by Joe Janzen, Department of Agricultural and Consumer Economics. University of Illinois
This article reviews the latest US corn and soybean production and use forecasts from USDA which include forecasts for the new-crop 2023/24 marketing year. These new-crop supply and demand projections are valuable not because they necessarily enable users of the information to better predict forthcoming price changes, but because they establish expectations about future market conditions and provide context for forthcoming marketing decisions.
Broadly speaking, prospects have coalesced around an inverted market structure with new-crop corn and soybean prices much lower than old-crop values. USDA projections for 2023/24 supply and demand support a return to prices near long-run average levels (See: farmdoc daily May 31, 2022), especially for corn. As planting ends and the growing season begins in earnest throughout the US Corn Belt, future price changes will be based on deviations from these expectations.
Corn Production and Use
On Friday, May 12, the US Department of Agriculture released its latest World Agricultural Supply and Demand Estimates (WASDE). The May WASDE report included USDA’s first complete projections for new-crop 2023/24 corn and soybean production and use. This does not imply that nothing is known or anticipated about new-crop market fundamentals prior to the May report; USDA does produce a limited new-crop commodity market outlook in February at its Annual Outlook Forum. More generally, market analysts have been forming price expectations for some time; for instance, futures contracts for delivery during the 2023 harvest time were listed for trade back in late 2019.
The new-crop WASDE production forecasts reflect updated acreage estimates released in the March Prospective Plantings report from the National Agricultural Statistics Service and yield estimates based on long-run trends. Thus, it is more instructive to view the May report as an important update to a widely followed benchmark supply and demand forecast.
Table 1 shows the old-crop and new-crop US corn balance sheets for corn from USDA. Old-crop use projections declined as US dropped its corn export forecast an additional 75 million bushels. This continues a series of declining 2022/23 corn export forecasts going back to the summer of 2022 (See: farmdoc daily March 13, 2023). Given fixed old-crop supply, the entire decrease in corn use is reflected in higher projected ending stocks, pushing the old-crop stocks-to-use ratio above 10%.
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