Soybean Market Outlook – Current Markets and Prospects for 2015

Following are parts of the Grain Market Outlook for 2014-2015 to be presented in the KSU Agricultural Economics 420 Class on Thursday, August 23, 2014.  This class is for Junior-Senior level students with a strong interest in returning to agriculture – either to their family farm business or into agricultural industry.

Following is the full Soybean portion of this Grain Market Outlook Presentation.

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Wheat Market Outlook – Current Markets and Prospects for 2015

Following are parts of the Grain Market Outlook for 2014-2015 to be presented in the KSU Agricultural Economics 420 Class on Thursday, August 23, 2014.  This class is for Junior-Senior level students with a strong interest in returning to agriculture – either to their family farm business or into agricultural industry.

Following is the full Wheat portion of the Grain Market Outlook Presentation.

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Feedgrain Market Outlook – Current Markets and Prospects for 2015

Following are parts of the Grain Market Outlook for 2014-2015 to be presented in the KSU Agricultural Economics 420 Class on Thursday, August 23, 2014.  This class is for Junior-Senior level students with a strong interest in returning to agriculture – either to their family farm business or into agricultural industry.

Following is the full feedgrain portion of today’s Grain Market Outlook Presentation.

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KSU Quarterly Grain Stocks and 2014 Small Grains Summary: S-D Changes for Soybeans, Corn, Sorghum, and Wheat

An analysis of the September 30th USDA Quarterly Grain Stocks (here) and Small Grains 2014 Annual Summary (here) reports can be found on the KSU AgManager website (http://www.agmanager.info/default.asp).

Following is a summary of the article on the USDA Sept. 30th Quarterly Stocks and Small Grains Summary – with the full analysis and article available by the end of the day on October 2nd on the KSU AgManager website – at http://www.agmanager.info/marketing/outlook/newletters/archives/GRAIN-OUTLOOK_10-02-14_Stocks.pdf

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Summary

On September 30, 2013 the United States Department of Agriculture (USDA) released its Quarterly Grain Stocks and Small Grains 2014 Summary reports from the National Agricultural Statistical Service (NASS). The Quarterly Stocks Report indicated the amount of U.S. corn, grain sorghum, wheat and soybean stocks on September 1st along with grain disappearance during June-August 2014.

Corn and Grain Sorghum

“Old crop” 2013/14 marketing year U.S. corn ending stocks increased from 1.181 billion bushels (bb) in the most recent September 11th World Agricultural Supply and Demand Estimates (WASDE) projection up to 1.236 bb in the 9/30 Quarterly Stocks report – which is up 50.5% from 821 million bushels (mb) from a year earlier on September 1, 2013. This USDA projection was 5.1% larger than the average pre-report trade estimate, but within the estimate range of 1.020-1.350 bb. Corn usage in the U.S. during June-August 2014 was 2.616 bb, up sharply from 1.985 bb in June-August 2013, and from 2.107 bb in June-August 2012. Grain sorghum stocks of 34 mb on September 1st in the U.S. were up from 15 mb on 9/1/2013, but less than 59 mb on 9/1/2012. Grain Sorghum usage in the U.S. during June-August 2014 was 58 mb, up sharply from 29 mb in June-August 2013, and from 36 mb in June-August 2012.

http://aliveandwellinkansas.files.wordpress.com/2011/09/dsc_0520.jpg?w=479&h=317

Corn harvest in Kansas (source: http://aliveandwellinkansas.wordpress.com/tag/kansas-corn-harvest/)

Soybeans

U.S. soybean Sept. 1st ending stocks in “old crop” MY 2013/14 were a record low 92 mb, down from 130 mb in the September 11th WASDE report, down 27% from the average pre-report trade estimate of 126 mb, and down from 141 mb on September 1, 2013. Soybean usage in the U.S. during June-August 2014 was 313 mb, down marginally from 318 mb in June-August 2013, and down sharply from 498 mb in June-August 2012. The USDA raised its estimate of 2013 U.S. soybean production by 69 mb to 3.358 bb, setting the stage for U.S. soybean supply-demand balance sheet adjustments to occur in the October 10, 2014 WASDE report.

Wheat

September 1, 2014 U.S. wheat stocks of 1.914 bb were up 34 mb (up 1.8%) from pre-report trade expectations of 1.880 bb. This projection of 1.914 bb in ending stocks on 9/1/2014 is also up from 1.870 bb on 9/1/2013, but less than 2.105 bb on 9/1/2012. Wheat usage in the U.S. during June-August 2014 was 711 mb, down from 1.013 bb in June-August 2013, and from 929 mb in June-August 2012.

http://ksugrains.files.wordpress.com/2013/10/add8d-img_1550.jpg?w=454&h=302

Grain Elevator in Argonia, Kansas in 2010 (source: http://rubberduckster.blogspot.com/2010)

Small Grains 2014 Summary

This report indicated a number of notable changes in 2014 U.S. wheat production from previous estimates by wheat type and category. However, these changes largely offset each other quantity-wise, leading to a small increase in total 2013 U.S. wheat production from previous USDA projections. United States’ wheat production in 2014 was estimated to be 2.035 bb, up marginally from 2.030 bb in the September 11th Crop Production report, and consistent with average pre-report trade expectations. Lower 2014 U.S. hard red winter wheat production was more than offset by larger production from soft red winter, white winter, other spring, and durum wheat types. Forecast production of “other spring wheat” was raised to 601 mb from earlier USDA projections of 572 mb, while projected “white winter” wheat production of 184 mb was down 17 mb from earlier USDA estimates.

Resulting Changes in USDA and KSU Supply-Demand and Price Forecasts

As a result of these September 30th reports, it is likely that the USDA will make some important changes in its October 10th Crop Production the and also in the supply-demand balance sheets and price forecasts in the 10/10/2014 WASDE report. It is anticipated that projected supplies and possibly ending stocks of U.S. corn, grain sorghum and wheat will increase, with these crops’ respective price projections lowered at least marginally for “new crop” MY 2014/15. Conversely, projected new crop beginning stocks and consequently supplies of U.S. soybeans are projected to decrease, providing at least some support for “new crop” MY 2014/15 U.S. soybean prices.

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 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/)

Soybean Market Outlook – 2014 KSU Risk and Profit Conf., Manhattan, KS

Following are parts of the Grain Market Outlook for 2014-2015 to be presented today at the 2014 KSU Risk and Profit Conference (here).  The theme of this years conference is “Ag Policy – Here, There, Everywhere.” This year’s Risk and Profit Conference is being held at the Kansas State University Alumni Center, starting with registration this morning, Thursday, August 21st, and lasting through 3 p.m., Friday, August 22nd.  More information on the 2014 Risk and Profit can be found at KSU AgManager website: www.agmanager.info

Following is the full Soybean-related portion of today’s Grain Market Outlook Presentation.

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