Welch on Grain: Domestic Corn Use Up 50M Bushels

    Market Situation

    WASDE. No changes were made to the supply side of the U.S. corn balance sheet in today’s WASDE. On the use side, feed and residual went down 25 million bushels and fuel use increased 75 million raising total domestic use by a net 50 million bushels. With exports unchanged at 1.750 billion bushels, ending stocks were down 50 million bushels to 1.827 billion. The season average farm price estimate was unchanged at $3.65/bushel.

    World corn supplies increased this month 4.78 mmt with increases in both beginning stocks (+1.57) and production (+3.21). The largest production increases were in Argentina (+1.00) and Ukraine (+1.45). Increased supplies were mostly offset by higher use of 4.29 mmt resulting in an increase in ending stocks of 0.49 mmt. But even with higher stocks, the elevated level of use caused a slight decline in the world stocks to use ratio. Days of use on hand at the end of the marketing year fell from 71.09 day supply to 70.96 days.

    Though December corn closed lower on the day, the market reversed higher after the release of the WASDE.

    Outside Markets. The January employment report from the Bureau of Labor Statistics showed the U.S. economy added 257,000 new non-farm jobs. The civilian unemployment rate (U3) rose 0.1%, as did U6, a broader measure of unemployment that includes persons working part time for economic reasons. The unemployment measure U3 stands at 5.7%, U6, 11.3%, with the difference between them unchanged at 5.6%. The 21-year average difference between U3 and U6 is 4.7%.

    Marketing Strategies

    2015 Corn Marketing Plan. My next sales objective for 2015 feed grain will be in late winter to early spring based on old crop grain use, planting intentions, and the early season weather outlook. I am currently 20% priced on new crop corn at 420¼.

    Upcoming Reports/Events.
    February 19-20 – USDA Agricultural Outlook Forum
    February 20 – Cattle on Feed
    February 26 – Grain Market Report, International Grains Council
    February 27 – FSA deadline to reallocate bases and update yields
    March 10 – WASDE
    March 20 – Cattle on Feed
    March 27 – Quarterly Hogs and Pigs
    March 31 – One-time, unanimous, irrevocable ARC/PLC decision at FSA, Grain Stocks, Prospective Plantings
    April 6 – USDA Crop Progress reports resume

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