Coarse Grain Outlook: Record Corn Yields Produce Record Crop

    The U.S. 2014/15 corn yield forecast is raised once again to a new record high of 174.2 bushels per acre, 2.5 bushels higher than last month’s forecast. The higher yield, partly offset by a 0.7-million-acre decline in harvested area, puts the crop at a forecast 14,475 million bushels, 80 million above last month, and the largest ever. A 129-million-bushel increase in supply and a 50-million-bushel increase in use raise the projected carryout to 2,081 million bushels. Both the high and low end of the 2014/15 corn farm price range are projected 10 cents lower for a new midpoint of $3.40 per bushel, which if realized, would be the lowest since 2006/07.

    Domestic Outlook

    Projected 2014/15 Yield Increase Boosts Corn Production

    The October 10 Crop Production report from USDA’s National Agricultural Statistics Service (NASS) forecasts the U.S. corn yield (as of October 1) at a record-high 174.2 bushels per acre, 2.5 bushels higher than last month’s forecast. The higher yield, partly offset by a 742,000-acre decline in harvested area, puts the crop at 14,475 million bushels, 80 million above last month’s forecast, and the largest ever.

    The October 1 corn objective yield data showed increased ears per acre compared with 2012 for each of the 10 objective yield States: Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin. (Comparisons are not available with 2013 due to the Federal Government shutdown in October 2013.) Plants per acre are also higher for all objective yield States when compared with 2012.

    Early October crop conditions, as indicated by the September 29 Crop Progress report surveying 18 States, was above average with 74 percent of the crop in the good-to-excellent range compared with 55 percent last year at the same time and 25 percent for the drought-damaged 2012 crop. However, as of October 5 in the 18 surveyed States, 17 percent of the crop was harvested, well behind the 5-year average of 32 percent.

    The September 30 Grain Stocks report estimated year-end corn stocks for 2013/14 at 1,236 million bushels. Higher carryin for 2014/15 is partly offset by a reduction in imports, with supplies projected at 15,736 million bushels, 129 million over last month’s projection and nearly a billion bushels over last year’s supply estimate of 14,782 million.

    Feed Grain Supply and Use

    U.S. feed grain production for 2014/15 is forecast at 382.9 million metric tons, nearly 1 million higher than last month’s projection. Increased corn production is offset by reduced production for sorghum, barley, and oats. Planted area for the four feed grains is decreased 1.4 million acres, and harvested area is lowered 1.3 million acres. Yields per harvested acre are up slightly at 4.1 tons per acre. With reduced forecast imports, supplies are set at 420.4 million tons, 2.6 million higher than last month and 25 million higher than 2013/14.

    Total feed grain use is projected at 364.7 million tons, 0.7 million above last month’s forecast due to expected higher feed and residual use and exports and lower food, seed, and industrial (FSI) use due to less sorghum being processed for ethanol. Disappearance in 2013/14 was just slightly lower at 361.4 million tons.

    Feed and Residual Use

    On a September-August marketing year basis for 2014/15, U.S. feed and residual use for the four feed grains plus wheat is projected to total 146.3 million tons, down 9.5 million from the revised total of 136.8 million tons in 2013/14. Corn is forecast to account for 93 percent of feed and residual use, down from 95 percent in 2013/14. The projected index of grain-consuming animal units (GCAU) in 2014/15 is 91.3 million units, up a million from 90.3 million in 2013/14. Feed and residual per GCAU is estimated at 1.60 tons, up from 1.52 tons in 2013/14. In the index components, GCAUs are increased for beef and dairy cattle, poultry, and pork.

    The forecasts for total meat production in 2014 and 2015 are raised from last month. For both 2014 and 2015, the increase in beef production is driven by heavier carcass weights as lower corn prices encourage producers to market heavier cattle. Increased pork production will also be supported by higher carcass weights. Broiler production for 2014 is unchanged, but lower forecast feed costs are expected to encourage more rapid production growth in 2015. Turkey production for 2014 is slightly higher based on production data to date; however, the production forecast for 2015 is unchanged. Egg production is raised for both 2014 and 2015, reflecting revisions to table egg production estimates.

    Corn Feed and Residual Forecast up for 2014/15

    Forecast corn feed and residual for 2014/15 is raised 50 million bushels to 5,375 million, in line with the increase in GCAUs forecast above. Ending stocks are set at 2,081 million bushels, 79 million over last month’s forecast in response to larger forecast supplies, which contributed to larger carryout.

    Corn Price Projected Lower

    Both the high and low end of the forecast price range for corn in 2014/15 were lowered by 10 cents for a new midpoint of $3.40 per bushel, which if realized, would be the lowest since 2006/07. Abundant domestic and global supplies are behind the lower price. The corn price for 2013/14 was estimated 1 cent per bushel higher than last month’s projection, for a year-end price of $4.46 per bushel.

    Minor Changes in the 2013/14 Balance Sheet

    U.S. corn imports were increased by 787,000 bushels to 35.8 million, with the availability of Bureau of the Census trade data for the complete marketing year. The resulting supply is 14,782 million bushels for the marketing year. Corn exports are lowered 7.7 million bushels on year-end Bureau of the Census data. FSI is increased 3.9 million bushels as Energy Information Administration data indicate increased fuel ethanol production in July and August.

    Total use is estimated at 13,546 million bushels, up 2,438 million from 2012/13. Ending stocks are reduced 54 million bushels based on the September 30 Grain Stocks report to 1,236 million bushels. As a result, feed and residual is lowered 49.8 million bushels to 5,125 million. Fourth-quarter feed and residual is 401 million bushels, 155 million higher than the fourth quarter of 2012/13.

    Untimely Kansas Rains Sap Sorghum Yields

    The U.S. average sorghum yield is forecast 1.8 bushels per acre lower this month to 65.4 bushels. Heavy rains, and even hail in some locations, along with cool conditions reduced projected yields in Kansas ahead of the most recent NASS survey. Continued weather challenges into early October may yet affect the Kansas and U.S. sorghum yield averages. At 9 percent harvested by October 5, the sorghum harvest in Kansas is 5 points behind last year’s pace.

    In spite of recent weather, October 5 conditions indicate that 53 percent of the Kansas crop is still rated as good to excellent. This compares to the 9 percent rated similarly in 2012. Due to the Federal Government shutdown in October 2013, comparable condition estimates are not available for 2013.

    Nationally, updates to sorghum planted and harvested area indicate declines of 258,000 and 225,000 acres, respectively. Subsequent to area and yield declines, production is forecast down 26.6 million bushels this month from the September figure. Total supply is augmented by a significant upward revision to the beginning stocks estimate, following the September Grain Stocks report. At 34.0 million bushels, the beginning stocks estimate is fully 13.8 million higher than the September projection and 18.9 million more than on September 1, 2013.

    However, at 34.0 million bushels, the stocks estimate is comparable to the 5-year (2008-12) average of 32.3 million bushels. Relative to 2013, a slightly higher proportion of September 1 stocks were held on farms (5.7 percent versus 3.9 percent) though the 2014 figure is down from the 5-year average of 7.1 percent.

    Several categories of domestic use are reduced this month and reflect lowered sorghum supplies and abundant corn. Projected sorghum feed and residual use is cut by 10 million bushels to 90 million as higher prices for sorghum make plentiful and lower priced corn a more appealing feed. Higher relative sorghum prices are also a factor in the 30 million bushel reduction in 2014/15 FSI use. In total, domestic sorghum use is reduced by 40 million bushels to 180 million.

    Maintained strength in the export market provides sorghum prices some insulation from the price-depressing effects of increased domestic and global corn supplies. Whereas the corn farm price is projected 10 cents per bushel lower this month, the season-average midpoint projection for sorghum is lowered just 5 cents per bushel to $3.25, with a range of $2.95-$3.55 per bushel. Sorghum prices are currently forecast at 95.6 percent of the corn price. The 5-year average is 94.3 percent.

    Several back year changes were made this month: U.S. sorghum imports were increased slightly and result in a slight increase in 2013/14 total supply to 404 million bushels. Sorghum exports are lowered 3 million bushels to 212 million. Both trade changes reflect year-end data from the Bureau of the Census. FSI use is lowered 9 million bushels and feed and residual use is lowered 2 million bushels. Estimated ending stocks combine with the trade changes to drive domestic use 13.8 million bushels lower.

    Idaho and Montana Malt Barley Losses Bolster Malt Prices

    Significant rain in late August and early September caused sprout damage to barley crops in Idaho and Montana and have reduced the volume of two-row barley available for malting. Industry sources indicate that some six-row barley from North Dakota and Minnesota may be finding its way to maltsters and brewers in Idaho; however, transportation challenges and differences in two-row vs. six-row malting properties may inhibit full substitution.

    Increased demand has driven up prices for malt barley and provides support for a slight increase in the all-barley prices, despite price declines for other grains and low feed barley prices. The 2014/15 all-barley season average farm price midpoint is raised again this month from $4.85 per bushel to $5.10 per bushel.

    Following the release of the NASS Small Grains report, many small changes to the barley balance sheet were made. Estimates of 2014/15 area planted and harvested are revised downward by 116,000 and 175,000 acres, respectively. The average yield is increased slightly to 73.4 bushels per acre, a record high, despite late season harvest challenges. The second-highest recorded yield, at 73.1 bushels per acre, was realized in 2010.

    Production for 2014/15 is estimated at 180.4 million bushels, a decline of 12.3 million from last month’s forecast. Beginning stocks are revised upward slightly; the production cut is charged against ending stocks which are lowered this month to 68.4 million bushels. If realized, this will be the third-lowest ending stocks level on record, behind estimates of 60.0 and 68.2 million bushels recorded, respectively, in 2011 and 2007.

    With final data available from the Small Grains report, barley final acreage for 2013/14 was increased slightly and yields reduced for a production increase of 1.7 million bushels. Feed and residual was increased 1.7 million bushels, and ending stocks were revised slightly to end at 82.0 million bushels.

    Despite High Prices in 2013/14, Oats Planted Area Down in 2014/15

    Successive years of high prices notwithstanding, according to the Small Grains report, growers seeded fewer acres of oats for grain in 2014/15. At 2.72 million acres, the area planted estimate is 257,000 acres less than the 2013/14 figure and 304,000 acres less than the September 2014/15 forecast. Harvested area is lowered 114,000 acres from the previous month’s forecast but is 3 percent higher than the 2013/14 estimate and represents the third-lowest harvested acre on record.

    The U.S. oats yield estimate is raise by 0.8 bushels to 67.8 bushels per acre this month, a gain of 3.7 bushels from the 2013/14 figure. Year-over-year gains in harvested area and yields contribute to a sizable 9-percent increase in production; despite a 6.8-million-bushel month-to-month reduction in estimated production from last month’s forecast. The loss is partly offset by a slight increase in beginning stocks. Oats feed and residual use is reduced by 5 million bushels; ending stocks absorb the remainder of the reduction and are lowered by 1.8 million bushels to 31.2 million.

    If realized, the 2014/15 ending stocks forecast will be the second-lowest on record behind only the 2013/14 estimate of 24.7 million bushels. Tightening supply conditions warrant an oats price increase. The projected season-average midpoint price is raised again this month, up 5 cents to $3.10 per bushel on the strength of higher prices through the early fall.

    The Small Grains report provides updated figures for 2013/14; an acreage reduction combined with a slight increase in yield to move production down 1.2 million bushels to 64.6 million. With imports, supply totaled 198.2 million. Feed and residual was reduced by 1.3 million bushels, and ending stocks are estimated up slightly at 24.7 million bushels.

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