Crop Progress. The U.S. corn crop condition index slipped three points this week from 381 to 378. The poor category increased 1%, the fair up 1%, and corn rated good declined 2%. The average crop index for this time of year is 372.
Grain Use. Feed use numbers continue to be supported by increases in livestock inventories and production. Last week USDA reported that Cattle on Feed as of June 1 were 1% above year ago levels for the second month in a row. Broiler placements have been averaging 2 to 4% above year ago levels all this corn marketing year.
In the June WASDE, USDA projects milk and meat production increases of 1 to 3% with only the egg sector showing a net decrease due to the outbreak of avian influenza impacting that industry.
Next week’s Grain Stocks report will provide a better reading on feed and residual use in the March to June quarter.
Ethanol production for the 2014/15 corn marketing year was 101% of year ago levels last week, about 5% above 2013/14 for the year. Corn export sales are at a pace to reach USDA’s 1.825 billion bushel target while sorghum export sales growth has stalled.
Outside Markets. After the meeting of the Federal Open Market Committee of the Federal Reserve on June 17th , Chairperson Janet Yellen affirmed the position of the Fed that
…the first increase in the federal funds rate will be appropriate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. At our meeting that ended today, the Committee concluded that these conditions have not yet been achieved.
A survey of committee members shows that most support some degree of policy firming (an increase in interest rates) yet this year, but that increase is expected to be modest. The highest opinion of the appropriate rate by the end of the year is still below 1%.
The greatest variation of opinion of the appropriate levels of interest rates shows up in 2016 with a range of less than ½% to almost 3%. For 2016, GDP is expected to increase from 2.4 to 2.7%, the unemployment rate decline to 4.9 to 5.1%, and inflation run from 1.6 to 1.9%.
That press release by the Fed put downward pressure on the dollar and gave a boost to the stock market.
2015 Corn Marketing Plan. I am 40% priced on the 2015 crop and we are entering the time frame when I will price the next 20%. Early season crop conditions are pressuring prices for now but we have a long way to go before the area and yield of this year’s crop are known. Use estimates remain firm.
June 26 – Quarterly Hogs and Pigs
June 30 – Acreage; Grain Stocks
July 7 – Short-term Energy Outlook
July 10 – WASDE
July 24 – Cattle on Feed
August 12 – WASDE (field survey-based production estimates)