Tax Reform and What It May Mean For Rural America - Wednesday, 08 November 2017

The November Supply and Demand report will be released tomorrow.  The worksheet below gives us an idea on where analysts feel the numbers may come in and where the numbers have been for comparisons.

USDA Supply and Demand

 

Nov. Est.

Avg. Guess

Trade Range

USDA October

USDA 2016

Corn Production

???

14.333

14.250 - 14.459

14.280

15.1

Yield

???

172.4

171.7 - 174.0

171.8

174.6

Harvested Acres

???

83.103

83.00 - 83.20

83.119

86.748

Soybean Production

???

4.408

4.375 - 4.467

4.431

 

4.307

Yield

???

 

49.3

48.9 - 49.9

49.5

52.1

Harvested Acres

???

89.486

89.40 - 89.50

 

89.471

82.696

U.S. Ending Stocks

 

Nov. Est.

Avg. Guess

Trade Range

USDA October

Corn

???

2.366

2.286 - 2.438

2.340

Soybeans

???

0.420

0.377 - 0.461

0.430

Wheat

???

0.957

0.940 - 0.980

0.960

World Ending Stocks

 

Nov. Est.

Avg. Guess

Trade Range

USDA October

Corn

???

201.18

197.60 - 203.50

200.96

Soybeans

???

95.50

93.00 - 97.00

96.

The Funds are holding more record short corn positions than in almost any time in history.  With the November USDA report due out tomorrow there has been some hope that a portion of those positions will be bought back especially in light of the recent rally in crude oil prices. The rally in crude is good news for corn producers who are faced with cheap prices and an ethanol industry that many thought would likely need to reduce production levels by the 4th quarter of this year.  Now the USDA has a reason to look further at their current estimate for corn used for ethanol which some believe may be 75 to 125 million bushels too low given this recent development.

This weeks updated harvest progress report from the USDA showed continued advancement in the corn harvest with 54% to 70% completed but the country remains well behind the traditional pace of 83% by this date. Below is a listing of a  few of the states lagging furthest behind:

  • Minnesota shows 22% to 60% of the corn harvested vs 5 year average of 87%.
  • Wisconsin has harvested 12% to 37% of the corn crop vs the 5 year average of 63%.
  • South Dakota is 26% to 61% harvested vs the 5 year average of 80%
  • IOWA reports 23% to 67% of the crop is harvested compared to the 5 year average of 84%.
  • North Dakota has 22% to 59% harvested vs the 5 year average of 73%.
  • Indiana shows 11% to 70% of the harvest is completed compared to 5 year average of 82%.
  • Illinois has harvested 10% to 83% of the corn compared to 5 year average of 91%.

There are some market analysts that believe that the USDA may adjust their soybean yield estimate lower from the current 49.5 bushels per acre in tomorrows report. If the agency lowers the expected yield then the ending stocks levels become less troublesome as well.  A large correction by the USDA is not expected but any reduction may be enough to bring some new money into the market and give the market a boost higher.

Reuters is reporting today that China is committing to buy more U.S. soybeans.  President Donald Trump’s is visiting the nation and is stressing to Chinese leaders the importance of agriculture trade between our nations even if tensions would develop between the 2 biggest economies in the world. 

Currently China imports more soybeans than any other country with the U.S. being the second largest supplier of those bushels.  Chinese soybean buyers are planning to sign a letter of intent with the U.S. Soybean Export Council.  The letter of intent is a commitment to purchase a certain volume of soybeans in the future but the exact amount has not been made public. The country has also promised to purchase more beef, barley and dairy products from the U.S.

The weekly USDA harvest report shows that the soybean harvest is now 90% completed which is on pace with the 5 year average of 91% completed by this date. From the Soybean Harvested map below you can see that there are several states running ahead of their typical pace and some falling behind but no states are drastically behind normal and causing any concern in the market.

 

A lot of talk out of Washington has been focused on proposed tax reforms. Brownfield Ag reports that tax policy specialists from the American Farm Bureau are warning producers that the impact from proposed changes to tax policy and their effects on farmers is still unknown. In addition they explain that new business rates being debated in the House Ways & Means will have the greatest impact on farmer’s taxes.  The current proposal would tax business income differently than in the past by lowering the rate for corporations. Impacts to pass-through businesses, which most U.S. farmers and ranchers have, is still unknown. The repeal of the Estate Tax is a major win as is the continuation of the business interest deduction and increasing immediate expensing.  There has been some discussions regarding the possible elimination of Section 199 known as the Domestic Production Activities Deduction. Chuck Conner, president of the National Council of Farmer Cooperatives, believes Congress could easily preserve the 199 exemption for agriculture without making too large of an impact on the rest of the bill.

A blast of arctic air is headed to the Midwest and Northeast thanks to a significant southward dip in the jet stream. 

 

WeatherTrends 360 explains that the Arctic blast expected over the weekend is coming directly from the North Pole and will bring with it the coldest second week of November in more than 30 years. They expect lows in the single digits by Saturday morning, typically these temperatures don’t arrive until January.

© 2015 Ag Performance | All Rights Reserved.

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