KSU Weekly Grain Market Analysis: Fall Harvest Approaching

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, September 12th  are up on  the Kansas State University www.AgManager.info website at the following web address: http://www.agmanager.info/news/Articles/KSRN_GrainOutlook_09-05-14.pdf

The recorded radio program will be aired at 10:03 a.m. central time, Friday, September 12th on the K-State Radio Network (here) – web player available.  At this time the program, the recording can also be listened to via a link from the following website in the “Radio Interviews” section: http://www.agmanager.info/news/default.asp

http://southeastfarmpress.com/site-files/southeastfarmpress.com/files/imagecache/large_img/uploads/2013/09/tennessee-corn-harvest.jpg

Fall Harvest in Tennessee in 2013 (Source of image: http://southeastfarmpress.com/grains/delayed-tennessee-corn-harvest-gets-started-good-yields)

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A corn field in Carroll County Indiana in Fall 2008 (Source: http://www.carrollcountyag.com/index.php/2008/09/)

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Range – Pastureland near Elkhart, Kansas (the very southwest part of the state) (Source: http://www.kgs.ku.edu/Extension/highplains/places.html)

KSU “Quick Analysis” Calculations of USDA September 11th Reports – Large fall crops coming with low harvest prices

A KSU “quick analysis” worksheet of the key grain marketing-related information found in the September 11th USDA Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports can be found on the Kansas State University AgManager.info website (http://www.agmanager.info/).

The specific web address for this downloadable MS Excel Spreadsheet is found here:  http://www.agmanager.info/marketing/outlook/newletters/default.asp

The spreadsheet contains a comparison of USDA September 2014 U.S. and Foreign grain supply-demand and market price forecasts for the “new crop” 2014/15 marketing year for corn, wheat, soybeans and grain sorghum, with comparisons to a) pre-report trade estimates, and b) last month’s (August 2014) USDA grain production, supply-demand, and price projections.  Key information is contained on the following:

A. United States’, Brazil, Argentina and Total World crop production forecasts for 2014 corn, grain sorghum, wheat and soybeans.

B. Updated U.S. & World ending stocks projections for the “current” 2013/14 marketing year for major crops (corn, sorghum, wheat, and soybeans).

C. Updated U.S. & World ending stocks projections for the “new crop” 2014/15 marketing year for major crops & crop categories (corn, coarse grains, wheat, and soybeans).

The worksheet also contains a more extensive foreign country-by-country analysis of the September 11, 2014 WASDE report results in regards to World wheat, coarse grain, corn and soybean supply-demand, focusing on country-by-country (or region-by-region in many cases) projections of production, imports, exports, domestic feed use, total domestic use, ending stocks, and stocks-to-use.

http://ksugrains.files.wordpress.com/2014/09/d0645-corn-sept.jpg?w=519&h=332

A U.S. corn field in early September 2012 (Source: http://grantedmutterings.blogspot.com/2012/09/corn-field-august-and-september.html)

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A ripening soybean field in South Dakota in 2013 (source: http://www.griggsdakota.com/2013/09/the-soybeans-ripen.html)

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A panoramic landscape scene in rural Kansas (Source: https://www.kssos.org/about/about_ks.html)

KSU Weekly Grain Market Analysis: Focus on Large Feedgrain-Oilseed Supplies, Wheat Quality and Export Trade Questions

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, September 5th  are up on  the Kansas State University www.AgManager.info website at the following web address: http://www.agmanager.info/news/Articles/KSRN_GrainOutlook_09-05-14.pdf

The recorded radio program will be aired at 10:03 a.m. central time, Friday, September 5th on the K-State Radio Network (here) – web player available.  At this time the program, the recording can also be listened to via a link from the following website in the “Radio Interviews” section: http://www.agmanager.info/news/default.asp

http://farmprogress.com/cdfm/Faress1/author/254/2013/9/cash_early_corn_harvest_basis_opportunities_1_635139962476601306.jpg

Early September Corn in Iowa in 2013 (Source of image: http://farmprogress.com/story-cash-early-corn-harvest-basis-opportunities-37-102138)

https://news.uns.purdue.edu/images/2013/casteel-corn.jpg

Indiana Soybean in late September 2013 (Source: http://www.agricultured.org/indiana-soybean-fields-in-september/)

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Ukraine Wheat Harvest in 2011 (Source: http://www.ukrainebusiness.com.ua/news/2683.html)

U.S. Corn Transportation Profile from the USDA Ag Marketing Service – August 2014

The USDA Agricultural Marketing Service has published a Corn Transportation Profile (August 2014).  This report was authored by Marina R. Denicoff, Marvin E. Prater, and Pierre Bahizi.

Following is the Executive Summary, with the full report available at the following web address:  http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5108805

Executive Summary

America’s farmers depend on transportation as the critical link between the fields of growers and the tables of consumers, both here and abroad. Transportation is a derived demand because the production and consumption of an agricultural commodity create the demand for transportation services. As such, it is an essential part of marketing; any change in supply or demand of the underlying commodity or commodities that compete for transportation services can affect the transport system’s efficiency by bringing about either shortages or surpluses in transportation capacity. This report examines transportation implications of the recent trends and outlook for U.S. corn.

Key highlights:

* Since the mid-1990’s, U.S. corn production has increased by 88 percent, but acreage devoted to growing corn has increased by only 34 percent. As demand for corn increased dramatically between 2006 and 2013, especially for ethanol production, U.S. farms responded by boosting production and acreage.

* The United States remains the world’s largest exporter of corn. The U.S. market share of world corn exports, however, has been declining as the world corn trade has been increasing.

* Corn prices, transportation costs, and the price of feed substitutes (such as distillers’ dried grains and feed-quality wheat) influence foreign demand for U.S. corn. Unexpected changes in export demand pose logistical challenges for U.S. grain shippers and carriers.

* If the projected long-term growth in corn exports materializes over the next 10 years, demand for barge and rail services will increase because corn exporters rely on these two modes of transportation to move the crops from the primary production regions of the United States to the ports on the West Coast, the Gulf of Mexico, the Atlantic Ocean, and the Great Lakes.

* The projected increase in feed use could also result in additional demand for truck and rail service.

* Lower total transportation costs are a major variable in keeping U.S. agriculture competitive in overseas markets.

* The majority of corn exports are shipped through the Mississippi Gulf Coast (65 percent of 2013 corn exports), but ocean shipping cost spreads between the Mississippi Gulf Coast (MGC) and the Pacific Northwest (PNW) exceeding $30 generally lead to a greater proportion of Asia-bound corn being shipped by rail to ports in the PNW.

Following are couple of the key graphics from the USDA AMS report, dealing with “2013 U.S. Corn Production, Ethanol Plants, Export Port Regions, and the GCAUs by State” (Figure 5), and “Corn Export Inspections by Port Region, 2013” (Figure 8).:

Slide1 Slide2

Long Term Potential of U.S. Ag Exports to China (Dermot Hayes-ISU)

Agribusiness Expert Sees Big Potential in China for U.S. Corn, Livestock Exports

http://www.ksre.ksu.edu/news/story/agribusiness_expert082814.aspx

- This photo courtesy of Iowa State University

Dermot Hayes expects urbanization trend in China; most citizens live on the best land.

MANHATTAN, Kan. – Recent government policy changes in China have the potential to boost U.S. agriculture, particularly the corn and livestock sectors, according to Iowa State University economics and finance professor Dermot Hayes.

Speaking at Kansas State University’s 2014 Risk and Profit Conference Aug. 22, Hayes said that most of China’s population density is also where the best agricultural land is and there have been recent signs that citizens in its rural areas are being encouraged to move to urban areas.

China is similar in size to the United States, but has the world’s largest population, estimated at 1.355 billion people as of July, 2014, according to the U.S. Central Intelligence Agency. That compares with India at 1.236 billion, the United States at 319 million and Russia at 142 million.

“In China, the amount of corn and soybeans planted is determined by the government” and not by market forces, Hayes said, plus China has about one-fifth of the per capita water resources that the United States has. Thirty percent of the pork in China comes from smaller “backyard” producers that readily quit raising pigs once they can afford a car to drive to the grocery store and to find employment.

Hayes, who is the Pioneer Hi-Bred International Chair in Agribusiness at Iowa State, added that while China’s Ministry of Agriculture has traditionally protected its farmers, China’s new Premier Li Keqiang has been quoted as saying that protectionism is a blind alley, and that free trade can help achieve a global economic recovery. Li was a pupil of free-market economist Li Yining and is the first Chinese premier to have a doctorate in economics.

“I don’t know how this will turn out,” Hayes said but noted that private Chinese firms spent more on U.S. investments in the past 15 months than in the previous 11 years. He cited the purchase of Smithfield Foods Inc. in 2013 as an example.

Smithfield, whose brands included such familiar U.S. names as Armour, Farmland, and its own namesake, was bought by Shuanghui International Holdings Ltd., the largest shareholder of China’s biggest meat processor. At the time of the sale, the company had grown to annual sales of $13 billion and had about 46,000 employees, according to published reports.

Hayes acknowledged however that despite signs of potential in China, the Chinese government owns much of the country’s farmland and does not disseminate accurate land use data which makes it difficult to get accurate information.

“No one really knows how much land China has in crops,” he said although he estimated the figure at about 275 million crop acres, much of it poor quality land. “They are farming on land we wouldn’t because we can’t get a tractor up the hill, but you can (farm such land) if you have the manual labor.”

In contrast, the U.S. has about 360 million acres in crops and about 400 million acres of pasture.

Despite the uncertainty that shrouds China and its impact on the rest of the world, Hayes said that if China frees its people and urbanization moves forward, it will need as much as 140 million tons (more than 5 billion bushels) of corn, which is bigger than the impact ethanol has made on the market. If China moves to a more free market for its livestock markets, a large proportion of its future needs will be imported.

“The impact of livestock product imports on world markets will not be as severe as the alternative policy of importing grain. Chinese livestock have poor feed conversion efficiency because Chinese consumers have complimentary preferences to consumers in the West,” he said, noting that the Chinese prefer parts of the animal that U.S. consumers don’t.

When asked if the U.S. should be concerned about China buying U.S. assets, Hayes said that many in the U.S. had concerns when Japan went on a buying spree of U.S. companies in the 1980s. Those fears generally proved unfounded, he said, adding that the buildings and land are still here in the U.S.

A copy of Hayes’ presentation, as well as others from K-State’s 2014 Risk and Profit Conference is available. An audio interview with Hayes is available on K-State Research and Extension’s Agriculture Today radio show. Scroll to U.S. Agricultural and Rural Policy in China, Aug. 25, 2014.

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China’s focus on U.S. agricultural imports (Source: http://usa.chinadaily.com.cn/epaper/2013-04/01/content_16364238.htm)

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Article on GMO Corn Import Issues between the U.S. and China (Source: http://online.wsj.com/news/articles)

KSU Weekly Grain Market Analysis: Lower-Sideways Feedgrain, Wheat prices, lower Soybeans heading into Harvest

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, August 29, 2014  are up on  the Kansas State University www.AgManager.info website at the following web address: http://www.agmanager.info/news/Articles/KSRN_GrainOutlook_08-29-14.pdf

The recorded radio program will be aired at 10:03 a.m. central time, Friday, August 29th on the K-State Radio Network (here) – web player available.  At this time the program, the recording can also be listened to via a link from the following website in the “Radio Interviews” section: http://www.agmanager.info/news/default.asp

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Early August Grain Sorghum Field near Hays, Kansas (Source of image: http://www.hayspost.com/2014/08/12/kansas-expected-to-harvest-bountiful-fall-crops/)

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Seeding Wheat acres in fall 2012 near Hutchinson, Kansas (Source: http://www.hutchpost.com/2012/09/11/kansas-farmers-now-planting-2013-wheat-crop/)

EIA Info-Graphics on Increasing Rail Car Numbers Hauling Oil (Competing with Grain Train Shipments)

The U.S. Energy Information Administration provides a graphic showing the increase in the number of railroad car shipments of U.S. oil on a weekly basis.  The article can be found at the following web address:

http://www.eia.gov/todayinenergy/detail.cfm?id=17751&src=email

It is not news in the U.S. agricultural / grain sector that the problem of lack of availability of rail cars could have a significant negative impact on grain markets in general and local grain basis in particular in the fall-winter of 2014-2015.  Large supplies on top of lack of rail shipping ability could have a much larger than expected impact on local Kansas grain prices in coming months than we have been anticipating.

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Railcar availability and grain shipping problems in the Dakotas in 2014 (Source: http://www.argusleader.com/story/news/2014/04/11/railroad-problems-put-grain-ethanol-shippers-trouble/7583293/)