Sponsored by Vol. 13, No. 3 / January 7, 2015 Analysts polled ahead of the release of the USDA WASDE report (Jan 12) expect only minor revisions to the supply/demand tables for major grain crops (see aƩached table reflecƟng opinions of 26 analysts surveyed). Normally USDA does not make significant revisions to the producon numbers but there have been excep ons in the past. Analysts expect corn yields to remain unchanged at 173.4 bushels per acre but there is the poten al for the figure to be lowered given the slow pace of harvest towards the end of the season. USDA did not make any changes to the harvested acres number in their December report but some market par cipants con nue to debate whether we could see a downward revision to this number in the January es mates. The consensus es mate for total corn produc on in 2014 is 14.342 billion pounds, 417 million pounds (+3%) compared to a year ago. The figure is slightly lower than es mates a couple of months ago but it s ll represents an all me record produc on level, surpassing the record output last year. There was a lot of talk in 2011 and 2012 than maybe, just maybe, the trend in corn yields had changed and that the long term trend in corn output was unsustainable. Corn yields hit a record level in 2009 at 165 bushels per acre but then declined in each of the next three years, with yields in 2012 dropping to 123 bushels per acre. Following this year’s harvest, it appears that corn yields once again have returned to trend. In hindsight, the drought of 2012 bears plenty of resemblance to similar events in the 1980s and 1990s. Weather pa erns have become more extreme and we have no aspira ons to become either grain or weather analysts. The issue that the market is grappling with, and that livestock producers are quite interested in, is the produc on poten al for corn given a return of yields to trend and plan ngs that are significantly larger than what we saw in the 1980s and 1990s. With the supply side of the ma er largely resolved, market parƟcipants will conƟnue to focus on demand issues impacƟng the corn market. The grain stocks survey will help answer some ques ons regarding the pace of livestock feeding during the first three months of the marke ng year and what that implies for the feed and residual component in the balance table. In its last report USDA pegged feed and residual for the 2014/15 marke ng year at 5.375 billion bushels, 4.7% ahead of year ago levels. Poultry and hog numbers are expected to increase as evidenced by a larger hatching flock and the 3% jump in the hog breeding numbers. Producers also are feeding ca le, hogs and broilers to heavier weights, which implies larger feed u liza on rates. A smaller than expected grain stocks number (some analysts think it may be under 11 billion bushels) could prompt USDA to further increase its feed es mate for the year. They may increase it anyways given the gains in livestock inventories and the current heavy weight trends. Some of the increases in feed use may be oﬀset, to some extent, by possible reduc ons in ethanol and exports, especially given the sharp drop in crude oil and the surge in the US$. Grain futures have rallied since early fall. It remains to be seen whether this latest USDA report will provide enough informa on to sustain that rally into spring. Analyst Pre-report Estimates of USDA WASDE Report Source: Bloomberg Previous USDA 2014 2013 Analyst Avg. Range of Est. Corn Production (bil. bu.) Corn Yield (bu/acre) 14.342 173.4 14.171 - 14.54 171.3 - 176.5 14.407 173.4 13.925 158.8 Soybean Production (bil. bu) Soybean Yield (bu/acre) 3.962 47.7 3.844 - 4.020 46.8 - 48.2 3.958 47.5 3.358 44 1,944 401 667 1,710 - 2,194 355 - 475 639 - 727 Production Ending Stocks Corn (million bu.) Soybeans (million bu.) Wheat (million bu.) 1,998 410 654 1,236 92 590 Previous USDA Sep. 1, '14 Dec. 1, '13 Dec 1 Grain Stocks Corn (billion bu.) Soybeans (billion bu.) Wheat (billion bu.) Bushel/Acre 11.138 2.599 1.503 10.820 - 11.351 2.400 - 2.9100 1.400 - 1.5850 1.236 0.092 1.914 10.453 2.154 1.475 Corn Yield/Acre by Market Year 180 Yield 10 Year Avg Yield 160 140 120 100 80 60 The Daily Livestock Report is made possible with support from readers like you. If you enjoy this report, find if valuable and would like to sustain it going forward, consider becoming a contributor. Just go to www.DailyLivestockReport.com to contribute by credit card or send your check to The Daily Livestock Report, P.O. 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