Assessing the Prospects for 2017 Corn Production
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markets and weather for the farming world | Todd Gleason, Farm Broadcaster
ifr170811–208
Google & 4-H Working Together on STEM
Rob Biederman, Head of External Affairs Midwest - Google
Jennifer Sirangelo, President & CEO National 4-H Council
Google made a big splash on the Illinois State Fairgrounds this past week when it and the National 4-H Council announced a computer science collaboration. Todd Gleason has more on the $1.5 million gift and how it will be used to create STEM programming for kids.
Google, through its philanthropic arm, has made a $1.5 million gift to 4-H across the nation. The company is providing both funding support and virtual reality equipment to 4-H youth computer science programs. It made the announcement at the Illinois State Fair Friday, August 11, 2017.
Excerpt from August USDA Crop Production report.
Corn production is forecast at 14.2 billion bushels, down 7 percent from last year. Based on conditions as of August 1, yields are expected to average 169.5 bushels per acre, down 5.1 bushels from 2016. If realized, this will be the third highest yield and production on record for the United States. Area harvested for grain is forecast at 83.5 million acres, unchanged from the June forecast but down 4 percent from 2016.
Soybean production is forecast at 4.38 billion bushels, up 2 percent from last year. Based on August 1 conditions, yields are expected to average 49.4 bushels per acre, down 2.7 bushels from last year. Area for harvest in the United States is forecast at a record high 88.7 million acres, unchanged from the June forecast but up 7 percent from 2016. Planted area for the Nation is estimated at a record high 89.5 million acres, also unchanged from June.
All wheat production, at 1.74 billion bushels, is down 1 percent from the July forecast and down 25 percent from 2016. Based on August 1 conditions, the United States yield is forecast at 45.6 bushels per acre, down 0.6 bushel from last month and down 7 bushels from last year.
...see USDA Reports page for more complete detail.
Thirteen agricultural economists put together short papers describing issues that will surface during the writing of the next farm bill. For each issue, the author describes the “policy setting” and details “farm bill issues” that likely will arise during negotiations. Each issue then has a “what to watch for” summary. These papers, along with an overview, are presented in an article posted to the farmdocDaily website.
USDA NASS will release the first corn and soybean Crop Production Report of the season Thursday, August 10th, 2017. Todd Gleason talks with USDA NASS State Statistician Mark Schleusener about how the information is collected and calculated.
Darrel Good - If we relied entirely on the crop conditions model, today’s ratings would point to of 167.2, with soybeans at 47.7."If we relied entirely on the crop conditions model", says Good, "today’s ratings would point to of 167.2, with soybeans at 47.7. Again, I’m not sure I would ever rely one-hundred-percent on crop conditions as a way to form crop expectations, but as one component it does give you a good barometer or where we are."
In the three years this added up to 2.24 billion gallons of ethanol equivalents at play in the cuts that have now been basically declared illegal.It would take about 800 million bushels of corn to make that much ethanol. However, because there are two parts to the RFS relating to ethanol, it’s not likely corn based ethanol will be the big winner when it comes to making up the lost gallons thinks Scott Irwin, “Because of the E–10 blend wall I think, ultimately, the beneficiary of this will be biodiesel or more broadly speaking biomass based diesel. It has been filling the gaps in the E–10 blend wall in the ethanol mandate for a number of years and I don’t see why that would change dramatically with this rule making.”
Because of the E–10 blend wall I think, ultimately, the beneficiary of this will be biodiesel…The back fill will require about one-point-five billion gallons of biodiesel. It would use about 11 billion pounds of feed stock. The number one feed stock is soybean oil.
Each day the weather changes and just as often, it seems, so has the direction of corn prices. Todd Hubbs from the University of Illinois was of the opinion a couple of weeks ago that corn market had a some upside potential. It did, but now, maybe it doesn’t. This has him thinking about the number of acres of corn in the United States, the impact of the weather on yield, and how the market might react August 10th when the United States Department of Agriculture releases the first corn crop production report of the season, "We talk about increased corn acreage and maybe a yield loss below trend. Is that seven bushels to the acre, five bushels, or two bushels. It is really hard at this point to say, but I am looking at, out of my little model, 168 bushel national yield.
Still it is hard to say what USDA is going to put out on August 10th. Hubbs says he is looking forward to seeing what they say about yields. If the market is pricing in 164/165 bushels to the acre for yield corn and USDA releases a 168/169 yield, then Hubbs says the price moves won’t be good.
Here’s the upshot for Hubbs. He does not think the amount of corn left over from last year is particular oppressive to the market place. It’s big, but not enough to really weigh heavily on price. So, if this year’s corn crop isn’t near average there will be upside price potential, “I’m not as high on corn prices as I was before, but I think there is still a possibility. I see the seasonal average farm price for 17/18 corn in that $3.80 to $3.85 range with some runs.”
I see the seasonal average farm price for 17/18 corn in that $3.80 to $3.85 range with some runs - Todd Hubbs
You may read more from University of Illinois Agricultural Economist most Monday’s on the farmdocDaily website.
by Scott Irwin & Darrel Good, Agricultural Economists
University of Illinois
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Implications
We analyzed the magnitude of the “push” in production and consumption of biofuels implied by the proposed rulemaking for the Renewable Fuels Standard (RFS) for 2018 released last week. We find that the proposed standard for 2018 implies a measurable push in the consumption of conventional ethanol since the mandate exceeds expected domestic consumption. The magnitude of that gap is estimated at 640 million gallons for 2018, compared to the estimate for a record large gap in 2017 of 738 million gallons. The gap ranged from 260 to 457 million gallons in 2014–2016. The advanced biofuels mandate is estimated at 684 million gallons in 2018, compared to the estimate of 900 million gallons in 2017 and the actual gap of 438 million gallons in 2016. Our analysis of the proposed rulemaking for 2018 implies:
(1) The EPA under the new Administration is “staying the course” on the implied conventional ethanol mandate with that mandate at the statutory level of 15 billion gallons. If that policy continues and the rate of increase in domestic gasoline consumption does not accelerate more rapidly, there will continue to be a notable conventional ethanol gap beyond 2018.
(2) The push in advance biofuels production and consumption remains large, but is smaller than in 2017 as both the total biofuels mandate dropped and the mandate for undifferentiated advanced biofuels declined marginally. However, the minimum undifferentiated mandate will increase by statute in 2019 to 4.5 billion gallons. So, even though the biodiesel mandate is proposed to stay constant at 2.1 billion gallons for 2019, the total advanced mandate gap could jump another 260 million gallons (4.5 –4.24 billion gallons).
(3) The relatively large conventional ethanol gap implied for 2017 and 2018 suggests that the current discount in the price of D6 (ethanol) RINs relative to D4 (biomass-based diesel) RINs will continue to narrow towards equality (e.g., farmdoc daily, December 4, 2015).
(4) Biomass-based diesel is likely to remain the “marginal gallon” for filling both the conventional and advanced mandate gaps. This means relatively large levels of biodiesel production will continue to be required which in turn will require large levels of fats and oils feedstock.
corn |
USDA’s release of the Quarterly Grain Stocks report on June 30 will provide an estimate of corn stocks in storage as of June 1, 2017. Since many of the consumption categories for corn can be derived from data provided during the marketing year, this estimate provides the ability to calculate the magnitude of feed and residual use of corn during the third quarter. The calculation offers the basis for evaluating the probable feed and residual use during the entire marketing year and imparts information on the potential size of ending stocks.
While the information imparted by the June Acreage report released on the same day will likely eclipse the Quarterly Grain Stocks report, the estimated corn stocks have important implications for the current marketing year.
The supply of corn available during the first half of the 2016–17 marketing year is the base for estimating June 1 stocks. Corn stocks at the beginning of the quarter were estimated at 8616 million bushels in the March Grain Stocks report. Currently, the Census Bureau estimates for corn imports are only available through April. In the first half of the marketing year, corn imports totaled 26 million bushels. Imports for the third quarter might have been around 12 million bushels. By combining imports with the beginning stocks, total available supply for the second quarter comes in at 8628 million bushels.
An estimate of corn exports for the third quarter is based on the cumulative weekly export inspections estimate available for the entire quarter. Cumulative marketing year export inspections through May totaled approximately 1738 million bushels. During the first eight months of the marketing year, total Census Bureau corn exports were greater than cumulative export inspections by 45 million bushels. Assuming the margin is maintained through May, corn exports through three quarters of the year equaled 1783 million bushels. Since exports in the first half of the marketing year totaled 1095 million bushels, the estimate for third quarter corn exports equals 688 million bushels.
The Grain Crushing and Co-Products Production report released on June 1 estimated corn used for ethanol and co-product production during March and April of 2017 at 893 million bushels. Weekly estimates of ethanol production provided by the Energy Information Administration indicates ethanol production increased by 5.5 percent in May 2017 from the preceding year. By calculating the amount of corn used to produce ethanol from these May numbers, corn used for ethanol production in May was approximately 449 million bushels. Total use for the quarter is estimated at 1342 million bushels.
Corn used to produce other food and industrial products during the 2016–17 marketing year is projected at 1470 million bushels by the USDA. Using historical corn use data, typically around 75 percent of the final marketing year food and industrial products use occurs in the first three quarters of the marketing year. If this historical pattern holds and the USDA projection is correct, corn use for the first three quarters of the marketing year totaled 1102 million bushels. Corn use during the first half equaled 689 million bushels which set the third quarter use estimate at 413 million bushels.
The current USDA projection for feed and residual use sits at 5500 million bushels. The historical pattern of feed and residual use in corn may provide some indication of the third quarter use. For the five previous marketing years, use during the first three quarters of the marketing year ranged from 90.5 – 94.2 percent of the marketing year total with an average of 91.6 percent. Third quarter feed and residual use ranged from 15 to 21 percent of the total use over this time span. For this analysis, the 91.6 percent average during the first three quarters of the previous five marketing years is used to calculate expected feed and residual use during the third quarter. If the USDA projection is correct, feed and residual use during the first three quarters of the 2016–17 marketing year totaled 5038 million bushels. Feed and residual use equaled 3797 million bushels in the first half. Therefore, the third quarter estimate totals 1241 million bushels.
By adding the estimates for exports and domestic uses, the total use of corn during the third quarter is estimated at 3684 million bushels. The total use estimate for the third quarter places June 1 corn stocks at 4944 million bushels. At this level, June 1 stocks come in 222 million bushels larger than the estimated 2016 June 1 corn stocks.
A June 1 corn stocks estimate that supports the USDA projection of 5500 million bushels of feed and residual use during the 2016–17 marketing year is considered neutral for corn prices. An estimate of corn stocks that deviates more than 100 to 150 million bushels from market expectations would provide an indication of changes in domestic feed and residual and alter expectations for ending stocks. This analysis indicates an estimate near 4944 million bushels should not change expectations that feed and residual use is on track to meet the marketing year projection.