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Honored Advisor

So, The USDA knocked over 1 billion bushels off of the corn demand side of things......

Three words come to mind......  Not.....Gonna....Happen.

(ok 4 words if you think gonna is really "going to")

 

I've heard that ethanol production is sold ahead for at least 3 -4 months.

The livestock have to eat something......unless they are dead.

While Brazil is to rumored to be able to export a little corn, the U.S. is still the only game in town.

 

Thoughts?

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24 Replies
Veteran Contributor

Re: So, The USDA knocked over 1 billion bushels off of the corn demand side of things......

Looks like they brought next years demand down to this years.   With these prices seems pretty reasonable.

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Senior Advisor

Re: So, The USDA knocked over 1 billion bushels off of the corn demand side of things......

Only two ways to reduce N American corn demand a billion bu. Either we have to scrape the barrel or ethanol eventually begins to shut down. Both happening simultaneously is the logical conclusion. Reduced DDG's replaced with stover and the like. 

 

Wheat is an alternative feed as it is worth less than corn in various locations. Or will be where corn deficits occur.

 

 

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Veteran Advisor

Re: So, The USDA knocked over 1 billion bushels off of the corn demand side of things......

agreed roarin! USDA just has to make balance sheet APPEAR (a master illusion of course) smooth sailing. They'd like to think they can keep mkt from panicking...Instead, their #'s + the manipulative talking heads who have another agenda sent mkt panicking the other direction!

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Senior Advisor

Re: So, The USDA knocked over 1 billion bushels off of the corn demand side of things......

I think the USDA position is realistic. But it doesn't reveal the pain that some are going to have to go through on both sides of the market. There is no negative inventory numbers, and for that matter it can never go to zero - ever. What's left?

 

From that point of view I don't see a reason to rag on the USDA. The 164 yield was a possibility with an early start and favorable weather after - and not having droughty weather. You have to start somewhere and few years will follow the master plan.

 

We get to enjoy marketing if we have a crop. Insurance should relieve most extreme suffering by producers but, by no means all. And it is certain we will have another circus next year.

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Senior Advisor

Re: So, The USDA knocked over 1 billion bushels off of the corn demand side of things......

So what shuts down first? The feedlots or the ethanol plants?

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Honored Advisor

Re: So, The USDA knocked over 1 billion bushels off of the corn demand side of things......

Corn is lower today......neither will have to shut down!

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Senior Advisor

Re: So, The USDA knocked over 1 billion bushels off of the corn demand side of things......

As long as there are animals to be fed they will be fed. There is no other option that is sensible. There are alternatives for feed even if they aren't as efficient. Ethanol plants don't have that luxury. Last year thousands of square miles of stover were baled and fed. It will continue and grow this year into the main corn belt is my guess. It's not a complete substitute but, it will be one of many things that more expensive feed will be cut with. 

 

Given the announcement just a bit ago that the gov blending requirements won't be cut back at this time we will see how the mandate holds up to petroleum companies desire to eliminate blending.

 

Let's hope this drought doesn't intensify in the longer term.

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SEILJohnR
Friend

Re: So, The USDA knocked over 1 billion bushels off of the corn demand side of things......

With revenue assurance as part of crop insurance the government has more reason than ever to keep prices down until the October average for December furtures is established!!

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Veteran Contributor

Re: So, The USDA knocked over 1 billion bushels off of the corn demand side of things......

What is manipulative about the USDA lowering demand.  Do people really think that we can have a negative carryover number.  Carryover can only go down to pipeline supplies, no more.  I just don't understand the logic behind calling the USDA a master manipulator when the simple math tells you we can't go below about a 600,000 mill bu carryover.  The argument simply does not make logical sense.  How do you have say a 14 bill bu demand with 13 bill bu supply.  Either you have to reduce demand or import supply.  The USDA lowered demand because they had to lower demand, how it works itself out I don't know but it will.

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