Fundamentally Speaking

Corn prices have continued to recede based on expectations that additional yield hikes, perhaps sizable, will be seen in subsequent USDA crop production reports.

Adding to the downside pressure are forecasts for record world production that will swell supplies overseas limiting U.S. export opportunities.

Though global harvested area for corn is down 1.0% from year ago levels, output at 987.5 million metric tons exceeds the prior year's record by less than 0.1%.

The reason for this is a new peak for global corn yields at 5.60 metric tons per hectare (mt/ha) topping last year's record of 5.54.

This graphic shows corn yields in the world and top producing nations in mt/ha for the past 15 years.

The last USDA estimate for the 2014 U.S. yield at 171.7 bushels per acre works out to 10.78 mt/ha though a yield as high as 180 bpa works out to 11.30 mt/ha.

The fact that the U.S. accounts for over 37% of global output this year implies that an upward revision in this year's U.S. yield will boost the world corn yield.

Besides the U.S., record yields are seen in Russia with China and the European Union posting their second highest yields ever.

We note that the USDA is forecasting lower yields this year in both Brazil and Argentina though with plantings still a few weeks away these are just projections.

(KA)