What a difference a year makes. Looking back at my article from last summer’s newsletter, at the time the local area had wrapped up planting, the nation as a whole was well ahead of the average pace, and all of us were hoping for some much-needed rainfall. Fast forward to this year and although the majority of local corn acres have been planted, it was only thanks to producers working long hours and pushing hard to get acres in between rain events. As I’m typing this, our rain gauge here at the plant has just surpassed 3” of rain today alone. Much of the U.S. corn belthas been a similar story to ours this spring as well, but so far, the nation as a whole has managed to maintain average planting pace on corn.
Nationally, the May USDA Supply & Demand report was just released and next year’s carryout is once again projected to be north of 2 billion bushels, which is a very comfortable surplus and a slight increase versus the old crop balance sheet. Planting intentions this year were surveyed at 90 million acres of corn with many market participants expecting to see something higher than this eventually get planted. Given the generally wet spring across the corn belt, and forecasts for delays during the last half of May, I think it is currently likely that final planted acreage doesn’t significantly surprise to the upside. National average yield was estimated to be 181.0 bushels per acre (bpa), which would best last year’s all-time record high yield by almost 4 bpa. This may sound like an aggressive yield, but the nation will also be planting 5 million fewer acres of corn this year, likely removing less productive acres. We’ve also seen it both locally and nationally over the past several years that even through adverse growing conditions, the corn hybrids today have enormous yield potential. Overall, the May Supply & Demand report was certainly not bullish, but it was significantly less bearish than the market had expected. This, combined with an average to slightly below average planting pace and generous new crop demand estimates, means that the market will at least have to take note of any hot and dry issues that may develop in June or July. If seasonal weather threats provide marketing opportunities, be prepared to take advantage of it by having pricing objectives identified or sell orders in place at your favorite local ethanol plant. Weather led rallies can materialize quickly, and fall apart even quicker.
Please feel free to call with any questions specific to shareholder delivery, or to discuss the various contracting options available to CVEC. Also, please note that sign-up for the Flexible Pricing Option for shareholder delivery next year will begin in mid-June. Sign-up information will be mailed out with Benson Corn Pool enrollments and will be due by August 1st.
