After a dismal performance in September and October, corn demand showed signs of life in November and may maintain its momentum into 2020, said Todd Hubbs, agricultural and consumer economist at the University of Illinois, in the Illinois Farmdoc Daily.
Ethanol production and export sales picked up over the last few weeks, while expanded placements and higher livestock weights pointed toward the potential for an uptrend in feed demand.
ETHANOL PRODUCTION UP
Ethanol production increased for 10 straight weeks with the Nov. 22 Energy Information Administration report, Hubbs said. On Oct. 25, production moved above a million barrels per day after five consecutive weeks of production below this level.
For the week ending Nov. 22, ethanol production came in at 7.413 million barrels, a level not seen since the middle of July, he said. Weekly gasoline demand saw a boost above last year’s pace in October and early November.
Over the previous four weeks, gasoline demand ran slightly above last year, Hubbs said. Continued production growth points to recovery from summer-time weakness and a potential expansion of exports.
Ethanol exports for the 2018-19 marketing year totaled near 1.552 billion gallons, down 80 million from 2017-18, he said. EIA export data for September indicated an eight-million-gallon expansion over last September at 106.7 million. The growth came mainly from larger exports to Brazil and the Philippines.
Relatively stable November gasoline demand over last year combined with declining ethanol stocks over the last few weeks point to ethanol exports moving higher, Hubbs said.
Corn used for ethanol projections sit at 5.375 billion bushels, and continued healthier ethanol production places corn use on pace to hit this projection despite early marketing year weakness, he said.
CORN EXPORTS LAG
Corn export inspections through Nov. 28 sit at 237.7 million bushels compared with the previous year’s 560.2 million, Hubbs said. Outstanding sales as of Nov. 21 total 323.6 million bushels, down from 471 million last year.
The huge second corn crop in Brazil combined with a strong dollar saw US exports wither in late summer and into the early harvest period, he said. Census Bureau data showed September exports at 80.3 million bushels, and export inspection data indicate a similarly weak performance in October.
Weekly export inspection data in November averaged 22.4 million bushels and point to slightly higher exports than the previous two months, Hubbs said. Last week’s export sales report indicated net sales of 31.8 million bushels. Net sales represent the fourth straight week of expansion and promise of continued growth, but the prospect of reaching or surpassing the USDA forecast of 1.85 billion bushels hinges on production of major export competitor crops for 2020 and US export price competitiveness.
In conjunction with a slight demand recovery, the size of the 2019 corn crop remains in doubt as winter weather affected harvest over large areas of the Corn Belt, he said. Continued demand recovery combined with a smaller crop may provide some price support moving forward.
CATTLE, BEEF RECAP
Cash cattle trading was reported this week at $119 per cwt on a live basis, steady to up $2 from last week.
Dressed-basis trade was reported last week at $187 per cwt, up $3 to $7.
The USDA choice cutout Thursday was down $1.35 per cwt at $225.60, while select was off $2.19 at $208.12. The choice/select spread widened to $17.48 from $16.64 with 100 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday was $144.53 per cwt, down $0.66 from the previous day. This compares with Thursday’s Jan contract settlement of $140.55, down $0.32.