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Grain News: November 2010

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Excellent corn quality reported across United States for 2010 crop

While this year’s U.S. corn crop may be smaller than that of a year ago, the quality difference between the two is “night and day,” said Nate Panko, facility manager for Aurora West, a central Nebraska grain terminal operated by the Aurora Cooperative, Aurora, Neb.

“This year’s crop is simply excellent,” Panko said. “Foreign matter is low, moisture came in well and the crop will handle and store well.”

Panko said only 5-10 percent of the crop delivered to the company needed to be run through dryers – and that was generally early harvested corn. The rest, he said, had moisture levels of 14-15 percent or less delivered or dried down in storage through good ventilation. “We saw a lot of No. 2 or better corn come in right off the fields,” he said.

The story from Panko can be repeated in virtually every corn producing state across the country. Some grain analysts and market watchers believe the 2010 crop may be one of the highest quality crops in history.

Arlan Suderman, a market analyst for “Farm Futures” magazine, said any crop that can be harvested in a timely matter after drying down in the field is going to be better quality. “If you look at the gains we’re getting in the hog industry you can tell we have a better quality corn crop this year,” he said.

Last year, corn went into the bin wet, had a low test weight and contained more broken kernels, he said.

“We need to remember that the lower than expected yield this year had nothing to do with crop quality. It was simply due to high nighttime temperatures when the corn plant put more effort into maintenance versus kernel development,” Suderman said.

Based in Bourbonnais, Ill., Heritage FS grain manager Mike Lambert said corn came out of the fields in Heritage FS’ originating territory at mostly No. 2 – compared to a year ago when much of the corn was No. 3 right off the field. Moisture levels of 20-30 percent were common in 2009 and that creates potential problems from harvest to drying to handling and storage.

For example, wet corn harvested last year needed more force to be removed from the cob than did the dry corn kernels harvested this year. “A year ago, combines had to work hard to bang corn off the cobs,” he said. “At the same time we had to dry and clean the grain, and then clean it again because there was so much foreign matter.”

None of that was the case when it came to harvesting and handling the 2010 crop.

“We’ve seen no problems at all this year. The crop is very nice with strong test weights, low foreign matter and overall very good quality,” Lambert said.

“Moisture levels were generally 14-15 percent right of the field and we probably only dried 10-15 percent of the crop early in harvest,” he said.

When corn dries down in the field, Lambert explained, it moves more easily through harvesting, grain handling and other equipment, which helps maintain corn quality through the entire system, including while in storage.

 

Council confident in U.S. corn supply

Snce the U.S. Department of Agriculture lowered U.S. corn yields and total corn production in its November crop estimate, futures prices have fluctuated greatly.

“We continue to produce major crops,” said Chad Hart, an economics professor at Iowa State University, noting that the 2010 U.S. corn crop is projected to be the third-largest on record, while the U.S. soybean crop is also expected to be record large.

“Yet we also have incredibly strong demand for those crops,” he said, “and that is the price situation we are in today. There is a little risk there and that is why we see so much price volatility.”

The 2010 U.S. corn crop is reported to be one of the highest quality crops in recent memory. A year ago, harvest was difficult and the crop did not dry down in the field. This year the crop dried down and was harvested rapidly, helping maintain high-quality corn going into storage. These samples are from a facility in Wisconsin.In its November World Agricultural Supply & Demand Estimates report, USDA forecasted corn yields at 154.3 bushels per acre (9.7 tons per hectare), down 1.5 bushels from October but still the third largest on record. Yields at that level result in a 2010-11 crop of 12.54 billion bushels (318.5 million tons). A year ago, 13.1 billion bushels (332.7 million tons) were produced thanks to extraordinary record yields, while in 2008, 12.1 billion bushels (307.3 million tons) of corn were produced.

U.S. Grains Council President and CEO Thomas C. Dorr noted that the decrease was generally anticipated and within expectations.

“Projections that ending stocks will reach levels last seen in the mid-1990s could create some additional volatility in the marketplace, but this is not unchartered territory. While market ups and downs do occur, they do not alter the position of the United States as a reliable supplier of feed grains,” Dorr said.

Based on its production estimates, USDA adjusted anticipated usage that lowered ending stocks – the amount of corn left over at the end of the 2010-11 marketing year – to 827 million bushels (21.1 million tons). Ending stocks a year ago were 1.71 billion bushels (43.4 million tons), while stocks in 2008-09 were 1.67 billion (42.4 million tons).

“Certainly we recognize that tighter ending stocks will impact corn prices,” Dorr said. “Yet over the long term we anticipate U.S. farmers will continue to produce adequate supplies that meet market demand. Their efforts and investments in technology and know-how give us confidence in the corn supply going forward.” 

Arlan Suderman, a market analyst with “Farm Futures” magazine, said global corn stocks as a percent of annual use has been trending lower for at least 25 years. “The United States has been increasing corn production but the rest of world has not kept pace,” he said. “This has allowed global demand to rise faster than production and the market has to deal with this. The market has to reach levels to draw resources into corn production.”

While springtime and planting are several months away in the United States, Suderman said farmers like to plant corn and will do so if it is profitable. “If the market gives the farmer an incentive, he’ll plant corn,” he said. “We’ve seen it in recent years, with the Corn Belt spreading, especially in the plains, from Kansas to North Dakota.”

Hart said the United States generally plants 320 million to 325 million acres to all major crops (129.6 million to 131.6 million hectares) but that about 6 million acres (2.4 million hectares) fewer acres were planted in 2010 than just two years before. He said if U.S. farmers see better crop margins and good planting weather those acres will return to production and be generally split among the major crops, with corn getting its share.

Suderman said he believes corn will need to gain 3 million to 5 million acres (1.2 million to 2.0 million hectares) in 2011 but that weather, market prices and more will play a role in final numbers. “We’re gearing up for the most intensive battle for acres since 2007,” he said.

Distillers grains option

While the supply of corn has tightened up for this year, the supply of feed co-products, including distiller’s dried grains with solubles (DDGS) are expected to expand.

In its supply and demand report, USDA said it expects ethanol production to remain strong for the 2010-11 marketing year.

Since DDGS comes from the corn ethanol process, that means DDGS production will remain strong, too, perhaps moving past 33 million tons.

“These co-products provide a tremendous opportunity to diversify livestock and poultry rations,” Dorr said. “They are high-quality feed ingredients that offer nutritional benefits and may lower overall feed costs.”

DDGS exports, which the Council anticipates will surpass 8 million tons this year, will also expand in 2011.

 

Exchange highlights DDGS, other market opportunities

The Export Exchange, sponsored by the U.S. Grains Council and Renewable Fuels Association, provided a great opportunity for those interested in U.S. corn and distillers dried grains with solubles (DDGS) to network, learn and build business.

Held in Chicago, Ill., the exchange was attended by nearly 500 producers, suppliers, importers and end-users from around the world. Several pre-conference study tours in different parts of the United States provided teams from several regions to see first hand U.S. DDGS production, this year’s corn crop, livestock operations and learn about U.S. production methods.

Willis Cheng, chairman of Charoen Pokphand Enterprise (Taiwan) Co., Ltd., said the conference allowed him to meet face-to-face with numerous commercial companies that offer U.S. corn and DDGS into the global market.

Richard Bilodeau of F. Menard Inc. in Quebec said the conference was a great place to meet new contacts. 

Based on the information he received at the conference, Wen-Chung Hsiao, a feed research and development nutritionist for Taisun Enterprises Co., said he planned to increase the inclusion rates of U.S. DDGS in tilapia feeds from 10 percent up to 15-20 percent.

Members of a trade team from Southeast Asia examine U.S. distillers dried grains with solubles ahead of the Export Exchange.“That is what a conference like this is all about,” said Adel Yusupov, a Malaysia-based regional director for the U.S. Grains Council. “It brings together many buyers and sellers and leads to business in the future. It also  allows global participants to learn about different opportunities when it comes to importing and feeding DDGS.”

For example, North African buyers met in several side meetings with several U.S. DDGS suppliers of DDGS, helping build relationships that may provide new options for those buyers in the future. It also helps them better understand the DDGS standards and quality that facilitate understanding and consequently negotiation and sales.

Several international groups also participated in side trips to see first hand the U.S. DDGS industry – including production, quality and logistics – and learn that the industry continues to grow. It also allows them to better understand how beef, dairy and poultry sectors in the United States take advantage of the feed ingredient to be more cost efficient.

DDGS is quickly becoming one of the fastest growing U.S. export commodities. As ethanol production grows, so does the production of DDGS because DDGS is produced by ethanol plants.

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