NEWS
Newsom on the Market
What'll You Have?
Darin Newsom DTN Senior Analyst
..."It is understandable then the interest in a recent prediction of $6 corn this coming year. As we all know, predictions are what they are, and everyone uses something different to come up with target prices. In this particular case, corn's resurgence is based on a coming flood during spring planting, drought during the growing season, and early frost before harvest. The only thing missing is a plague of locusts.
I'm not going to say this prediction is wrong. However, given USDA's latest round of supply and demand numbers for corn it would take the above scenario, including the locusts, to get the corn market back to $6.00.
Think back to what USDA did this past Tuesday. Domestic ending stocks were raised 35 million bushels as a result of 10 mb more imports, 25 mb more in ethanol demand, and 50 mb less in exports projected. This brought domestic ending stocks in at 1.837 billion bushels and raised ending stocks-to-use to 13.6%. To put these numbers into context, they are both the largest since the 2005-06 marketing year, just prior to the beginning of the ethanol-driven demand market in corn.
As they say on infomercials: But wait, there's more! As mentioned above the export projection was trimmed 50 mb to 1.65 bb, or 11% below last marketing year's 1.864 bb. However the most recent weekly Export Sales and Shipment report (for the week ending Thursday, February 4) had total marketing year sales down 27% from the previous year (for the same week) and total shipments running 22% behind. If the latter pace continues through the end of the marketing year, another 30 reporting weeks, total export shipments would be 1.450 bb. That's 200 mb below USDA's February estimate. And where do those 200 mb go? That's right -- to ending stocks, potentially taking U.S. leftover supplies to 2.037 bb.
And what becomes of those ending stocks when the 2015-2016 marketing year concludes next August? They become beginning stocks for the 2016-17 marketing year."...
Newsom on the Market
What'll You Have?
Darin Newsom DTN Senior Analyst
..."It is understandable then the interest in a recent prediction of $6 corn this coming year. As we all know, predictions are what they are, and everyone uses something different to come up with target prices. In this particular case, corn's resurgence is based on a coming flood during spring planting, drought during the growing season, and early frost before harvest. The only thing missing is a plague of locusts.
I'm not going to say this prediction is wrong. However, given USDA's latest round of supply and demand numbers for corn it would take the above scenario, including the locusts, to get the corn market back to $6.00.
Think back to what USDA did this past Tuesday. Domestic ending stocks were raised 35 million bushels as a result of 10 mb more imports, 25 mb more in ethanol demand, and 50 mb less in exports projected. This brought domestic ending stocks in at 1.837 billion bushels and raised ending stocks-to-use to 13.6%. To put these numbers into context, they are both the largest since the 2005-06 marketing year, just prior to the beginning of the ethanol-driven demand market in corn.
As they say on infomercials: But wait, there's more! As mentioned above the export projection was trimmed 50 mb to 1.65 bb, or 11% below last marketing year's 1.864 bb. However the most recent weekly Export Sales and Shipment report (for the week ending Thursday, February 4) had total marketing year sales down 27% from the previous year (for the same week) and total shipments running 22% behind. If the latter pace continues through the end of the marketing year, another 30 reporting weeks, total export shipments would be 1.450 bb. That's 200 mb below USDA's February estimate. And where do those 200 mb go? That's right -- to ending stocks, potentially taking U.S. leftover supplies to 2.037 bb.
And what becomes of those ending stocks when the 2015-2016 marketing year concludes next August? They become beginning stocks for the 2016-17 marketing year."...
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