Feed Grain Outlook
April 12, 2016
Volume 25, Number 21
Market Situation
Today’s Newsletter
Market Situation
WASDE
1
Crop Progress
4
Outside Markets
5
Marketing Strategies
2016 Feed Grain
Marketing Plan
8
Upcoming
Reports/Events
8
WASDE. U.S. corn ending stocks rose slightly in today’s World
Agricultural Supply and Demand Estimates. Based on inventories
reported in last month’s Grain Stocks report, feed use was
reduced 50 million bushels. Fuel use increased 25 million bushels
on higher ethanol production. With no changes to supply, ending
stocks increased from 1.837 billion bushels last month to 1.862
billion. Days of use on hand at the end of the marketing year went
from a 49.5 day supply to 50.3 days. The season average farm
price declined from $3.60 to $3.55 and the estimated PLC
payment increased from 10 cents per bushel to 15 cents.
Ending stocks of grain sorghum held steady with last month as a
15 million bushel decrease in feed use and a 10 million bushel
reduction in exports was offset by a 25 million bushel increase in
the food, seed, and industrial category (fuel).
1
Feed Grain Outlook
April 12, 2016
Volume 25, Number 21
U.S. Corn Supply and Demand, 4/12/2016
Million Bushels
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Beginning Stocks
Production
+0
2014/15
Nov 15/16
Imports
+0
May 15/16
Dec 15/16
+0
Jun 15/16
Jan 15/16
Domestic Use
Exports
Ending Stocks
-24
+0
+25
=
Jul 15/16
Feb 15/16
Aug 15/16
Mar 15/16
Sep 15/16
Apr 15/16
Oct 15/16
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
0
Source: USDA WASDE, 4/12/2016
2
Feed Grain Outlook
April 12, 2016
Volume 25, Number 21
Projected world corn ending stocks increased from a 78 day supply on hand at the end of the
marketing year to a 79 day supply this month. Supplies are higher on an increase in beginning
stocks (+2.47 mmt) and production (+2.49 mmt), more than offsetting an increase in use (+3.02
mmt). Production gains were reported in Argentina (+1.0 mmt), Mexico (+0.5 mmt), and the
FSU-12 (+0.21 mmt)
Corn Production
Million bu
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
US
WASDE 4/12/2016
WORLD
CORN (MMT)
Beginning
Stocks Production Imports
Foreign
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
174.91
1008.82
122.62
582.44
975.55
136.84
208.19
0.2134
77.89
192.50
989.83
118.76
610.32
990.42
120.90
191.94
0.1938
70.74
2014/15
2015/16
May
2015/16
June
197.01
989.30
118.73
610.32
991.12
122.20
195.19
0.1969
71.88
2015/16
July
193.95
987.11
120.83
609.46
991.10
122.56
189.95
0.1917
69.95
2015/16
August
197.42
985.61
121.66
605.55
987.94
123.43
195.09
0.1975
72.08
2015/16
September
197.21
978.10
123.66
604.84
985.62
123.48
189.69
0.1925
70.25
2015/16
October
196.03
972.60
123.31
602.49
980.79
121.93
187.83
0.1915
69.90
2015/16
November
208.21
974.87
123.51
596.17
971.16
119.26
211.91
0.2182
79.64
2015/16
December
208.19
973.87
123.34
596.12
970.20
117.69
211.85
0.2184
79.70
2015/16
January
207.23
967.93
124.59
594.85
966.22
116.71
208.94
0.2162
78.93
2015/16
February
206.18
970.08
128.30
596.65
967.45
119.40
208.81
0.2158
78.78
2015/16
March
205.11
969.64
128.90
596.95
967.78
119.73
206.97
0.2139
78.06
April
207.58
972.13
129.96
598.40
970.80
122.34
208.91
0.2152
78.55
2.47
2.49
1.06
1.45
3.02
2.61
1.94
0.00
0.49
1.20%
0.26%
0.82%
0.24%
0.31%
2.18%
0.94%
0.62%
0.62%
2015/16
net change
percentage change
3
Feed Grain Outlook
April 12, 2016
Volume 25, Number 21
World Corn: Days of Use on Hand
140
120
100
80
60
40
20
0
Days of Use
20-yr avg
USDA, WASDE, 4/12/2016
Crop Progress. This week’s Crop Progress report contained the first estimated planting pace of
the 2016 corn crop. For the week ending April 10, 4% of the U.S. crop was planted, just about
average for this week of the crop year.
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
April 12, 2016
Volume 25, Number 21
Outside Markets. Over the last several years, Brazil has moved from a rising international
economic power to a country deep in recession and immersed in political scandal. President
Dilma Rousseff faces impeachment as a sweeping corruption investigation has implicated high
ranking business and government leaders. GDP is expected to contract 3.45% in 2015.
Source: Bloomberg, 3/29/2016
Over the last five years the value of the Brazilian Real has fallen from about 1.5 BRL per US$ to
over 4, currently back down to about 3.5. One of the implications this has for agricultural
competitiveness is that while U.S. producers have seen the price of commodities fall over the
last several years, the price of dollar denominated commodities in the domestic currency of
Brazil has gone up. This gives producers in Brazil a built in marketing advantage as output
prices are relatively higher because of the currency change.
In March 2015, the exchange rate was about 3BRL/US$. A world soybean price of $10/bushel
was 30 reals/bushel. This March, the price of soybeans has fallen to $9/bushel, but with an
exchange rate of 3.75 BRL/US$ the price in reals has increased to 33.75/bushel. The 10%
decline in the world price, in U.S. dollars, was more than offset by a 25% decline in the value of
the real.
The combination of U.S. monetary policy and the political situation in Brazil have implications
for global grain production. Further delays in raising U.S. interest rates and movement toward
political reform and stability in Brazil would support appreciation in the real and put downward
pressure on domestic commodity prices, and possibly some disincentive for increased grain
production. Higher U.S. interest rates and continued political turmoil fuels further currency
depreciation (some forecasts call for 4.25 BRL/US$ in 2016, 4.36 BRL/US$ in 2017) and means
the trend of higher dollar denominated commodity prices would continue, all else unchanged,
furthering the incentive to increase production.
5
Feed Grain Outlook
April 12, 2016
Volume 25, Number 21
Soybean USDA Season Average Farm Price
U.S. Dollars and Brazilian Real
USD/BRL
35
30
25
20
US SAFP
15
Real/bu
10
5
0
2010
2011
2012
2013
2014
2015
2016
6
Feed Grain Outlook
April 12, 2016
Volume 25, Number 21
Prices as of 1:00 pm CDT:
II Qtr 2016
S&P 500 Index
1-Apr
2,072.78
12-Apr
2,058.43
net change
(14.35)
% change
-0.69%
CRB Commodity Index
168.03
174.96
6.94
4.13%
Jun ’16 Crude Oil
38.20
43.37
5.17
13.53%
Jun ’16 Copper
2.1685
2.1500
(0.0185)
-0.85%
Jun ’16 Dollar Index
94.618
94.085
(0.5330)
-0.56%
May ’16 Corn
3.5400
3.6275
0.0875
2.47%
Jul ‘16 Corn
3.5775
3.6575
0.0800
2.24%
Dec ‘16 Corn
3.6975
3.7400
0.0425
1.15%
7
Feed Grain Outlook
April 12, 2016
Volume 25, Number 21
Marketing Strategies
2016 Feed Grain Marketing Plan. December corn futures have regained about half the ground
it lost after the March 31 Planting Intentions report, recovering 10 cents of a 20 cent drop.
Today’s WASDE did little to change the old crop price outlook and much of the potential for a
new crop rally will hinge on weather. To this point I am 20% sold on new crop corn with the
intention of getting to 40% sold over the next several weeks.
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%
20%
20%
Acreage
Report/
Grain
Stocks
Weather
Tassel
and
August
Crop
Report
Cash
sales at
harvest
410
400
390
380
370
Sold 20% at 389¼
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
5/10/2016
5/17/2016
5/24/2016
5/31/2016
6/7/2016
6/14/2016
6/21/2016
6/28/2016
7/5/2016
7/12/2016
7/19/2016
7/26/2016
8/2/2016
8/9/2016
8/16/2016
8/23/2016
8/30/2016
9/6/2016
9/13/2016
9/20/2016
9/27/2016
10/4/2016
10/11/2016
10/18/2016
10/25/2016
11/1/2016
11/8/2016
11/15/2016
11/22/2016
11/29/2016
12/6/2016
12/13/2016
350
Upcoming Reports/Events.
April 22
May 3 & 4
May 10
May 20
Cattle on Feed
Grain Grading Workshop, Amarillo
WASDE
Short-term Energy Outlook
Cattle on Feed
8
Feed Grain Outlook
April 12, 2016
Volume 25, Number 21
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
9