KSU Weekly Grain Market Analysis: USDA Grain Supply-Demand #s during Wheat Seeding and Fall Harvest

Grain market summary notes, charts and comments supporting the Grain Market Update presented in the KSU Agriculture Today radio program to be played on Friday, October 13, 2017 are available on the Kansas State University www.AgManager.info website at the following KSU web address:

http://www.agmanager.info/sites/default/files/pdf/KSRN_GrainOutlook_10-13-17.pdf

The recorded radio program was aired at 10:03 a.m. central time, Friday, October 13, 2017 on the K-State Radio Network (KSU Agriculture Today Radio) – web player available. A copy of the October 13th recording will be available at the KSU Agriculture Today website.

Following are sections of the Working notes for this week’s radio program up on the KSU AgManager.info website…

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KSU Weekly Grain Market Analysis: Heading toward delayed Wheat Seeding and Harvest in Kansas

Grain market summary notes, charts and comments supporting the Grain Market Update presented in the KSU Agriculture Today radio program to be played on Friday, October 6, 2017 are available on the Kansas State University www.AgManager.info website at the following KSU web address:

http://www.agmanager.info/sites/default/files/pdf/KSRN_GrainOutlook_10-06-17.pdf

The recorded radio program was aired at 10:03 a.m. central time, Friday, October 6, 2017 on the K-State Radio Network (KSU Agriculture Today Radio) – web player available. A copy of the August 4th recording will be available at the KSU Agriculture Today website.

Following are sections of the Working notes for this week’s radio program up on the KSU AgManager.info website…

USDA Sept. 29th Small Grains 2017 Summary and Grain Stocks Reports “By the Numbers”

The September 29, 2017 USDA Small Grains Summary and Grain Stocks reports provided the following results:

A. U.S. Corn Results

  • U.S. Corn stocks on September 1, 2017 were projected to be 2.295 billion bushels – down from pre-report expectations of 2.353 bb.  Compared to recent years: U.S. corn stocks on September 1st (2.295 bb) were 32%-33% larger than on the same dates in 2015 & 2016, up 86% from 2014, and up 180% from 2013.
  • U.S. Corn Use in June-August 2017 of 2.930 billion bu. was up from implicit pre-report expectations of approximately 2.876 bb.   Compared to recent years: June-August 2017 U.S. corn use was down marginally from the same period in 2016 (2.970 bb – down 1%), but up 6%-16% from 2014-2015, up 35%-48% from 2012-2013, and up 12%-15% from 2010-2011.
  • Summary Thoughts: Relative to pre-report trade expectations, these results are at least marginally positive for U.S. corn supply-demand prospects, indicating that usage of U.S. corn for feed and possibly fuel ethanol were larger than the trade had expected.  Still, these are historically large levels of U.S. corn stocks for September 1st.  The existing “large supply – low price” scenario for U.S. corn heading into the 2017 harvest was not appreciably changed by these results.

B. U.S. Soybean Results

  • U.S. Soybean stocks on September 1, 2017 were projected to be 301 million bushels – down from pre-report expectations of 338 mb.   Compared to recent years: U.S. soybean stocks on September 1st (301 mb) were 53%-58% larger than on the same dates in 2015 & 2016, up 227% from 2014, and up 113% from 2013.
  • U.S. Soybean Use in June-August 2017 of 665 million bu. was up from implicit pre-report expectations of approximately 628 mb.  Compared to recent years: June-August 2017 U.S. soybean use was down marginally from the same period in 2016 (681 mb – down 2%), but up 49%-94% from 2014-2015, up 109% from 2013, and up 32%-63% from 2010-2012.
  • Summary Thoughts: Similar to U.S. corn, relative to pre-report trade expectations, these results are at least marginally positive for U.S. soybean supply-demand prospects, indicating that usage of U.S. soybeans for domestic crush and residual uses were larger than the trade had expected.  Still, these are also historically large levels of U.S. soybean stocks for September 1st.  The existing “large supply – low price” scenario for U.S. soybeans heading into the 2017 harvest was not appreciably changed by these results either.

C. U.S. Wheat Results

  • U.S. Wheat stocks on September 1, 2017 were projected to be 2.253 billion bushels – up from pre-report expectations of 2.205 bb.   Compared to recent years: U.S. wheat stocks on September 1st (2.253 bb) were down 11% from 2016, but were 7%-19% larger than on the same dates in 2013, 2014, & 2015.
  • U.S. Wheat Use in June-August 2017 of 668 million bu. was down 10%-11% from 2014-2016, down 26%-34% from 2012-2013, and down 7%-8% from 2010-2011.
  • Summary Thoughts: Relative to pre-report trade expectations, these results are negative for for U.S. wheat supply-demand prospects, indicating at a minimum that usage of U.S. wheat for domestic feed and residual uses were less than the trade had expected.  Also, these are also historically large levels of U.S. wheat stocks for September 1st.  The existing “large supply – low price” scenario for U.S. wheat heading into Fall-Winter 2017-2018 was supported by these results.

D. U.S. Grain Sorghum Results

  • U.S. Grain Sorghum stocks on September 1, 2017 were projected to be 34 million bushels – up from pre-report expectations of 28 mb.   Compared to recent years: U.S. grain sorghum stocks on September 1st (34 mb) were down 8% from 2016, were 89% larger than on the same date in 2015, and were 100%-107% of September 1st stocks in 2013-2014.
  • U.S. Grain Sorghum Use in June-August 2017 of 51 million bu. was down 6% from 2016, up 219% from 2015, down 12% from 2014, but up 42%-76% from 2012-2013.
  • Summary Thoughts: Relative to pre-report trade expectations, these results are negative for for U.S. grain sorghum supply-demand prospects, indicating at a minimum that usage of U.S. grain sorghum for domestic feed and residual uses were less than the trade had expected.  The existing “large supply – low price” scenario for U.S. grain sorghum and other feedgrains as a whole heading into Fall-Winter 2017-2018 was supported by these results.

E. U.S. Wheat Annual Small Grains Summary Results

  • U.S. All Wheat Production is projected to be 1.741 billion bushels – up  from pre-report expectations of 1.718 bb.   Compared to recent years: U.S. All Wheat Production is down 25% from 2016, and 14%-18% from 2013-2015.
  • U.S. Winter Wheat Production is projected to be 1.269 billion bushels – down from pre-report expectations of 1.287 bb.   Compared to recent years: U.S. Winter Wheat Production is down 24% from 2016, and 8%-18% from 2013-2015.
  • U.S. Hard Red Winter (HRW) Wheat Production is projected to be 750 million bushels – down from pre-report expectations of 758 mb.   Compared to recent years: U.S. HRW Wheat Production is down 31% from 2016, and down 10% to up 1% from 2013-2015.
  • U.S. Soft Red Winter (SRW) Wheat Production is projected to be 292 million bushels – down from pre-report expectations of 306 mb.   Compared to recent years: U.S. SRW Wheat Production is down 15% from 2016, and 19%-49% from 2013-2015.
  • U.S. White Winter Wheat Production is projected to be 230 million bushels – up from pre-report expectations of 230 mb.   Compared to recent years: U.S. White Winter Wheat Production is down 6% from 2016, and up 24%-25% from 2014-2015.
  • U.S. Other Spring Wheat Production is projected to be 416 million bushels – up from pre-report expectations of 402 mb.   Compared to recent years: U.S. Other Spring Wheat Production is down 22% from 2016, and 22%-31% from 2013-2015.
  • U.S. Durum Wheat Production is projected to be 55 million bushels – up from pre-report expectations of 51 mb.   Compared to recent years: U.S. Durum Wheat Production is down 47% from 2016, and down 35% from 2015.

KSU Weekly Grain Market Analysis: Focus on Grain Sorghum and USDA Stocks/Small Grains Reports

Grain market summary notes, charts and comments supporting the Grain Market Update presented in the KSU Agriculture Today radio program to be played on Friday, September 29, 2017 are available on the Kansas State University www.AgManager.info website at the following KSU web address:

http://www.agmanager.info/sites/default/files/pdf/KSRN_GrainOutlook_09-29-17.pdf

The recorded radio program was aired at 10:03 a.m. central time, Friday, September 29, 2017 on the K-State Radio Network (KSU Agriculture Today Radio) – web player available. A copy of the August 4th recording will be available at the KSU Agriculture Today website.

Following are sections of the Working notes for this week’s radio program up on the KSU AgManager.info website…

KSU U.S. Sorghum and World Coarse Grain Market Outlook in Late-September 2017

An analysis of U.S. and World Grain Sorghum & World Coarse Grain Market Outlook following the USDA’s September 12th USDA Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports is available on the KSU AgManager website  (http://www.agmanager.info/).

Following is a summary of the article on “U.S. Grain Sorghum and World Coarse Grain Market Outlook” with the full article and accompanying analysis on the KSU AgManager website to be available shortly at the following web address:

http://www.agmanager.info/grain-marketing/grain-market-outlook-newsletter

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Summary

Overview

Since the September 12th Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports, the USDA forecast that the 2017 U.S. grain sorghum crop would be 371 million bushel (mb).  This projection for U.S. grain sorghum combined with a large 2017 U.S. corn crop of 14.184 billion bushels (bb) have caused markets to focus on “large feedgrain production and supply” scenarios, bringing continued to pressure both U.S. grain sorghum and corn market prices.  Just as with corn, wheat, and soybeans, current cash bids for grain sorghum are below cost of production in most instances – although to a degree anticipated high yields in 2017 at many locations may help lower cost of production per bushel and help to mitigate low grain sorghum prices to some degree.

Since September 12th, corn futures prices have trended essentially sideways.  On Tuesday, September 12th – the day of the report – CME DEC 2017 corn futures opened at $3.57, but then traded as low as $3.45 ½ before closing at $0.06 lower at $3.51 ½.  Since that day, DEC 2017 corn at first trended higher, but since has moved generally sideways to close at $3.54 on September 27th.

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Cash Grain Sorghum Market Prices in Kansas

On Wednesday, September 27th cash grain sorghum price bids at major grain elevators in Western Kansas were in the range of $2.84 – $2.96 /bu – with basis levels $0.70 to $0.50 per bushel under CME DEC 2017 Corn futures.  As low as these prices were, they were still markedly higher than county FSA marketing loan rates of $1.76-$1.90 per bushel.  Similarly, Central Kansas cash grain sorghum price bids were in the range of $2.89 – $3.14 /bu with basis levels $0.65 to $0.40 per bushel under DEC 2017 Corn, but still above local FSA loan rates of $1.85-$1.93 /bu..  At Topeka in East Central Kansas, a bid was reported of $3.14 /bu (basis = $0.40 under).

Kansas ethanol plant price bids for grain sorghum ranged from $3.14 ¼ to $3.37 ¼ , with basis at $0.35 to $0.15 under DEC 2017 Corn futures. This higher ethanol bid relative to other Kansas cash grain sorghum price bids is indicative of both strength in ethanol industry profitability AND that grain sorghum is a competitive feedstock for ethanol production at Western Corn Belt plant locations.

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Market Factors for U.S. Grain Sorghum / Feedgrains in 2017-2018

1) The pace and timing of U.S. farmer marketing of the 2017 grain sorghum and corn crops – much of which may end up being placed in storage after the 2017 fall harvest and likely will be held for sale through the winter into at least early spring 2018

2) Anticipation of continued strong domestic U.S. fuel ethanol use and livestock feeding of the 2017 crop U.S. feedgrains through the “new crop” 2017/18 marketing year.

3) At least moderate strength in U.S. grain sorghum exports – with the possibility that prospects for a smaller 2018 South American feedgrain harvest that may help U.S. exports of grain sorghum and other feedgrains.

4) The possibility in late 2017-2018 of broader U.S. and Foreign economic and/or financial system disruptions impacting grain, energy, and other commodity markets.  The impact on the direction of U.S. and World grain sorghum and corn markets from these potential disruptions is difficult to anticipate or predict.

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USDA Supply-Demand Forecast for “New Crop” MY 2017/18

The USDA has projected of 2017 U.S. sorghum plantings of 5.987 ma, harvested acres of 5.311 ma, and yields of 69.8 bu/ac (vs 77.9 bu/ac in 2016 and 76.0 bu/ac in 2015), resulting in a 2017 U.S. grain sorghum production of forecast to be 371 mb.  This size of a 2017 U.S. grain sorghum crop is the lowest in five years, being down from 480 mb in 2016, 597 mb in 2015, 433 mb in 2014, and 392 mb in 2013.

With forecast “new crop” MY 2017/18 total supplies of 399 mb, total use of 370 mb, and projected ending stocks of 29 mb (7.94% S/U), U.S. grain sorghum prices are projected by the USDA to be in the range of $2.50-$3.30 (midpoint = $2.90 /bu).   Ending stocks of 29 mb (7.94% S/U) in “new crop” MY 2017/18 compared to 37 mb (6.35% S/U) in “old crop” MY 2016/17, and 18 mb (4.10% S/U) in MY 2015/16.  This scenario is given a 50% likelihood of occurring by KSU Extension Agricultural Economist D. O’Brien.

U.S. grain sorghum prices of $2.90 /bu in “new crop” MY 2017/18 are only a “small relief” from the multiple-year downward price trend from the record high of $6.33 /bu in the drought year of MY 2012/13.  Since that record high, U.S. average grain sorghum prices have declined to $4.28 in MY 2013/14, $4.03 in MY 2014/15, $3.31 /bu in MY 2015/16, $2.85 /bu in “old crop” MY 2016/17, and to now to the forecast range of $2.50-$3.30 (midpoint – $2.90 /bu) in “new crop” MY 2017/18.

Note: This is a “large U.S. feedgrain crop” – “no major U.S. or Foreign crop problem” scenario.  Emerging production threats and the actual outcome of 2018 U.S. grain sorghum and corn production will play a large part in driving the U.S. grain sorghum market in the later months of “new crop” MY 2017/18.

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Alternative KSU Supply-Demand & Price Forecast for “New Crop” MY 2017/18

Three alternative KSU-Scenarios for U.S. grain sorghum supply-demand and prices are presented for “new crop” MY 2017/18.  Each scenario presents the likelihood of lower U.S. grain sorghum acreage, varying yields and alternative production outcomes than projected for “new crop” MY 2017/18 by the USDA in the September 12th WASDE report.

A – KSU “New Crop” MY 2017/18 Scenario #1) “Lower Acres – 69.8 bu/ac.” Scenario (15% probability) assumes: 5.468 ma planted, 4.850 ma harvested, 69.8 bu/ac trend yield, 339 mb production, 368 mb total supplies, 351 mb total use, 17 mb ending stocks, 4.95% S/U, & $3.05 /bu U.S. grain sorghum average price;

B – KSU “New Crop” MY 2017/18 Scenario #2) “Lower Acres – 75.0 bu/ac.” Scenario (25% probability) assumes: 5.468 ma planted, 4.850 ma harvested, 75.0 bu/ac trend yield, 364 mb production, 393 mb total supplies, 370 mb total use, 23 mb ending stocks, 6.22% S/U, & $3.00 /bu U.S. grain sorghum average price;

C – KSU “New Crop” MY 2017/18 Scenario #3) “Lower Acres – 75.0 bu/ac. – Higher Use” Scenario (10% probability) assumes: 5.468 ma planted, 4.850 ma harvested, 75.0 bu/ac trend yield, 364 mb production, 393 mb total supplies, 381 mb total use, 12 mb ending stocks, 3.15% S/U, & $3.15 /bu U.S. grain sorghum average price.

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World Coarse Grain Supply-Demand

The USDA projected that “new crop” 2017/18 marketing year World coarse grain total supplies of 1,578.1 mmt will be down 2.3% from 1,615.9 mmt in “old crop” MY 2016/17, but still up 4.7% over 1,507.2 mmt in MY 2014/15.   Projected World coarse grain total use of 1,347.8 mmt in “new crop” MY 2017/18 is down 0.5% from “old crop” MY 2016/17, but up 7.3% over MY 2016/17.   “Coarse grains” include grain sorghum, corn, barley, oats, rye, millet, and mixed grains.

World coarse grain ending stocks are forecast to continue to decline, with the USDA projecting ending stocks of 230.3 mmt in “new crop” MY 2017/18, down 2.0% from “old crop” MY 2016/17, and down 8.4% from MY 2015/16.  Although World coarse grain ending stocks are projected to be the fourth highest on record in “new crop” MY 2017/18 at 230.2 mmt, World coarse grain percent ending stocks-to-use in “new crop” MY 2017/18 are forecast to actually decline to 17.1% – to the lowest level in four (4) years.  This is indicative that strong World demand for coarse grains at low prices is expected to continue.

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U.S. Ethanol and Biodiesel Market-Profitability Graphics through 9/26/2017

Following are some graphics on price and profitability trends in the U.S. ethanol and biodiesel industries, which is available on the KSU AgManager website at the following webaddress:

http://www.agmanager.info/grain-marketing/grain-market-outlook-newsletter

The full presentation titled “U.S. Ethanol & Biodiesel Market Situation” was made in support of a bioenergy market update presented on WILL (Illinois Public Radio) on Tuesday, September 26, 2017.

KSU Weekly Grain Market Analysis: Weighing Alternative U.S. Corn and Soybean Market Scenarios

Grain market summary notes, charts and comments supporting the Grain Market Update presented in the KSU Agriculture Today radio program that was played on Friday, September 22, 2017 are available on the Kansas State University www.AgManager.info website at the following KSU web address:

http://www.agmanager.info/sites/default/files/pdf/KSRN_GrainOutlook_09-22-17.pdf

The recorded radio program was aired at 10:03 a.m. central time, Friday, September 22, 2017 on the K-State Radio Network (KSU Agriculture Today Radio) – web player available. A copy of the September 22nd recording will be available at the KSU Agriculture Today website.

Following are sections of the Working notes for this week’s radio program up on the KSU AgManager.info website…