Feed Grain Market Outlook
Feed Grain Market Outlook December 10, 2010 Volume 19, Number 75
Market Situation Trade expectations were for a furthering tightening of U.S. corn stocks in today’s World Agricultural Supply and Demand Estimates. The range of estimates was from 608 to 877 million bushels with an average guess of 803. USDA estimated 2010/2011 corn ending stocks basically unchanged at 832 million bushels. The only adjustment to the U.S. corn balance sheet from November was a 5 million bushel increase in corn imports. The U.S. corn stocks to use ratio remains at a tight 6.2 percent.
U.S. Corn Supply and Demand, 12/10/2010 Million Bushels
16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Beginning Stocks +0 2009/2010 Sep 10/11
Production
Imports
+0
+5
May 10/11 Oct 10/11
Domestic Use =
Jun 10/11 Nov 10/11
Exports
+0
+0 Jul 10/11 Dec 10/11
Ending Stocks +5 Aug 10/11
World corn production increased enough to raise the estimate of days of use on hand at the end of the marketing year by 1, from 56 to 57. Increased corn production is estimated for the EU‐27 (+0.3 mmt), Canada (+0.7 mmt), and Ukraine (+0.5 mmt). Beginning stocks were revised downward by 0.8 mmt leaving the net effect of +0.8 mmt in ending stocks.
1
Feed Grain Market Outlook December 10, 2010 Volume 19, Number 75
U.S. Corn Supply and Demand Mil bu
16,000
50%
14,000 40%
12,000 10,000 8,000 6,000
30% 19.8%
17.5% 11.6%
4,000
20%
12.8% 13.9% 11.1% 6.2%
10%
2,000 0
0% 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
Ending Stocks Domestic Use and Exports
Production Stocks:Use
Source: WASDE 12/10/2010
U.S. Corn Use Million bushels
7,000 6,000 5,000 4,000 3,000 2,000 1,000 0
Feed and Residual Ethanol Exports
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
Food Seed and Other Industrial
Source: USDA, 12/10/2010
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Feed Grain Market Outlook December 10, 2010 Volume 19, Number 75
World Corn: Days of Use on Hand 140 120 100
89 80
57
60 40 20 0
Days of Use
Average
12/10/2010
U.S. exports of soybeans were increased in the S&D Estimates by 20 million bushels, reducing U.S. carryout stocks by the same amount. World soybean ending stocks for the 2010/2011 marketing year were reduced ‐1.6 mmt on increased consumption. Production estimates in the U.S., Argentina, and Brazil were unchanged. The soybean to corn price ratio continues to drift either side of 2.3. For many Corn Belt budgets, this ratio gives the advantage to corn in a comparison of enterprise budgets.
3
Feed Grain Market Outlook December 10, 2010 Volume 19, Number 75
Outside markets were mixed in their support of grain prices this week. The Dow and copper are higher but crude oil is off slightly and the dollar a bit stronger. Friday December 3 11,382.09
Friday December 10 11,410.32
Net Change 28.23
Percentage Change 0.25%
Dec ‘10 Crude Oil
89.07
88.70
‐0.37
‐0.42%
Dec ‘10 Copper
3.9990
4.1075
0.1085
2.71%
Dec ‘10 Dollar Index
79.797
80.430
0.633
0.79%
Dec ’10 Corn
5.7350
5.7425
0.0075
0.13%
Dec ‘11 Corn
5.3450
5.2925
‐0.0525
‐0.98%
Dec ‘12 Corn
5.0475
4.9475
‐0.1000
‐1.98%
Dow Jones Ind. Avg.
Dollar
Crude Oil
Copper
Ethanol
4
Feed Grain Market Outlook December 10, 2010 Volume 19, Number 75
The Energy Information Administration has updated its liquid fuel demand estimates and it points to higher consumption in the months ahead. Not surprisingly, there is a strong positive correlation between the consumption of crude oil and world economic growth. The EIA reports that in the 3rd quarter of 2010 we are consuming 86.82 million barrels per day. This is just below the all‐time high of 87.06 million barrels recorded just before the recession. The estimate is for a new record high to be established by the end of the 1st quarter of 2011. If this level of energy consumption is achieved, it will signal continued global economic growth which is positive for commodity demand. World Liquid Fuel Consumption Million barrels per day 89 88 Record High: 87.06 87 86 85 84 83 Actual 82 81 Energy Information Administration, Short-term Energy Outlook, December 2010 Market Strategies
87.81
Projected
Strong demand, tight stocks, and the need for increased acres in 2011 will give support to corn prices. I have taken price protection on a portion of 2011 sales and anticipate pricing more after the first of the year.
5
Feed Grain Market Outlook December 10, 2010 Volume 19, Number 75
09/10 Planted Acreage (Mil. Acs.) Harvested Acreage (Mil. Acs.) Yield (Bushels) Supply
U.S. Corn
December 10, 2010
11/12p
88.2 81.3 154.3
91.5 84.2 160.0
- - - Million Bushels - - -
Beginning Stocks Production Imports
1,673 13,110 8
1,708 12,540 15
832 13,468 10
14,791
14,262
14,310
5,167 5,930 1,987
5,300 6,180 1,950
5,200 6,180 2,000
13,040
13,430
13,380
1,708
832
935
Carryover/Use (%)
13.1
6.2
7.0
Average Farm Price ($/Bu.)
3.55
5.20
4.96
Closing Price, Dec Futures
3.92
5.60
5.14
Total Supply
S&D
86.5 79.6 164.7
10/11e
Disappearance Feed and Residual Food, Seed & Industrial Exports Total Use Ending Stocks
Column 2 contains USDA’s 2010/2011 estimates and the current closing price of December 2010 futures. Column 3 contains my projections for 2011/2012.
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Feed Grain Market Outlook December 10, 2010 Volume 19, Number 75
Mark Welch Texas AgriLife Extension Economist 401 C Blocker Building TAMU 2124 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 AgriLife Extension Service. Texas AgriLife Extension Service assumes no liability for the use of this newsletter. Educational programs of the Texas AgriLife Extension 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
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Market Situation Trade expectations were for a furthering tightening of U.S. corn stocks in today’s World Agricultural Supply and Demand Estimates. The range of estimates was from 608 to 877 million bushels with an average guess of 803. USDA estimated 2010/2011 corn ending stocks basically unchanged at 832 million bushels. The only adjustment to the U.S. corn balance sheet from November was a 5 million bushel increase in corn imports. The U.S. corn stocks to use ratio remains at a tight 6.2 percent.
U.S. Corn Supply and Demand, 12/10/2010 Million Bushels
16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Beginning Stocks +0 2009/2010 Sep 10/11
Production
Imports
+0
+5
May 10/11 Oct 10/11
Domestic Use =
Jun 10/11 Nov 10/11
Exports
+0
+0 Jul 10/11 Dec 10/11
Ending Stocks +5 Aug 10/11
World corn production increased enough to raise the estimate of days of use on hand at the end of the marketing year by 1, from 56 to 57. Increased corn production is estimated for the EU‐27 (+0.3 mmt), Canada (+0.7 mmt), and Ukraine (+0.5 mmt). Beginning stocks were revised downward by 0.8 mmt leaving the net effect of +0.8 mmt in ending stocks.
1
Feed Grain Market Outlook December 10, 2010 Volume 19, Number 75
U.S. Corn Supply and Demand Mil bu
16,000
50%
14,000 40%
12,000 10,000 8,000 6,000
30% 19.8%
17.5% 11.6%
4,000
20%
12.8% 13.9% 11.1% 6.2%
10%
2,000 0
0% 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
Ending Stocks Domestic Use and Exports
Production Stocks:Use
Source: WASDE 12/10/2010
U.S. Corn Use Million bushels
7,000 6,000 5,000 4,000 3,000 2,000 1,000 0
Feed and Residual Ethanol Exports
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
Food Seed and Other Industrial
Source: USDA, 12/10/2010
2
Feed Grain Market Outlook December 10, 2010 Volume 19, Number 75
World Corn: Days of Use on Hand 140 120 100
89 80
57
60 40 20 0
Days of Use
Average
12/10/2010
U.S. exports of soybeans were increased in the S&D Estimates by 20 million bushels, reducing U.S. carryout stocks by the same amount. World soybean ending stocks for the 2010/2011 marketing year were reduced ‐1.6 mmt on increased consumption. Production estimates in the U.S., Argentina, and Brazil were unchanged. The soybean to corn price ratio continues to drift either side of 2.3. For many Corn Belt budgets, this ratio gives the advantage to corn in a comparison of enterprise budgets.
3
Feed Grain Market Outlook December 10, 2010 Volume 19, Number 75
Outside markets were mixed in their support of grain prices this week. The Dow and copper are higher but crude oil is off slightly and the dollar a bit stronger. Friday December 3 11,382.09
Friday December 10 11,410.32
Net Change 28.23
Percentage Change 0.25%
Dec ‘10 Crude Oil
89.07
88.70
‐0.37
‐0.42%
Dec ‘10 Copper
3.9990
4.1075
0.1085
2.71%
Dec ‘10 Dollar Index
79.797
80.430
0.633
0.79%
Dec ’10 Corn
5.7350
5.7425
0.0075
0.13%
Dec ‘11 Corn
5.3450
5.2925
‐0.0525
‐0.98%
Dec ‘12 Corn
5.0475
4.9475
‐0.1000
‐1.98%
Dow Jones Ind. Avg.
Dollar
Crude Oil
Copper
Ethanol
4
Feed Grain Market Outlook December 10, 2010 Volume 19, Number 75
The Energy Information Administration has updated its liquid fuel demand estimates and it points to higher consumption in the months ahead. Not surprisingly, there is a strong positive correlation between the consumption of crude oil and world economic growth. The EIA reports that in the 3rd quarter of 2010 we are consuming 86.82 million barrels per day. This is just below the all‐time high of 87.06 million barrels recorded just before the recession. The estimate is for a new record high to be established by the end of the 1st quarter of 2011. If this level of energy consumption is achieved, it will signal continued global economic growth which is positive for commodity demand. World Liquid Fuel Consumption Million barrels per day 89 88 Record High: 87.06 87 86 85 84 83 Actual 82 81 Energy Information Administration, Short-term Energy Outlook, December 2010 Market Strategies
87.81
Projected
Strong demand, tight stocks, and the need for increased acres in 2011 will give support to corn prices. I have taken price protection on a portion of 2011 sales and anticipate pricing more after the first of the year.
5
Feed Grain Market Outlook December 10, 2010 Volume 19, Number 75
09/10 Planted Acreage (Mil. Acs.) Harvested Acreage (Mil. Acs.) Yield (Bushels) Supply
U.S. Corn
December 10, 2010
11/12p
88.2 81.3 154.3
91.5 84.2 160.0
- - - Million Bushels - - -
Beginning Stocks Production Imports
1,673 13,110 8
1,708 12,540 15
832 13,468 10
14,791
14,262
14,310
5,167 5,930 1,987
5,300 6,180 1,950
5,200 6,180 2,000
13,040
13,430
13,380
1,708
832
935
Carryover/Use (%)
13.1
6.2
7.0
Average Farm Price ($/Bu.)
3.55
5.20
4.96
Closing Price, Dec Futures
3.92
5.60
5.14
Total Supply
S&D
86.5 79.6 164.7
10/11e
Disappearance Feed and Residual Food, Seed & Industrial Exports Total Use Ending Stocks
Column 2 contains USDA’s 2010/2011 estimates and the current closing price of December 2010 futures. Column 3 contains my projections for 2011/2012.
6
Feed Grain Market Outlook December 10, 2010 Volume 19, Number 75
Mark Welch Texas AgriLife Extension Economist 401 C Blocker Building TAMU 2124 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 AgriLife Extension Service. Texas AgriLife Extension Service assumes no liability for the use of this newsletter. Educational programs of the Texas AgriLife Extension 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
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