Feed Grain Outlook November 28, 2016 Volume 25, Number 70 Today’s Newsletter Market Situation Crop Progress 1 Grain Use
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Outside Markets
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Marketing Strategies Seasonality 4 2017 Feed Grain Marketing Plan
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Upcoming Reports/Events
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Market Situation Crop Progress. Corn harvest reached 97% in the U.S. as of last week, November 20th and no update was provided today. At that time the only state below 90% was Michigan at 83%. Grain sorghum harvest is reported this afternoon at 96% complete, the same as the 5-year average. Grain Use. Reports released this week continue to support strong grain use trends. Updated estimates of grain consuming animal units (GCAUs) in 2016 shows these numbers at all-time record highs. GCAUs are 95.486 million, up +1.8% from 93.839 million in 2015 and above the previous record of 95.084 million in 2007. The livestock category with the largest gain was poultry, up 735,000 units (+2.4%), followed by pork, up 493,000 units (+1.8%), then cattle on feed, up 365,000 units (+1.8%). Also up was energy feed per GCAU (including ddgs). Feed per unit is up 357 pounds (+9.3%) to 4,176 pounds per GCAU per year.
Feed and Residual Use
Year to Year Change: GCAU: +1.8% Feed/GCAU: +9.3%
Energy feed, lbs/GCAU
GCAU mil
100
5,000
90
4,500
80
4,000
70
3,500
60
3,000
50
2,500
40
2,000
30
1,500
20
1,000
10
500
0
0 Dairy Hogs Feed per GCAU
Cattle on Feed Poultry Plus DDGs
Other Cattle Other Livestock
33% Poultry 30% Pork 36% Cattle
USDA Feed Grain Database and Agricultural Marketing Resource Center, November 23, 2016
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Feed Grain Outlook November 28, 2016 Volume 25, Number 70
Ethanol production in the 2016/17 corn marketing year is averaging 41.786 million gallons per day. That is 4% above last year and 12% over the 5-year average. 2016/17 U.S. Ethanol Production 2016/17 daily average = 41.786 mil gal per day Implies use of 5,447 mil bu of corn (2.8 gal/bu) November USDA estimate = 5,300 mil bu corn for fuel, 120 mil bu sorghum fsi. Total = 5,420 mil bu Million gallons per day
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November 18 101% of last year 109% of average
42 40 38 2016/17 marketing year to 2015/16: 104% 2016/17 marketing year to 5-yr avg: 112%
36 34 32 30
5-year average
2015/16
2016/17
Energy Information Administration, Weekly Petroleum Status Report, November 23, 2016 Ethanol conversion rate, Agricultural Marketing Resource Center, Iowa State University
Grain export sales numbers were strong again last week. Corn exports reported for the week of November 17th were 66 million bushels. The weekly pace needed to hit the 2.225 billion bushel target is 27 million bushels. Sales commitments for the year are at 52% of the annual total, above where we normally are at the end of November. U.S. Corn Export Sales Commitments, 2016/17 MY Projected MY Total
Mil bu
2,400 2,200
Cumulative Net Sales
2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200
Weekly Net Sales
0
Pace to reach target:
26.8
Export Sales Commitments for the week 11/17/2016: 66 million bushels Total Export Sales Commitments this marketing year: 1,155 million bushels 52% of the 2016/17 MY Export Sales Target of 2,225 million bushels (November WASDE) Normal pace of sales end of November: 48% USDA, Foreign Agricultural Service: November 25, 2016
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Feed Grain Outlook November 28, 2016 Volume 25, Number 70
Grain sorghum exports were 12 million bushels for the most recent reporting week. The pace needed to reach USDA’s marketing year target of 250 million bushels is now about 4 million. U.S. Grain Sorghum Export Sales Commitments, 2016/17 MY Mil bu
300
Projected MY Total 250
200
Cumulative Net Sales
150
100
50
Weekly Net Sales
Pace to reach target: 3.9
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Export Sales Commitments for the week 11/17/2016: 12 million bushels Total Export Sales Commitments this marketing year: 96 million bushels 38% of the 2016/17 MY Export Sales Target of 250 million bushels (November WASDE) Normal pace of export sales by the end of November: 48% USDA, Foreign Agricultural Service: November 25, 2016
Outside Markets. OPEC ministers will meet on Wednesday trying to finalize output cuts designed to boost oil prices. According to the International Energy Agency, without a cut by OPEC, the oil market will stay in surplus in 2017 for the fourth year in a row. Prospects for an agreement within OPEC may hinge on the actions of non-OPEC producers. Russia has stated it will coordinate action with OPEC but this may mean freezing output at current levels, not a commitment to a real cut (“OPEC makes last-ditch bid to save oil deal as tensions grow”, Reuters, November 28, 2016). Prices as of 1:40 pm CST: IV Qtr 2016 S&P 500 Index
3-Oct 2161.20
28-Nov 2206.07
net change 44.87
% change 2.08%
CRB Commodity Index
187.03
187.76
0.73
0.39%
MAR ’16 Crude Oil
51.06
48.74
(2.32)
-4.54%
DEC ’16 Copper
2.19
2.66
0.47
21.35%
DEC ’16 Dollar Index
95.59
101.38
5.79
6.06%
DEC ’16 Corn
3.46
3.49
0.02
0.72%
MAR ‘17 Corn
3.56
3.58
0.02
0.70%
DEC ‘17 Corn
3.84
3.88
0.04
0.98%
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Feed Grain Outlook November 28, 2016 Volume 25, Number 70
Marketing Strategies Seasonality. The long-term seasonal price pattern for December corn is to set the harvest low in early October then trade mostly sideways to expiration. It looks like we may have set that seasonal low a month early this year but the overall pattern is still holding at this point. 2017 Feed Grain Marketing Plan. I have done no pre-harvest pricing of the 2017 crop. I look for growing conditions in South America and early estimates of next year’s acreage to offer an early season pricing opportunity. At this point, the soybean to corn price ratio in the 2017 harvest month contracts supports a switch from corn to soybeans. Last year the price ratio of the RMA base prices was 2.29; the ratio during the survey period for the Planting Intentions report was 2.35.
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Feed Grain Outlook November 28, 2016 Volume 25, Number 70
2016 December Corn Futures and Seasonal Index Patterns Price
Index
450
110 108 106 104 102 100 98 96 94 92 90
430 410 390 370 350 330 310 290
2016-C
20-yr avg
10-yr avg
2017 Nov Soybean: Dec Corn Price Ratio March Planting Intentions Survey
3.00
Plant Soybeans
RMA Price Discovery
2.75
2.66 2.50
2.25
Plant Corn 2.00
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Feed Grain Outlook November 28, 2016 Volume 25, Number 70
December Corn Futures and 2017 Marketing Plan 20% South American crop conditions Battle for Acres Planting Intentions
¢/bu
500 490 480 470 460 450 440
20% Planting Intentions Grain Stocks Early season crop conditions/ progress Weather outlook
20% Acreage Report/ Grain Stocks Weather
20% Tassel and August Crop Report
20% Cash sales at harvest
430 420 410 400 390 380 370 360 350 340 330 320 310 9/16/2016 9/28/2016 10/10/2016 10/20/2016 11/1/2016 11/11/2016 11/23/2016 12/4/2016 12/12/2016 12/20/2016 12/28/2016 1/5/2017 1/13/2017 1/21/2017 1/29/2017 2/6/2017 2/14/2017 2/22/2017 3/2/2017 3/10/2017 3/18/2017 3/26/2017 4/3/2017 4/11/2017 4/19/2017 4/27/2017 5/5/2017 5/13/2017 5/21/2017 5/29/2017 6/6/2017 6/14/2017 6/22/2017 6/30/2017 7/8/2017 7/16/2017 7/24/2017 8/1/2017 8/9/2017 8/17/2017 8/25/2017 9/2/2017 9/10/2017 9/18/2017 9/26/2017 10/4/2017 10/12/2017 10/20/2017 10/28/2017 11/5/2017 11/13/2017 11/21/2017 11/29/2017 12/7/2017 12/15/2017
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Upcoming Reports/Events. December 9 December 23 January 8-14 January 12
September 18-20 October 2-3 October 16-17 October 30-31
Crop Production WASDE Cattle on Feed Hogs and Pigs The Executive Program for Agricultural Producers, information available at tepap.tamu.edu Crop Production WASDE Grain Stocks Winter Wheat and Canola Seedings Master Marketer, Uvalde-San Antonio area
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Feed Grain Outlook November 28, 2016 Volume 25, Number 70
Mark Welch, Texas A&M AgriLife Extension Economist 600 John Kimbrough Blvd, Suite 335 College Station, Texas 77843 Tel. (979)845-8011 Fax. (979)845-4906
[email protected]
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
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