Welch on Grain: Corn Harvest Reaches 18%

    Market Situation

    Crop Progress. The U.S. corn crop condition index held steady again this week, all category ratings unchanged for the fifth week in a row. The index stands at 374, 14 points better than the 360 average and 14 points below last year’s 388.

    Maturity indicators are about normal: corn dented, 97% this week, 97% normal; corn considered mature, 71% this week, 72% normal; corn harvested, 18% this week, 23% normal.

    The September WASDE forecast a record high yield for U.S. sorghum this year, 74.9 bushels per acre. Sorghum conditions this week show an increase of 1% in the fair category and 1% decline in excellent. Very poor and poor held steady at 8%, 27% is fair, and good and excellent is 65%, down from 66% last week.

    Grain Stocks. USDA’s Grain Stocks report on Wednesday is expected to show 1.739 billion bushels of corn in all locations as of September 1. That is up from 1.236 billion at the end of the 2013/14 marketing year and the highest since 1.967 billion bushels in 2005/06. Soybean ending stocks are expected to be at their highest since 2010/11, 205 million bushels to end 14/15 compared to 215 million bushels in 2011.

    Grain Use. Reports related to feed grain use were mixed in their implications last week. Domestic use remains firm while export marketing prospects are struggling. The ethanol production number from the Energy Information Administration on Wednesday morning showed continued increases: 106% of last year and 110% of average for the week.

    That afternoon the Broiler Hatchery report showed broiler chicks placed about on par with year ago numbers, up 2% over average.

    The export picture on Thursday was not as promising. U.S. corn export sales for the week of September 17th were 17 million bushels, about half of the 30 million bushels per week needed to reach the current export target for the marketing year. The same was true of sorghum, 2.3 million bushels on the week, 6 million bushel pace to reach USDA’s marketing year projection.

    Then on Friday, USDA’s Quarterly Hogs and Pigs report showed the highest inventory of all hogs and pigs since this number began being reported in 1988. On September 1, all hogs and pigs were up 4% compared to last year and up 2% from average.

    Outside Markets. Though the Federal Reserve decided to delay an increase in interest rates in its September meeting, news regarding the timing of the anticipated change in policy continues to have an impact on financial markets. Fed Chair Janet Yellen said that an increase in rates was still likely this year, citing “Prospects for the U.S. economy generally appear solid”.

    This more optimistic economic outlook boosted U.S. and European stock markets early in the day last Friday. This same outlook, in light of increased concerns over economic growth in China was cited as the reason stocks are lower today.

    Supporting Yellen’s position was an upward revision in 2nd quarter GDP by the Bureau of Economic Analysis. Consumer spending was higher in the April to June period than first estimated raising GDP from 3.6% to 3.9%. All other national accounts showed a small decrease.

    Marketing Strategies

    2015 Corn Marketing Plan. I have completed all my pre-harvest sales of the 2015 crop and have 20% remaining to price at harvest.

    Prices have firmed since ending stocks were reduced in the September WASDE. Domestic use categories continue to show steady increases. Even with the second highest yield in U.S. history, corn ending stocks are projected to be lower this year (15/16) than last (14/15).

    Upcoming Reports/Events.
    September 30 – Crop Insurance Sales Closing Date for Texas Winter Wheat; Grain Stocks; Small Grains Summary
    October 6 – Short-term Energy Outlook
    October 9 – Crop Production; WASDE
    October 23 – Cattle on Feed
    January 10-16 – TEPAP (The Executive Program for Agricultural Producers), Unit I is full but space remains for Unit II, here
    January 20-March 3 – Master Marketer, Abilene, Texas. Registration is now open, here

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