July 25, 2017

A Weather Market & Corn Yields

Each day the weather changes and just as often, it seems, so has the direction of corn prices. Todd Hubbs from the University of Illinois was of the opinion a couple of weeks ago that corn market had a some upside potential. It did, but now, maybe it doesn’t. This has him thinking about the number of acres of corn in the United States, the impact of the weather on yield, and how the market might react August 10th when the United States Department of Agriculture releases the first corn crop production report of the season, "We talk about increased corn acreage and maybe a yield loss below trend. Is that seven bushels to the acre, five bushels, or two bushels. It is really hard at this point to say, but I am looking at, out of my little model, 168 bushel national yield.

Still it is hard to say what USDA is going to put out on August 10th. Hubbs says he is looking forward to seeing what they say about yields. If the market is pricing in 164/165 bushels to the acre for yield corn and USDA releases a 168/169 yield, then Hubbs says the price moves won’t be good.

Here’s the upshot for Hubbs. He does not think the amount of corn left over from last year is particular oppressive to the market place. It’s big, but not enough to really weigh heavily on price. So, if this year’s corn crop isn’t near average there will be upside price potential, “I’m not as high on corn prices as I was before, but I think there is still a possibility. I see the seasonal average farm price for 17/18 corn in that $3.80 to $3.85 range with some runs.”

I see the seasonal average farm price for 17/18 corn in that $3.80 to $3.85 range with some runs - Todd Hubbs

You may read more from University of Illinois Agricultural Economist most Monday’s on the farmdocDaily website.


July 20, 2017

Corn Belt Crop Tour July 18-22

* hit the square in the upper right corner of the map to take it full screen.
* you may see photos/video by clicking on the blue pins.
* click the photos/video to make them bigger/play.
* come back often as photos/video will be added over time.


July 13, 2017

2018 EPA RFS Still a Biofuels Push

by Scott Irwin & Darrel Good, Agricultural Economists
University of Illinois
read full blog post

Implications

We analyzed the magnitude of the “push” in production and consumption of biofuels implied by the proposed rulemaking for the Renewable Fuels Standard (RFS) for 2018 released last week. We find that the proposed standard for 2018 implies a measurable push in the consumption of conventional ethanol since the mandate exceeds expected domestic consumption. The magnitude of that gap is estimated at 640 million gallons for 2018, compared to the estimate for a record large gap in 2017 of 738 million gallons. The gap ranged from 260 to 457 million gallons in 2014–2016. The advanced biofuels mandate is estimated at 684 million gallons in 2018, compared to the estimate of 900 million gallons in 2017 and the actual gap of 438 million gallons in 2016. Our analysis of the proposed rulemaking for 2018 implies:

(1) The EPA under the new Administration is “staying the course” on the implied conventional ethanol mandate with that mandate at the statutory level of 15 billion gallons. If that policy continues and the rate of increase in domestic gasoline consumption does not accelerate more rapidly, there will continue to be a notable conventional ethanol gap beyond 2018.

(2) The push in advance biofuels production and consumption remains large, but is smaller than in 2017 as both the total biofuels mandate dropped and the mandate for undifferentiated advanced biofuels declined marginally. However, the minimum undifferentiated mandate will increase by statute in 2019 to 4.5 billion gallons. So, even though the biodiesel mandate is proposed to stay constant at 2.1 billion gallons for 2019, the total advanced mandate gap could jump another 260 million gallons (4.5 –4.24 billion gallons).

(3) The relatively large conventional ethanol gap implied for 2017 and 2018 suggests that the current discount in the price of D6 (ethanol) RINs relative to D4 (biomass-based diesel) RINs will continue to narrow towards equality (e.g., farmdoc daily, December 4, 2015).

(4) Biomass-based diesel is likely to remain the “marginal gallon” for filling both the conventional and advanced mandate gaps. This means relatively large levels of biodiesel production will continue to be required which in turn will require large levels of fats and oils feedstock.


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