Feed Grain Outlook March 10, 2016 Volume 25, Number 15

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1 Today s Newsletter Market Situation WASDE 1 Grain Use 3 Outside Markets 6 Market Situation WASDE. USDA made no changes to the supply and demand balance sheets for corn or sorghum in yesterday s World Agricultural Supply and Demand Estimates. It has been a very stable marketing year for U.S. corn supply and use. About the only change of significance was the impact of reduced export estimates from November to February resulting in increased ending stocks. Marketing Strategies 2016 Feed Grain Marketing Plan 7 Upcoming Reports/Events 8 1

2 Million Bushels 16,000 U.S. Corn Supply and Demand, 3/9/ ,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Beginning Stocks Production Imports Domestic Use Exports Ending Stocks = /15 May 15/16 Jun 15/16 Jul 15/16 Aug 15/16 Sep 15/16 Oct 15/16 Nov 15/16 Dec 15/16 Jan 15/16 Feb 15/16 Mar 15/16 U.S. Corn: Disappearance Million Bushels 7,000 6,000 5,000 4,000 3,000 2,000 Ending Stocks Feed & Residual Exports Food Seed Industrial Fuel 1, /81 81/82 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 Source: USDA WASDE, 3/9/2016 2

3 Global corn ending stocks tightened a bit as USDA noted production declines in South Africa and the Philippines while use was up slightly. Estimated world days of use on hand at the end of the marketing year decreased from a 79-day supply estimate in February to 78 days. 140 World Corn: Days of Use on Hand Days of Use USDA, WASDE, 3/9/ yr avg Grain Use. With no changes on the consumption side of this month s WASDE, we will wait for the Grain Stocks report at the end of the month to verify corn disappearance. Use indicators support steady to slightly higher consumption trends. Gasoline consumption in this corn marketing year is up 4% for the month and 2% for the year; ethanol, +7% and +3%. Ethanol production for the week is up 4% over year ago and up 3% for the year to date. Mil barrels per day /16 U.S. Motor Gasoline Consumption February 104% of last year 104% of average MY to date 15/16 to 14/15: +1.9% 15/16 to avg: +4.3% Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 5-yr avg 2014/ /16 EIA, Short Term Energy Outlook, March

4 Quadrillion Btu /16 U.S. Ethanol Consumption February 107% of last year 108% of average MY to date 15/16 to 14/15: +3.3% 15/16 to avg: +5.3% Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 5-yr avg 2014/ /16 EIA, Short Term Energy Outlook, March Million gallons per day /16 U.S. Ethanol Production 2015/16 daily average = mil gal per day Implies use of 5,322 mil bu of corn (2.8 gal/bu) March USDA estimate = 5,225 mil bu corn March 4 104% of last year 111% of average Total for Current Marketing Year to last year at this time: +2.7% Total for Current Marketing Year to 5-yr avg at this time: +9.1% 5-year average 2014/ /16 Energy Information Administration, Weekly Petroleum Status Report, March 9, 2016 Ethanol conversion rate, Agricultural Marketing Resource Center, Iowa State University 4

5 Meat, egg, and milk production are all estimated to be from about 1½ to 4% higher in 2016 compared to last year, positive for corn for feed numbers. As USDA does not survey or directly measure feed use, this is the category most vulnerable to revision as a result of the grain stocks report U.S. Meat, Egg, and Milk Production % change from previous year Milk Production Egg Production Total Red Meat and Poultry WASDE, 3/9/ % 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% We had another strong corn export sales number this morning, 46 million bushels, another week twice the 23 million bushel pace needed to reach the year end goal. Mil bu 1,800 U.S. Corn Export Sales Commitments, 2015/16 MY Projected MY Total 1,600 1,400 1,200 1, Cumulative Net Sales Weekly Net Sales Pace to reach target: 23 mil bu/wk Export Sales Commitments for the week 3/3/2016: 46 million bushels Total Export Sales Commitments this marketing year: 1,135 million bushels 69% of the 2015/16 MY Export Sales Target of 1,650 million bushels (March WASDE) USDA, Foreign Agricultural Service: 5

6 Outside Markets. Sharp and opposite movements in currency markets today on news from the European Central Bank. The Euro was sharply lower and dollar higher on the statement from ECB s Chief Drahgi announcing additional stimulus measures. Hints that no further interest rate cuts would be forthcoming and both markets quickly reversed course. 30 minute line chart Euro FX US Dollar Index Prices as of 12:00 pm CST: I Qtr Jan 10-Mar net change % change S&P 500 Index 2, , (32.85) -1.64% CRB Commodity Index (2.81) -1.61% Jun 16 Crude Oil (0.18) -0.44% Jun 16 Copper % Jun 16 Dollar Index (2.9110) -2.94% May 16 Corn % Jul 16 Corn % Dec 16 Corn % 6

7 Marketing Strategies 2016 Feed Grain Marketing Plan. My marketing plan for 2016 again calls for breaking up sales over 4 pre-harvest time periods and the final 20% at harvest, along seasonal tendencies in the corn market. Revised budget projections show a breakeven price of corn of $3.85 and $3.70 for grain sorghum. I am currently 20% priced on new crop corn at I am looking for uncertainty around acres and weather to provide additional pricing opportunities this spring. 7

8 /bu December Corn Futures and 2016 Marketing Plan 20% 20% 20% 20% 20% South American crop conditions Battle for Acres Planting Intentions Planting Intentions Grain Stocks Early season crop conditions/ progress Weather outlook Acreage Report/ Grain Stocks Weather Tassel and August Crop Report Cash sales at harvest Sold 20% at 389¼ 350 9/1/2015 9/14/2015 9/24/ /6/ /16/ /28/ /9/ /19/ /2/ /14/ /24/2015 1/7/2016 1/20/2016 2/1/2016 2/11/2016 2/24/2016 3/7/2016 3/17/2016 3/29/2016 4/6/2016 4/14/2016 4/22/2016 4/30/2016 5/8/2016 5/16/2016 5/24/2016 6/1/2016 6/9/2016 6/17/2016 6/25/2016 7/3/2016 7/11/2016 7/19/2016 7/27/2016 8/4/2016 8/12/2016 8/20/2016 8/28/2016 9/5/2016 9/13/2016 9/21/2016 9/29/ /7/ /15/ /23/ /31/ /8/ /16/ /24/ /2/ /10/2016 Upcoming Reports/Events. March 18 March 25 March 31 April 4 Cattle on Feed Hogs and Pigs Grain Stocks Prospective Plantings Crop Progress 8

9 Mark Welch, Texas A&M AgriLife Extension Economist 600 John Kimbrough Blvd, Suite 335 College Station, Texas Tel. (979) Fax. (979) The opinions and recommendations expressed are solely those of the author and are intended for educational purposes only as part of the Texas A&M AgriLife Extension Service. The author and Texas A&M AgriLife Extension Service assume no liability for the use of this newsletter. Educational programs of the Texas A&M AgriLife Service are open to all people without regard to race, color, sex, disability, religion, age, or national origin. The Texas A&M University System, U.S. Department of Agriculture, and the County Commissioners Courts of Texas Cooperating 9