Plenty of Demand for 2014 Corn Crop
The market is focused on the expected supply of corn for 2014; but, with a large crop, there will likely be plenty of demand. The bears have been in control of the market, focusing on weather and crop conditions. But Mike Silver, with Kokomo Grain, says the demand side has been steady and strong. In the first week of June, we had the highest level of ethanol corn usage since December of 2011. We are averaging 972,000 barrels a day, a historic new high, Silver stated, “Right now our accumulated pace has us using 5.090 billion bushels of corn to produce ethanol, slightly above the most recent USDA projection of 5.050 billion.” He added, if we can sustain this level of production, the corn usage number will come in at what had been forecast by USDA. Silver told HAT that livestock and export demand, while not setting records, are strong, “When you combine ethanol demand with export sales and livestock usage, we will have good demand for this large corn crop.”
While heavy rains pounded parts of the Western Corn Belt last week and parts of Indiana saw flooding, the condition of the corn crop was not impacted much, according to the USDA crop update released on Monday. The USDA estimated corn conditions at 74% of the crop rated “Good” or “Excellent”, a 2% decrease from the previous week and a 9% increase from last year. The report falls on the high side of analyst estimates, who expected somewhere between 71-74%. Twenty-one percent was considered “Fair” up 1 % from last week, while only 5% was considered “Poor” or “Very Poor.” While crops generally look good, Silver warns producers to take precautions, “There is still a lot that can happen before harvest, and producers need to be taking precautions. Look at your position, get some offers in above the market.”