Corn and Soybean Demand - Tuesday, 22 November 2016

The U.S. markets will be closed this Thursday in observance of the Thanksgiving holiday and marks the beginning of the holiday trading season in commodities. While the markets will be open most days with the exception of Thursday many of the traders will be gone all week which can cause some volatility, this turbulence often continues into December as traders begin their early year and quarter end positioning.

The USDA WASDE report announced on November 9th a significant increase to the corn yield for the 2016/17 marketing year. Several of the western states in the Corn Belt saw the largest increases in yield.  The states of Nebraska and South Dakota both saw 3 bushel per acre increases from the October estimates.  Minnesota had an increase in yield of 4 bushels per acre and the state of North Dakota led the way with an increase from the October estimates of 17 bushels per acre. The current yield totals bring the ending stocks-to-use ratio to around 16.4% under current consumption guesstimates, this ratio has not been seen since the 2005-06 marketing year.  Todd Hubbs, an Agricultural Economist from the University of Illinois recognizes the negative effects associated with historic yields and market prices.  In an article published in Farm News, Hubbs offered his projections regarding how he be sees this corn crop being used this marketing year. 

  • Demand remains strong.  The USDA has projected that the U.S. will export 2.2 billion bushels during the 2016/17 marketing year.  This September exports reached 248 million bushels, this is an 89% increase from just 1 year ago.  This proves just how strong our U.S. corn export market really is.
  • Corn usage numbers for food, seed and industrial uses increased by 85 million bushels to 6.73 billion bushels.  This increase is a result of growth in the ethanol sector that is projected to need an additional 25 million bushels and 60 million is needed in the food, seed and non-ethanol industrial areas.
  • Feed and residual corn use is predicted to be 5.65 billion bushels this marketing year.  Due to current livestock populations at high numbers this is a 10% increase from last year.  Hubbs recommends that producers monitor the upcoming feed and residual usage numbers for 2016/17 as they could greatly influence the marketing year-ending stocks and corn usage total.

Soybean oil and meal are both finding interest from the global market.  NOPA has reported the 3rd largest crush number ever, while at the same time member stocks fell to 1.343 billion pounds from last year’s stock total of 1.408 billion pounds.  This decrease was the 4th month in a row showing a decline in the bean oil supply.

An Ag Economist recently reported that leadership in the House Agriculture committee has signaled it would like to consider separating the nutrition title from the Farm Bill.  It’s expected that the House Ag Committee will propose this idea but how it will be received by the Senate is unclear since the last time it was proposed the Senate argued to keep them combined.  Carl Zulauf a professor at Ohio State University stated, “If the nutrition title is removed-the dynamics of the Farm Bill changes.”  This would likely lead to “Interesting partners for agriculture”.  “The most likely broad coalition that would be merged-would be between farmers and environmentalists.  That has the potential to be broad enough – if the two groups could determine how they could work together in a compromise, large negotiating position like that.”

The weather forecast for the last week of November and into the beginning of December is showing colder and snowier conditions across most of the country.  The overall weather pattern is becoming more active with 3 large storm systems expected over the next 2 weeks and a major cold outbreak expected to move across the country from west to east.

 

 

 

Ag Performance would like to wish all of you a

 Happy Thanksgiving!!

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