Record High Ethanol Production and A Local Spring Forecast - Friday, 03 February 2017

Ethanol continues to be a shining star and is continuing to set new record high production numbers despite on-going negative headlines.  Kevin Van Trump of the Van Trump Report wrote, “Many insiders are now in agreement that the USDA’s current corn used for ethanol estimate is once again too conservative and will need to be bumped higher. I should also point out that, even though many bears continue to point to an overall building of our ethanol surplus, total ethanol supplies are still about -2% below last year’s level.  I should also note that exports remain extremely strong, meaning overall strong domestic demand continues to be difficult for the bears to debate.  Bottom-line, it feels like the U.S. balance sheet is going to be getting tighter on increased demand.”

Weather in South America, which has been improving the past couple of weeks, continues to be a big topic of conversation amongst soybean traders.  Demand for U.S. soybeans, especially from China, is an issue on everyone’s mind as new trade agreements will need to be negotiated between our countries. At this time though lines are already forming at the shipping ports in Brazil and the wait times to load appear to be considerably longer than at this time last year.  This will likely shift Chinese demand back to U.S. supplies quite rapidly.

Former U.S. Secretary of Agriculture, Tom Vilsack, has endorsed the newly nominated Sonny Perdue as his replacement as the head of the agency.  In a statement Vilsack stated that he believes that Perdue’s experience as a former governor will assist him in his new position and feels Perdue “would expand markets here and throughout the world.”  Perdue is not likely to be confirmed as the U.S. Agriculture Secretary until mid to late month since a preliminary hearing date has not been set as of yet. 

Bryce Anderson, Senior Meteorologist for DTN expects that 2017 crop yields should hold close to the 10 year average for corn and soybeans based on the weather patterns he was been watching.  He expects the La Niña pattern could suggest a wet spring “hovering over the northern third of Iowa, following U.S. Highway 20 from Sioux City to Waterloo and Dubuque and going into northern Illinois.” According to Anderson the jet stream will bring cold Alaskan air over the northern states and deliver heavy precipitation delaying spring planting and in turn potentially delaying harvest as well. He noted that 5 out of the past 8 years the north central Corn Belt has dealt with above normal spring rainfall but this year he believes producers could find the grain market react to the delay in planting progress and acreage issues. Anderson finds correlation between this upcoming season and one of from the recent past. “A similar temperature and precipitation setup happened in the production year 2001, coming out of the year 2000. Corn production in the U.S. was 9.5 billion bushels, -4% below the year 2000, but at the time was still the fourth largest corn crop on record.”

The outlook for February 7th-11th is looking above normal for temps and also above normal for precipitation for most of the U.S.  The below normal temps are expected to remain isolated in the far north central and northeastern portion of the country.

© 2015 Ag Performance | All Rights Reserved.

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