Welch on Grain: Corn Crop Off to Good Start

    corn yield
    Photo by Debra L Ferguson - AgFax Media

    Market Situation

    Crop Progress. The U.S. corn crop is off to a good start, with both the planting pace and early season crop condition index above normal. USDA reports that as of May 31 95% of corn is in the ground compared to a normal rate of 92%. The crop condition index is 383, the same as last week and above the average of 371.

    Grain Use. The Environmental Protection Agency released proposed 2014-2016 Renewable Fuel Standards last week. Recognizing the limited availability of qualifying renewable fuels, “… EPA is proposing volumes which, while below the volumes originally set by Congress, would increase renewable fuel use in the U.S. above historical levels and provide for steady growth over time” (EPA Regulatory Announcement, May 2015).

    Specifically, conventional (non-advanced or corn) renewable fuel volumes proposed are 13.25 billion gallons in 2014 (set at the amount actually produced), 13.40 billion gallons in 2015, and 14.00 billion gallons in 2016. The original RFS set conventional ethanol at 14.4 billion gallons in 2014 and 15 billion gallons for 2015 and beyond.

    In the original RFS, cellulosic ethanol was set to reach 3 to 5.5 billion gallons in 2014 to 2016. The levels suggested in this proposal (% of original RFS) are 33 million gallons in 2014 (1.1%), 106 million gallons in 2015 (2.5%), and 206 million gallons in 2016 (3.7%).

    Last week’s Ethanol Production report from the Energy Information Administration showed another strong week of production numbers, 39.619 million gallons per day for the week ending May 22. For the corn marketing year ethanol production is up about 5% over last year.

    Poultry losses continue to climb in the current outbreak of highly pathogenic avian influenza. As of May 29, USDA reports that 44.671 million birds have been affected, including chickens, turkeys, and ducks; that number represents about ½ of 1% of the 8.5 billion chickens slaughtered for meat in 2013 (U.S. Poultry and Egg Association).

    Broiler chick placements last week were 4% above year ago and 2% above average.

    The May Cattle on Feed Report shows on-feed inventories up 1% on May 1.

    Outside Markets. Revised estimates of U.S. Gross Domestic Product show economic contraction in the first quarter of 2015. The initial estimate of 0.2% growth was slight but the revised number was negative, -0.7%. The biggest drag on the economy was a worsening trade balance or a large decline in net exports, down $113 billion, a change of 24%. This is the largest quarterly change in this category, numerical or percentage, since 1999.

    Marketing Strategies

    2015 Corn Marketing Plan. I am 40% priced on the 2015 crop and we are entering the time frame when I will price the next 20%. Early season crop conditions are pressuring prices for now but we have a long way to go before the area and yield of this year’s crop are known.

    Upcoming Reports/Events.
    June 10 – WASDE
    June 19 – Cattle on Feed
    June 26 – Quarterly Hogs and Pigs
    June 30 – Acreage; Grain Stocks




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