Feed Grain Outlook. May 10, 2017 Volume 26, Number 25

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1 Today s Newsletter Market Situation WASDE 1 Crop Progress 5 Outside Markets 5 Marketing Strategies Seasonality Feed Grain Marketing Plan 8 Upcoming Reports/Events 1 Market Situation WASDE. The first supply and demand estimates for corn in the 217/218 marketing year in today s World Agricultural Supply and Demand Estimates were in line with numbers released back in February at the Outlook Forum. The big change is the impact the U.S. numbers have on the world supply and demand situation. USDA projects corn acres at 9. million and a yield of 17.7 bushels per acre. That lowers production to 14.1 billion bushels from 15.1 billion last year. Total use of 14.3 billion bushels is down from 14.6 billion last year on lower feed use and exports; food, seed, and industrial use is up. Ending stocks for 217/18 are estimated at 2.11 billion bushels, down from billion for 216/17. However, USDA left the mid-point of the season average farm price unchanged at $3.4. The PLC payment in the new crop year remains at 3 cents per bushel. 1

2 Million Bushels 16, 14, 12, 1, 8, 6, 4, 2, U.S. Corn Supply and Demand, 5/1/217 Beginning Stocks Production Imports Domestic Use Exports Ending Stocks ,83-5 = /17 May 17/18 Million Bushels 7, 6, 5, 4, 3, 2, 1, U.S. Corn: Disappearance, 5/1/217 Feed & Residual Ending Stocks Fuel Food Seed Industrial Exports 8/81 81/82 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/9 9/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/ /1 1/2 2/3 3/4 4/5 5/6 6/7 7/8 8/9 9/1 1/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 Source: USDA WASDE, 5/1/217 2

3 The drop in U.S. production had a significant impact on the world corn supply and demand situation. World corn production in 217/18 is projected at 1,34 mmt (just over 4 billion bushels) down from 1,65 mmt (about 42 billion last year). Not only is U.S. production forecast to drop a billion bushels, foreign production is down 155 million, this as total corn use is up 8.7 mmt (343 million bushels). Lower production and higher use cuts the days of use on hand at the end of the marketing year from a 78-day supply in 216/17 (and the 2-year average) to a 67- day supply, the lowest since 213/214. Million bu 45, 4, 35, 3, 25, 2, 15, 1, 5, Corn Production WASDE 5/1/217 US Foreign 3

4 Mil bu. 16, World Corn Production 14, 12, 1, 8, 6, 4, 2, 212/13 213/14 214/15 215/16 216/17 217/18 USDA, WASDE, 5/1/217 These 8 areas account for 83% of global corn production World Corn: Days of Use on Hand Days of Use USDA, WASDE, 5/1/217 2-yr avg 4

5 Crop Progress. The pace of corn planting in the US. slowed this week as reported in the Crop Progress for week #18. Corn planting is 47% complete as of May 7 th, right at the long term average. The midpoint of planting usually occurs between weeks 18 and 19. In 1984, a record slow pace of planting was set in weeks Yields that year were still +2% of trend. The record area planted in one week was 43% between May 3 rd and May 1 th, % U.S. Corn Planting Progress % Planted, High Low Average 217 USDA Crop Progress, May 8, 217 Week Outside Markets. The April jobs report showed an increase of 211, jobs lowering the civilian unemployment rate to 4.4%. The broader measure of unemployment, U6, which includes persons working part time but seeking full time employment, dropped to 8.6%. Both of these numbers are the lowest since 27. 5

6 The advance estimate of GDP released by the Bureau of Economic Analysis at the end of April showed the U.S. economy growing only by.7% in the first quarter of 217. At its May 3 rd meeting, the Federal Reserve left interest rates unchanged. Even if the next rate hike comes in June, interest rates continue to be at historically low levels. 6

7 II QTR Apr 1-May net change % change S&P 5 Index % CRB Commodity Index (5.2) -2.72% JUN 17 Crude Oil (3.34) -6.59% JUL 17 Copper (.13) -4.77% JUN 17 Dollar Index (.91) -.91% JUL 17 Corn (.15) -.4% SEP 17 Corn (.1) -.26% DEC 17 Corn (.5) -.13% 7

8 2-month chart: 3/1-5/1/17 Marketing Strategies Seasonality. The seasonal pattern for December corn from early March to early June is a sideways pattern. The 217 contract is following suit. Normally, the highest price of the year is in June with below average prices from July to harvest. My marketing plan calls for having 4 to 6% of the 217 crop priced by then. 217 Feed Grain Marketing Plan. I am ready to price the next 2% of the 217 crop. I will use basic technical tools to time this sale when they provide the signal that prices are turning lower. With favorable production prospects, the current level of futures prices offers me the opportunity to lock in a price that covers total costs. 8

9 Price December Corn Futures and Seasonal Index Patterns Index /3 2/3 3/3 4/3 5/3 6/3 7/3 8/3 9/3 1/3 11/3 12/3 CZ17 3-yr avg 1-yr avg 9 December Corn Futures and 217 Marketing Plan /bu % 2% 2% 2% 2% South American crop conditions Battle for Acres Planting Intentions Sold 2% at 39¾ 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 9/16/216 9/27/216 1/6/216 1/17/216 1/26/216 11/4/216 11/15/216 11/25/216 12/6/216 12/15/216 12/27/216 1/6/217 1/18/217 1/27/217 2/7/217 2/16/217 2/28/217 3/9/217 3/2/217 3/29/217 4/7/217 4/19/217 4/28/217 5/9/217 5/18/217 5/3/217 6/6/217 6/13/217 6/2/217 6/27/217 7/4/217 7/11/217 7/18/217 7/25/217 8/1/217 8/8/217 8/15/217 8/22/217 8/29/217 9/5/217 9/12/217 9/19/217 9/26/217 1/3/217 1/1/217 1/17/217 1/24/217 1/31/217 11/7/217 11/14/217 11/21/217 11/28/217 12/5/217 12/12/217 9

10 Upcoming Reports/Events. May 26 June 9 June 23 June 29 June 3 September 18-2 October 2-3 October October 3-31 Cattle on Feed WASDE and Crop Production Cattle on Feed Hogs and Pigs Acreage Grain Stocks Master Marketer, Castroville, Texas Mark Welch, Texas A&M AgriLife Extension Economist 6 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. The Texas A&M AgriLife Extension Service provides equal access in its programs, activities, education and employment, without regard to race, color, sex, religion, national origin, disability, age, genetic information, veteran status, sexual orientation or gender identity. The Texas A&M University System, U.S. Department of Agriculture, and the County Commissioners Courts of Texas Cooperating 1