Corn Outlook. January, Commodity & Ingredient Hedging, LLC

Transcription

1 Corn Outlook January, 2017 Commodity & Ingredient Hedging, LLC

2 Corn Outlook January, 2017 Historical Price Reference Fundamental Backdrop Seasonal Tendency Summary 2

3 Historical Price Reference Where are Corn Prices Currently, And Where are they Historically? 3

4 Historical Price Reference 4

5 Historical Price Reference 5

6 Historical Price Reference Insert Comparative CK Chart from Website 6

7 Fundamental Backdrop USDA Supply/Demand Report : January 12,

8 Fundamental Backdrop The January WASDE report finalized corn production at billion bushels, down 78 million bushels from the December estimate. The average yield is estimated at bushels per acre, down 0.7 bushels from the December forecast, but up 6.2 bushels from the 2015 average yield. This year s yield is a new record above the 2014/15 crop year which produced bushels per acre. Area harvested is estimated at 86.7 million acres, down slightly from December, but 7% above last year. 8

9 Fundamental Backdrop U.S. Corn Balance Sheet in Million Bushels Crop Year 2015/ /2017 December January Change December January Change Area (Million Acres) Planted Harvested Yield (Bushels/Acre) Beginning Stocks Production Imports Supply, Total Feed & Residual Food, Seed & Industrial Ethanol for Fuel Domestic Total Total Exports Use, Total Ending Stocks Stocks/Usage Ratio 12.72% 12.71% -0.01% 16.45% 16.15% -0.30% 9

10 Fundamental Backdrop 2016/17 Ending Stocks Estimates January USDA Average Range December USDA USDA Corn Soybeans

11 1,000 Metric Tons Fundamental Backdrop U.S. Corn Ending Stocks (Updated January 12, 2017) 140,000 Source: USDA Foreign Agricultural Service 120, ,000 80,000 60,000 40,000 20,

12 Fundamental Backdrop 70% U.S. Corn Stocks/Use Ratio (Updated January 12, 2017) 60% 50% 40% 30% 20% 10% Source: USDA Foreign Agricultural Service 0%

13 Bushels Per Acre Fundamental Backdrop 200 U.S. Corn Trendline Yield (Updated January 12, 2017) Source: USDA Economic Research Service Source: USDA World Agricultural Outlook Board

14 100,000 Bushels Fundamental Backdrop Total U.S. Domestic Corn Use (Updated January 12, 2017) Source: USDA World Agricultural Outlook Board & Economic Research Service Ethanol & by-products Other Food, Seed & Industrial Feed and Residual

15 100,000 Bushels Fundamental Backdrop U.S. Feed and Residual Corn Use (Updated January 12, 2017) 7000 Source: USDA World Agricultural Outlook Board & Economic Research Service 6000 Feed and Residual

16 100,000 Bushels Fundamental Backdrop U.S. Corn Consumption for Ethanol (Updated January 12, 2017) 6000 Source: USDA Economic Research Service

17 Fundamental Backdrop What About Global Supply/Demand Fundamentals? 17

18 Fundamental Backdrop The January WASDE projected lower global corn ending stocks at million metric tons, off Lower production slightly outstripped greater beginning stocks. 18

19 Fundamental Backdrop The following tables outline changes to the Global balance sheet for 2015/16 crop year & 2016/17 crop year 19

20 Fundamental Backdrop World Corn Balance Sheet in Million Metric Tons Crop Year 2015/2016 January, 2017 Supply Use Region Beginning Stocks Production Imports Feed Exports Ending Stocks Stocks/Use World % United States Major Exporters Argentina South Africa Major Importers Egypt EU Japan Mexico Southeast Asia South Korea Selected Other Brazil Canada China FSU Ukraine

21 Fundamental Backdrop World Corn Balance Sheet in Million Metric Tons Crop Year 2016/2017 January, 2017 Supply Use Region Beginning Stocks Production Imports Feed Exports Ending Stocks Stocks/Use World % United States Major Exporters Argentina South Africa Major Importers Egypt EU Japan Mexico Southeast Asia South Korea Selected Other Brazil Canada China FSU Ukraine

22 1,000 Metric Tons Fundamental Backdrop World Corn Ending Stocks (Updated January 12, 2017) 250,000 Source: USDA Foreign Agricultural Service 200, , ,000 50,

23 Fundamental Backdrop World Corn Stocks/Use Ratio 50% (Updated January 12, 2017) 45% 40% 35% 30% 25% 20% 15% 10% 5% Source: USDA Foreign Agricultural Service 0%

24 Fundamental Backdrop 70% World vs U.S. Corn Stocks/Use Ratio (Updated January 12, 2017) 60% 50% Wor ld U.S. 40% 30% 20% 10% Source: USDA Foreign Agricultural Service 0%

25 1,000 Metric Tons Fundamental Backdrop 500, ,000 Southeast Asia Mexico Major Foreign Corn Producers (Updated January 12, 2017) Source: USDA Foreign Agricultural Service 400, ,000 Argentina Brazil 300, ,000 E.U. China 200, , ,000 50,

26 1,000 Metric Tons Fundamental Backdrop Major Foreign Corn Exporters 120,000 (Updated January 12, 2017) Source: USDA Foreign Agricultural Service 100,000 Ukraine FSU-12 80,000 Argentina Brazil 60,000 40,000 20,

27 1,000 Metric Tons Fundamental Backdrop 100,000 Brazil Corn Production (Updated January 12, 2017) 90,000 Source: USDA Foreign Agricultural Service 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,

28 1,000 Metric Tons Fundamental Backdrop 40,000 Argentina Corn Production (Updated January 12, 2017) Source: USDA Foreign Agricultural Service 35,000 30,000 25,000 20,000 15,000 10,000 5,

29 1,000 Metric Tons Fundamental Backdrop Brazil Corn Exports 40,000 (Updated January 12, 2017) Source: USDA Foreign Agricultural Service 35,000 30,000 25,000 20,000 15,000 10,000 5,

30 1,000 Metric Tons Fundamental Backdrop Argentina Corn Exports 30,000 (Updated January 12, 2017) Source: USDA Foreign Agricultural Service 25,000 20,000 15,000 10,000 5,

31 1,000 Metric Tons Fundamental Backdrop 90,000 80,000 70,000 E.U. Southeast Asia Egypt South Korea Major Corn Importers (Updated January 12, 2017) Source: USDA Foreign Agricultural Service 60,000 Mexico Japan 50,000 40,000 30,000 20,000 10,

32 Seasonal Tendency 32

33 Implied Volatility 33

34 Summary The January WASDE report finalized the 2016/17 corn crop at a new record of bpa, surpassing the old 2014/15 crop year s record by 3.6 bpa. Final production was estimated to be billion bushels on harvested acres of 86.7 million. The carryout of corn is now estimated to be 2.55 billion bushels. Demand was increased in the corn for ethanol category by 25 million bushels, while export expectations were left unchanged at 2,225 million bushels. Globally, the corn balance sheet was largely unchanged. Lower global production was due largely to the U.S. reduction from December. Argentina and Brazil s production estimates were both unchanged, but the market will keep a keen eye on both country s weather, planting progress and crop development going forward as we move further into the first quarter of

35 Commodity & Ingredient Hedging, LLC 120 South LaSalle Street, Suite 2200 Chicago, IL fax internet site: There is a risk of loss in futures trading. The information contained in this publication is taken from sources believed to be reliable, but is not guaranteed by Commodity & Ingredient Hedging, LLC as to accuracy or completeness, and is intended for purposes of information and education only. Nothing therein should be considered as a trading recommendation by Commodity & Ingredient Hedging, LLC. The rules and regulations of the individual exchanges should be consulted as the authoritative source on all contract specifications and regulations. There is a risk of loss in all futures and options trading. Copyright 2010 Commodity & Ingredient 35 Hedging, LLC. All rights reserved.