ARC projects March 1 US corn stocks at 8,779 Mil Bu, up 177 Mil on last year and record large. Physical exports have, of course, not yet caught up with the recent surge in sales, and no doubt there’s a lot of corn left in the interior US. Basis has fallen in recent weeks amid active farmer selling, and an official Feb 28 stocks number of 8.7-8.8 Bil Bu won’t materially change corn’s price range in the near term.
May corn will continue to be fairly priced between $3.70-3.95 into expiration, but increasingly the market will be focused on year-ending stocks and wheat trend yield implies for 2018/19 inventories. ARC notes that amid years of cheap price, domestic corn disappearance has inched steadily higher, and through the first half of the 17/18 crop year domestic use rests at a record 7,323 Mil Bu, up 118 Mil from a year ago. Animal numbers are rising (cattle inventory on Jan 1 was a 9-year high), and US ethanol margins, particularly in the cash market, have been sustained by rising DDG values. Slowing domestic use will be more difficult in 2018 should adverse weather develop this summer.
March 1st US corn stocks/use is pegged at 108%, vs. 104% a year ago and the highest since 2009/10. Again, this indicates ample supplies from now till summer. However, clients should be mindful that weekly export shipments will be steadily rising, and along with 2018 planting intentions it’s important to focus on the pace of disappearance over the next 6 months. Cash ethanol margins across the W Midwest this month rest $.30/Gal above variable costs, vs. just $.20 in March of last year. And it’s likely that Mar-May US corn exports will be a record 700+ Mil Bu, in which case June 1 US corn stocks/use will be unchanged from the previous year. Expect the US farmer to be more hesitant with new sales as planting begins.
