Welch on Grain: Corn Condition Continues Above Average

    Market Situation

    Crop Progress. The U.S. corn crop condition index continues to run above average and counter the long term summer trend. The crop score increased from 375 to 376 this week as 1% of the crop moved from the fair to good category. The average index score for this time of year is 364. Crop maturity indicators are about normal, 78% silking compared to 77% average; 14% in the dough, 17% average.

    Grain Use. Friday’s Cattle on Feed report showed on feed numbers up 2% compared to last year and 99% of the 5-year average. This is the largest year over year increase of the corn marketing year and the narrowest gap between current numbers and average. Broiler chick placements continue to run 2 to 3% above year ago levels.

    Updated numbers from USDA’s Feed Grain Data base show estimated grain consuming animal units in 2015 of 95.128 million, up 2% from 2014. Feed use per grain consuming animal unit is estimated at 1.76 mt (including ddgs), down 2.5%. The long term average of energy feed per GCAU is 1.79 mt.

    These numbers are consistent with the July WASDE feed and residual projections of 5.3 billion bushels in 2014/15 and 5.275 billion bushels in 2015/16. However, abundant feed supplies, lower grain prices, and increased livestock numbers suggest the feed and residual number may be subject to upward revision.

    Ethanol production was 101% of last year and 112% of average in last week’s update. For the current corn marketing year ethanol production is up about 5%.

    Corn exports are on pace to reach USDA’s target for the 2014/15 marketing year while grain sorghum appears to have plateaued, still just short of the target.

    Outside Markets. Financial markets around the world were lower on Monday following losses in China’s Shanghai Composite Index. China’s stock market dropped 345 points or 8.5%, the single biggest decline since 2007.

    Though the Shanghai Composite is down 28% from its high for the year of 5178 on June 15, it is still up 375 points or 11% compared to January 1. The Chinese government has intervened to prop up the market and limit losses as GDP in the first half of 2015 is estimated to have increased 7% compared to 7.4% growth in 2014.

    Marketing Strategies

    2015 Corn Marketing Plan. The corn market has lost all the gains it made following the bullish Acreage and Grain Stocks reports on June 30. The next window of pre-harvest sales is centered around the August Crop Report. That report will include the first official yield estimate of the 2015 crop based on field samples. Private firms will be releasing their yield estimates as well. USDA left its yield estimate unchanged in the July WASDE at 166.8.

    Favorable weather seems to be supporting yield estimates at this time (see today’s Wheat Outlook for more on weather issues). Acres are down, use is firm, the question is yield.

    Upcoming Reports/Events.
    August 11 – Short-term Energy Outlook
    August 12 – WASDE (field survey-based production estimates)
    August 21 – Cattle on Feed
    September 7-9 – Advanced Training for Agricultural Professionals, Fort Worth, Hosted by Texas Corn Producers (here)
    January 10-16 – TEPAP (The Executive Program for Agricultural Producers), registration is now open here

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