Ethanol Update and Harvest Progress - Thursday, 02 November 2017

Latest data from the USDA continues to show the U.S. corn harvest is running behind the 5-year average. Harvest progress advanced by +16% last week to 54% completed this compares to our 5 year average of 72% completed by this time. Next week the USDA updates their yield estimates for the November report.  Many traders believe that private analysts and the USDA will all move the estimated yield a bit higher.  Yesterday INTL FC Stone moved their yield estimate higher from 169.2 to 173.7 bushels per acre and total production of 14.4 billion bushels. Informa is expected to release their latest estimates today.


Soybean harvest is thought to be running at a pace close to normal. The USDA reported that as of last week 83% of the nation’s soybean crop has been harvested compared to the 5 year average of 84% by this date.  INTL FC Stone updated their soybean yield estimates yesterday and have left it unchanged at 49.9 bushels per acre and total production at 4.467 billion. Informa will release their latest estimates for yields in the U.S. as well as global numbers later today.


Hurricane Harvey has caused heavy agricultural losses that are estimated to cost around $200 million.  According to an evaluation done by Texas A&M University the cotton-belt along the Upper Gulf Coast sustained $100 million in losses and livestock losses are projected to be near $93 million. The livestock and cotton industries are the two most profitable agriculture industries in the state of Texas.  The Texas Observer reports that the cotton and livestock industries in the state bring in a total of approximately $12.7 billion in cash receipts each year.

A government report from the USDA named, Global Ethanol Mandates: Opportunities for U.S. Exports of Ethanol and DDGS, states that between 2001 and 2016 the production and use of ethanol has increased from 5 billion gallons produced yearly to nearly 27 billion gallons. In the United States ethanol makes up 10% of all of the gasoline consumed.  The countries of the U.S., Brazil and the European Union have been the major markets for ethanol in the past. Government blending requirements have aided in the growth of the ethanol market here in the U.S. and around the globe.  China has increased their domestic production by 2/3’s over the past 10 years which has made it the 3rd largest producing/consuming nation on the globe. In 2016 26 other countries adopted mandates or targets for ethanol usage, some with official requirements and some without.  Many of these countries struggle to meet their mandates with solely the use of their domestically grown grain.  If these countries make every effort to fulfill their mandates the opportunity for export sales to these nations becomes very realistic. The U.S. is the world’s biggest producer and exporter of ethanol, in addition 85% of the distillers dried grains with solubles used around the world are exported from the U.S. All of this is good news for U.S. corn and producers of ethanol as there is growing demand from countries all over the world.



The Climate Prediction Center has updated their predictions for the month.  The agency is now expecting a forecast that matches precisely with a La Niña weather system which typically brings colder and wetter conditions to the Northwest the Southwest to the Southeast generally experience dry and mild conditions. The upper Midwest and Northeast tend to have temps below normal.


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