Latest Weather Outlooks and NAFTA Update - Apr, 20 April 2018
The exceptionally cold spring has producers and analysts wondering what to expect as we move into May.  Meteorologists predict that this cold spell should end before May 1st but there is rising concern that damage to yields may already be done by that point.  Chip Flory of Pro Farmers and host of Agri-Talk “After the Bell” interviewed Mike Tannura of T-Storm Weather regarding his research that shows a strong association between significantly cold temps in April and below trend-line yield results.  He told Flory that, “Based on data we’re looking at today, there’s a chance it could be the coldest of the entire period going back to 1895.” He explained that if you take corn performance data from the 20 coldest years since 1895 and compare it with corn performance since 1960 you will find a link between cold April temps and smaller yields. He uses the year 1960 because hybrid technology was so different prior to then and 7 of the coldest 20 have occurred since that year.  Out of those 7 years, six of them produced below trend line yields. He also pointed out that while the weather in April is typically not a major contributor to final production but a cold April that leads to later planting of the corn crop is. The extremely cold temps in April have some wondering if this is an indication to expect more weather extremes during the growing season. Some recent outlooks are telling us we could have an extremely hot period in either June or July. This is an important scenario when you consider a lower USDA corn acreage of 88 million acres, a possible jump in preventive plant acres and the prospect of the late planting pushing pollination into a period of extreme heat.  All things to be aware of and watch for as we move forward. ... view details

USDA Worksheet, Status on Trade Deals and Weather Outlook - Apr, 13 April 2018
While somewhat surprising, the markets are focusing little attention on the trade war instead prices seem to be more interested in U.S. spring planting delays, the declining condition of winter and spring wheat and smaller than expected South American corn production.  The USDA announced the April Supply and Demand report on Tuesday which delivered some surprises.  U.S. soybean ending stocks were lowered by 5 million bushels from a month ago to 550 million bushels.  This blew away estimates from the trade which showed an expected 19 million increase in stocks.  Global soybean supplies were reported at 90.80 million tons vs 94.40 a month ago and trade estimates of 92.95 million tons.  This reduction is partially due to further cuts to Argentine production which dropped another 7 million tons from last month. U.S. corn ending stocks grew by 55 million bushels from a month ago but was slightly less than the trade was looking for.  Global corn stocks fell by 1.39 million tons to 197.78.  Yield reductions to both Argentina corn, down 3 million ton and Brazil corn, down 2.5 million tons was the main reason the global corn supply was lowered. ... view details

New Chinese Tariff's and A Cold/Wet April Outlook - Apr, 04 April 2018
China’s Ministry of Commerce announced today plans to impose a 25% tariff on U.S. soybeans and several additional agricultural produce including corn, wheat, cotton sorghum, tobacco and beef in addition it’s expected that ethanol will see a 15% tariff.  This comes as retaliation against U.S. proposed duties on high-tech goods from China.  The actual date that these tariffs will be implemented depends on the outcome of negotiations being held between our two countries. Last Thursday the USDA surprised the market with lower than expected acreage estimates for both corn and soybeans. Corn acres were estimated at 88.026 million vs the trade estimate of 89.42, this is a 2% decline from 2017. Soybean acres were estimated at 88.982 vs the trade estimate of 91.06, this is a 1% decline from 2017.  This reduces total corn and soybean acres by 3.301 million acres compared to last year.  Wheat acres came in higher than expected at 47.399 million compared to 46.0 with spring wheat leading the way with 12.627 million acres vs the expected 11.5 million acres, for spring wheat that is a 15% increase from a year ago when looking at the total for wheat as a whole there is a 3% increase from last year.  Other crops pulling significant acres away from corn and soybeans besides wheat are cotton, up 7% from last year, sorghum, rice and oats. The map below shows the reduction of corn and soybean acres is widespread across the Plains and Corn Belt. ... view details

USDA Worksheet & Spring Outlook - Mar, 27 March 2018
The big story in the trade this week is the Thursday, March 29th USDA 2018 Prospective Plantings Report and the March 1st Grain Stocks numbers.  Generally the acreage report has a bigger impact on new crop values while the quarterly grain stocks estimate can influence both the old and new crop. The worksheet is shown below. ... view details

Markets, Exports and Weather Outlooks - Mar, 22 March 2018
Rain in Kansas and Fund liquidations of long positions have turned crop markets lower.  The Funds spent about 6 weeks increasing their long market positions, ultimately purchasing over 1 million contracts during that time. This is about as large of a long position as the Spec Funds ever have for corn and soybeans. So it’s safe to assume the sell-off that has begun will take some time to complete. U.S. shipments of corn for the marketing year that runs from September-August 2017/18 shows that of the top 10 destinations for U.S. corn,  Mexico is in the lead.  Mexico has imported 267 million bushels of corn which is 18 million bushels more than 1 year ago.  A few of the other top destinations of U.S. corn are falling below last year’s shipment totals for this period. Currently Japan is 50 million bushels short of the previous year with 113 million bushels shipped, South Korea has imported 51 million bushels which is less than ½ of a year ago. Saudi Arabia and Taiwan are also behind last year’s pace having imported less than 1/3 of last year’s bushels at this same point of the marketing year. ... view details

Weather Issues and Export News - Mar, 14 March 2018
U.S. export demand for corn was increased by +175 million bushels to 2.225 billion for 2017/18 by the USDA with the major destinations being Japan, Mexico, Columbia and Taiwan the past few weeks. The agency also increased their estimate of corn used for ethanol by +50 million bushels in their report bringing the total projected to 5.575 billion bushels which is up by +143 million bushels from 2016/17.  The Energy Information Administration reports strong growth in weekly ethanol use and the outlook for ethanol exports is also encouraging.  The demand for ethanol in Brazil has swelled recently with the extensive use of flex-fuel vehicles and the countries ethanol mandated minimum of 27%.  Since the price of ethanol in Brazil is priced around $2.30 per gallon many feel that U.S. ethanol will becomes more attractive since the price at Gulf Ports in the U.S. is around $1.50 per gallon. In addition to a possible increase in U.S. ethanol sales to Brazil ethanol demand has been on the rise in China.  It’s important to remember that even though the USDA reduced U.S. corn ending stocks by -225 billion bushels this still leaves us with the 2nd highest stock-to-use ratio since 2005/06, with an excess of 2.127 billion bushels according to information from the USDA, Economic Research Service. ... view details

USDA March Report Update and RFS Reform - Mar, 08 March 2018
Update for March 8th, 2018 The March USDA Supply and Demand Report was announced this morning.  Some of the particular highlights for both corn and soybeans are shown below. Corn U.S. corn stocks were reduced by -225 million bushels. Corn used for ethanol was increased by +50 million bushels. Corn Exports were raised by +175 million bushels. Production in Argentina as lowered to 36 MMT’s. Exports from Argentina were lowered from 27.5 MMT to 25.0 MMT. Exports out of Brazil were unchanged at 35 MMT. Chinese corn imports were raised from 3 to 4 MMT’s. The South African crop was increased from 12.5 to 13.0 MMT’s. The EU corn crop was increased from 60.1 to 61.1 MMT’s ... view details

March 1st, 2018 - Mar, 01 March 2018
Update for March 1st, 2018 Uncertainty in South America and strong demand here at home have helped fuel commodity prices.  Many private analysts have lowered their production estimates for Argentine corn this season and now the USDA also trimmed their estimate from 42 MMT down to 39 MMT. Recently some sources have lowered their forecasted estimates even further to sub 35 MMT. There are conflicting reports in regards to the planting of the safrinha crop in Brazil. Some believe that the number of acres that actually get planted will be much less than what had been predicted but AgRural reports that 43% of the safrinha crop is planted compared to 57% a year ago and the 5 year average of 47%.  There are now reports out of Washington that the meeting between President Trump and several senators and cabinet members to discuss the RFS mandate ended without an agreement but further conversations are planned, this meeting, uncertain trade negotiations and weather in South America all put added attention on the USDA March 8th report out next week. ... view details

USDA Long-Term Ag Projections and La NiƱa Update - Feb, 20 February 2018
The USDA has published their long term agricultural projections for 2018 to 2027 for U.S. crops, I have included the highlights for corn and soybeans. CORN Total corn acres are expected to continue to decline.  During the period from 2012-2014 the U.S. planted an average of 257 million acres of the 8 major crops. Since then the average acres planted to corn, soybeans, wheat, upland cotton, sorghum, rice, barley, and oats has dropped off to an average of 253 million acres.  It is expected that that the average acres planted to these crops will remain somewhere between 252 and 255 million acres for the next decade.  Corn acres are predicted to lose the most acres between now and 2027 to an average of 87.5 million acres but improved hybrids and increasing yields the total amount of production is still expected to increase.  The USDA has estimated the average yield in 2018/19 at 173.5 bushels per acre which is well behind this last season’s average of 175.4 bushels per acre.  The agency has also forecast their expected average yield for coming years and as we look 10 years out the predicted average yield increases to an average of 191.5 bushels per acre. Ethanol production is expected to increase slowly for the next couple of years and then begin to gradually fall off to levels near those of 2016 within the next 10 years.  Reductions in fuel consumption due to more fuel efficient vehicles and better modes of urban mass transportation are expected to reduce overall usage.  It’s predicted that falling demand for ethanol and an increase in demand for corn for other sources will drop ethanol production from the high of 38% of total use to below 35%. The U.S. is anticipated to remain the world’s largest exporter of corn for the duration of the outlook.  An increase in income especially in developing countries will increase the demand for quality meat which will raise the demand of corn for feed.  A slowly weakening U.S. Dollar is also expected to raise export potential.  In contrast though increasing competition from Brazil, Argentina and Ukraine along with our own growth of corn used for domestic feed is forecast to slowly reduce the U.S. market share of global corn trade to below 30% during the outlook period. The USDA also projects that the average price for corn will range from $3.20 to $3.60 per bushel during the next 10 years. ... view details

USDA WASDE Worksheet and South America Update - Feb, 13 February 2018
As we inch closer to planting season in the U.S. new crop corn and soybean price ratios are beginning to gain more attention.   The ratio for corn to soybeans typically runs around 2.5:1, meaning it takes 2.5 bushels of corn to equal the value found in 1 bushel of soybeans and any divergence from this has shown to persuade acres to move in one direction or the other. Currently this ratio sits at 2.6:1 which gives soybeans a slight advantage over corn. If this price advantage continues it’s possible that we will see more double-cropping especially in southern states this season. As always though the weather tends to dictate some planting decisions for producers.  Over the past few weeks there has been a slight increase in La Niña readings which makes it more likely the U.S. will be impacted to some extent this growing season by the weather pattern.  In most La Niña years the southern U.S. tends to experience drought conditions while the northern states tend to see wetter weather. If this indeed occurs it is likely southern states will plant more corn acres due to the early planting opportunities. ... view details

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