KSU Weekly Grain Market Analysis: Looking to the October 10th USDA Reports

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, October 10th  are up on  the Kansas State University www.AgManager.info website at the following web address: http://www.agmanager.info/news/Articles/KSRN_GrainOutlook_10-10-14.pdf

The recorded radio program will be aired at 10:03 a.m. central time, Friday, October 6th 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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Kansas Corn Harvest Coming in Earnest! (Source of image: http://www.kansas.com/news/business/agriculture)

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Kansas Milo Harvest in 2009 (Source: http://www.kfrm.com/)

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Kansas Soybean Harvest in 2013 (Source: http://www.cranefarms.com/blog/soybean-harvest-complete/)

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.

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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.

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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 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/)