From Agriculture Canada’s OUTLOOK FOR PRINCIPAL FIELD CROPS
For 2013-14, production increased by 9% to a new record of 14.2 Mt due to higher area and near record yields. Both seeded and harvested areas increased by 4% and exceeded the records established last year.
Total supply is forecast to increase by 8% to a record 16.2 Mt due to higher production and higher carry-in stocks. Imports are forecast to decrease 12% due to higher domestic supply and are expected to remain below the average of the previous five and 10-years.
Total domestic use is forecast to increase by 3% as overall feed and industrial demand remains at trend levels. Exports are forecast to decrease significantly from the record high in 2012-13 due to a projected recovery in US and world corn production along with lower prices in the world’s main corn exporting countries. Carryout stocks are forecast to increase substantially to a record level of 3.4 Mt. The Chatham in-store elevator price is forecast to decrease with the large North American and world corn crop that was produced in 2013.
The nearby Chatham market price has been posting basis gains over the last month and the nearby basis is trading above the previous three-year average. Ontario’s Corn Belt had less than ideal fall conditions and this had been complicated by snow squall activity, slowing the harvest and producer deliveries. In November, the US Environmental Protection Agency (EPA) did not propose a specific 2014 volume for ethanol made from corn. However, the proposed change in advanced biofuels implies a corn ethanol mandate of 12.7 to 13.2 billion gallons vs. the previous 2014 mandate of 14.4 billion gallons. The EPA expects to release a final rule next spring after a 60-day public comment period.
Based on their latest reports, the IGC and USDA are offering very similar outcomes for 2013-14 world coarse grains. On a world basis; coarse grain total supply, total use and ending stocks are all forecasted higher for 2013-14 when compared to the previous year. World trade in coarse grains is forecast to increase, especially for corn which forecast to increase by 10%. The US represents nearly 30% of world corn production and as such the Chicago corn futures is the “price point” for world corn and grain trade in general.
The large increase in world corn ending stocks can be attributed almost entirely to the higher production and stock position in the US.