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01-25-2013 08:04 AM
I read an article that confirmed my initial thoughts; Nebraska does NOT have a surplus of corn. I haven't traveled across the whole State, by any means, but around here, there is not a lot of corn just sitting around, and the piles are disappearing fast.
Nebraska Corn stocks in all positions on Dec. 1 totaled 957 million bushels, down 18% from a year earlier and the lowest in 10 years, according to USDA's National Agricultural Statistics Service, Nebraska field office.
Of the total stocks, 570 million bushels are stored on farms, down 22% from 2011. Off-farm stocks, at 387 million bushels, are down 11% from last year.
Soybeans stored in all positions on Dec. 1 2012 totaled 140 million bushels, down 30% from last year and lowest since 2003. On-farm stocks, at 42 million bushels, are down 33% from a year earlier. Off-farm stocks, at 98 million bushels, are down 29% from 2011.
Wheat stored in all positions on Dec. 1 were 47.5 million bushels, down less than 1% from a year earlier. On-farm stocks, at 3.8 million bushels, are up 9% from 2011 while off-farm stocks, at 43.7 million bushels, are down 1 percent from a year earlier.
Note the 22% less corn in farmer's hands for corn, and 33% less for beans. Someone may be scrambling for those last bushels.
Farther down the article:
Hay stocks on Nebraska farms totaled 3.05 million tons, down 29% from a year earlier and the lowest since 1957. Year-end grain production totals also were released by the NASS Nebraska field office.
Corn for grain production in Nebraska, based on year-end surveys, is estimated at 1.29 billion bushels, down 16% from 2011 and smallest production since 2006. Yield of 142 bushels per acre is up 3 bushels from the November forecast, but still 18 bushels below last year. Farmers harvested 9.1 million acres of corn for grain, down 5% from 2011.
Soybean production for 2012 totaled 207 million bushels, down 21% from 2011. Yield, at 41.5 bushels per acre, is down 12.5 bushels from a year earlier and the lowest since 2003. Area for harvest, at 4.99 million acres, is up 3% from 2011.
The harvested acres for grain, is down some, because of abandoned dryland, in my opinion. The yields, while very good in some areas, was disappointing in others, due to the extreme heat. My crop insurance guy said that he had appraised pivots that had no irrigation restrictions, to a yield of 75 BPA, and some that were under watering restrictions, at less than that.
What you should REALLY look at, is the hay stocks down 29% from last year. Keep in mind, last year was not a big 'surplus hay' year, there were a lot of people with 2, 3, year old hay, that got their old inventory cleaned out (the least hay in over 50 years). This year, there are people scrambling to get hay brought in from the Dakotas, and farther, to keep their cows fed. How many acres of hay ground will be planted in NE to keep the cows fed? (only Texas is the only State with more cattle than NE).
I guess what I am trying to say, is that if people expect the irrigated fields of NE, to make up for dry conditions somewhere else, they may be in for a disappointment.
01-25-2013 09:25 AM
The hay stocks have me concerned. most to all of the CRP and filter strips that have come out have been torn up. I guess in my opinon I would have left some of that and sold hay this year.
If you happened to see the UNL show last night on NET, if it don't rain they recommend not grazing the range/pastures at all, due to stress on the grass.
My local coop has a 3 under basis, and the coop announced the other day that they are taking free DP contracts if sold before August 31. the ethanol plants within 40 miles of me all have at least 10 over for nearby.
most of the farmers around me never put anything in the bin,
01-25-2013 09:26 AM
A lot of it depends on what part of the state one is from. The eastern half of the state relies a lot more on dryland, so I'd conclude this is the area where corn is the shortest. If you want to see plenty of grain piles, go south of North Platte until you hit highway 23. Take highway 23 west all the way to the CO state line. You'll see millions upon millions of bushels of outside grain piles that haven't been touched. A lot of the unitrain loaders built in the past five years are stuffed with corn because we're exporting so little. We've already seen York and Ravenna idle their ethanol plants. One of the local ones around here is going to 40% capacity starting next week. We may very well be 18% below last year in corn stocks, but we're more than likely as a state rationing this amount as well.
01-25-2013 09:30 AM
Highyields, the hay stocks should have everyone down right scared to death. A lot of the forage we do have around here is what I consider junk forage such as cornstalk bales and crp grass bales. These are extremely low in nutrients and do nothing more than act as a filler when feeding wet distillers. Guys in the feedlots can get away feeding these lower quality forages, but guys with cows can't especially now that nobody can get wet distillers. If guys are forced to drylot cows this summer, they're basically going to be forced into buying and feeding corn in their ration. I've heard a few feedlots already quoting as high as $4.00 a day for a lactating cow. I'm not sure feeders this fall can even get high enough to cover that kind of cost. I have the feed, but I'm not going to use it. I'll dump the cows and sell the feed to someone who wants to try to salvage their herd.
01-25-2013 09:45 AM
GORDEDHUSKER- I find it very interesting that NE is sitting on alot of corn stocks. Maybe you should send them to North-Central Iowa, at the current demand pace which is not rationing any corn at all in NC Iowa, we will be out of corn by the end of JUNE/2013.Basis levels at the ethanol plants, feed mills, and the local elevators are the best I have seen in 26 years. Perhaps I should offer to buy some of your NE Corn and sell it here in NC Iowa, sounds like with our extremely good basis levels I could make some money doing that. I only have room for 60,000 bushels of corn currently in my total storage capicity of 200,000bu since I still have alot of undelivered and unpriced corn in my "TIN CANS".
01-25-2013 10:16 AM
NEBRAFARMER- thanks for clearing that up, I think the entire cornbelt will run out of Physical Corn before the 2013 crop is harvested. It is of course impossible for us to run out of corn before the 2013 crop is harvested, prices will go up to ration demand so we will never run out of corn. I just wonder want kind or how high basis levels will need to go to ration demand of physical cash corn. This is the "MILLION DOLLAR QUESTION" I feel.
01-25-2013 10:38 AM
RSW, I think you misinterpreted what I was saying. I wasn't implying we're sitting record corn stocks. I was stating we're sitting on basically normal inventory here. If the export business doesn't pick up, then by fall we might very well be sitting on a lot of corn stocks. I read somewhere where a ISU professor stated by July-August IA could see half of their ethanol plants idled. I'm not sure whether it was because of not being able to source corn or if it was because of negative margins. The plants that have shutdown in NE did so because of negative margins.
In corn short years, what we're seeing is pretty typical. We won't run out of corn, but the available corn out there will be very dislocated. There will be places that will run out of corn while there will be places that have an abundance. I read where down south wheat is already making it's way into feed rations because of wheat prices compared to corn prices. During harvest, I was told SA grain sorghum was being brought in as far north as SW KS. I'd assume with a big SA crop coming that some of it will find it's way into the U.S. before our harvest. I was reading what Dan Basse of AgResource was saying about 2013 being a make or break year for corn where we're either going to see $4.00 corn or $9.00 corn. It's hard to argue the logic considering how dry it is in the corn belt this time of year.
01-25-2013 10:56 AM
Everytime a e plant closes or slows down, we have rationing, so in actuality we can have rationing with no price increase. Maybe even prices decling. Is my thinking flawed or did i miss something.
01-25-2013 11:12 AM
you are correct.....corn costs in many of the areas needing to replace lost supply is "up there", with many of those places at $8 or more by the time they take delivery......basis levels 20-40 higher than normal just add to the woes....
so far, my theory about the corn market needing to inflict "persistent pressure to the user" is proving true
the only thing I am not hearing is livestock liquidation, which got a lot of press last summer......
01-25-2013 11:21 AM
GORDEDHUSKER- Yes, sorry for miss-understanding your post, but now I know your position and the corn stocks. I am just not seeing any ethanol plants shutting down in my area, but these plants have had all there buildings, land, and equipment paid-off for a number of years. These Capital Costs can add as much as 50 cents per gallon of ethanol in production costs. 50 cents doesn't seem like alot, but it can be as 20% of your ethanol production cost. So if an ethanol plant is still paying there Capital Cost Loans off, yes, that could cause there margins to be much worst than other plants that have paid-off all there loans.My ethanol plant in NC Iowa that I sell my corn to and I also have money invested in them has been trying to get more corn delivered before the end of the month since they are running at 107% of production, they are a 100 Million gallon plant. Anyway, it will be very exciting if the drought continues into the 2013 crop year. Iowa, state-wide got around 143bu yield in 2012. If the drought continues, I see a sub-120bu yield or even lower. One thing for sure is it will not be a boring 2013 marketing year. I am at 0% new crop corn sold, so I am taking some risks. I could sell 2013 corn to the ethanol plant for $5.60 today.