Feed Grain Outlook November 2, 2015 Volume 24, Number 67

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1 Today s Newsletter Market Situation Crop Progress 1 Grain Use 1 Outside Markets 3 Marketing Strategies 2015 Feed Grain Marketing Plan 7 Upcoming Reports/Events 8 Market Situation Crop Progress. Grain harvest continues at an above average pace according to today s Crop Progress report from USDA. Corn harvested as of Sunday November 1 st is 85% compared to a fiveyear average of 79%; soybean harvest is at 92% complete versus 88% average; grain sorghum is 79% cut, 72% average. Grain Use. Export sales for both corn and grain sorghum were up last week. Though still just below levels needed to reach the yearly projected totals set by USDA, corn and sorghum sales for the week of October 22 nd were both the second highest of the new marketing year. China has been importing barley, sorghum, and distillers grains as corn substitutes, products exempt from tariffs or quota restrictions. The Reuters news agency reported last week that some Chinese customers have stopped buying ddgs, anticipating a move by the government to impose import duties or some type of import quota ( China is the world s largest importer of ddgs and the U.S. is the world s largest exporter. Mil bu 2,000 1,800 1,600 U.S. Corn Export Sales Commitments, 2015/16 MY Cumulative Net Sales Projected MY Total 1,400 1,200 1, Weekly Net Sales Pace to reach target: 31 mil bu/wk Export Sales Commitments for the week 10/22/15: 28 million bushels Total Export Sales Commitments this marketing year: 496 million bushels 27% of the 2015/16 MY Export Sales Target of 1,850 million bushels (October WASDE) USDA, Foreign Agricultural Service: October 29,

2 U.S. Grain Sorghum Export Sales Commitments, 2015/16 MY Mil bu Projected MY Total Cumulative Net Sales Weekly Net Sales Pace to reach target: 7 mil bu/wk Export Sales Commitments for the week 10/22/15: 6 million bushels Total Export Sales Commitments this marketing year: 143 million bushels 33% of the 2015/16 MY Export Sales Target of 430 million bushels USDA, Foreign Agricultural Service: October 29, 2015 Broiler chick placements are running about on par with last year and just above average so far this corn marketing year. Thousand 175, /16 Broiler Chicks Placed 19 states, weekly Oct 24, % of last year 100% of average 2015/16 MY Total to Date Year ago: -0.6% Average: +1.7% 170, , , , ,000 Source: USDA/NASS, October 21, year average 2014/ /16 2

3 The ethanol production number from the Energy Information Administration last Wednesday morning showed a dip in production contrary to a normal uptrend at this time of year. The average for the week of October 23 rd was million gallons per day, up 1% compared to last year and 6% above average. Ethanol futures prices are up about 10% since the first of September while crude oil futures are basically unchanged. Million gallons per day /16 U.S. Ethanol Production 2015/16 daily average = mil gal per day Implies use of 5,197 mil bu of corn (2.8 gal/bu) October USDA estimate = 5,250 mil bu October % of last year 106% of average Total for Current Marketing Year to last year at this time: +4.8% Total for Current Marketing Year to 5-yr avg at this time: +9.7% 5-year average 2014/ /16 Energy Information Administration, Weekly Petroleum Status Report, October 21, 2015 Ethanol conversion rate, Agricultural Marketing Resource Center, Iowa State University Outside Markets. The Bureau of Economic Analysis released preliminary estimates of 3 rd quarter U.S. GDP last week. This advance estimate showed an annual increase of 1.5% led by consumer (+3.2%) and government (+1.7%) spending; business investment (-5.8%) and exports minus imports (-1.2%) were lower. The growth rate in the 2 nd quarter was 3.9%. As information that would guide the Fed in its decision of when and how much to raise interest rates, these early GDP numbers suggest strength in household economies but caution in the business sector (Wall Street Journal, GDP Waves Yellow Flag at the Fed, ?mod=rss_markets_main). 3

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5 GDP, % change annual basis 6% 4% 2% 0% -2% -4% -6% -8% 2005 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q3-10% Source: U.S. Bureau of Economic Analysis, updated October 29, 2015 Real Gross Domestic Product GDP = C + I + G + (X-M) Real $ billions 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, , % +0.6% % annual rate 2,839 2,839 2,857 2,869 2,773 2,830 2,865 2,824 11,033 11,081 11,179 11, Q Q Q Q3 C I G X-M % GDP 17% 17% 69% -3% Source: U.S. Bureau of Economic Analysis and Federal Reserve Bank of St. Louis, updated October 29,

6 IV Qtr Oct 2-Nov net change % change S&P 500 Index 1, , % CRB Commodity Index % Dec 15 Crude Oil % Dec 15 Copper % Dec 15 Dollar Index % Dec 15 Corn (0.1225) -3.15% Mar 16 Corn (0.1450) -3.63% Dec 16 Corn (0.0875) -2.13% 6

7 Marketing Strategies 2015 Corn Marketing Plan. I completed all sales of the 2015 crop at harvest and am now preparing my marketing plan for I will again break up sales over 4 pre-harvest time periods and the final 20% at harvest. My early budget projections show a breakeven price of corn of $4.13 and $4.08 for grain sorghum. December Corn Futures and 2016 Marketing Plan /bu % 20% 20% 20% 20% South American crop conditions Battle for Acres Planting Intentions Planting Intentions Grain Stocks Early season crop conditions Weather outlook Acreage Report/ Grain Stocks Weather Tassel and August Crop Report Cash sales at harvest /1/2015 9/14/2015 9/24/ /6/ /16/ /28/ /7/ /15/ /23/ /1/ /9/ /17/ /25/2015 1/2/2016 1/10/2016 1/18/2016 1/26/2016 2/3/2016 2/11/2016 2/19/2016 2/27/2016 3/6/2016 3/14/2016 3/22/2016 3/30/2016 4/7/2016 4/15/2016 4/23/2016 5/1/2016 5/9/2016 5/17/2016 5/25/2016 6/2/2016 6/10/2016 6/18/2016 6/26/2016 7/4/2016 7/12/2016 7/20/2016 7/28/2016 8/5/2016 8/13/2016 8/21/2016 8/29/2016 9/6/2016 9/14/2016 9/22/2016 9/30/ /8/ /16/ /24/ /1/ /9/ /17/ /25/ /3/ /11/2016 7

8 Upcoming Reports/Events. November 10 Crop Production WASDE Short-term Energy Outlook January TEPAP (The Executive Program for Agricultural Producers), Unit I is full but space remains for Unit II, January 20-March 3 Master Marketer, Abilene, Texas. Registration is now open, Mark Welch, Texas A&M AgriLife Extension Economist 600 John Kimbrough Blvd, Suite 335 College Station, Texas Tel. (979) Fax. (979) JMWelch@tamu.edu 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 8