USDA forecasts buildup in US corn stocks next season – 5/14/2023
The US Department of Agriculture (USDA) projects a buildup in US corn carryout stocks during the 2023/2024 crop year. The USDA’s latest World Agricultural Supply and Demand Estimates (WASDE) report projects that corn carryout stocks will reach 2.2 billion bushels in 2023/2024, up from 1.4 billion bushels in 2022/2023.
There are a number of factors that are contributing to the projected buildup in corn carryout stocks. These include:
- A record corn crop in 2023
- A modest increase in corn exports
- An only minor increase in corn use for ethanol
The record corn crop in 2023 is the main factor contributing to the projected buildup in carryout stocks. The USDA projects that US corn production will reach 15.3 billion bushels in 2023, up from 13.7 billion bushels in 2022. USDA’s national corn yield projection for 2023 assumes a trend yield of 182 bushels per harvested acre which matches our forecast assuming normal summer weather in the US Corn Belt.
| US Corn Data Million Bushels/Acres | ||||
| 2020 | 2021 | 2022 | 2023 Proj. | |
| March Survey | 96,990 | 91,114 | 89,490 | 91,996 |
| Planted | 90,652 | 93,357 | 88,579 | 91,996 |
| Harvested | 82,313 | 85,318 | 79,207 | 84,100 |
| % Harvested | 90.8% | 91.4% | 89.4% | 91.4% |
| Yield Bu./Ac. | 171 | 177 | 173 | 182 |
| Production | 14,111 | 15,074 | 13,730 | 15,265 |
| 2023 Forecast Based on USDA May 2023 Data. | ||||
The USDA projects that US corn exports will reach 2.1 billion bushels in 2023/2024, up from 1.78 billion bushels in 2022/2023. China corn imports are the major variable in projecting US corn exports. In the May WASDE report USDA forecast Chinese world wide corn imports at 23 million tonnes compared to 18 million tonnes a year ago. It is likely USDA assumes China will buy some US corn in 2023/2024, but not in the volume of the market changing years of 2020/21 & 2021/22. Of course adverse weather in China this summer could force the Chinese to be more aggressive in the US corn market.
The only minor increase in corn use for ethanol is also contributing to the projected buildup in carryout stocks. The USDA projects that US corn use for ethanol will reach 5.3 billion bushels in 2023/2024, up from 5.25 billion bushels in 2022/2023. It appears US ethanol production has peaked, although more ample corn supplies may allow for modest growth.
| US Corn Supply/Usage Million Bushels acres | ||||
| 2020/21 | 2021/22 | 2022/23 | 2023/24 | |
| Area Planted | 90.7 | 93.3 | 88.6 | 92 |
| Area Harvested | 82.3 | 85.3 | 79.2 | 84.1 |
| Yield per Harvested Acre | 171.4 | 176.7 | 173.3 | 181.5 |
| Beginning Stocks | 1919 | 1235 | 1,377 | 1,417 |
| Production | 14111 | 15074 | 13,730 | 15265 |
| Imports | 24 | 24 | 40 | 25 |
| Supply, Total | 16055 | 16333 | 15,147 | 16707 |
| Feed and Residual | 5607 | 5721 | 5,275 | 5650 |
| Food, Seed & Industrial | 6467 | 6764 | 6,680 | 6735 |
| Ethanol & by-products | 5028 | 5326 | 5,250 | 5300 |
| Domestic, Total | 12074 | 12484 | 11,955 | 12385 |
| Exports | 2747 | 2471 | 1,775 | 2100 |
| Use, Total | 14821 | 14956 | 13,730 | 14485 |
| Ending Stocks | 1235 | 1377 | 1,417 | 2222 |
| Carryout/Usage* | 13% | 15% | 17% | 25% |
| * Excluding Feed Residual, May 2023 USDA Estimate & Projected New Crop | ||||
The accompanying scatter study displays the average crop year corn farm price as a function of the US corn carryout to usage ratio where usage is defined as FSI usage plus exports. We leave feed & residual usage aside as feed usage is very elastic relative to price and at any rate is implicit in the corn carryout calculation. Note that the current marketing year (labeled 2023) read very high on the scatter. The early outlook for the 2022/2023 US corn supply/usage was very tight resulting in $6.00+ corn, but disappointing corn exports resulted in less price pressure than market participants had anticipated. USDA forecasts the September 2023 through 2024 average farm price at $4.80 which appears to be on the high side based on the historical evidence and assuming USDA’s May 2023 published corn supply/usage balance table.
The USDA’s (WASDE May 2023) new crop corn supply usage projections portray a bearish outlook for corn prices in 2023/2024. But by necessity the USDA’s scenario is based on the assumption that the Corn Belt will enjoy at least normal weather this summer. As an extreme bullish example, a 2012 year type US Midwest drought would likely result in $8.00 + corn at farm level.