Market Situation
Crop Progress. The Crop Progress from USDA Monday afternoon showed 9% of the U.S. crop had been harvested by September 18th, just below a normal pace of 12%.
Crop condition ratings were unchanged leaving the condition index at 385 for the third week in a row. A normal index for this late in the season is 358 and this year’s index continues to track in line with the record setting yield of 2014, 387.
Grain Use. The Short-term Energy Outlook from the Energy Information Administration updated September 7 shows U.S. gasoline consumption closing out the 2015/16 corn marketing year up 2.4% compared to the year before and up 5.2% compared to average. This provided support for ethanol consumption which was up in similar fashion, +3.4% compared to 2014/15 and +6.1% to the 5-year average.
Ethanol production numbers are starting off strong for the 2016/17 corn marketing year: 103% of last year and 110% of average.
Outside Markets. Inflation remains moderate as indicated by the Consumer Price Index released by the Bureau of Labor Statistics on Friday. Compared to August of 2015, prices of all items in the index were up 1.1%; food prices were unchanged.
The Open Market Committee of the Federal Reserve meets today and Wednesday to consider an increase in interest rates. A Reuters poll of economists shows only 6% expect the Fed to move to raise rates this week, the majority now expecting the Fed to wait until December.
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Marketing Strategies
Seasonality. The normal seasonal price pattern for December corn is to set the harvest low in early October. That holds true for both the 10-year and 20-year indices. At this point, it looks like that low may have been set a month early.
2016 Feed Grain Marketing Plan. I went ahead and priced another 20% of the 2016 crop on September 13th when the closing price fell below the 9-day moving average. I will price the rest of the crop at harvest in mid- to late October.
Upcoming Reports/Events.
September 23 – Cattle on Feed
September 30 – Grain Stocks; Small Grains Summary; Hogs and Pigs
January 8-14 – The Executive Program for Agricultural Producers, information available here
