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Wednesday, February 22, 2017

2017 Corn Prospects

ifr170224–043
2017 Corn Prospects
Todd Hubbs, Grain Markets Specialist - University of Illinois

The grain marketing specialist at the University of Illinois has been thinking a lot about the coming growing season. Todd Gleason has more on how the balance sheet for corn may look.

A balance sheet is just what it sounds like…
2:55 radio
3:07 radio self-contained

A balance sheet is just what it sounds like. It adds up on the available supplies and then subtracts all of the demand. It is often times called a supply and demand table. The grain markets specialist at the University of Illinois has been developing his S&D table for corn. It starts, says Todd Hubbs, with the number of acres he believes farmers will plant this year.

Hubbs :19 …it may even come in a little bit higher.

Quote Summary - When I look forward into 2017/17 on the supply side I see a reduction in corn acreage. I put it at 91.5 which is a 3.5 million acre reduction from 2016. It could be more than that, the numbers are all over the place, but that’s a fair estimate. It may even come in a little bit higher.

The first number, then, in the new crop corn balance sheet is 91.5 million acres with an expectation that 83.2 million of those will be harvested. Hubbs uses a trend-line yield of 169 bushels to the acre despite the fact the last three growing seasons have produced above average yields.

Hubbs :14 …have is about 14.1 billion bushels for 2017.

Quote Summary - I’m going to stick with the trend expectations for right now. I don’t think it is time to abandon that kind of thinking. So when you put those two together the crop projection I have is about 14.1 billion bushels for 2017.

When you add USDA’s 2.32 billion bushel corn carryout from this year and 50 million bushels of corn imports for next year to the 14.1 number, it tallies 16.4 billion bushels of total supply.

Hubbs :40 …strong exports we’ve seen of ethanol over the last year.

Quote Summary - On the demand side, I actually see ending stocks coming down in 2017/18 from what they are in 2016/17. We’ve had really strong consumption. I see corn used for ethanol trending up a little bit. We’ve seen a gradual move up year-over-year for the last five years. Now while we don’t see massive growth in it, there is a slight (upward) trend in it. I put it at about 5.4 billion bushels mainly based on Energy Information Agency (EIA) expectations of gasoline consumption, gas prices, and the relatively strong exports we’ve seen of ethanol over the last year.

While the number of bushels of corn used to make ethanol is trending higher in Todd Hubbs’ balance sheet, corn exports are lower. He’s thinking 1.95 billion bushels because Brazil should fill back in the export hole its poor corn crop created last year. Oh, and that number also assumes there won’t be a trade policy problem in the coming year. The remaining demand figure is domestic usage called feed and residual. The University of Illinois number cruncher puts it at 5.5 billion bushels. These all add up to 14.3 billion bushels of demand. When you subtract it from the available supply, 2.131 billion bushels are leftover. Right now Todd Hubbs thinks each of those bushels of corn will be worth $3.70 in the cash market.