Grain & Energy Outlook
CattleFax’s Mike Murphy predicts flat grain prices, but higher energy costs.
Thanks to record yields in 2016, record U.S. feedgrain supplies are in place. While larger livestock inventories are supportive of demand, and fewer U.S. acres are expected to be planted to corn, CattleFax Market Analyst Mike Murphy sees the corn supply and demand situation as fairly balanced. Murphy talked about production and prices of grain, hay and energy during the CattleFax Outlook Seminar Feb. 2 at the 2017 Cattle Industry Convention in Nashville, Tenn.
The current balance between supply and demand suggests that near-term grain grower margins will be narrow, said CattleFax Analyst Mike Murphy. Corn prices should remain fairly flat through 2017, averaging around $3.45 per bushel.
Discussing factors influencing corn supply and demand, Murphy said U.S. acreage planted to corn is expected to decrease in 2017 by 1.1 million acres, trimming production by 700 to 800 million bushels.
Corn use for ethanol production is expected to increase modestly, and U.S. corn exports seemed to be poised for increase by the end of the decade. Still, the current balance between supply and demand suggests that near-term grain grower margins will be narrow. Murphy said corn prices should remain fairly flat through 2017, averaging around $3.45 per bushel.
“I look for a solid hay-production year ahead, offering cattle producers some additional price relief,” stated Murphy, referencing a weather forecast promising conditions favorable to forage production.
Regarding energy production, estimates call for global crude oil production at 79 million barrels per day during 2017. Murphy said OPEC’s share of total production has diminished, while North America’s share has increased. U.S. crude oil production is projected to increase to 9.2 million barrels per day — up 0.4 million barrels per day from a year ago. With lower total supplies, however, Murphy predicted higher energy prices in 2017.
“Expect an average of $48 (per barrel), with a range of $40 to $66,” advised Murphy. “Prices should average around $2.49 per gallon for gasoline, and $2.60 for diesel.”
Editor’s Note: Field Editor Troy Smith is a freelance writer and cattleman from Sargent, Neb. This article was written as part of Angus Media’s coverage of the 2017 Cattle Industry Convention. For further coverage, watch future issues of the Angus Beef Bulletin and visit www.angus.media.