Fundamentally Speaking

Prospective Corn Ending Stocks

Joel Karlin
By  Joel Karlin , DTN Contributing Analyst

This year's U.S. corn stock to use ratio as indicated by the March 2016 WASDE report was pegged at 13.6% which is the highest since the 2008/09 season and before that 2004/05.

Current ending stocks pegged at 1.838 billion bushels are the highest since the 2005/06 season while this year's average farm price at $3.60 is the lowest since the 2009/10 season and before that 2006/07.

All of these facts attest to the deteriorating price situation with corn just three years removed from values that were about twice as high.

As sobering as this picture is the current scenario for this season may be far better than what corn producers can expect for the 2016/17 marketing year if last week's USDA planting intention figure for corn at 93.6 million acres is anywhere close to the mark.

This graphic shows prospective 2016/17 U.S. corn ending stocks in million bushels per various combinations of acreage and yields.

Going across the x-axis is planted acreage in millions while going down the y-axis are possible yields in bushels per acre.

Within the cells is the ending stocks based on the combination of yields, planted acreage, a 92% harvested to planted ratio, beginning stocks at 1.837 billion bushels and demand at 13.725 billion bushels as given at the USDA's Feb Ag Outlook Forum.

As an example, the USDA intentions report shows 93.6 million acres planted with the Feb Outlook yield forecast at 168 bushels per acre (bpa).

The intersection of that column and row shows an 18.8% figure.

We arrive at this number by taking 93.6 million acres and multiplying that by 92% and then by 168 bpa to give a production figure of 14.467 billion bushels.

To that we add the beginning stocks of 1.837 billion and subtract estimated 2016/17 demand of 13.725 billion bushels which results in a 2016/17 ending stocks figure of 2.579 billion bushels.

Note that cells shaded yellow have a stocks to use ratio of less than 10.0%, cells shaded grey have stock to use ratio between 10% and 20% and cells shaded blue have stock to use ratios over 20%.

This year's stocks-to-use ratio is 13.6% and any combination of planted acreage in excess of 91.6 million acres and a yield over 163 bpa will result in a stocks to use ratio above that.

(KA)

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