NEW Directions September 2011 : Page 2
GRAIN GLIMPSES A BALANCING ACT The 2010-2011 marketing year saw extreme highs and lows. As we close this marketing year, it appears that 2011-2012 could be just as dynamic. Corn production at this time is of great concern to the marketplace. The USDA released a na-tional average corn yield of 153 bushels per acre in their August S&D Report. In comparison, Pro Farmer completed their crop tour and issued a 147.8 bushel per acre national average corn yield. If we assume that the USDA has the harvested acres correct at 84.4 million, then production would be reduced by 439 million bushels using Pro Farmer's smaller yield. This type of yield reduction would take the USDA corn carryout, from the already critical 714 million bushel quantity, to below 300 million bushel. Is that possible and how would the market have to react? This type of scenario would require that corn achieves a price that rations lessening exports and feed usage even further. In the August USDA report, corn demand was stated at 13,160 million bushel after dropping feed usage and exports by 300 million bushel from the previous estimate. This again brings up the concern of additional rationing that will need to take place in today's marketplace should the fi nal corn yield be below 150 bushel per acre. The USDA set the estimated price range of corn to be $6.20 to $7.20 per bushel based on a projected yield of 153 bushels per acre. If this projected yield does become less than 150 bushels per acre and there is a need to further ration corn, how high must prices go? Have they already gone high enough? Some analysts are anticipating weakened demand for meat and other livestock products for next year. In addition, numbers of cattle on feed are currently high due to drought conditions in the southwest United States, but those numbers are expected to decline by mid-year and reduce demand for corn. As for exports, the uncertainty of China’s demand will be a major factor in the upcoming year. With these comments I have attempted to review the bullish side of the market together with tempering strength of the rationing that may already be in the mar-ket. USDA will release new production forecasts on September 12 and October 12. My recommendation is to hold onto your hat and watch out for the catalyst that alters the direction of the market. Included in the June 2011 NEW Directions newsletter was step-by-step instructions on using our Online Offer Contracts via the NEW Cooperative website and customer login. I encourage you to utilize offer contracts as they are a means of reducing the emo-tional moves in the market. You can access the previous news-letter and also set up a customer account through the customer login at www.newcoop.com. Facility Changes This fall, producers delivering from additional receiving capaci-are nearing completion and will expansions are not only bene fi ting tions such as these positively affect locations due to the a reduced during harvest. to Humboldt, LuVerne, Badger and Lidderdale will bene fi t ties due to the expansions this summer. All of the projects be ready to go this fall. These grain storage and receiving producers delivering to those listed locations. Large addi-all those delivering grain to any of the NEW Cooperative amount of grain having to be moved between locations During harvest, NEW Cooperative wants to make sure you, other cus-tomers and employees remain safe. Take a look at page 7 to read how NEW Cooperative is implementing procedures to ensure everyone has a safe harvest! 2
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