Fundamentally Speaking

Corn Balance Sheet Changes

Joel Karlin
By  Joel Karlin , DTN Contributing Analyst

The prospective 2019/20 U.S. corn balance sheet just got a lot looser with larger beginning stocks and increased acreage as implied by the March 29 release of the prospective planting and quarterly grain stocks data as of March 1st.

Without question, corn had the most negative figures with stocks 270 million bushels (mb) higher than expected and acreage about 1.500 million acres greater than had been anticipated,pushing this market to new contract lows.

Recall in February at their annual Outlook Forum, USDA pegged next year's corn ending stocks at 1.650 billion bushels (bb) based on planted acreage of 92 million, a yield of 176.0 bushels per acre (bpa), beginning stocks of 1.735 bb, export demand at 2.475 bb and domestic demand of 12.540 bb (feed 5.50 and FSI of 7.04).

Now beginning stocks looks to be at least 2.00 bb if not more, planted acreage at least for the May and June 2019 WASDE will be 92.8 million and a prospective 2019 yield of 176 bpa looks low.

Exports of 2.475 bb look very high in light of a substantial rebound in South American corn production this year, and the negative implications for the FSI and feed categories from the 3/1/19 stocks report looks to carry over into next year's consumption.

The bottom line is that it is very easy to project ending stocks next year almost 800 mb higher than the 1.650 bb carryout USDA projected just six weeks ago.

Along these lines, this graphic shows the change for U.S. corn ending stocks, production, domestic use and exports in million bushels from USDA's February Agricultural Outlook Forum projections usually released the third week of February to the 1st WASDE report of the year given in May.

We have 20 years of data and it looks like the biggest increases in the stocks estimate from the Feb Outlook to the first WASDE report of the marketing year given in May was in 2008 when they were 740 mb higher and back in 1999 when they were 595 mb greater.

(KLM)

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