USDA released preliminary numbers related to its long-term commodity projections last week. Among the information in the release were acreage projections for major crops. These projections are based on expectations related to macroeconomic conditions, normal weather, existing policy, and no domestic or external shocks to agricultural markets. These numbers will be revised and reported again in February ahead of the annual Agricultural Outlook Forum in Washington DC.
For 2015, USDA expects planted corn acres at 88.0 million, down 2.9 million from 2014. Informa has released its projections of 2015 corn at 88.3 million. USDA projects soybean acres at 84.0 while Informa expects soybean acres to equal corn at 88.3 million.
USDA’s preliminary projection for corn use in 2015/16 is 13.745 billion bushels. With 88 million acres planted, a yield of about 169 bushels per acre will be needed to keep ending stocks level at the end of the marketing year. Using a trendline yield projection since 1980 of 163 bushels per acre, planting 88 million acres would result in ending stocks about 440 million bushels lower in 2015/16 compared to 2014/15.
Outside Markets. Lower energy prices led the Consumer Price Index lower in November compared to October, prices down 0.3% for the month and up 1.3% compared to this time last year.
With inflation well below the Federal Reserve’s target rate of 2%, the Fed Open Market Committee stated last week that its current 0 to 1/4% target for the federal funds rate is appropriate and that current economic conditions allow the Fed to “…be patient in beginning to normalize the stance of monetary policy.”
2015 Corn Marketing Plan. My marketing plan calls for pricing the first portion of the 2015 crop this winter. With the recent uptrend in the market, I am ready to price the first 20% on a technical signal that the trend is changing.