Egg Industry News and Commentary

  —  Apr 12

USDA - WASDE FORECAST #564, April 11th 2017



The April 11th 2017 USDA WASDE projections for the 2016/7 corn and soybean crops reflected actual harvest data. Areas for corn and soybeans were unchanged at 86.7 million and 82.7 million acres respectively. The USDA retained corn and soybean yields to 174.6 bushels per acre and 52.1 bushels per acre. Ending stocks for corn and soybeans were projected at 2,320 million bushels (unchanged from March) and for soybeans 445 million bushels (up 0.5 percent) compared to the data in the March WASDE Report.



The corn harvest attained a near record of 15,148 million bushels. None of the major categories of use were appreciably changed as is normal for a post-harvest WASDE report. The projected USDA range in farm price incorporated a 30 cent per bushel spread and price was up 5 cents per bushel on the low end and down 5 cents on the high end of the range compared to the March 2017 WASDE Report, attaining 325 to 355 cents per bushel. At the close of trading on April 11th, CME quotations for May and July 2017 corn were 367 cents and 374 cents per bushel respectively suggesting that the USDA projections may be low.

The RFS for 2016 was belatedly determined to be 18.11 billion gallons by the EPA on November 30th 2015 (See Editorial in CHICK-CITE). The value was four percent higher than the May 2015 proposal of 17.4 billion gallons. It is doubtful that the incoming Administration will alter existing RFS levels given support of the Midwest agricultural sector to the election outcome and reinforced by assurances to Corn-State legislators in early January 2017. A wild card will be the influence of the incoming EPA Administrator and the Secretary of Energy, both of whom favor the oil and refining industries of their home states and both have historically opposed the RFS. Business associates of the President-elect have recently commented negatively on the system of Renewable Identification Numbers (RINs) which affect the profitability of many domestic refineries. For April, USDA raised diversion of corn to ethanol by 50 million bushels.

The prevailing but stable historically low oil price reflects a slowing of World economic activity and increased oil and gas production in North America. Supply is a function of now restricted output from Saudi Arabia, lower production from Nigeria and Venezuela, resumption of supply from Iraq and Iran, and interference by Russia in Mideast affairs. Reduced output according to an OPEC “agreement” in early December 2016 and subsequent negotiations between OPEC and Russia are all contributory factors, determining the balance between supply and demand which is important to the livestock industry as oil price is correlated to grain prices. The WTI fluctuated in a narrow range of $51 to $53 per barrel during the past month with a sharp rise in early April.

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