Trade is worried about feed use estimates. Feed usage has been below what it was last year for 2 quarters now and feed usage will need to be up 30% from last year’s third quarter in the June 30 report to support the USDA’s annual feed use estimate. With a 2 million bushel old crop carryout looming, any reduction in estimated feed use on June 30, and continuing favorable weather, could result in further drops in corn prices. Producers are reluctant to sell old crop and new and are willing to build additional storage for this next year’s crop.
China might weaken in its rejection of GMOs. China currently uses imported GMO grain for only livestock feed but is currently looking to improve farm productivity on marginal ground. They are looking into allowing planting of GMO grains in the next 3 years.
Ever wonder how the USDA comes up with their yield estimate on their supply and demand reports? It involves several factors but one is when planting occurs. They look at planting progress reports and whether a majority of it occurs before April 25, between April 25 and May 15, or after May 15. Read more below.
Values spiraled lower this week despite excessive rains in Texas and Oklahoma. Trade is anticipating increased bushels due to the wet conditions even though there may be a sharp decline in quality. “There will still be bushel and those bushel will have to go somewhere.” There are currently dryness concerns in Canada and southern Russia. Russia is estimating grain production levels equal to 2014 but private analysts put it below that. Funds went from being short a record 104,000 contracts on May 14th to 68,000 contracts on May 26th which resulted in the $0.55 rally last week which we lost again this week.
Nebraska Wheat Crop Report
The Russian government has approved a new wheat export tax to start on July 1 in order to protect exports if the Russian Ruble starts to decline. The tax only goes into effect if wheat prices reach 13,000 Rubles/ton ($247/ton, $7.41/bu). Exported wheat is currently going for 10,526 Rubles/bu ($200/ton, $6.00/bu).
Trade is debating the impacts El Nino will have on crop production this year. Just to clarify, El Nino is the warm phase of a band of seas surface temperatures and is associated with a band of warm ocean water that develops in the Pacific ocean near the equator. El Nino has a large impact on weather conditions in the Midwestern United States. El Nino is currently located further east in the Pacific Ocean than usual so not much historical data is available on long-term impacts on Midwestern crop conditions. Earlier in the year, they were predicting a cooler, wetter summer but there are now forecasts that indicate temperatures will be higher than normal across many of the growing areas. This could increase yield estimates as soil moisture is adequate and warmer temperatures would be beneficial to crop development.