KSU Soybean Market Outlook in Late September 2014

An analysis of U.S. and World soybean supply-demand factors and 2014 price prospects following the USDA’s September 11th Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports can be found on the KSU AgManager website (http://www.agmanager.info/default.asp) early next week.

Following is a summary of the article on Soybean Market Outlook – with the full article and accompanying analysis to be available likely on Monday, September 29th on the KSU AgManager website at the following web address http://www.agmanager.info/marketing/outlook/newletters/Soybeans.asp

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Summary

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on Thursday, September 11, 2014, U.S. soybean market prices have responded by moving sharply lower in anticipation of a record large U.S. soybean crop and near record large U.S. soybean supply-demand balances in Fall 2014.

USDA U.S. Soybean Forecast for “New Crop” MY 2014/15

The USDA forecast record high U.S. soybean production in 2014 of 3.913 billion bushels (bb) – up 624 million bushels (mb) from 3.289 bb in 2013, and up 554 mb from the previous record high of 3.359 bb in 2009. This USDA forecast 2014 U.S. soybean production of 3.913 bb is based on record high planted acres (84.839 million acres or ‘ma’), harvested acres (84.058 ma), and yields (46.6 ma) acres – figures that are still uncertain to some degree and subject to change in upcoming USDA Crop Production reports. In the “new crop” 2014/15 marketing year which began on Sept. 1, 2014, U.S. soybean total supplies were forecast to be a record high 4.058 bb – up 549 mb from “old crop” MY 2013/14.

Domestic crush was projected to be 1.770 bb – up 40 mb from a year ago, while exports were forecast to be a record high 1.700 bb, up from the old record of 1.645 bb in “old crop” MY 2013/14. Forecast “new crop” 2014/15 ending stocks were raised to 474 mb (the high since 574 mb in MY 2006/07), while % ending stocks-to-use were projected to be 13.3% – up from 12.1% in August, and from the record low of 3.85% in “old crop” MY 2013/14. The USDA forecast “new crop” MY 2014/15 average soybean prices to be in the range $9.00-$11.00 with a midpoint of $10.00 – down $0.35 /bu from August. The USDA will update their supply-demand, and price projections in its October, November, and January Crop Production and WASDE reports.

KSU U.S. Soybean Forecast for “New Crop” MY 2014/15

KSU forecasts for “new crop” MY 2014/15 are as follows: a) “Likely Production” Scenario: 65% prob. of 83.589 ma planted, 82.812 ma harvested, 45.0 bu/ac yield, 3.727 bb 2014 U.S. soybean crop, 3.872 bb U.S. soybean supplies, 1.707 bb crush, 1.639 bb exports, 3.448 bb total use, 424 mb ending stocks, 12.3% S/U, & $10.75 /bu; b) “High Production” Scenario: 20% prob. – essentially equal to the USDA forecast of 3.913 bb 2014 U.S. soybean crop, 475 mb ending stocks, 13.3% S/U, & $10.00 /bu, and c) “Low Production” Scenario: 15% prob. of 82.339 ma planted, 81.573 ma harvested, lower yields of 43.5 bu/ac, a 3.548 bb 2014 U.S. soybean crop, 3.698 bb U.S. soybean supplies, 1.648 bb crush, 1.583 bb exports, 3.333 bb total use, 365 mb ending stocks, 10.95% S/U, & $11.75 /bu.

World Soybean Supply-Demand

Record high projected World soybean production of 311.1 mmt in “new crop” MY 2014/15 is projected to be up from 283.1 mmt in “old crop” MY 2013/14, and from 267.8 mmt in MY 2012/13. Record high projected World soybean ending stocks of 90.2 mmt (31.6% S/U) in “new crop” MY 2014/15 are up from 66.9 mmt (24.9% S/U) in “old crop” MY 2013/14, and up from 56.8 mmt (21.9 % S/U) in MY 2012/13. Forecast South American “new crop” MY 2014/15 soybean production that will be harvested in early 2015 for major U.S. World export competitors Brazil (94.0 mmt – up 7.3 mmt from a year earlier) and Argentina (55.0 mmt – up 1.0 mmt) is projected to be up a combined 8.3 mmt or 5.9% from MY 2013/14.

World & U.S. Soybean Market Trends

If this forecast of “new crop” MY 2014/15 soybeans from South America comes to fruition along with the record large 2014 U.S. soybean production, then World soybean supply-demand balances are likely to grow to burdensomely high levels (as is now projected), with U.S. soybean prices dropping sharply down to or below MY 2008/09 and MY 2009/10, i.e., down to or below $9.97 and $9.59 per bushel, respectively. The possibility of weather-related production problems in South America during the spring of 2015, or in the United States during the summer-fall of 2015 could impact these trends, but until such issues surface the soybean market will likely assume that these “predominant trends” will continue into the foreseeable future.

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Soybean harvest in Deleware in 2011 (Source: http://extension.udel.edu/kentagextension/tag/soybean/)

KSU Weekly Grain Market Analysis: Searching for the fall low with full harvest approaching

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, September 26th  are up on  the Kansas State University www.AgManager.info website at the following web address: http://www.agmanager.info/news/Articles/KSRN_GrainOutlook_09-26-14.pdf

The recorded radio program will be aired at 10:03 a.m. central time, Friday, September 26th 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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Corn Harvest in Oklahoma in Fall 2012 (Source of image: http://oklahomafarmreport.com/wire/news/2012/)

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2014 Grain Sorghum Harvest “on the way” in the Central Plains (Source: http://oklahomafarmreport.com/wire/news/2014/)

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Seeding Wheat in Idaho in Fall 2010 (Source: http://www.idahofarmwife.net/2010/10/fall-work-on-palouse.html)

KSU Wheat Market Outlook in September 2014

An analysis of U.S. and World Wheat supply-demand factors and price prospects based on information from the September 11, 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 on Thursday morning, September 25th.

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Summary

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on September 11, 2014, U.S. wheat market prices have responded negatively to projections of larger U.S. and World wheat ending stocks and ending stocks-to-use. The USDA projected for the “new 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 moderately 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 United States are projected to be down to the lowest levels in four years due to limited demand for U.S. wheat exports and for livestock wheat feeding.

Wheat Market Expectations & Other World Market Factors

Wheat market expectations concur with USDA projections 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 – at least to the degree that the “large crop-over supply” situation in World wheat markets has been affected. That said, there are preliminary concerns emerging about dry wheat production conditions in Australia, as well as crop quality problems in parts of Europe. The possible negative impact of military conflict in the Black Sea Region on World wheat exports has at least not yet emerged to an appreciable degree – but still holds potential to significantly impact wheat markets for at least the next several months.

USDA U.S. Wheat Forecast for “New Crop” MY 2014/15

Compared to a year earlier, the USDA projected lower 2014 U.S. wheat production, reduced wheat usage, an increase in U.S. wheat ending stocks and % stocks-to-use, and lower prices in “new crop” MY 2014/15. The USDA’s projected “new crop” market scenario is: 56.5 million acres (ma) planted, 46.2 ma harvested, 43.9 bu/ac yield, a 2.030 billion bushel (bb) 2014 U.S. wheat crop, 2.789 bb total supplies, 900 mb exports (down 25 mb from last month), 2.091 bb total use (up 10 mb), 698 mb ending stocks (up 25 mb), 33.38% ending stocks-to-use (up from 31.33% last month), and $5.90 average price per bu. (range of $5.50 to $6.30) – down from $6.30 last month.

KSU U.S. Wheat Forecast for “New Crop” MY 2014/15

KSU projections of “new crop” MY 2014/15 supply-demand balances and prices are essentially equal to the USDA’s except for the acknowledged possibility of a “Higher Export” scenario which is as follows: a) “Higher Export” Scenario: 20% prob. of acreage, yields, production and total supplies being the same as those of the USDA, but with 150 mb greater U.S. wheat exports. This would result in 1.050 bb exports (up 150 mb from USDA), 2.241 bb total use (up 150 mb), 548 mb ending stocks (down 150 mb from the USDA), 24.45% S/U (versus 33.38% S/U for USDA), and a forecast price of $6.75 /bu (up from the USDA midpoint of $5.90).

USDA World Wheat Supply-Demand & Export Trends Among World Sellers

World wheat total supplies of 906.4 mmt in “new crop” MY 2014/15 are up from 889.7 mmt in “old crop” MY 2013/14, and up from 855.0 mmt in MY 2012/13. Projected World wheat ending stocks in “new crop” MY 2014/15 of 196.4 mmt (27.7% S/U) are up from 186.5 mmt (26.5% S/U) in MY 2013/14, and from 175.6 mmt (25.9% S/U) in MY 2012/13. For perspective these figures can be compared to the historic World wheat stocks minimum of 129.4 mmt (21.0% S/U) in MY 2007/08. Year-over-year increases are projected for wheat exports in “new crop” MY 2014/15 for major exporters Argentina (+4.3 mmt), Brazil (+0.9 mmt), Russia (+4.0 mmt), and Ukraine (+0.24 mmt), with decreases forecast for the U.S. (-7.5 mmt), Australia (-0.5 mmt), Canada (-1.24 mmt), the EU (-5.9 mmt), India (-2.9 mmt), and Kazakhstan (-1.6 mmt).

The U.S. wheat market will now likely focus on the September 30th USDA Small Grains Summary report, and on the progress that will be made this fall in seeding the U.S. winter wheat crop for 2015.

 

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Seeding Wheat near Great Bend, Kansas in Fall 2012 (Source: http://www.greatbendpost.com/2011/10/25/report-shows-that-2012-wheat-crop-is-almost-planted/)

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Fall Harvest of High Moisture Corn in Kansas in September 2013 (Source: http://kansasagnetwork.com/2013/harvesting-high-moisture-corn-seeding-wheat-and-preparing-for-fall-harvest-in-kansas-continues/)

 

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An Eastern Kansas Landscape in Springtime (Source: http://www.sos.ks.gov/images/Backgrounds/spring/hills.jpg)

 

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, September 23rd 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_09-23-14.pptx

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KSU Weekly Grain Market Analysis: KSU Probabilities of Alternative Corn, Wheat, Soybean Price Scenarios

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, September 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_09-19-14.pdf

The recorded radio program was aired at 10:03 a.m. central time, Friday, September 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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Western Australia Wheat being Harvested (Source of image: http://www.daff.gov.au/agriculture-food/crops/wheat)

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

KSU Corn Market Outlook in September 2014: Confirmed large crop – low price situation (with a few nagging questions)

An analysis of U.S. and World corn supply-demand factors and 2014 price prospects following the USDA’s September 11th 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 September 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/archives/GRAIN-OUTLOOK_07-18-14_Corn.pdf

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Summary

Since the USDA released its Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports on September 11th, DEC 2014 and MAY 2015 corn futures prices have moved sideways to higher, raising hopes of a possible end to the decline in corn prices that has occurred since mid-May 2014. With the existing market consensus that a record large 14 billion bushel (bb) plus U.S. corn crop will occur in 2014, U.S. feedgrain prices have declined steadily as grain buyers have little incentive to aggressively buy corn, leading to weaker U.S. corn prices.

Several factors may work together to lower final 2014 U.S. corn production, such as a) accounting for 2014 corn prevented planting acreage in future Crop Production reports, b) the impact of less than ideal June-July growing weather in the U.S. corn belt, and c) the effect of cool-wet weather in the later stages of the growing season. However, it is unlikely that the combined impact of these factors will cause a significant change in the “large crop-low price” scenario that is likely to occur. Corn prices are likely to be weak through fall harvest until the beginning of the coming growing season in April-May 2015.

USDA U.S. Corn Forecast for “New Crop” MY 2014/15:

The USDA forecast U.S. 2014 corn production to be a record 14.395 billion bushels (bb), based on projected of planted acreage of 91.641 million acres or ‘ma’, harvested acreage of 83.839 ma, and record 2014 U.S. corn yields of 171.7 bushels per acre. Along with a record 2014 U.S. corn crop, the USDA also projected record U.S. corn total supplies of 15.607 bb. Projected “new crop” MY 2014/15 total corn usage of 13.605 bb is also a record, with ethanol use of 5.125 bb (unchanged from MY 2013/14), non-ethanol FSI use of 1.405 bb (up 30 mb), exports of 1.750 bb (down 175 mb from last year), and feed and residual use of 5.325 bb (up 250 mb).

“New crop” ending stocks were also raised to 2.002 bb (up 194 mb from last month and up 821 mb from last year) with ending stocks-to-use of 14.72% (up from 8.58% S/U a year ago). The USDA forecast that “new crop” MY 2014/15 U.S. average cash corn prices will be in the range of $3.20-$3.80 per bushel with a midpoint of $3.50 – down $0.40 /bu from August.

KSU U.S. Corn Forecast for “New Crop” MY 2014/15:

KSU projections for “new crop” MY 2014/15 are as follows: a) “Likely Production” Scenario: 60% prob. of 90.141 ma planted, 82.470 ma harvested, average yields of 170.5 bu/ac, 14.061 bb 2014 U.S. corn production, 15.272 bb U.S. corn supplies, 13.449 bb total use, 1.823 bb ending stocks, 13.6% S/U, & $3.70 /bu U.S. corn price; b) “High Production” Scenario (equal to USDA September forecast): 25% prob. of 91.641 ma planted, 83.839 ma harvested, yields of 171.7 bu/ac, 14.395 bb 2014 U.S. corn production, 15.607 bb U.S. corn supplies, 13.605 bb total use, 2.002 bb ending stocks, 14.7% S/U, & $3.50 /bu, and c) “Low Production” Scenario: 15% prob. of 88.641 ma planted, 81.098 ma harvested, lower yields of 168.0 bu/ac, 13.624 bb 2014 U.S. corn production, 14.845 bb U.S. corn supplies, 13.214 bb total use, 1.631 bb ending stocks, 12.3% S/U, & $4.00 /bu U.S. average corn price.Wor

World Corn Supply-Demand for 2014/15

World Corn Total Supplies of 1,161 mmt projected for “new crop” MY 2014/15 are up from 1,125 mmt in “old crop” MY 2013/14, and up from 1,003 mmt in MY 2012/13. Projected World corn ending stocks of 190 mmt (19.7% S/U) in “new crop” MY 2014/15 are up from 173 mmt (18.2% S/U) in “old crop” MY 2013/14, and from 138 mmt (16.0% S/U) in MY 2012/13. Combined “new crop” MY 2014/15 corn production for the U.S.’ major export competitors Brazil (75.0 mmt – down 4.3) and Argentina (23.0 mmt – down 2.0) is projected to be down 6.3 mmt. Forecast Ukraine 2014 corn production of 26.0 mmt is down 4.9 mmt.

Upcoming South American and U.S. Corn Acreage Decisions for 2015 Crops

South American acreage decisions will be made for first planting of crops by Nov-Dec 2014, with subsequent plantings coming after the first of the year. With closing NOV-2015 soybean futures of $9.99 and DEC-2015 corn futures of $3.87 on 9/17/2014, the ratio of 2.58 favors soybeans. If South American farmers shift sizable acreage away from 2015 corn into 2015 soybeans, then by March-April 2015 World corn market price prospects for MY 2015/16 could be effected – impacting U.S. farmers’ 2015 planting choices in the spring.

 

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Indian corn harvest in 2010 (Source: http://www.indianagrain.com/blog/corn-harvest-continues-to-impress)

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Loading a semi-truck at field’s edge during harvest in Kansas in 2010 (Source: http://windowontheprairie.com/2010/09/10/hauling-the-corn-to-the-elevator/)

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

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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)