cancel
Showing results for 
Search instead for 
Did you mean: 
roarintiger1
Honored Advisor

Interesting "after the report" info

I received this in an email this morning from our local ethanol plant............some interesting stuff!

 

Was I surprised that March corn got pounded as hard as it did? Yes. I was thinking more along the lines of -30 on a bearish report. However what today’s price action clearly showed was that several people got caught leaning the wrong way. The night session closed higher, which made the set-up for this morning’s negative response to the January report all the more acute.

 

What’s the biggest reason not to get overly negative on this report? The corn yield. Yes it was higher than the average trade guess and the November estimate but let’s take a step back…it was 147.2 BPA.  That’s beyond brutal and totally discomforting going into 2012. Even with 94 million corn acres. Think about it…we’ve planted 90+ million corn acres two times in modern history and the yield’s been 150.7 BPA (2007; 93.5 million planted acres) and 147.2 BPA (2011; 91.9 million planted acres). That’s an average of 149 BPA. Therefore on 94 million corn acres, 86 million harvested acres and a yield of 149 BPA, that’s a corn crop of 12,814 million bushels. That’s not nearly enough corn. And yet we keep thinking that we should start with a trend-line yield closer to 158 to 160 BPA. There’s no proof that anything remotely close to that is possible on 90+ million corn acres. I don’t care what the science says. The math says it hasn’t happened. Not even close.

 

And demand…it will not be as easy to ration demand in 2012/13 as it was in 2011/12. The corn market is changing again. Argentina and Brazil are not going to produce the crops we need them to this year to allow this to happen again (this = US corn exports of only 1,650 million bushels). Ukraine’s winter wheat crop is already in trouble. We want E15…that will take a lot more corn than 5,000 million bushels. The landscape is evolving and yet the market is only focused on the here and now. And that is today’s headline, US corn ending stocks 97 million bushels ABOVE the average trade guess and a US corn yield 1.1 BPA ABOVE the average trade guess. But look at the stinking numbers. Next year’s carryin stocks will be no more than 846 million bushels. The last two years we have had corn yields of 152.8 BPA and 147.2 BPA. The numbers don’t lie. There remains no stocks cushion going forward.

 

18 Replies
Mizzou_Tiger
Senior Advisor

thanks RT1..............

at least there are some others out there that see it for what it is..............instead of what the "experts" think it should be..........

0 Kudos
Hobbyfarmer
Honored Advisor

Re: thanks RT1..............

A copy and Paste from an e-mail got this morning , This is the Rebuttal from John Macintosh .

Some back ground here , John was on ( I think CNBC the other day talking about what he was seeing on the USDA report , his take was that we are alot lower on carry out and yeilds .

John , I'm with you , great job !

No , I am Not in hiding. And I am totally unrepentant. The pilot had a
> few more drinks than I thought.
> I can honestly say that in 11 years' of yield work , I do not think I
> have ever been off the mark by more than 3 or 4 bushels for a major
> corn state. I am now at odds with the USDA in Iowa by 12 bushels. For
> what it is worth , check out the corn map on agweb.com . You will see
> they have Iowa at 164.5 on 41,000 thousand acres, and Illinois at
> 164.2 on 67,000 acres. The spread is 0.3 bushels . The USDA has Iowa
> 15 bushels above Illinois. Then look at the USDA yield map, Iowa at
> 172 , with the contiguous states at 156,156,157,114,160 and 132. Corn
> certainly respects borders, or else the moonshine is cheaper in Iowa.
> Every single time we have had a drought in the Southwest the planted
> to harvested corn acres drop off sharply. This year we had the worst
> drought in 100 years. Result ? No drop off whatsoever, but a nice
> tequila sunrise.
> The feed numbers continue to get more and more absurd. We are now
> supposedly feeding 11.2 percent less corn last quarter compared to the
> same quarter a year ago, with more cattle on feed .At this rate we
> will continue to produce the same amount of meat with not a bushel
> corn in
> 15 years. The entire country has become a giant zoo .Do Not Feed The
> Animals.Try this one on for size. The USDA says in the first quarter
> last year we fed 2.072 billion bushels, and in the last quarter with
> roughly the same animal numbers, 437 million bushels, down 79 percent.
> What is that ? Chickens on grass , hogs on hogs, or USDA on Jack
> Daniels ?
> How many more times do you want the USDA to insult your intelligence ?
> The day of reckoning will come , and if it comes late in the year it
> will be too late to ration .We will run out of corn . If you can't
> fight City Hall , take City Hall. You are all invited to my Occupy
> USDA Movement. Do not bring booze, they will provide it. I am not so
> sure about the food.
>
> Have faith in common sense . John
> Macintosh
rayjenkins
Veteran Advisor

Re: thanks RT1..............

"we want E-15"

 

people in h**l want ice water, too

 

I heard the head dude at RFA was quoted as saying "we let the VEETEC expire"

 

yeah, right....

0 Kudos
Mizzou_Tiger
Senior Advisor

Re: thanks RT1..............

Ray, you having a bad day...........is e-plant nation not for E-15?????

 

we have a few blender pumps showing up.........

0 Kudos
rayjenkins
Veteran Advisor

Re: thanks RT1..............

I'm having a wonderful day......my grandson is having his tonsils out and Gpa is going to go see him later this afternoon...

 

got no problem with blender pumps....in fact, I think that would have been a far better path to follow than E-85....

 

if I read your thoughts correctly, you believe that getting more than 12-13 byn corn per year is a stretch....if so, how would moving toward E-15 be anything more than an eventual train wreck for livestock/exports---and probably the E business, too

 

what am I missing?

0 Kudos
Mizzou_Tiger
Senior Advisor

Re: thanks RT1..............

I am indifferent on E-15.........I look at corn based ethanol demand as a 5Bish bushel target, not on a gallons or allecation basis.........

 

On a pure calculated numbers basis, not including ethanol exports and such. how many bushels of corn would it take to go to E-15..........is that number higher or lower than say 5.5B bushel..........

 

as for exports, most countries drop us like a bad habit if they can with regards to exports..........so if we grind a few more bushels and ship a few less, so what...........

 

at the end of the day, the reality is, corn based ethanol is mature...........it has always been a part of a bigger solution........unfortunately the rest of the solution is either a political hot potato or complacency.........

 

which then begs the question........on a longer term basis, is it actually smarter to pump the rest of the world dry first and then go tap our waters and land for energy...........

 

final thought.........as spoken many times recently..........the next several decades, maybe even century will be defined by a commodity/natural resource war..........if you think about the implications of that and how things naturally overshoot both directions..........and then think about that in terms of food and energy and its direct impact on humanity, its kind of scary........IMO we will need to button up our business and our country and/or continent and prepare.........and that day may come before we are ready..........

 

0 Kudos
GoredHusker
Senior Contributor

Re: thanks RT1..............

The only thing I'd like to add here is that E15 is more than likely a pipe dream at best right now and the feed numbers do make sense considering USDA rarely ever goes back in previous years and corrects mistakes.  The feed number has been particularly high in years past because USDA did very little with distillers grain.  A few years back taking USDA's feed number and then using roughly 80% of the distillers grain that year would have put us at roughly 6.9 billion of corn for feed.  This would have shattered the record for corn use, yet we were feeding considerably less animals than when that record feed use for corn was reached.  While I realize we do export some dried distillers, we export a small percentage of the total that's produced.  The feed number presented by the USDA might look a bit more palatable if one add 1.32 billion to it from distillers grain. 

0 Kudos
GoredHusker
Senior Contributor

Re: thanks RT1..............

MT, can you please explain your math to me.  If it takes 5 billion bushels to make enough ethanol for just 10% of the blend, then how will it only take another half a billion bushel to get up to 15%?  My math says it will take 7.5 billion to get to 15% of the blend. 

0 Kudos
rayjenkins
Veteran Advisor

Re: thanks RT1..............

MT....you have an interesting perspective on exports, considering the US ag industry has spent the last 3-4 decades convincing a variety of countries that we could meet their grain needs and they should not invest money in ag production ..

 

you may want to study the relationship between Japan and the US

 

they'll pay the (high) price if required by s/d, but they do ask that they have access to the product

 

sure seems like it's not been a long period of time between begging for buyers of our excess production to flipping them off and telling them to take a hike.....

 

I'll put you in the "he didn't believe in burning bridges---he napalmed them" category....(g)

0 Kudos