New projections for the US maize harvest
Agricultural scientists at the University of Kansas (KSU) use statistical forecasting models to develop the expected harvest results with the associated prices. The calculation model is continuously updated with new information. In addition to a number of other model calculations, the approach to the US corn harvest provides the most interesting information because the US result has a global impact due to its high market share.
According to the latest information from mid/end July 2013, 3 model variants are being discussed. The first KSU model assumes a 45% probability. The key result is the stock-to-use ratio of 11.6%. Due to the correlation with the price, this results in a maize price of 5.65 $/bu (converted at 1.3 $/€ => 17.08 €/dt).
A second variant with a 35 % probability comes to the result of a 14 % stock to use ratio and a corresponding price of 5 $/bu or 15.12 €/dt. And a third variant with 20 % probability yields 9.7 % stock to use ratio and a maize price of 6.35 $/bu or 19.20 €/dt.
In comparison, the US Department of Agriculture (USDA) estimate from the beginning of July 2013 is 15.4% stock-to-use ratio and an estimated price of $4.80 per bu or €14.50 per tonne.
The average market prices on the CME for the fall/winter futures range between $4.75 and under $5/bu. On the Paris exchange, the maize price has fallen in recent days from just under €22 for the Aug-13 date to below €17/dt for the Dec-13 date - a premature overreaction ?!
It is well known that the next USDA estimate at the beginning of August 2013 will revise its optimistic supply situation downwards and price forecasts upwards. Delayed sowing and an average weather development that has so far not been record-breaking, as well as the increased risk of early frosts, are sufficient reasons to refrain from expecting top harvest results.
The latest projections from Kansas State University suggest higher average corn prices than previously forecast. If the forecast is correct, this will also be reflected in the global market price level.
