Ag Incomes Expected to Remain Lower in 2016 - Tuesday, 16 February 2016

It is becoming extremely difficult to find much bullish news lately.  Even when bullish events (like the decline of the U.S. Dollar) anxiously awaited occur, the market doesn’t respond as expected. The USDA’s Ag Forum Outlook will be held next week, February 25th-26th, and the trade will be interested in the predictions for 2016 even though they are only estimates at this point.  Beyond that the market will be turning their focus to spring weather planting conditions and acres of corn vs soybeans.

Weekly U.S. export sales were disappointing once again, some analysts are beginning to wonder if the USDA will need to reduce the latest estimate as commitments for new crop corn are currently down -25% !  2016 will likely be the 3rd consecutive year of sinking agriculture incomes following record profits in 2013.  The Wall Street Journal, ran an article recently on farm income, they foresee Ag incomes dropping to $54.8 billion (levels not seen since 2002) from $123 billion just 3 years ago.  Government agencies have estimated that receipts from corn sales for U.S. producers will fall by $800 million this year.  Input costs are also expected to decrease again this year, this will mark the first time since the 1980’s that input expenses have declined for 2 years in a row.

Contrary to our falling export market, Brazil’s corn exports hit a new record in January.  During the month they exported 4.46 million tons of corn which is 46% more than what they shipped during the same month in 2015.  The Ministry of Development, Industry and Foreign Trade (MDIC) expects corn exports to remain strong through February and is awaiting the surge of Brazilian soybean exports which typically begins this month as well.

Ethanol producer, Poet LLC. Is cutting the number of hours it will receive grain this month at 6 locations by 3 hours (7:30a.m.-12:00 p.m. vs 7:30 a.m. – 3:00 p.m.) on the days they were open.  Facilities affected by this are in Indiana and Ohio and when combined can produce more than 400 million gallons of ethanol each year. According to their website these plants were also closed 1 to 2 days as well during their normal business hours.

Several OPEC members, including Russia and Saudi Arabia have agreed to keep crude oil output at their January levels and not increase production any further at this time.  The International Energy Agency reported that during January Saudi Arabia produced 10.2 million barrels/day and Russia 10.9 million/day, unfortunately Iran did not agree to the freeze and appears to be increasing production.  Some analysts look at this as being a step in the right direction while others look at this agreement as insignificant given current production levels.

We are finally finding relief from the bitterly cold air as the jet stream carrying the arctic cold moves to the East.  As a result the strong upper level ridge that kept record warm temperatures to our west will also move eastward allowing warmer temps to move into the Midwest later this week and are predicted to remain in place into the beginning of next week.

© 2015 Ag Performance | All Rights Reserved.

Home | About Us | Services | Products | News | Contact Us |