Would you expect anything but conditional formatting from The Ag Fix. Is there a better way to look at 40 years of monthly grain prices? The seasonal storing and selling zones become visually recognizable in this format. The U.S. corn and soybean price maps provide an immediate visual summary of the high (green) and low (red) prices for each marketing year. As a producer, you can easily identify the months that historically generate the highest cash prices.
Having an awareness of the high and low pricing zones can help you make better decisions at times when the news and "noise" in the market might suggest otherwise. The U.S. corn and soybean price history used with The Ag Fix Heat Maps can be excellent tools in your risk management plan. Learn more about The Heat Maps...here
© 2017 The Ag Fix, LLC. All rights reserved.
U.S. Corn - 2.487 billion bushel carryout, up 147 million bushels from October.
This month’s 2017/18 U.S. corn outlook is for larger production, increased feed and residual use and exports, and greater ending stocks. Corn production is forecast at 14.578 billion bushels, up 298 million from last month on a record-high yield. Feed and residual use is raised 75 million bushels based on a larger crop. Exports are raised 75 million bushels, reflecting expectations of improved U.S. competitiveness, reduced exports for Ukraine, and increased demand from Mexico based on sharply lower sorghum production prospects. With supply rising faster than use, corn ending stocks are up 147 million bushels from last month. The projected range for the season-average corn price received by producers is unchanged with a midpoint of $3.20 per bushel.
2017/18 Corn Stocks to Use at 17.17%.
World Corn ending stocks increase 2.9 MMT to 203.9 MMT.
Foreign corn production is forecast lower mostly reflecting reductions for Ukraine, Russia, and Vietnam that are only partially offset by an increase for the European Union. The projected corn yields for Russia and Ukraine are reduced based on reported harvest results to date. Sorghum production in Mexico is lowered based on area indications from the government and lower forecast yields as a result of the prevalence of the sugarcane aphid. Corn exports are lowered for Ukraine but raised for the United States. Imports are raised for Mexico and Canada, but lowered for South Korea. China’s barley imports are raised reflecting expectations of continued demand for imported feedstuffs. Foreign corn ending stocks are down from last month, mostly reflecting declines for China, Vietnam, Canada, and WASDE-571-2 Ukraine that more than offset increases for the EU and Argentina. Global corn stocks, at 203.9 million tons, are up 2.9 million from last month.
U.S. Soybean - 17/18 ending stocks at 425 million bushels, down 5 million from October.
Soybean production is forecast at 4,425 million bushels, down 5 million due to a fractionally lower yield. With use unchanged, soybean ending stocks are projected at 425 million bushels. Prices for soybeans and soybean meal are raised this month. The U.S. season-average soybean price is projected at $9.30 per bushel, up 10 cents at the midpoint. The soybean meal price is projected at $295 to $335 per short ton, up 5 dollars on both ends of the range. The soybean oil price projection is unchanged at 32.5 to 36.5 cents per pound.
2017/18 Soybean Stocks to Use at 9.8%
World Soybeans endings stocks increase to 97.9 MMT.
The foreign oilseed supply and demand forecasts for 2017/18 include higher production, exports, and stocks compared to last month. Foreign production is forecast at 446.7 million tons, up 2.0 million with higher soybean, peanut, cottonseed, and rapeseed partly offset by lower sunflowerseed. Soybean production for Brazil is increased 1 million tons to 108 million on higher reported area for Parana and Rio Grande do Sul. Peanut production is increased for India on higher yields for the state of Gujarat. Sunflowerseed production is lower for Ukraine, Argentina, and South Africa. Major foreign soybean trade changes for 2017/18 include higher exports for Brazil and Paraguay, with increased soybean imports for China. Foreign soybean ending stocks for 2017/18 are up from last month, mostly reflecting increases for China, Argentina, and Brazil.
Summary by Chris Benson
source: USDA WADSE
Full report here
By definition, seasonal index is a forecasting tool used to determine demand for various commodities or goods in a given marketplace over the course of a typical year (or shorter time period). Such an index is based on data from previous years that highlights seasonal differences in consumption.
So, what is the definition of forecasting? Forecasting is a planning tool that helps management in its attempts to cope with the uncertainty of the future, relying mainly on data from the past and present and analysis of trends.
Now that we understand the seasonal index and forecasting, we can begin the steps of developing a seasonal forecast for a specific commodity. Let's start with historical data. We will look at a set of past-periods data and use this as a basis for forecasting future data or trends. For this example, we developed the seasonal index to forecast the future price of cash corn.
At The Ag Fix we use 10 years of prior-periods data to construct our seasonal index. Why would we choose 10 years? With the increased demand for corn created through the federal Renewable Fuels Standard (RFS), the seasonal tendency for corn demand has shifted over the past 10 years. The RFS program was authorized under the Energy Policy Act of 2005 and expanded under the Energy Independence and Security Act of 2007.
In the chart below (Chart 1), you can see we calculated the 2017/18 marketing year seasonal index for cash corn in NW Iowa. The seasonal average monthly low price for cash corn is historically made during the September/October harvest period. We use the October low to then project a seasonal cash price in the future. On the same chart, we include the current average cash prices received by farmers in NW Iowa.
As you can see in the chart above (chart 1), we can visually compare the seasonal forecast price in relationship to the actual current cash price. Therefore, we have the past-period prices built into our seasonal index forecast, and the present price in the actual NW Iowa cash. We can now analyze the current trend of the market. If the market is not trending in relationship to the seasonal forecast, we then need to monitor the fundamental conditions and determine if we expect these factors to continue or change soon. Let's recall - forecasting is a planning tool helping us cope with the uncertainty of the future.
In the chart below (chart 2) you can examine the 2016/17 marketing year actual prices received in relationship to the seasonal forecast I posted last year in December. The seasonal chart can be helpful when looking at the forward curve and spring bids.
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