use of barley, corn, millet, mixed grains, oats, rice , rye, sorghum, soybeans, and wheat has increased by 40 kg (88 lbs), +12%.

    Outside Markets. A referendum to leave Ukraine and become part of Russia received 96.8% of the votes on Sunday. The Crimean Parliament voted today to separate from Ukraine and join the Russian Federation. Given that the vote was held in the presence of Russian military intervention, results were dismissed by the U.S. and its Western European allies as illegitimate and a violation of the Ukrainian constitution.

    A story this morning from the Bloomberg news organization notes that at this point sanctions imposed by the West on Russia are in the form of asset freezes and visa bans, not embargoes or trade restrictions (“Commodities Cushioned From Crimea Crisis by Ample Supply“). Fortunately, this confrontation is taking place at a time when Europe is having a milder than normal winter and natural gas supplies are up 34% from the year before. Global grain production is at record levels easing concern over grain supplies. Ukraine’s biggest port of Yuzhniy, near Odessa to the northwest of Crimea, is reported to be operating normally.

    Reuters and the Moscow Times reports that the crisis, which has lowered the value of the Russian ruble on world currency markets, is making Russian wheat more affordable on world wheat markets and increasing export activity for wheat sourced out of the Black Sea (“Ruble Weakness a Boon to Wheat Export“).

    Marketing Strategies

    2014 Corn Marketing Plan. I have priced the first 20% of 2014 production. My marketing plan calls for pricing the next 20% from now to the end of May based on seasonal price strength related to questions about carryover stocks, acreage, planting conditions, and early season weather. With the emerging development of an El Nino (see today’s Wheat Outlook), the long term weather outlook looks favorable at this time.

    Upcoming Reports/Events.

    March 21 – Cattle on Feed
    March 28 – Quarterly Hogs and Pigs
    March 31 – Grain Stocks, Prospective Plantings
    April 8 – Short-term Energy Outlook, EIA
    April 9 – WASDE

    The Latest

    Send press releases to

    View All Events

    [ecs-list-events limit="5" key="start date" order="asc"]
    Send press releases to

    View All Events