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Bullish Outlook for U.S. Corn Following USDA Report

Posted on Corn

The U.S. Department of Agriculture (USDA) offered a bullish projection for U.S. corn by increasing its estimated average farm price by 25 cents to $3.45 to $4.05 per bushel in its World Agricultural Supply and Demand Estimates (WASDE) report released Friday.

“This report predicts U.S. corn prices will be above U.S. corn farmers’ production costs due to lower ending stocks and a slight increase in the U.S. market’s demand for its own corn,� said U.S. Grains Council (USGC) Manager of Global Trade Alvaro Cordero. “Yet, the report also indicates 46 million metric tons (1.8 billion bushels) of U.S. corn will be available for export, which is even more than the current marketing year.�

The report also decreased corn beginning stocks for the 2015/2016 marketing year by 2.46 million tons (97 million bushels) and decreased corn production estimates by 2.54 million tons (100 million bushels), bringing total corn production to 343 million tons (13.5 billion bushels).

“An interesting fact about this report is it did not lower yield estimates from 10.5 tons per hectare (166.8 bushels per acre),� Cordero said. “The United States has the technology to maintain its yield levels even though the acres planted decreased due to a cool, wet spring this year.�

Improvements in seed varieties have helped keep the United States a leading corn exporting country. But competition is heating up from corn originating in South America and the Black Sea area.

“U.S. corn still faces strong competition from these competitors, especially Brazil,� Cordero said. “However having another large crop on our hands will help maintain the United States’ reputation as the long-term, reliable supplier of high-quality corn.�

The USDA data supports this contention, with a majority (69 percent) of the 2015 U.S. corn crop rated as being in excellent or good condition.

The next WASDE report, which is set to be released Aug. 12, will provide updated information about the U.S. corn crop following pollination, further filling out the picture of this year’s market conditions.