Soybean Market Outlook for MY 2014/15 (KSU Forecasts)

Following the April 9th USDA WASDE report, the following grain market outlook analysis and forecasts for U.S. Soybeans have been developed.  A full MS Powerpoint presentation of corn, wheat and soybean market analysis following the April 9th USDA report was given at the Agricultural Exposition in Great Bend, Kansas on Thursday, April 10th.  The full presentation is available on the KSU AgManager.info website:  http://www.agmanager.info/default.asp, at the following web address:  http://www.agmanager.info/marketing/outlook/crop_outlook/OBrien_AgExpo_GreatBend_04-10-14.pdf

Following are key parts of the current KSU Soybean Market Outlook for the 2014/15 marketing year.

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Wheat Market Outlook for MY 2014/15 (KSU Forecasts)

Following the April 9th USDA WASDE report (http://www.usda.gov/oce/commodity/wasde/), the following grain market outlook analysis and forecasts for U.S. Wheat have been developed.  A full MS Powerpoint presentation of corn, wheat and soybean market analysis following the April 9th USDA report was given at the Agricultural Exposition in Great Bend, Kansas on Thursday, April 10th.  The full presentation was given on the KSU AgManager.info website:  http://www.agmanager.info/default.asp, at the following web address:  http://www.agmanager.info/marketing/outlook/crop_outlook/OBrien_AgExpo_GreatBend_04-10-14.pdf

Following are key parts of the current KSU Wheat Market Outlook for the 2014/15 marketing year.

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Corn Market Outlook for MY 2014/15 (KSU Forecasts)

Following the April 9th USDA WASDE report, the following grain market outlook analysis and forecasts for U.S. Corn have been developed.  A full MS Powerpoint presentation of corn, wheat and soybean market analysis following the April 9th USDA report was given at the Agricultural Exposition in Great Bend, Kansas on Thursday, April 10th.  The full presentation was given on the KSU AgManager.info website:  http://www.agmanager.info/default.asp, at the following web address:  http://www.agmanager.info/marketing/outlook/crop_outlook/OBrien_AgExpo_GreatBend_04-10-14.pdf

Following are key parts of the current KSU Corn Market Outlook for the 2014/15 marketing year.

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KSU Weekly Grain Market Analysis: Reviewing the week’s reaction to the 3/31/14 Prospective Plantings and Stocks reports

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, April 4th  are up on  the Kansas State University www.AgManager.info website at the following web address: http://www.agmanager.info/news/Articles/KSRN_GrainOutlook_04-04-14.pdf

The recorded radio program will be aired at 10:03 a.m. central time, Friday, April 4th on the K-State Radio Network (here) – web player available.  After the program airs, 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 Grain Sorghum Field (Source of image: http://charliewolf.hubpages.com/)

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Center Pivot Irrigated Corn in Rice County, Kansas in 2013 (Source: http://www.rice.ksu.edu/p.aspx?tabid=13)

Results and Implications of the USDA Prospective Plantings and Quarterly Stocks Reports of 3/31/2014

 

Following is a KSU Summary with market implications stemming from the USDA National Agricultural Statistical Service (NASS) Prospective Plantings and Quarterly Stocks reports.  The full report is available on the KSU Agmanager.info website (http://www.agmanager.info/) at the following web address:

http://www.agmanager.info/marketing/outlook/newletters/archives/GRAIN-OUTLOOK_04-01-14_Plantings-Stocks.pdf

Summary

On Monday, March 31st the USDA National Agricultural Statistics Service (NASS) released its Grain Stocks and Prospective Plantings reports. The 2014 Prospective Plantings report provided the first actual survey-based information by the USDA on U.S. farmer’s cropping intentions for 2014. From this market analysts can begin examinations of 2014 U.S. crop production prospects, projected supply-demand balances, and prices for these crops in their respective “new crop” 2014/15 marketing years. The quarterly March 2014 Grain Stocks report provided grain markets with improved information on the pace of usage of U.S. corn, grain sorghum, wheat, soybeans and other major crops in their respective “current” 2013/14 marketing years. Adjustments may occur to U.S. corn supply-demand projections for “current” MY 2013/14 in the upcoming April 9th USDA WASDE report.

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Grain Storage in Farm Country (Source: http://www.feedandgrain.com/)

 

The Prospective Plantings report projected 2014 U.S. corn planted acreage to be 91.691 million acres (ma), down over 1 million acres from pre-report trade expectations, and down 3.674 ma from 95.365 ma in 2013. In addition, 2014 U.S. soybean planted acres were forecast to be 81.493 ma, up 418,000 acres from pre-report average trade expectations, and up 4.960 ma from 76.533 ma in 2013. Expected 2014 plantings of U.S. wheat of 55.815 ma were down 462,000 acres from pre-report trade expectations, and 341,000 acres less than 56.156 ma of U.S. wheat planted in 2013. By category, projected 2014 U.S. winter wheat acreage was below both pre-report expectations and year ago levels. Other U.S. spring wheat acreage was projected to be below pre-report expectations in 2014, but still above year ago levels, while 2014 U.S. durum wheat acreage was projected to be higher than year ago levels.

The quarterly Grain Stocks report estimated that U.S. corn stocks on March 1st were 7.006 billion bushels (bb), down 93 mb from pre-report expectations, but still up from 6.023 bb a year ago. This lower than expected projection of U.S. corn March 1st stocks was a result of higher than expected U.S. corn usage during the December 2013 through February 2014 period. Calculated U.S. Dec-Feb 2014 U.S. corn use is 3.446 bb, up 119 mb from implied pre-report trade estimates, and down 177 mb from 3.623 bb in Dec-Feb 2013. Projected U.S. soybean and wheat March 1st stocks and associated usage during Dec-Feb 2014 were nearly as expected. Usage of U.S. wheat during Dec-Feb 2014 was less than a year ago, and usage of U.S. soybeans were markedly greater than a year ago during Dec-Feb 2013.

As a result of these reports, KSU supply-demand and price forecasts for the “new crop” 2014/15 marketing year were adjusted from projections made earlier in March. The United States’ 2014 corn, grain sorghum, and wheat crop production forecasts were generally lowered as a result of the lower planted acreage projections in these USDA reports – with an expected moderate increase in projected prices for these same crops. KSU “new crop” U.S. corn price projections were raised $0.10 to $0.35 per bushel from a month ago, while U.S. wheat price projections were unchanged to up $0.25 per bushel. Conversely, the large increase in projected U.S. soybean acres in 2014 has caused projections of “new crop” 2014 U.S. soybean production to jump significantly, leading to an increase in supply-demand balances, and to a marked decrease in expected “new crop” MY 2014/15 soybean prices – down to $10 per bushel and below. KSU “new crop” U.S. soybean price projections were lowered $0.50 in “expected” and “large production” scenarios, and by as much as $4.00 per bushel from a month ago in the “low production” supply-demand scenario.

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Corn versus Soybean Planting Decisions in 2014 (Source: http://cornandsoybeandigest.com/)

 

KSU “Quick Analysis” Calcs of USDA March 31st Reports – 2014 Acreage, 3/1 Stocks, and Dec-Feb14 Grain Use Results versus expectations and last 2-3 years

A KSU “quick analysis” worksheet of the key grain marketing-related information found in the March 31st USDA U.S. Prospective Plantings and Quarterly Grain Stocks 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 March 31, 2014 USDA U.S. crop planted acreage, quarterly stocks and implicit Dec-Feb grain usage estimates compared to a) prereport trade estimates, b) the three years of acreage, March 1st Stocks, and Dec-Feb grain usage.  Key information is contained on the following:

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U.S. Corn being Planted in the Corn Belt in Past Years (Source: http://farmprogress.com/)

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Planting Soybeans in Indiana in 2012 (source: https://www.purdue.edu/)

KSU Weekly Grain Market Analysis: Looking ahead to March 31st Prospective Planting and Quarterly Stocks reports

Grain market summary notes, charts and comments associated with the KSU Agriculture Today Grain Outlook to played on Friday, March 28th  are up on  the Kansas State University www.AgManager.info website at the following web address: http://www.agmanager.info/news/Articles/KSRN_GrainOutlook_03-28-14.pdf

The recorded radio program was be aired at 10:03 a.m. central time, Friday, March 28th on the K-State Radio Network (here) – web player available.  The recording of this program will be available for listening to via a link from the following website in the “Radio Interviews” section: http://www.agmanager.info/news/default.asp

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(Source of image: http://openmarkets.cmegroup.com/5838/what-will-influence-final-u-s-planted-acreage)

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A U.S. Wheat Field during Summer Harvest (Source: http://agfdablog.com/2014/01/)

U.S. Ethanol Market Trend Graphics (via KSU AgManager)

Following are some graphics on economic trends in the U.S. ethanol industry, which will soon be available on the KSU AgManager website: http://www.agmanager.info/    The full presentation titled “U.S. Ethanol Market Situation” made for WILL (Illinois Public Radio) is located at the KSU AgManager.info website at the following web address:

http://www.agmanager.info/news/Articles/Ethanol-Market_WILL-Radio_03-25-14.pdf

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KSU Soybean Market Outlook in mid-March 2014 (via AgManager)

An analysis of U.S. and World Soybean supply-demand factors and 2014 price prospects following the USDA’s March 10, 2014 WASDE report at  World Agricultural Supply Demand Estimates (WASDE) reports will be available on the KSU AgManager website (http://www.agmanager.info/default.asp).

Following is a summary – with the full analysis-article written for Soybeans with the full article available at the following web address:  http://www.agmanager.info/marketing/outlook/newletters/Soybeans.asp

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Summary

When the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on March 10, 2014, both “current crop” MAY 2014 and “next crop” NOV 2014 U.S. soybean market prices initially responded negatively – but have since traded in a volatile pattern due to various market factors. The USDA raised its projections of “current” 2013/14 marketing year U.S. soybean imports and exports, lowered its forecast of domestic crush, made a marginal reduction in “already tight” ending stocks, and raised its projection of U.S. average soybean prices by $0.25 per bushel.

The soybean market has recently focused on South American soybean production and logistical issues, reports of potential livestock disease and feed demand problems in China, and the ongoing strong pace of U.S. soybean export shipments and sales.  While MAY 2014 soybean futures have been trading as high as $14.60 per bushel, “next crop” NOV 2014 futures have been trading as nearly as high as $12.00 – reflecting the expectation of a large 2014 South American crop to be harvested and sold into export channels to compete with U.S. exports later in the spring and summer months.

USDA Soybean Projection for “Current” MY 2013/14: With a 5 million bushel (mb) increase in imports to 35 mb, the USDA raised its forecast of “current” MY 2013/14 U.S. soybean total supplies (3.464 billion bushels or ‘bb’ – up 5 mb).  Changes in domestic crush (1.690 bb – down 10 mb), exports (1.530 bb – up 20 mb to a record high), and total use (3.319 bb – up 10 mb), resulted in “current” ending stocks projected at 145 mb (down 5 mb) – still up from 141 mb in “last year’s” MY 2012/13, but down from 169 mb in MY 2011/12.  Projected % ending stocks-to-use of 4.37% are record low compared to 4.55% in “last year’s” MY 2012/13, and 5.35% in MY 2011/12.  The USDA projected U.S. soybean prices for “current” MY 2013/14 to be $12.20-$13.70 /bu (midpoint = $12.95), up $0.25, but still down from the record high of $14.40 in “last year’s” MY 2012/13.

KSU & USDA U.S. Soybean Forecasts for “Next Crop” MY 2014/15: KSU projections of 2014 U.S. soybean production and “next crop” MY 2014/15 supply-demand and price scenarios are:  a) KSU “Low Production” Scenario: 20% prob., 77.5 ma planted, 76.5 ma harvested, 40.0 bu/ac yields, a 3.060 bb 2014 U.S. soybean crop, 4.5% S/U, & $14.00-$15.00/bu; b) KSU “Likely Production” Scenario: 60% prob. of 79.0 ma planted, 78.0 ma harvested, 43.0 bu/ac yields, a 3.355 bb 2014 U.S. soybean crop, 7.29% S/U, & $9.90-$10.90/bu; and c) KSU “High Production” Scenario: 20% prob. of 80.5 ma planted, 79.5 ma harvested, 45.0 bu/ac yields, a 3.578 bb 2014 U.S. soybean crop, 9.78% S/U, & $8.50-$9.50/bu.  The “next crop” MY 2014/15 projection from the February 21st USDA Agricultural Outlook Conference with updates made by KSU for March 10th WASDE beginning stocks and prices would indicate the following for the coming year: 79.5 ma planted, 78.5 ma harvested, a record high 45.2 bu/ac yield, a 3.550 bb 2014 U.S. soybean crop, 8.16% S/U, & an approximate price of $9.85 /bu.  These initial USDA 2014 U.S. soybean production estimates are subject to change.

World Soybeans: Projected World total supplies of 343 mmt in “current” MY 2013/14 are up from 321 mmt in “last year’s” MY 2012/13, and from 310 mmt in MY 2011/12.  Projected World soybean ending stocks of 70.6 mmt (26.2% S/U) in “current” MY 2013/14 are up from 57.8 mmt (22.3% S/U) in “last year’s” MY 2012/13, and from 53.5 mmt (20.8% S/U) in MY 2011/12, being comparable to a low 19.5% S/U in MY 2008/09.

Market Perspective: U.S. soybean prices have been supported by Chinese export demand, recent problems in South American soybean production, and by U.S. farmer’s “holding” of soybeans in storage.   Weakness or at least “moderation” in soybean prices is likely to occur in the spring-summer of 2014 if a record high 2014 South American soybean crop is produced and moved into export channels in a timely manner, and if prospects develop through the summer months for a large 2014 U.S. soybean crop to be produced.

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Early Planting of Soybeans in Illinois in late April 2012 (Source: http://farmindustrynews.com/blog/very-early-planting-illinois)

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KSU Soybean Variety Performance Trials in 2012 (Source: http://www.agronomy.ksu.edu/extension/p.aspx?tabid=94)

KSU Wheat Market Outlook in mid-March 2014 (via KSU AgManager)

An analysis of U.S. and World wheat supply-demand factors and 2013 price prospects following the USDA’s March 10th Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports is available on the KSU AgManager website (http://www.agmanager.info/default.asp).

A full analysis of this article on Wheat Market Outlook may be found at this web location:  http://www.agmanager.info/marketing/outlook/newletters/Wheat.asp

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Summary

When the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on March 10, 2014, U.S. wheat market prices initially responded negatively before moving higher in the succeeding week.  The USDA made no changes in its projections of “current” 2013/14 marketing year supply-demand projections for U.S. wheat, but did make a marginal increase in its projection for U.S. wheat average prices.  A mixture of factors are impacting prospects for U.S. and World wheat prices in the coming calendar year.  These include a) an expectation of at least moderately lower supplies of U.S. wheat in the “next crop” MY 2014/15 marketing year, b) growing quantities of competitive, exportable foreign wheat supplies likely to be available in coming months – absent continuing or spreading geopolitical conflicts in the Black Sea Region, c) the likelihood of a “weaker-to-moderating” pace of U.S. wheat exports in coming months – should no major foreign wheat production threats materialize, and d) more abundant supplies of U.S. corn and grain sorghum supplies in 2014 “hanging over the market” and limiting U.S. and foreign wheat feeding.

USDA U.S. Wheat “Current” MY 2013/14:  Based on projections from the Feb. 21 USDA Agricultural Outlook Conference, with small adjustments made in the beginning stocks estimate, forecast 2014 U.S. wheat production and “next crop” MY 2014/15 supply-demand and price scenarios are: 55.5 ma planted, 47.2 ma harvested, 45.8 bu/ac yields, a 2.160 bb 2014 U.S. wheat crop, 2.281 bb total use, 587 million bushels (mb) ending stocks, 25.7% S/U, & $5.30 average price per bu.  The price forecast of $5.30 /bushel seems to be “overly pessimistic” given the uncertainty in U.S. and World supply-demand prospects.   If “new crop” 2014 U.S. winter wheat production prospects remain poor in late March-April as the crop breaks dormancy in the spring period – possibly due to dry conditions, damage from cold temperatures, widespread disease issues, a late killing frost, etc. – U.S. wheat market prices will find the impetus to respond by moving sharply higher.

KSU U.S. Wheat Forecast for “Next Crop” MY 2014/15: KSU projections of “next crop” MY 2014/15 supply-demand balances and prices are as follows:  a) “Likely Production” Scenario: 55% prob. of 56.3 million acres (ma) planted, 47.4 ma harvested, trend yields of 45.8 bu/ac, 2.171 bb 2014 U.S. wheat production, 2.889 bb U.S. wheat supplies, 1.175 bb exports, 150 mb wheat fed, 2.359 bb total use, 530 mb ending stocks, 22.5% S/U, & $7.10 /bu;  b) “Low Production” Scenario: 35% prob. of 55.3 ma planted, 46.6 ma harvested, low yields of 39.0 bu/ac, 1.817 bb 2014 U.S. wheat production, 2.555 bb U.S. wheat supplies, 1.000 bb exports, 100 mb wheat fed, 2.129 bb total use, 426 mb ending stocks, 20.0% S/U, & $8.25 /bu;  and c) “High Production” Scenario: 10% prob. of 56.3 ma planted, 48.3 ma harvested, record high yields of 47.5 bu/ac, 2.294 bb 2014 U.S. wheat production, 2.992 bb U.S. wheat supplies, 1.200 bb exports, 160 mb wheat fed, 2.399 bb total use, 593 mb ending stocks, 24.7% S/U, & $6.60 /bu.

USDA World Wheat: World wheat total supplies of 889 mmt in “current” MY 2013/14 are up from 855 mmt “last year’s” MY 2012/13, but down from 896 mmt in MY 2011/12.  Projected World wheat ending stocks in “current” MY 2013/14 of 183.8 mmt (26.1% S/U) are up from 175.9 mmt (25.9% S/U) in “last year’s” MY 2012/13, but down from 198.9 mmt (28.5% S/U) in MY 2011/12.  The recent historic World wheat stocks minimum of 129.6 mmt (21.1% S/U) occurred in MY 2007/08.  Exports from nearly all of the U.S.’ major World wheat trade competitors are projected to be higher in “current” MY 2013/14 than a year ago.  This list of export competitors with improved sales prospects includes Australia, Canada, the European Union, Russia, Kazakhstan, and Ukraine.  Should threats to U.S. and World wheat markets subside, then the fact remains that large supplies of wheat are available from foreign wheat export competitors – which could still remain as a potential challenge for U.S. wheat exports and prices later in 2014.

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U.S. Spring fieldwork in 2013 (Source: http://mybarnyardview.blogspot.com/2013/04/farmer-john-says-yipee.html)