Welch on Grain: Corn Planting Jumps, Usage Increases
Crop Progress. Monday’s Crop Progress report from USDA showed a 30% increase in corn planted from the week before. USDA estimates that 59% of the U.S. corn crop was planted as of May 11th (week 19), up from 29% on May 4th.
Last year at this time planting was progressing at a record low pace of 26%. This week’s number is below the 30-year average for week 19 of 66% and just above the most recent 5-year average of 58%.
Corn Use. The May WASDE continued the trend of a narrower gap between 2013 U.S. corn production and the total use estimate. USDA raised domestic use in the old crop year by 35 million bushels and increased exports 150 million bushels.
The gap between old crop production and use declined from an estimated 1.168 billion bushels last September down to 290 million bushels in May.
This afternoon’s Cattle on Feed report showed May 1 inventories in feedlots with a capacity of 1,000 head or more at 99% of a year ago and 98% of average. So far this corn marketing year, total numbers of cattle on feed are 5% below average and 4% below a year ago.
For the week of May 10th broiler placements were 101% of a year ago. Cumulatively in the 2013/14 corn marketing year, placements are 0.59% below average but 0.92% above a year ago.
The May Short-term Energy Outlook from the Energy Information Administration showed ethanol consumption in April below that of last year and the average for the first time this corn marketing year. Year to date numbers continue to show 13/14 consumption ahead of last year by 2.9% and above average by 2.7%.
Ethanol production in 2013/14 is averaging 37.729 million gallons per day, 8.4% above last year and 3.2% above average.
The pace of export sales continues strong. A normal rate of export sales is 85% of the marketing year total by the end of April. This year, even with the May revision from 1.75 billion bushels to 1.9 billion, we are at 92% of the projected marketing year total.
Outside Markets. From IHS Global Insight, May 9, 2014:
The trade deficit narrowed by $1.5 billion in March, to $40.4 billion. Exports increased by $3.9 billion, while imports increased by about $2.5 billion. Export growth has been lackluster because global GDP growth slowed in 2012 and 2013 and the Eurozone contracted. Imports have moved sideways for the past couple of years, a result of falling petroleum imports cancelling out rising nonpetroleum imports. A narrowing trade deficit is typically a positive for GDP growth. But in this instance, it will probably cause a downward revision to first-quarter growth. This is because the Bureau of Economic Analysis assumed an even narrower deficit in March when it computed the advance GDP growth number of 0.1%. The actual data were not yet available. As a result, first-quarter real GDP growth will likely be revised down, cutting it by 0.2-0.3 percentage point. In other words, it appears that the economy contracted in the first quarter.
The ISM Nonmanufacturing Index increased 2.1 points in April, to 55.2. The index is now at its highest since October. New export orders, in particular, went from mild contraction to strong expansion. The employment subindex, however, fell a bit, at odds with the official employment report for April, which indicated strong gains in service-sector payrolls. Nevertheless, nonmanufacturing (and manufacturing) industries appear to be firing on all (or most) cylinders this spring, after nearly stalling during the winter.
Up this week are reports on retail sales, consumer prices, industrial production, and housing starts for April, and consumer sentiment in early May. Retail sales likely increased 0.2%, an inevitably softer result after pent-up demand fueled a 1.2% spike in March. An expected 0.3% increase in the CPI was likely dominated by food and gasoline, while core CPI inflation probably fell back to a mild 0.1%. Industrial production likely fell 0.2%, as a drop in utilities from lower heating demand offset a good month for manufacturing. Housing starts likely retained March’s strength, but probably held at 949,000 (from 946,000) following a spike in single-family starts. Finally, the Reuters/University of Michigan Consumer Sentiment Index likely continued its climb in early May, from 84.1 to 85.0, thanks to improving jobs prospects.
2014 Corn Marketing Plan. I priced another 20% of 2014 production this week when the close on the December contract broke the trendline and the moving averages gave a sell signal.
My next sales objective is in June around the time of the Acreage report and we have a better handle on crop weather in the growing season. At this time, production prospects look favorable.
May 19 – Crop Progress
May 27 – Crop Progress
June 2 – Crop Progress
June 9 – Crop Progress
June 10 – Short-term Energy Outlook
June 11 – WASDE
June 16 – Crop Progress
June 20 – Cattle on Feed
June 23 – Crop Progress
June 30 – Crop Progress, Acreage, Grain Stocks
I recently attended a Farm Credit Director Development program in Charleston, South Carolina, where Dave Kohl presented an agricultural economic update. I thought his presentation was exceptional. He described agricultural