Milling & Baking News - August 25, 2020 - 30

Ingredient Market Insight

soil-borne disease when it moves closer to or even touches the soil.
Mike Naig, Iowa's secretary of agriculture, at a press briefing in Cedar
Rapids with President Trump on Aug.
18, said there were "millions of acres
of corn" that would not be able to be
harvested.
Further, the storm destroyed or seriously damaged an estimated 57 million bus of commercial grain storage
and a similar amount of on-farm storage in Iowa, according to the state's
agriculture department. The damage
resulted in the immediate marketing

eastward from the western Corn Belt
(mainly western Iowa as of mid-August), Mr. Meyers does not expect a
major impact on the corn crop (with
possibly a greater effect on soybeans).
"These factors (derecho, prevented
planting acres and dryness) will be
supportive over the next few weeks,
but we still need to see clarification
on all three before pronouncing them
outright bullish," said Brian Harris,
executive director and owner of consultancy Global Risk Management.
The USDA said it will collect new
harvested area data from Iowa with

September corn futures price
$4.25

per bu

$3.80

$3.35

$2.90

Sept. Oct. Nov. Dec. Jan. Feb. March April May June
2019
2020

of some grain but may have a greater
impact on storage space for the upcoming fall harvest.
The USDA's Farm Service Agency
said farmers indicated 9.3 million
prevented planting acres (all crops),
including about 3.7 million acres in
North and South Dakota combined.
Mr. Meyers said the total included
around 5 million acres of corn, which
he saw as surprising based on reports
of mostly favorable planting conditions during the spring. The high
number of unplanted acres in the Upper Midwest was in part the result of
attempts to complete last fall's weather-delayed corn harvest in the spring,
when wet weather again bogged
down combines.
The high prevented planting acres
helps explain the surprisingly low
planted acreage estimate in the June
30 USDA Acreage report, Mr. Meyers
said. The USDA surprised the trade
in June with corn planted area at
92,006,000 acres, down sharply from
96,990,000 acres in its March 31 Prospective Plantings report.
Although dry conditions and some
level of drought have been creeping
30 / August 25, 2020

Milling & Baking News

July

Aug.

updates in the Sept. 11 Crop Production report.
The nearby September Chicago future rose to a five-week high on Aug.
17 with continued support from expected losses caused by the derecho
storm, as well as new export sales of
corn to China, where high domestic corn prices have contributed to
active purchases of US grain under
phase one of the US-China trade
deal. The December (new crop) future closed at $3.44¾ a bu that day,
up 7% from a week earlier.
Mr. Harris expects the December
corn future to be around $3.35 per bu
late in the year. Mr. Meyers, who had
expected December lows near $2.80
per bu a month ago, now expects prices "in the low $3" per bu range later
in the year.
With the corn marketing year ending Aug. 31, focus was on 2020-21 in
the USDA's Aug. 12 WASDE report,
which can be fine-tuned with survey-based production data from the
crop report.
US corn carryover on Sept. 1, 2021,
was projected at 2,756 million bus,
up 108 million bus, or 4.1%, from the

USDA's July projection and up 528
million bus, or 24%, from 2,228 million
bus forecast for Sept. 1, 2020. Feed and
residual use of corn in 2020-21 was
forecast at 5,925 million bus, up 75 million bus from July and up 325 million
bus from 2019-20. Use of corn for ethanol was unchanged from July at 5,200
million bus but was up 350 million bus
from this year. Exports next marketing
year were forecast at 2,225 million bus,
up 75 million bus from this year and
up 430 million bus from 2019-20.
Mr. Meyers expects a 2021 corn carryover near 3,300 million bus, about
550 million bus above the USDA's
forecast due mainly to his expectations
that use of corn for feed and ethanol
will be below USDA forecasts with a
higher carry-in from 2020 also a factor.
Mr. Harris said he sees the USDA's
corn carryover forecast as "solid right
now, awaiting derecho damage verification." He also agreed with the USDA's corn export forecast, in part as
"we believe that (China) will continue
to come for US ag products." The value of the dollar at near two-year lows,
which makes US exports cheaper, also
has contributed to increased foreign
demand for US commodities.
There were mixed views on the
USDA's corn used for ethanol production. The USDA earlier this year sharply reduced its 2019-20 forecast due to
the impact of reduced travel and low
energy prices because of the coronavirus. The current-year forecast use at
4,850 million bus is down 10% from
last year, with the 2020-21 forecast up
7%. Mr. Meyers doubts that ethanol
use will rebound that quickly, given
the lingering impact of the coronavirus. But Mr. Harris said he thought
the forecast "looks good" even with
the coronavirus "as cars will continue
to outpace planes likely through firsthalf 2021 or until we have a vaccine."
Even with the apparent bullish factors in the corn market, the sheer size
of the crop will tend to limit price
gains. Using the high end of some
derecho loss estimates of 400 million
bus, for example, equates to only a
2.6% decline in forecast US corn production to about 14,880 million bus,
which still would be the second largest crop on record.
The USDA, in its WASDE, forecast
the average price of corn paid to farmers in 2020-21 at $3.10 per bu, down
25¢ from its July forecast and down
50¢ from 2019-20.
There still will be high domestic and
world production, Mr. Meyers said. MBN
- Ron Sterk
bakingbusiness.com / world-grain.com

http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - August 25, 2020

Table of Contents for the Digital Edition of Milling & Baking News - August 25, 2020