Corn prices are well-supported moving into the 2018 growing season, according to Peter Georgantones of Abbott Futures. Georgantones analyzed the latest World Agricultural Supply and Demand Estimates report during a May 10 conference call hosted by MGEX.
He said lower expected carryover stocks for corn make the market more positive for corn, with a possible price of $4.65 per bushel predicted for later this year — maybe more if there’s a weather issue impacting yields. World ending stocks for corn have come down dramatically from a year ago, he said.
The corn crop is projected at 14 billion bushels, down from last year with a lower forecast area and yield. The yield projection of 174 bushels per acre is based on a weather-adjusted trend assuming normal planting progress and summer growing season weather and estimated off the 1988-2017 timeframe.
With beginning stocks down from a year ago, total corn supplies at 16.3 billion bushels, if realized, would be down 675 million from the previous year. Total U.S. corn use in 2018-19 is forecast to decline modestly from a year ago on reductions in domestic use and exports, according to the WASDE report. U.S. corn exports are forecast to decline 125 million bushels in 2018-19.
With the total U.S. corn supply falling faster than use, 2018-19 U.S. ending stocks are down 500 million bushels from last year, to 1.7 billion. The season-average farm price is projected at $3.30 to $4.30 per bushel, up 40 cents at the midpoint from 2017-18.
Weather across the U.S. has been “ideal” for planting in recent weeks, according to Georgantones, who added, “We’ve caught up” after a late spring.
He said he also has a good feeling about soybeans, but that market is a bit trickier because of a very large South American crop; Brazil is expecting a record crop. Bean prices could be $10 to $11 per bushel, he said. The 2018-19 U.S. season-average soybean price range is forecast at $8.75 to $11.25 per bushel, compared to $9.35 in 2017-18. World ending stocks are about the same as they were a year ago.
The 2018-19 outlook for U.S. soybeans calls for higher supplies, crush and exports and lower ending stocks compared to 2017-18, according to the WASDE report. The crop is projected at 4.2 billion bushels, down 112 million from last year’s record crop on lower harvested area and trend yields. With higher beginning stocks, bean supplies are projected at 4.8 billion bushels, up 2 percent from 2017-18. Total U.S. oilseed production for 2018-19 is forecast at 127.3 million tons, down 3.7 million, mostly due to lower soybean production.
Georgantones said he didn’t see much positive in the report for wheat, as “the world is awash with wheat.” The overabundance of wheat could be a drag on corn, too, he said.
“It would take a weather problem to straighten things out with wheat and get the market going,” he said. “Sell wheat and soybeans on any kind of rally; with corn, you could be a little more patient yet.”
The next WASDE report is scheduled for release on June 12.