KSU Weekly Grain Market Analysis: Cuba Wheat Imports, Russia Wheat Exports, and Chinese Corn Import Rules Impacting Markets

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, December 19th  are up on  the Kansas State University www.AgManager.info website at the following web address: http://www.agmanager.info/news/Articles/KSRN_GrainOutlook_12-19-14.pdf

The recorded radio program will be aired at 10:03 a.m. central time, Friday, December 19th 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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KSU Wheat Market Outlook in December 2014

An analysis of U.S. and World Wheat supply-demand factors and price prospects based on information from the December 10, 2014 USDA Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports will be placed up on the KSU AgManager website (http://www.agmanager.info/default.asp).

Following is a summary – with the full analysis-article for Wheat to be found here: http://www.agmanager.info/marketing/outlook/newletters/Wheat.asp

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Summary

Introduction

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on December 10, 2014, U.S. wheat market prices have trended higher. The USDA projected marginally larger World wheat production, ending stocks and ending stocks-to-use, but marginally higher U.S. domestic wheat supply-demand balances. The USDA projected for the “current crop” 2014/2015 marketing year that a) World wheat production, supplies, and total use would be at record high levels, b) World wheat export trade would be 4.7% lower than a year ago but still the third highest on record, and c) World wheat ending stocks and percent ending stocks-to-use would be at their highest levels in three marketing years, although still less than during the 2009/2010 through 2011/2012 period. Wheat prices in the U.S. are projected to be down to the lowest levels in four years due to limited U.S. wheat exports and domestic livestock wheat feeding.

What to Watch for Through mid-January 2015

The USDA projects that foreign wheat supplies are more than adequate to “mitigate” shortfalls in 2014 U.S. hard red winter wheat production in the Central and Southern plains states. Also, no other major production problems in competing World wheat exporting countries have yet emerged to the degree that the “large crop-over-supply” situation in World wheat markets has been affected. However, there are developing concerns about dry wheat production conditions in Australia, crop quality problems in parts of Europe, and wheat export supply availability from Russia and the Black Sea region. United States’ wheat exports have been reduced by a recent strong positive trend in the U.S. dollar. The wheat market will now likely focus on weekly export sales and shipments, the condition of U.S. and foreign crops in the field, Russian export supply news, and the upcoming January 12, 2015 USDA NASS Crop Production Annual Summary report.

USDA U.S. Wheat Forecast for “current crop” MY 2014/15

The USDA maintained its projection of lower 2014 U.S. wheat production, reduced total use, increased ending stocks and % stocks-to-use, and lower prices in “current crop” MY 2014/15 vs a year ago. The USDA’s projected MY 2014/15 scenario is for a 2.026 billion bushel (bb) 2014 U.S. wheat crop, 2.795 bb total supplies (up 10 mb), 925 mb exports, 2.141 bb total use, 654 mb ending stocks (up 10 mb), 30.6% ending stocks-to-use (vs 30.1% last month), and a forecast U.S. price of $6.00 /bu (range of $5.80 to $6.20) – compared to $5.65-$6.15 ($5.90 midpoint) from November. If recent wheat futures prices hold through May, the USDA “current crop” MY 2014/15 price may rise to near $6.38 /bu.

KSU U.S. Wheat Forecast for “current crop” MY 2014/15

KSU projections of “current crop” MY 2014/15 supply-demand balances and prices are essentially equal to the USDA’s except for the possibility of either “Lower Export” or “Higher Export” scenarios, which are as follows. A) “Lower Export” Scenario: 10% prob. of acreage, yields, production and total supplies being the same as those of the USDA, but with 125 mb less U.S. wheat exports. This would result in 800 mb exports, 2.016 bb total use, 779 mb ending stocks, 38.64% S/U, and a forecast price of $5.65-6.15 /bu (midpoint of $5.90 – down from $6.00 for the USDA). Cash wheat prices in the U.S. will need to decline to $5.20-$5.25 for January-May 2015 for this price forecast to occur. B) “Higher Export” Scenario: 20% prob. of acreage, yields, production and total supplies being the same as those of the USDA, but with 125 mb more U.S. wheat exports. This would result in 1.050 bb exports, 2.266 bb total use, 529 mb ending stocks, 23.35% S/U, and a forecast price of $6.60 /bu (up from the USDA midpoint of $6.00). Cash wheat prices in the U.S. will need to rise to $7.75 for January-May 2015 for this to occur.

USDA World Wheat

World wheat total supplies of 907.5 mmt in “current crop” MY 2014/15 are up from 889.2 mmt in MY 2013/14, and 854.1 mmt in MY 2012/13. Projected World wheat ending stocks in “current crop” MY 2014/15 of 194.9 mmt (27.4% S/U) are up from 185.3 mmt (26.3% S/U) in MY 2013/14, and from 174.5 mmt (25.7% S/U) in MY 2012/13. For perspective, these figures can be compared to the historic World wheat ending stocks and ending stocks-to-use minimums of 129.0 mmt and 21.0% S/U in MY 2007/08.

 

http://kansasagnetwork.com/wp-content/uploads/2014/02/Winter-Wheat-Snow.jpg

Kansas Wheat fields a year ago (January 2014) (Source: http://kansasagnetwork.com/2014/kansas-wheat-condition-drops-significantly-during-the-month-of-january/)

http://russia-insider.com/sites/insider/files/styles/s400/public/2666914808.jpg?itok=UaVRNI_U

A farmer scooping wheat in Russia (Source: http://russia-insider.com/en/business/2014/11/05/04-37-47pm/weaker_ruble_boosts_russian_wheat_exports)

 

 

 

KSU Corn Market Outlook in December 2014: The case for $3.95 /bu in MY 2014/15 and $4.20 /bu in MY 2015/16

An analysis of U.S. and World corn supply-demand factors and 2014-2015 price prospects following the USDA’s December 10th USDA Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports is available on the KSU AgManager website  (http://www.agmanager.info/default.asp).

Following is a summary of the article on “Corn Market Outlook in December 2014″ with the full article and accompanying analysis will soon be available on the KSU AgManager website at the following web address: http://www.agmanager.info/marketing/outlook/newletters/Corn.asp

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Summary

Introduction

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) reports on December 10th, MAR 2015 and DEC 2015 corn futures prices have moved higher, raising hopes of an eventual return to storage for U.S. crop producers resisting sales at sub-$4.00 cash prices. With 1) a record high 2014 U.S. corn crop, and 2) prospects for record or near-record World corn production and ending stocks in the “current crop” 2014/15 marketing year, prospects for a corn futures price rally above say $5.00 appear limited – unless unexpected and substantial crop production problems occur in other major coarse grain production regions of the World (such as in South America or Ukraine). Absent such a foreign production shortfall in coming months, price prospects are likely to be limited until at least April-May 2015 – the main U.S. corn planting season.

USDA U.S. Corn Forecast for “Current crop” MY 2014/15

The USDA left unchanged its forecast 2014 U.S. corn production to be a record 14.407 billion bushels (bb), based on projected planted and harvested acreage of 90.885 million acres or ‘ma’, and 83.097 ma, respectively, and a record 2014 U.S. corn yield of 173.4 bushels per acre. The USDA projected record U.S. corn total supplies of 15.668 bb (billion bushels), up 6.0% from 14.782 bb last year. Projected MY 2014/15 total corn usage of 13.670 bb (up 10 mb or million bushels from a month ago) is also a record, with ethanol use of 5.150 bb (up 16 mb from MY 2013/14), non-ethanol FSI use of 1.395 bb (up 10 mb from a month ago), exports of 1.750 bb (down 167 mb from a year ago), and feed and residual use of 5.375 bb (up 243 mb vs last year).

“Current crop” ending stocks are forecast at 1.998 bb (14.6% S/U) – up from 1.236 bb (9.1% S/U) in MY 2013/14, and from 821 mb (7.4% S/U) in MY 2012/13. The USDA left unchanged its forecast that “current crop” MY 2014/15 U.S. average cash corn prices will be in the range of $3.20-$3.80 per bu. with a midpoint of $3.50 – down from $4.46 in MY 2013/14, and $6.89 in MY 2012/13.

KSU U.S. Corn S/D Forecast for “Current Crop” MY 2014/15

An alternative projection by KSU Extension to the USDA for “current crop” MY 2014/15 U.S. corn supply-demand and prices is as follows: “Increased Usage” Scenario: 30% prob. of 15.668 bb U.S. corn supplies (same as USDA), 13.965 bb total use (up 2.2% from USDA), 1.703 bb ending stocks, 12.2% S/U, & $3.95 /bu U.S. corn price (compared to $3.50 /bu by the USDA).

KSU U.S. Corn S/D Forecast for “Next Crop” MY 2015/16

A KSU projection for “next crop” MY 2015/16 for U.S. corn is as follows: “2015 Less 2 Million Acre” Scenario: 88.885 ma planted in 2015, 81.268 ma harvested, trend yields of 162.7 bu/ac, 2015 U.S. corn production of 13.222 bb, U.S. corn supplies of 15.246 bb, total use of 13.700 bb, ending stocks of 1.545 bb, 11.3% S/U, & $4.20 /bu U.S. corn season average prices.

World Corn Supply-Demand

World total supplies of 1,164 mmt are projected for “current crop” MY 2014/15, up from 1,127 mmt in MY 2013/14, and from 1,002.5 mmt in MY 2012/13. Projected World corn ending stocks of 192.2 mmt (19.8% S/U) in “current crop” MY 2014/15 are up from 173 mmt (18.1% S/U) in MY 2013/14, and from 138 mmt (15.9% S/U) in MY 2012/13.

Combined “current crop” MY 2014/15 corn production for the U.S.’ major export competitors Brazil (75.0 mmt – down 4.3) and Argentina (22.0 mmt – down 3.0) is projected to be down 7.3 mmt from MY 2013/14. Forecast Ukraine 2014 corn production of 27.0 mmt is down 3.9 mmt from a year ago. South American acreage decisions either have been or are being made now for later plantings of 2015 crops in the Dec-January period.

U.S. Corn Acreage Decisions in 2015

With closing CME NOV-2015 soybean futures of $10.02 and CME DEC-2015 corn futures of $4.30 ¾ on 12/16/2014, the soybean/corn price ratio of 2.33 is neutral for the two crops in the U.S. (i.e., being essentially equal to the customary 2.3 breakeven level). If South American farmers were to shift sizable acreage away from corn into 2015 soybeans – markedly diminishing foreign 2015 production prospects, and/or have weather-induced 2015 corn production problems, then by March-April 2015 World corn market price prospects for “next crop” MY 2015/16 could be positively affected – which could impact U.S. farmers’ 2015 spring planting choices (i.e., more U.S. corn acres, and less soybean acres).

http://harvestpublicmedia.org/sites/default/files/styles/article_main_image/public/0112_corn-1.jpg?itok=K5lNONxW

Kansas Corn Stubble & Grain Storage in 2012 (Source: http://harvestpublicmedia.org/article/965/surprise-corn-stocks-are/5)

http://images.morris.com/images/cjonline/mdControlled/cms/2008/02/23/250015597.jpg

Corn being used at a Kansas ethanol plant in 2008 (Source: http://cjonline.com/stories/022308/bus_250015541.shtml)

KSU Weekly Grain Market Analysis: Taking in the USDA Dec Reports, Looking to 2015 Crop Developments

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, December 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_12-12-14.pdf The recorded radio program will be aired at 10:03 a.m. central time, Friday, December 6th on the K-State Radio Network (here) – web player available.  After the live program is completed, 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 Slide1 Slide2 Slide3 Slide4 Slide5          

KSU “by the numbers” Analysis of USDA Dec. 10th Reports – U.S. and Foreign S-D Changes and Trends

A KSU “quick analysis” worksheet of the key grain marketing-related information found in the December 10th 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 December 2014 U.S. and Foreign grain supply-demand 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 (November 2014) USDA grain production and supply-demand.  Key information is contained on the following:

A. United States’, Brazil, Argentina and Total World crop production forecasts for 2014/2015 corn, grain sorghum, wheat and soybeans.

B. Updated U.S. & World ending stocks projections for the “new crop” 2014/15 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 December 10, 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://www.getruralkansas.org/townassets/218/Canyon%20resized.jpg

Gyp Hills Scenic Drive, West of Medicine Lodge, Kansas (Source: http://www.getruralkansas.org/Medicine-Lodge/218Explore/1316.shtml)

http://www.kssos.org/images/Backgrounds/winter/winterfield.jpg

A Kansas Field & Grassland During Winter with Snow Cover – in the Red Hills Area (source: http://www.kssos.org/about/about_ks_archive.html)

http://www.kshs.org/exhibits/wheat/graphics/wheat3.jpg

A aerial view of a Kansas wheat field (Source: http://www.kshs.org/p/wheat-people-part-1/10869)

U.S. Ethanol and Biodiesel Market-Profitability Graphics (via KSU AgManager)

Following are some graphics on price and profitability trends in the U.S. ethanol and biodiesel industries, which will soon be available on the KSU AgManager website: http://www.agmanager.info/    The full presentation titled “U.S. Ethanol & Biodiesel Market Situation” made for WILL (Illinois Public Radio) on Tuesday, November 25th and will be located at the KSU AgManager.info website – at the following web address:

http://www.agmanager.info/news/Articles/Ethanol-Market_WILL-Radio_11-25-14.pptx

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“The great deceleration” – Concerning South American Economies (Important for World/U.S. Agriculture)

The following article from “The Economist” titled “The great deceleration” addresses the economic slowdown that is occurring in South American economies. See the following web address:

http://www.economist.com/news/americas/21633940-regions-economies-have-slowed-far-more-abruptly-anyone-expected-great-deceleration

This article addresses a number of issues, including the role that agricultural commodity price inflation has played in past growth of South American economies, and what might occur in the future in that same regard.  The article hints at the economic uncertainty and problems that may occur in these economies as populations in South America are forced to lower their standard of living.  In a big picture view, these trends are of great importance to U.S. agriculture and commodity markets.

http://www.voyagesphotosmanu.com/Complet/images/economy_of_south_america.jpg

“The economy of South America” (Source: http://www.voyagesphotosmanu.com/south_america_economy.html)