May 10, 2015
Sub-$4 per bushel corn futures continue to strain markets as a large old-crop carryover and lower feed demand hold down prices. December 2015 corn futures closed Friday at just over $3.78, meaning many farmers are seeing $3.50 or lower cash markets, depending on their local basis.
USDA’s supply and demand report Thursday indicated that U.S. feed grain ending stocks for 2014-2015 are projected higher with increases for corn, barley and oats, only partly offset by a reduction for sorghum. USDA raised corn ending stocks by 50 million bushels, with a reduction in expected feed and residual use reflecting December-February disappearance as indicated by March 1 stocks report.
“The projected range for the corn season-average farm price is narrowed 5¢ on each end to $3.55-3.85,” USDA says.
Bryce Knorr, Farm Futures senior editor, says fears of softening demand have the average guesses from the trade predicting an increase in old-crop carryout in Tuesday's monthly production, supply and demand report from USDA. “While Farm Futures believes a small reduction is actually warranted, the spread of bird flu and lower ethanol production are bearish forces right now,” Knorr says.
The Des Moines Register reports that avian influenza continues to cause major problems for many of the state’s poultry producers. The Iowa Department of Natural Resources has issued temporary permits to a Massachusetts company that would allow it to set up large portable incinerators in Sioux, Kossuth and Cherokee counties to help in the disposal of several million of chickens, turkeys and ducks that have died from bird flu.
Meanwhile, Knorr says that while wet weather the past week slowed corn planting, “the drier 6- to 10-day outlook indicates a quick return to the fields.” He notes that USDA last Monday said 55% of the corn was planted, up from 19% a week earlier, one of the largest week-to-week increases on record. That number should increase on Monday, when a year ago the average was 58% planted.
“Unless heavy rains linger past next week it will be hard to get the trade excited about planting delays,” Knorr says. “As long as 80% of the crop is in the ground by mid-May the market should continue to focus on large old crop carryout, especially with bird flu still spreading.”
As for Tuesday’s supply and demand report, Farm Futures anticipates some slippage in old-crop corn ending stocks to 1.80 billion, while the first report on new-crop stocks should show 1.85 billion.
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