Coarse grains markets have come down in recent months as it’s become increasingly clear that 2013-14 is going to produce a sharp recovery in production, especially in the U.S. corn crop which is reassuming its role as the dominant production factor in the world market.

“Corn prices have fallen to a three-year low, amidst huge and better than expected harvest reports,” the U.S. Grains Council said in a report at the end of October. “Lower oilseed and grain prices have prompted a bevy of overseas buying,” it noted.

Corn futures prices came under further pressure following a couple of announcements in mid-November. The U.S. Environmental Protection Agency on Nov. 15 proposed reducing the 2014 ethanol mandate, which may reduce corn demand. On Nov. 18, trade reports confirmed China had rejected an import cargo of unapproved bioengineered U.S. corn.

Projected U.S. feed grain supplies for 2013-14 are raised with higher estimated beginning stocks and increases in corn and sorghum production with the November Crop Production report, the USDA said in its November World Agricultural Supply and Demand Estimates report. It forecast U.S. corn production at a record 355.33 million tonnes, up from 273.83 million the year before and noted that a reduction in area was more than offset by an increase in yield, although yield per hectare remains below the 2009-10 record.

USDA now predicts U.S. corn exports in 2013-14 at 35.56 million tonnes, up from a projection of 31.12 million made two months earlier and from the previous year’s 18.58-million-tonne figure, with larger supplies and lower prices that have increased the competitiveness of U.S. corn as indicated by strong outstanding export sales and rising export shipments in recent weeks.

The International Grains Council (IGC) has also been racking up its estimates for corn production. “The 2013-14 world corn production forecast has been increased by 5 million tonnes, to a record 948 million, to reflect better crop prospects in the U.S. and the E.U,” it said in its end of October report. “The 10% year-on-year increase is mainly due to a substantial 7-million-tonne rebound in the U.S., from the previous season’s very poor crop.”

Improved output is also expected in the E.U., Ukraine and China, while production in Argentina and Brazil is likely to decline from last year’s record levels, the IGC said. “The global corn area is projected slightly lower than in 2012-13, but the average yield is forecast at 5.4 tonnes per hectare, up 11% year on year,” it said.

The U.S. harvest was 59% complete by Oct. 27, the IGC said. “The pace is significantly behind last year’s 91%, but only slightly short of the five-year average of 62%, mainly due to late planting, although there have also been some rain-related delays in the central and eastern Corn Belt,” it said.

After the IGC report was written, U.S. farmers made quick progress with the harvest and by Nov. 17 the crop was 99% harvested in the 15 key producing states covered by the USDA’s Crop Progress report. “Given better yield prospects, the crop forecast has been lifted by 2 million tonnes this month, to 352 million, which would be a 29% year-on-year increase,” IGC continued.

The IGC described a less positive picture for South American production. “In Argentina, heavy rains improved soil moisture levels in La Pampa, southern Buenos Aires and parts of Cordoba, whereas drier conditions returned to Entre Rios, Santa Fe and northern Buenos Aires,” it said. “Overall, the sowing campaign has been delayed by previous dry weather, with 25% completed by Oct. 24. The planting delays, combined with weak prices and crop rotation practices, are expected to reduce the area by one-quarter, to about 4.5 million hectares. Assuming average yields, production is projected at 26 million tonnes, down 13% year on year.

“Showery weather in Brazil kept the soil moisture at high levels as planting of the main first crop progressed across central and southern regions,” it said. “The overall area is projected slightly lower than last season, at 15.5 million hectares (15.8 million the previous year) and, with yields forecast below the 2012-13 record, production is placed at 72 million tonnes, down 11% year on year.”

It will change the situation in the world market. “The U.S. is forecast to reclaim its position as the world’s leading exporter, with marketing year (September-August) shipments placed at 31 million tonnes, compared to 18.7 million the previous year,” the IGC said. “U.S. export prices for early-2014 shipment have become increasingly competitive and, with a record crop currently being collected, the forecast is up by 1 million tonnes from last month.”

In contrast, the IGC’s forecast for Brazil’s 2013-14 exports (March-February) is down by 2.3 million tonnes on the year at 22 million. “Recent demand has been strong, but competition from northern hemisphere suppliers will intensify in the coming months,” it said.

The IGC increased its forecast for the world barley crop by 600,000 tonnes to 142.9 million, the highest level in four years, “reflecting improved prospects in the E.U. and Canada,” it said. “The 10% year-on-year rise is due to higher production in the E.U., the CIS, Canada, Turkey and Australia, partly offset by a smaller crop in Argentina.”

For sorghum it forecast world production at 61.4 million tonnes in 2013-14, a 10% year-on-year increase due to larger crops in the major exporting nations. A 23% rise to 10.1 million tonnes is set to take the U.S. sorghum crop to the highest level in five years.

Chris Lyddon is World Grain’s European editor. He may be contacted at: