Feed Grain Outlook
May 10, 2016
Volume 25, Number 27
Market Situation
Today’s Newsletter
Market Situation
WASDE
1
Crop Progress
4
Outside Markets
5
Marketing Strategies
2016 Feed Grain
Marketing Plan
7
Upcoming
Reports/Events
9
WASDE. Based on an acreage number from the March 31
Planting Intentions report and the trend yield number from the
February Outlook conference, USDA projected a 2016 U.S. corn
crop of a record 14.430 billion bushels in today’s World
Agricultural Supply and Demand Estimates.
Total use of 14.120 billion bushels is also a record, but with
production>use and a higher level of beginning stocks, the ending
stock projection is 2.153 billion bushels, the highest since 1987.
Days of use on hand at the end of the marketing year is estimated
at a 56 day supply of corn, the highest since a 64 day supply on
hand at the end of the 2005/06 marketing year.
The season average farm price estimate of $3.35 per bushel is the
lowest since $3.04 in 2006/07 and in realized would earn a PLC
payment of 35 cents per bushel.
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Feed Grain Outlook
May 10, 2016
Volume 25, Number 27
U.S. Corn Supply and Demand, 5/10/2016
Million Bushels
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Beginning Stocks
+72
Production
+829
Imports
-15
Domestic Use
=
Exports
+360
2015/16
+175
Ending Stocks
+350
May 16/17
U.S. Corn: Disappearance
Million Bushels
7,000
Feed & Residual
6,000
Ending Stocks
5,000
Fuel
4,000
Exports
3,000
Food Seed Industrial
2,000
1,000
80/81
81/82
82/83
83/84
84/85
85/86
86/87
87/88
88/89
89/90
90/91
91/92
92/93
93/94
94/95
95/96
96/97
97/98
98/99
99/00
00/01
01/02
02/03
03/04
04/05
05/06
06/07
07/08
08/09
09/10
10/11
11/12
12/13
13/14
14/15
15/16
16/17
0
Source: USDA WASDE, 5/10/2016
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Feed Grain Outlook
May 10, 2016
Volume 25, Number 27
World corn production in today’s WASDE is projected at a record 1011 mmt or 39.801 billion
bushels. Use is projected just above that amount at 1012 mmt which would result in a small
decrease in world ending stocks. The estimated days of use on hand at the end of the
marketing year are for 75 day supply, down from 78 days on hand this August 31st at the end of
the 2015/16 marketing year.
WORLD
CORN (MMT)
Beginning
Stocks Production Imports
Feed Use
Total
Use
Exports
Ending
Stocks
Stocks
to Use
Days
on Hand
2005/06
131.28
700.70
80.13
479.10
706.70
80.90
124.50
0.1762
2006/07
124.50
716.62
90.16
479.94
726.65
93.91
110.72
0.1524
64.30
55.62
2007/08
110.72
795.53
98.32
499.23
774.20
98.61
131.71
0.1701
62.09
2008/09
131.71
800.98
78.27
482.88
783.32
79.47
147.46
0.1882
68.71
2009/10
147.46
825.62
89.76
491.68
826.47
96.82
146.61
0.1774
64.75
2010/11
146.61
835.95
92.62
503.47
852.45
91.46
130.11
0.1526
55.71
2011/12
130.11
889.33
98.34
508.39
884.82
108.11
134.63
0.1522
55.54
2012/13
134.43
868.00
99.42
517.67
864.49
95.16
137.94
0.1596
58.24
2013/14
132.90
991.44
123.97
570.34
949.43
131.10
174.91
0.1842
67.24
2014/15
175.21
1013.46
125.01
585.71
980.80
141.67
207.88
0.2119
77.36
2015/16
207.88
968.86
132.66
600.82
968.86
121.33
207.87
0.2146
78.31
207.87
1011.07
128.70
623.43
1011.90
132.89
207.04
0.2046
74.68
-0.01
42.21
-3.96
22.61
43.04
11.56
-0.83
-0.01
-3.63
0.00%
4.36%
-2.99%
3.76%
4.44%
9.53%
-0.40%
-4.64%
-4.64%
2016/17
May
net change
percentage change
Corn Production
Million bu
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
WASDE 5/10/2016
US
Foreign
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Feed Grain Outlook
May 10, 2016
Volume 25, Number 27
World Corn: Days of Use on Hand
140
120
100
80
77
75
60
40
20
0
Days of Use
20-yr avg
USDA, WASDE, 5/10/2016
Crop Progress. About 2/3rds of the U.S. corn crop is in the ground according to this week’s
Crop Progress report. The 64% reported planted as of Sunday is above the average pace of 45%
for this week of the crop year. The increase over last week was right at the average weekly
increase for the first half of May of 21%.
U.S. Corn Planting Progress
% Planted, 1980-2016
%
100
90
80
70
60
High
Low
Average
2016
50
40
30
20
10
0
13
14
15
16
17
18
19
20
21
22
23
Week
4
Feed Grain Outlook
May 10, 2016
Volume 25, Number 27
Outside Markets. Last Friday’s jobs report showed a smaller increase than expected, +160,000
jobs compared to analyst’s expectations of +200,000. In addition, February and March job gains
were lowered by 19,000. On the positive side, the unemployment rate held steady at 5% and
the report showed a continuation of increases in average hourly earnings. This report does not
appear to reflect the strengthening labor market the Fed is looking for to support an interest
rate hike at its June meeting.
5
Feed Grain Outlook
May 10, 2016
Volume 25, Number 27
A broader measure of unemployment, U6, which includes persons working part time but would
prefer a full time position, fell in April to 9.7%. The gap between U6 and U3 is 4.7, the same as
the average between these measures over the last 21 years, with a low of 2.9 (October 2000)
and a high of 7.3 (last in September 2011).
II Qtr 2016
S&P 500 Index
1-Apr
2,072.78
10-May
2,084.39
net change
11.61
% change
0.56%
CRB Commodity Index
168.03
180.28
12.25
7.29%
Jun ’16 Crude Oil
38.20
44.52
6.32
16.54%
Jun ’16 Copper
2.1685
2.0940
(0.0745)
-3.44%
Jun ’16 Dollar Index
94.618
94.235
(0.3830)
-0.40%
Jul ’16 Corn
3.5775
3.8100
0.2325
6.50%
Dec ‘16 Corn
3.6975
3.8775
0.1800
4.87%
Dec ‘17 Corn
3.8600
4.0475
0.1875
4.86%
6
Feed Grain Outlook
May 10, 2016
Volume 25, Number 27
Marketing Strategies
2016 Feed Grain Marketing Plan. The most significant changes to supply and demand numbers
in the grain complex came in the soybean market today. Global old crop carryover estimates
were lowered from a 91 day supply to 85 days and the estimate for the 2016/17 crop is a 76
day supply, back below the 20-year average. USDA cut production numbers in both Argentina
and Brazil for the 2015/16 crop. U.S. ending stocks are lower for 2016 as well with both acres
and yield below 2015.
Since the setting of the RMA base price for corn and soybeans and the March Planting
Intentions report, the soybean to corn price ratio has increased from 2.29 to 2.75, much more
strongly favoring the net returns for soybeans over corn in many Midwest crop budgets. As with
7
Feed Grain Outlook
May 10, 2016
Volume 25, Number 27
corn, USDA used for its estimates today the number from the March Intentions survey. The
next official estimate of 2016 crop acres will come in the Acreage report on June 30th.
2016 Soybean:Corn Price Ratio
March Planting Intentions
Survey
3.00
Plant Soybeans
2.75
S:C Price Ratio
Current: 2.75
2.50
Survey period: 2.35
RMA base ratio: 2.29
2.25
Plant Corn
2.00
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Feed Grain Outlook
May 10, 2016
Volume 25, Number 27
I am comfortable being 40% priced on new crop feed grain at this point. My next pricing
objective is related to expectations around the Acreage report and early season weather.
December Corn Futures and 2016 Marketing Plan
20%
South American crop
conditions
Battle for Acres
Planting Intentions
¢/bu
450
440
430
420
20%
Planting
Intentions
Grain Stocks
Early season
crop
conditions/
progress
Weather
outlook
20%
Acreage
Report/
Grain
Stocks
Weather
20%
20%
Tassel
and
August
Crop
Report
Cash
sales at
harvest
410
400
390
380
370
Sold 20% at 389¼
Sold 20% at 395
360
9/1/2015
9/11/2015
9/22/2015
10/1/2015
10/12/2015
10/21/2015
10/30/2015
11/10/2015
11/19/2015
12/1/2015
12/10/2015
12/21/2015
12/31/2015
1/12/2016
1/22/2016
2/2/2016
2/11/2016
2/23/2016
3/3/2016
3/14/2016
3/23/2016
4/4/2016
4/13/2016
4/22/2016
5/3/2016
5/12/2016
5/23/2016
6/2/2016
6/9/2016
6/16/2016
6/23/2016
6/30/2016
7/7/2016
7/14/2016
7/21/2016
7/28/2016
8/4/2016
8/11/2016
8/18/2016
8/25/2016
9/1/2016
9/8/2016
9/15/2016
9/22/2016
9/29/2016
10/6/2016
10/13/2016
10/20/2016
10/27/2016
11/3/2016
11/10/2016
11/17/2016
11/24/2016
12/1/2016
12/8/2016
12/15/2016
350
Upcoming Reports/Events.
May 20
June 7
June 10
June 24
June 30
Cattle on Feed
Grain Grading Workshop, Corpus Christi
WASDE
Cattle on Feed
Acreage
Grain Stocks
9
Feed Grain Outlook
May 10, 2016
Volume 25, Number 27
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
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
10