Sunday, May 17, 2015

Corn - Consumption Is Expected To Be Higher Than Production; This Is A Radical Change In Fundamentals

Some time ago I published a bullish post on agriculture commodities (link here). On May, 12 the USDA (United States Department of Agriculture) published new crop forecasts. According to these forecasts, for the first time since the season 2010 / 2011, the world consumption of corn is expected to exceed its production. Please, look at the chart below:

                                                               source: USDA and Simple Digressions

As the chart shows, in 2015 / 2016 corn consumption should exceed its production by 0.47 million tons. The last such occurrence took place in 2010 / 2011, when corn consumption was higher than its production by 18.22 million tons.

Looking at some details, below I am listing countries and their production / consumption numbers projected for 2015 / 2016:

  • The biggest world producer of corn is USA with production of 346.22 million tons per year (35% of the world production).
  • China and Brazil are ranked second and third with production of 228 and 75 million tons respectively. All these three countries are expected to report an excess in production over consumption of 68.96 million tons. And here we have another bullish indicator for the corn prices - this excess is expected to be lower than 82.11 million tons reported in 2014 / 2015.
  • The chart below shows other big players in the corn market and differences between their production and consumption (a negative bar means that consumption is expected to be higher than production):  

                                                                  source: USDA and Simple Digressions

In my opinion, the last forecast is supportive for the bull case for the corn prices.

While the fundamentals are indicating chances for the beginning of the new bull market in the corn prices, the technical picture is still bearish - look at the chart below:

No comments:

Post a Comment