Early Plainting Data and A Outlook on Corn Prices - Friday, 08 April 2016

The acreage report last week will be the source of much debate for the next several weeks with weather being the number 1 topic.  The USDA did not release their full weekly planting report this week but several states still reported progress: 

  • Arkansas 31% planted vs. 27% last year
  • Georgia 43% planted vs. 36% last year
  • Louisiana 46% vs. 67% last year
  • Mississippi 19% vs. 25% last year
  • Missouri 3% vs. 1% last year
  • South Carolina 30% vs 2% last year
  • Texas 42% vs. 32% last year

Many were caught off-guard by the huge increase in corn acres that the USDA expects U.S. producers to plant in 2016.  Kevin Van Trump of the Van Trump Report explains that “the extra-large prevent plant acres from 2015 along with sorghum, barley, winter wheat and spring wheat acres that didn’t get planted this year are all in play and looking for a crop.  Insurance and government guarantees are obviously playing a major factor and more than likely why the USDA is forecasting an acreage jump for crops like Rice, Cotton, Corn and Durum Wheat.  Any way you slice it planted corn acres are going to be north of +90 million and bulging supply will unfortunately act like an anchor on prices at least until the trade wants to focus more heavily on June-July moisture and heat.”  There continues to be important differences of opinion regarding the timeframe for the arrival of full-blown La Niña weather conditions.  Forecasters all seem to be in agreement that it will develop but when it develops is critical!

The USDA will release the April Supply and Demand Report next week, below is a worksheet with data from the March report as well as estimates of the upcoming data.

USDA Supply and Demand TUESDAY, April 12, 2016 Worksheets

2016 U.S. Ending Stocks

 

April #

Average

Trade Range

USDA March

Corn

???

 

1.845

1.787 - 1.902

1.837

Soybeans

???

 

0.454

0.430 - 0.480

0.460

Wheat

???

0.977

0.961 - 0.996

0.966

2016 World Ending Stocks

 

April #

Average

Trade Range

USDA March

Corn

???

 

207.35

206.00 - 209.20

206.97

Soybeans

???

 

78.96

77.50 - 80.50

78.87

Wheat

???

237.22

235.14 - 238.50

237.59

South American Production

 

April #

Average

Trade Range

USDA March

Brazil
Corn

???

 

83.79

82.00 - 85.00

84.00

Brazil
Soybeans

???

 

100.20

99.50 - 101.00

100.00

Argentine
Corn

???

 

27.18

26.50 - 29.00

27.00

Argentine
Soybeans

???

59.16

58.20 - 60.00

58.50

 

There have been reports out of China that confirm that the Chinese are flooded with a supply of domestic corn and as a result they have ended their “Minimum Price Program” for producers that had been in effect for 9 years.  It’s believed that this policy change will bring an increase in market based pricing and more competition within the country This will likely make domestic corn less expensive within the country and reduce their need for imports for the time being. 

Reuters ran a story yesterday titled, “AgResource Sees Corn, Wheat Prices Fall to 10-Year Lows” written by Sybille de La Hamaide.  AgResource Co. in Chicago, Illinois is an independent information, statistical research and advisory firm.  The company founded by president, Daniel Basse, is an agriculture research group that studies and forecasts domestic and international price trends, their research is sold around the world in 81 countries. 

AgResource is predicting that the Chicago Board of Trade December corn will fall by 25% to $2.80 as fall harvest approaches and DEC becomes the markets front month.  We have not seen that price for corn since October 2006.  Daniel Basse explained his forecast at a recent conference in Geneva, “for corn, you have a record production both in the U.S. and in Argentina this year, the two combined lead to a price of $2.80 per bushel”. Argentina has become one of the top exporters of grain and producers are likely to increase production next year now that the government in place has eased restrictions and eliminated heavy export taxes.  He also pointed out that farmers in Brazil are also expected to increase corn production and will produce more soybeans than the U.S. for the first time in history, making South America an “export powerhouse” that essentially will change the global market.  He also expects soybean prices will drop due to sufficient supplies and China’s plan to increase domestic production for human consumption. 

China’s imports in 2015 accounted for 70% of the global trade.

We are currently in the midst of another Arctic blast that is expected to last through the weekend.  This may not be the last of the unseasonably cold air, (-10 to -25 degrees below normal) another surge of cold air is forecast for Monday but is expected to move out by mid-week.

The Weather Channel is predicting April will be warmer than average for the majority of the U.S.  They point out that this is the trend for the entire month as a whole even with the occasional cold fronts we have had….Let’s hope this forecast is correct, I think we’re all ready for that warm air to finally arrive.

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