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World Demand for Feed Grains and the Latest on Trade With China

Update for November 1st, 2018


Corn has seen two consecutive weeks of poor export numbers, this week the USDA announced weekly corn exports of 13.8 million bushels. This is far lower than the 36 million bushel average that traders believe we need to reach the earlier forecasted export totals. These recent export numbers also fall substantially behind last year’s export total for this week of 50 million bushels. If this trend were to continue it would be reason for concern because many analysts believe that it’s the strong demand story for corn that has helped support the price of corn and has kept it from being pulled lower by soybeans. Overall corn sales are running ahead of schedule and stocks are expected to be tighter than a year ago, both of these facts are encouraging to corn prices compared to a year ago.


World demand for feed grain continues to grow and set new records. The move towards Western diets has increased the demand for foods such as milk, meat and eggs and there is no indication that this upwards trend will reverse. Production levels for world feed grain has stalled and with the pace of demand it’s estimated that this year we will need an additional 33 million tons. The usage of feed grains is out-pacing production and is reducing feed grain stocks around the world including the U.S. Since April, China has been working to reduce their over-supply of feed grain stocks and has auctioned off more than 99 million tons. As this supply of stocks shrinks they will begin buying more stocks from sources found overseas which will tighten world exporter supplies. The Chinese tariffs placed on U.S. grains, oilseeds and meat imports have caused a quicker reduction in Chinese supplies than what would have occurred otherwise. So perhaps as spring approaches and fundamental traders begin thinking about U.S. March acreage estimates they will be reminded that we need to have record production of feed grain crops this year to meet demand. Likewise traders will begin to worry and speculate about all of the things that could go wrong with the crops throughout the long growing season. Many times it’s when all of these concerns begin to build that the trade starts to question the potential size of the upcoming crop that prices tend to move higher.


While U.S. soybean prices are comparable to soybean prices in Brazil the country has very little if any sell until they begin to harvest the crop in January. Analysts are now forecasting the soybean acres in Brazil will not increase as much as many had previously anticipated. The truckers’ strike is largely responsible for this reduction. The strike resulted in new freight schedules that have made it considerably more expensive to haul the crop to market as well as to haul the soybean inputs needed to put the crop in the ground to the farmers. Acreage estimates right now look for an increase of 2% to 2.5% which is about half of what was originally projected.


The daily price limit from the CME for soybeans is being changed. Until today the maximum move allowed per bushel had been $0.75, this has now dropped to $0.60 per bushel. The daily maximum move for soybean meal was also reduced from $25.00 per ton to $20.00 and soybean oil was lowered from $0.25 per pound down to $0.20 per pound. The $12 billion aid package producers will be receiving for tariff repercussions for 2018 bushels is not expected to go forward in 2019. U.S. Ag Secretary Sonny Perdue said, “Farmers are a resilient bunch and would adapt their marketing and planning decisions based on current market conditions”.


China has asked to resume trade talks with the U.S. but until China can formulate a specific plan to stop allegedly stealing technology or intellectual property rights from U.S. companies, the U.S. refuses to meet. The Wall Street Journal reports that this demand could jeopardize the meeting currently scheduled for the end of November during the G-20 summit. A White House official told the WSJ, “If China wants the G-20 session to be a meaningful meeting, we need to do the groundwork and if they don’t give us any information, it’s just hard to see how that becomes fruitful.” If negotiations do not progress during the G-20 summit the U.S. is prepared to announce by early December a list of new tariffs that would include all remaining Chinese imports which could amount to $257 billion.


Extended forecasts through November 9th are calling for above normal rainfall across a large portion of the country. The central Midwest is expected to see below-normal temperatures while both the east and west coasts will likely see above-normal temperatures for that period.





Last week I brought you the winter outlook from WeatherTrends 360 which showed a rather eventful season for those that enjoy lots of cold and snow. For the sake of comparison I have some other outlooks from other trusted sources. This first map below shows us the outlook from WeatherTrends 360.



The next outlook for winter 2018/19 is from Accuweather. They foresee that the winter season will begin with mild temps for much of the country before colder weather arrives for January and February. Accuweather expects the Midwest will follow the same temperature pattern as much of the rest of the country but they look for below-normal snowfall and less storms than typically seen in this region during the winter season.



The Old Farmer’s Almanac has been a trusted source for long-range weather outlooks since 1792. The Almanac’s weather predictions are made up to 18 months in advance and according to their numbers they are correct 80% of the time. This year they are predicting a warm and wet winter with above normal temps almost everywhere but in the Southwest and don’t expect a white Christmas this year as rain will fall in the above normal range for much of the U.S.

The newer version of the Old Farmer’s Almanac named, the Farmer’s Almanac was started in 1818 and has a very different view of the winter of 2018/19 than the older version. The Farmer’s Almanac is predicting that this winter will be colder than normal from the Continental Divide east through the Appalachians. Above normal precipitation with lots of snow is forecasted for the Great Lakes, Midwest, and central and northern New England. The majority of this snowfall is expected to arrive in January and February with very cold temps in mid-February which may also be accompanied with bitterly cold wind and widespread snow. This cold and snowy weather is expected to hold on through the official start of spring especially for the East Coast. So those of you that enjoy outdoor activities that require plenty of snow will like the Farmer’s Almanac outlook and those of you that prefer a warmer and less snowy winter appreciate the forecast from the Old Farmer’s Almanac.




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