Will corn production forecast get smaller?
URBANA, ILL. (University of Illinois) – The U.S. Department of Agriculture’s Aug. 12 corn production forecast and the projections of 2015-16 marketing-year consumption point to another year of ample corn supplies.
The midpoint of the marketing-year average price projection is $3.65 per bushel.
According to a University of Illinois agricultural economist, from the corn producers’ viewpoint, the question is whether these projections will change enough to result in higher prices than currently forecast and currently reflected in the futures market.
“Prospects for year-ending stocks to be smaller than the current projection of 1.713 billion bushels could come from a smaller production forecast or from a larger consumption forecast,” Good said.
Good provided the following analysis of supply prospects.
A smaller supply projection could result from some combination of a lower estimate of harvested acreage or a smaller yield forecast.
The estimate of planted and harvested acreage should become more precise in October as the USDA’s National Agricultural Statistics Service has a chance to review acreage data reported to the Farm Service Agency by producers enrolled in federal farm programs.
Last year, for example, the forecast of harvested acreage declined by 742,000 acres from August to October.
For now, the FSA monthly reports of planted and prevented acreage will be monitored to form expectations about likely changes in NASS acreage estimates.
The first of those reports was released Monday, with producers reporting 83.147 million acres planted to corn compared to the current NASS estimate of 88.897 million.
The FSA acreage figure will grow as acreage reporting and processing is completed, but the final figure will be less than the final NASS estimate because not all producers are required to report acreage to the FSA.
Monday’s report indicated that 2.3 million prevented corn acres have been certified so far in 2015.
That compares to 1.54 million acres reported last year in August and the final 2014 report of 1.6 million acres.
Prevented acres of all crops were reported at 6.5 million, compared to 4.2 million reported in August 2014 and the final 2014 report of 4.37 million acres.
Prevented acres of corn in today’s report totaled 506,039 in Missouri, 233,394 in Mississippi, 193,976 in Colorado, 191,086 in Arkansas, and 170,528 in Texas.
In contrast, prevented corn acres in eastern Corn Belt states that received record or near record rainfall in June were surprisingly small.
Prevented acres were reported at 87,035 in Illinois, 33,643 in Indiana, and 26,423 in Ohio.
Similarly, prevented acres were relatively small in Kansas, reported at only 50,593 acres.
Prevented corn acres exceeded those totals in Iowa, Nebraska, North Dakota, and South Dakota.
The magnitude of prevented plantings reported so far this year does not point to a substantial decline in the NASS estimate of planted acreage of corn.
It is possible, however, that the NASS forecast of corn acreage harvested for grain will decline.
The current forecast of the difference between planted acreage and acreage harvested for grain of 7.8 million acres is only 300,000 acres larger than the 1996 to 2014 average.
It is difficult to assess how harvested acreage in areas of severe flooding have been affected and how those acres will be reflected in forecasts of acreage and forecasts of yield.
The NASS Aug. 12 forecast of the 2015 United States average corn yield of 168.8 bushels is about four bushels above the average trade guess reflected in news service surveys.
History suggests the forecast will likely change in subsequent Crop Production reports by enough to alter the expectations of year-ending stocks.
In the 40 years from 1975 through 2014, the yield forecast changed by less than 2 bushels through the August to November forecast cycle in only five years.
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