Corn
The Corn Harvest is getting underway with 38% of the US Corn Harvest complete, which is well behind the five year average of 59% complete at this time last year. The condition of the Corn Crop is also lagging last year, with 66% of the crop rated good to excellent compared to 74% at this time last year. Even so, the USDA estimates the Corn Crop will be the second highest production on record, second only to last year’s record crop. Similarly, the ending stocks as a percentage to use is expected to be a record high. If these numbers are realized, there will be robust Corn inventories in the US.
The USDA is forecasting an average Corn Price for the 2017/2018 crop year to range between $2.80 to $3.60/bushel. Despite record production and record ending inventory stocks, Corn Futures Prices are currently trading between $3.52 to $3.82/bushel, and it seems likely that Corn prices could be due for a correction as harvest progresses.
Soybean
The Soybean Harvest is also underway and further along at 70% complete. This is only slightly behind its five year average of 73%. Like Corn, the condition of the Soybean crop is behind last year, with 61% rated good to excellent compared to 74% last year. Nevertheless, a record production is forecast for Soybeans. However, usage has also grown and the stocks-to-use ratio is far from a record high as a percentage, although it is the highest since the 2006/2007 crop year. Also, similar to Corn, Soybean Prices are at the high end of the forecasted price range with Soybean Futures prices ranging from $9.75 to $10.14/bushel compared to a USDA price forecast of $8.35 to $10.05/bushel.
Soybean Meal and Soybean Oil prices are driven not only by Soybean prices but also by the supply and demand fundamentals of each component. The supply and demand fundamentals of both Soybean Meal and Soybean Oil are fairly balanced and prices are well within the USDA price forecast range. Soybean Meal is priced between $314 to $324/ton, with the forecast at $290 to $330/ton. Soybean Oil is priced between $.34 to $.35/lb., with the forecast at $.325 to $.365/lb.
Sugar
The premium for Cane Sugar over Beet Sugar has returned to more historical levels after experiencing a wide gap in pricing due to Beets being genetically modified. Historically, Cane Sugar was priced at a $.02 to $04/lb. premium. Previously, the gap had widened to as much as $.08/lb., but it has recently returned to a more normal $.025/lb. differential.
Sugar supplies are relatively tight and creating upward price pressure. The USDA has a goal of maintaining a “stocks to use” ratio of approximately 13.5% through the application of quotas and tariffs, which has traditionally created a relatively tight Sugar inventory situation. Until the past year, Mexico had enjoyed open access to exporting Sugar to the US without limits though NAFTA. However, there has been a trade agreement limiting the quantity and price allowed into the US, which is further tightening supply, and causing higher prices.
Milk
Non-Fat Dry Milk powder and Whey Powder have been experiencing lower prices due to increasing global stocks and weaker demand; not only in the US, but also, internationally. In addition to increasing US inventories, the US is experiencing strong competition in the export markets, specifically from the EU and New Zealand.
Please contact your Skidmore representative for additional information.
