<\/p>\n<\/a>Grains<\/u> –
\nI found it interesting on Friday to consider soybeans and meal and to a lesser extent wheat have all \u201ccorrected\u201d a bit off their Feb highs and are hugging support levels near key moving averages (though admittedly they\u2019ve both found some life overnight).\u00a0 Corn futures, however, remain relatively unscathed having bounced back following the ethanol \u201cnews\u201d from last week and downticks since have been few and far between thus far.\u00a0 It got me thinking that there must be some demand element I\u2019m missing to this puzzle, because looking at solid weather developments (so far) in Brazil and Argentina point towards excellent crop potential there and likely strong headwinds against US exports this summer\/fall and beyond.\u00a0 So this morning let\u2019s do a quick rundown of some key demand figures in corn.<\/p>\n
We\u2019ll start with ethanol because that is obviously a major topic of conversation right now.\u00a0 Ethanol demand has obviously been very robust this year, aided largely by increased export demand.\u00a0\u00a0\u00a0 As you can see from the chart, this year\u2019s ethanol production has followed basically the same pattern as we saw last year, but from a slightly higher base.\u00a0 Based on the expectation for a continued higher export base, it would stand to reason this similar pattern would continue going forward.\u00a0 Last year the Mar-Aug monthly corn grind averaged roughly 434 mil bu and to meet this year\u2019s WASDE projection this year we need to average roughly 430 mil bu.\u00a0 That might argue that WASDE remains a bit too small on their projection, but probably not by a dramatic level.\u00a0 The orange line on the chart shows what we\u2019d need to average to meet a 5,400 mil bu pace.\u00a0 Is a 50 mil bu difference a big deal to the corn balance sheet?<\/p>\n
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