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, May 26th 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_05-26-15.pdf

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KSU Weekly Grain Market Analysis: “Wet Fields” and Concerns about the 2015 HRW Wheat Crop

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, May 22nd will be up on the Kansas State University www.AgManager.info website at the following web address: http://www.agmanager.info/news/Articles/KSRN_GrainOutlook_05-22-15.pdf

The recorded radio program will be aired at 10:03 a.m. central time, Friday, May 22nd 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

Following are selected parts of the May 22nd grain market outlook working notes from KSU Ag Economics.

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KSU Wheat Market Outlook in May 2015

An analysis of U.S. and World Wheat supply-demand factors and price prospects based on information from the May 12, 2015 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 at the following web address on Tuesday, May 19th: http://www.agmanager.info/marketing/outlook/newletters/archives/

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Summary

Overview

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on May 12, 2015, U.S. wheat market prices have traded higher due to concerns about U.S. Hard Red Winter wheat production prospects and some weakening of the value of the U.S. dollar. For the “new crop” 2015/16 marketing year the USDA projected that a) World wheat total supplies and total use would be at record high levels, b) World wheat export trade would be 4.1% lower than a year ago – with U.S. exports at their lowest level since MY 2009/10, and c) World wheat ending stocks would be record high, with percent ending stocks-to-use at their highest level since MY 2011/12.

There are emerging concerns about potential wheat export supply prospects from Australia in “new crop” MY 2015/16 due to the emergence of a significant El Nino World weather pattern. Other factors of concern are a) ongoing wariness of how geopolitical problems in the Black Sea region, and b) strength in the U.S. dollar that has limited the competitive position of U.S. wheat exports in World markets. World markets have evolved into a “large crop-over-supply” situation, with future prospects dependent on whether production and/or export problems can be avoided in major World wheat producing and exporting areas in year 2015 and beyond.

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

Projected U.S. wheat exports were dropped to 860 million bushels (mb) (down 20 mb) – down to the lowest level since 2008/09. Taken together with a 5 mb decline in imports, the USDA raised its forecast of ending stocks to 709 mb (up 25 mb), with 34.5% ending-stocks-to-use (the highest level in 4 years). Projected U.S. wheat prices of declined $0.05 to $6.00 /bu – compared to $6.87 in MY 2013/14, $7.77 (record) in MY 2012/13, and $7.24 in MY 2011/12.

USDA U.S. Wheat Forecast for “New Crop” MY 2015/16

The USDA projected 55.367 million acres (ma) planted, 47.977 ma harvested, 43.5 bu/ac yield, 2.087 billion bushels (bb) production, 2.937 bb total supplies, 925 mb exports, 2.144 bb total use, 793 mb end stocks, 37.0% S/U, and a $5.00 /bu U.S. average price in “new crop” MY 2015/16 – the lowest since $4.87 in MY 2009/10.

KSU U.S. Wheat Forecast for “New Crop” MY 2015/16

KSU projections of “new crop” MY 2015/16 supply-demand balances and prices are represented in two alternative scenarios:

A) “Medium Yield-Increased Exports” Scenario: 75% prob. of 55.367 ma planted, 46.557 ma harvested, 43.5 bu/ac yield, 2.025 bb production, 2.874 bb total supplies, 975 mb exports, 2.194 bb total use, 680 mb end stocks, 31.0% S/U, and $5.50 /bu U.S. avg. price.

B) “Low Yield-High Exports” Scenario: 25% prob. of 55.367 ma planted, 46.557 ma harvested, 42.0 bu/ac low yield, 1.955 bb production, 2.814 bb total supplies, 1.000 bb exports, 2.196 bb total use, 618 mb end stocks, 28.7% S/U, and $6.20 /bu U.S. avg. price. Key factors in these forecasts for “new crop” MY 2015/16 are the level of 2015 U.S. wheat production, and the degree of recovery in U.S. wheat exports.

USDA World Wheat

World wheat total supplies of 919.3 mmt in “new crop” MY 2015/16 are up from 916.4 mmt in “current” MY 2014/15, and 893.7 mmt in MY 2013/14. Projected World wheat ending stocks in “new crop” MY 2015/16 of 203.3 mmt (28.4% S/U) are up from 201.0 mmt (28.1% S/U) in “current” MY 2014/15, and from 190.0 mmt (27.0% S/U) in MY 2013/14.

Growing World wheat stocks prospects are a burden on World wheat market prices. For perspective, these recent supply-demand figures can be compared to the historic World wheat ending stocks and stocks-to-use minimums of 128.75 mmt and 21.0% S/U in MY 2007/08.

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Wheat Fields in May 2014 near Hays, Kansas (Source: http://www.hayspost.com/2014/05/07/k-state-to-host-may-27-wheat-tour-in-tribune-spring-field-day-in-garden/)

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Wheat Harvest near Minsk, Belarus in the Black Sea Region (Source: http://www.theaustralian.com.au/archive/business-old/wheat-prices-hit-two-year-high-as-russia-bans-grain-exports/story-e6frg90x-12259019)

 

 

 

KSU Corn Market Outlook – Corn Market Scenarios for “New Crop” MY 2015/16

An analysis of U.S. and World corn supply-demand factors and 2015/16 price prospects in mid-late May 2015, following the USDA’s May 12th USDA Crop Production and World Agricultural Supply Demand Estimates (WASDE) report, will be available on the KSU AgManager website  (http://www.agmanager.info/default.asp).

Following is a summary of the article on “Corn Market Outlook in May 2015″ 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_05-18-15_Corn.pdf

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Summary

Overview

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on May 12th, corn futures prices have moved sideways-to-higher. This is a temporary change from the downtrend in corn futures prices since January that had resulted in lows during late April-early May. With 1) a record high 2014 U.S. corn crop of 14.216 billion bushels (bb), and 2) prospects for another large U.S. crop in the 13.2-13.7 bb range in 2015, the likelihood of corn futures prices having a strong rally to $5.00 or above in coming months appear limited – unless unexpected, substantial crop production or export availability problems occur in either the U.S. or in other major coarse grain production and exporting regions of the World in coming months. As a caveat, IF major geopolitical conflicts and/or financial market problems occurred, it would could cause grain markets to be extremely volatile, but the direction of such potential price changes is difficult to predict.

USDA U.S. Corn Market Forecast

The USDA made it first official WASDE forecast of U.S. corn supply-demand and prices for the “new crop” 2015/16 marketing year in the May 12th report. The USDA projected lower production and marginally lower ending stocks, stocks-to-use, and U.S. prices for “new crop” MY 2015/16 than for the “current” 2014/15 marketing year. Projected 2015 U.S. corn production of 13.630 bb and total supplies of 15.506 bb (billion bushels) in “new crop” MY 2015/16 are both down from record high levels of 14.216 bb production and 15.472 bb total supplies in “current” MY 2014/15. Projected MY 2015/16 total corn usage of 13.760 bb is a record (up from 13.622 bb in MY 2014/15), with ethanol use of 5.200 bb (same as a year ago), non-ethanol FSI use of 1.360 bb, exports of 1.900 bb (up 100 mb vs last year), and feed and residual use of 5.300 bb (up 50 mb vs last year). Ending stocks are forecast at 1.746 bb (12.69% S/U) – down from 1.851 bb (13.59% S/U) in “current” MY 2014/15, but still up from 1.232 bb (9.2% S/U) in MY 2013/14, and 821 mb (7.4% S/U) in MY 2012/133. “New crop” MY 2015/16 U.S. average cash prices are forecast the range of $3.20-$3.80 per bu. (midpoint of $3.50) – which compares to $3.65 /bu in “current” MY 2014/15, and $4.46 in MY 2013/14.

KSU U.S. Corn Market Forecasts

Projected supply-demand and price scenarios by KSU for “new crop” MY 2015/16 are as follows:

a) “2015 “Normal Crop” 13.262 bb Production” Scenario (55% prob.): 89.199 ma planted, 81.715 ma harvested, KSU long term trend yield of 162.25 bu/ac, 2015 U.S. corn production of 13.262 bb, total supplies of 15.138 bb, total use of 13.730 bb, ending stocks of 1.408 bb, 10.25% S/U, & $4.25 /bu U.S. corn MYA prices;

b) “2015 “Smaller Normal Crop” 13.190 bb Production” Scenario (25% prob.): 88.750 ma planted, 81.295 ma harvested, KSU long term trend yield of 162.25 bu/ac, 2015 U.S. corn production of 13.190 bb, total supplies of 15.006 bb, total use of 13.730 bb, ending stocks of 1.336 bb, 9.73% S/U, & $4.35 /bu U.S. corn MYA prices;

c) “2015 “Short Crop” 12.666 bb Production” Scenario (20% prob.): Planted and harvested acres unchanged Scenario (a) above, but with a KSU low yield forecast of 155.0 bu/ac, U.S. corn production of 12.666 bb, total supplies of 14.542 bb, total use of 13.450 bb, ending stocks of 924 mb, 6.87% S/U, & $6.75 /bu U.S. corn MYA prices.

World Corn Supply-Demand

World total supplies of 1,182 mmt are projected for “new crop” MY 2015/16, up from 1,170 mmt in “current” MY 2014/15, and 1,007 mmt in MY 2013/14. Projected World corn ending stocks of 191.9 mmt (19.4% S/U) in “new crop” MY 2015/16 are down marginally from 195.5 mmt (19.7% S/U) in “current” MY 2014/15, but up from 173.8 mmt (18.2% S/U) in MY 2013/14. With closing CME NOV-2015 soybean futures of $9.34 ½ and CME DEC-2015 corn futures of $3.82 ¾ on 4/30/2015, the soybean/corn price ratio of 2.44 still favors the planting of soybeans in the U.S. in 2015.

A lack of profitability for both currently with the 2014 crop, and in 2015 at current fall 2015 harvest contract prices is likely to limit U.S. corn planted acres and corn production potential. Lower 2015 production eventually may provide at least moderate support for U.S. corn prices in “new crop” MY 2015/16 in the spring and early summer of next year.

https://i0.wp.com/cornandsoybeandigest.com/site-files/cornandsoybeandigest.com/files/imagecache/large_img/uploads/2013/12/4-corn-uniform-emergencea.jpg

Corn Emergence in 2014 (Source: http://cornandsoybeandigest.com/2014-midwest-corn-amp-soybean-production-guide/uniform-emergence-must)

KSU Weekly Grain Market Analysis: KSU “New Crop” 2015/16 Forecasts for Corn, Wheat, Soybeans

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, May 15th will be up on  the Kansas State University www.AgManager.info website at the following web address: http://www.agmanager.info/news/Articles/KSRN_GrainOutlook_04-24-15.pdf

The recorded radio program will be aired at 10:03 a.m. central time, Friday, May 15th 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

Following are selected parts of the May 15th grain market outlook working notes from KSU Ag Economics.

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KSU “Quick Analysis” of the ‘Numbers’ in the USDA May 12, 2015 Crop Production and WASDE Reports

A KSU “quick analysis” worksheet of the key grain marketing-related information found in the May 12th USDA Crop Production and World Agricultural Supply and Demand Estimates (WASDE) 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 presents the results of the USDA’s May 12th U.S., Foreign, and overall World grain supply-demand and market supply-demand forecasts for the “New crop” 2015/16 marketing year for corn, wheat, soybeans and grain sorghum, with comparisons provided to a) pre-report trade estimates, and b) “current crop” MY 2014/15 and MY 2013/14 estimates by the USDA .  Key information is contained on the following:

A. The initial WASDE forecasts of U.S. production and supply-demand and price projections for the “new crop” 2015/16 marketing year as well as for the “current” 2014/15 marketing year for major crops (corn, sorghum, wheat, and soybeans).

B. Brazil, Argentina and Total World crop production forecasts for 2015 corn, grain sorghum, wheat and soybeans.

C. Updated U.S. & World ending stocks projections for the “new crop” 2015/16 marketing year, for major crops & crop categories (corn, coarse grains, wheat, and soybeans).

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Kansas Wheat Crop Forecast Accuracy in Early May, 2015 (Kansas Wheat Tour and May USDA Crop Report)

With the 2015 Kansas Wheat Tour (http://wheatqualitycouncil.org/) just completed and the May 12, 2015 USDA NASS Crop Production report (here) coming soon, an evaluation of the forecast accuracy of these information sources is in order.   Following is a summary of the accuracy of both of the Kansas Wheat Tour and the USDA May Crop Production reports over the 2000-2014 and 2008-2014 periods.

The upshot of all of these technical calculations is that these forecast sources have provided valuable information on the size of the Kansas wheat crop in recent years.  However, there is a track record of significant variability between the early May forecasts from both of these sources and the final outcome of the Kansas wheat crop over the 2000-2014 period.

The final, complete version of this article will be available on the Kansas State University Agmanager website (www.agmanager.info) on Monday, May 11, 2015.

Following is a summary of the article, along with the key charts and tables of the paper.

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Kansas Wheat Crop Forecast Accuracy in Early May, 2015
Daniel M. O’Brien – Extension Agricultural Economist, Kansas State University
May 11, 2015

Summary

The 2015 Kansas Wheat Tour occurred May 4-7, 2015 in Kansas, and parts of the adjoining states of Nebraska, Colorado, and Oklahoma. Following are technical comments on the accuracy of the forecasts of Kansas wheat production, yields, and harvested acreage since 2000 associated with the Kansas Wheat Tour and with the USDA May Crop Production report. These results indicate opportunity for variation from these early May forecasts in regards to the final production of wheat in Kansas in 2015.

2015 Kansas Wheat Production

On Thursday, May 7th the 2015 Kansas Wheat Tour forecast that 2015 Kansas wheat production would be 288.5 million bushels (mb). This projection for 2015 was up 17% or 42.1 mb from the low 2014 Kansas wheat crop of 246.4 mb as reported by the USDA. The 2015 projection of 288.5 mb is much smaller than the largest five Kansas crops that have occurred since year 2000 (360 to 480 mb). Using the 2008-2014 measure of accuracy, the 67% confidence interval is 265.0 to 312.0 mb (+/- 23.1 mb).

The May 12, 2015 USDA Kansas wheat production forecast 67% confidence interval may be calculated by subtracting and adding +/- 43.0 mb using the 2000-2014 measure of forecast accuracy. For the 2008-2014 period, the 67% confidence interval may be calculated by subtracting and adding +/- 16.9 mb for the lower and upper bounds of the range.

2015 Kansas Wheat Yields

Kansas wheat yields in 2015 were forecast by the Kansas Wheat Tour to be 35.9 bushels per acre (bu/ac), up from the low USDA estimate of 28.0 bu/ac in 2014. Kansas wheat average yields since year 2000 have ranged from a low of 28.0 bu/ac in 2014 up to a high of 48.0 bu/ac in 2003. Using the 2008-2014 measure of forecast accuracy, the 67% confidence interval is 31.7 to 40.1 bu/ac (+/- 4.2 bu/ac).

The 67% confidence interval for the May 12, 2015 USDA Kansas wheat yield forecast can be calculated by subtracting and adding +/- 4.1 bu/ac, based on forecast accuracy during the 2000-2014 period. Similarly, using a 2008-2014 measure of forecast accuracy, 2.0 bu/ac would subtracted and added to calculate the lower and upper bounds of the range for the 67% forecast confidence interval.

2015 Kansas Wheat Harvested Acreage

Kansas wheat harvested acreage in 2015 is implicitly projected to be 8.036 million acres (ma), down from the USDA estimate of 8,800,000 ma in 2014, and the lowest amount since 8,000,000 ma in 2010, and 7,900,000 ma in 2011. Using the 2008-2014 measure of accuracy, the 67% confidence interval is 7,314,876 to 8,757,547 acres (+/- 721,336 acres). Harvested acreage of wheat in Kansas is typically not directly projected publically by the Kansas Wheat Tour, but rather implied from the Tour’s production and yield forecasts.

The 67% confidence interval for the May 12, 2015 USDA Kansas wheat harvested acres forecast would first be calculated by subtracting and adding +/- 368,782 acres using the 2000-2014 measure of forecast accuracy. For a 2008-2014 measure of forecast accuracy, the 67% confidence interval would be calculated by subtracting and adding +/- 309,377 acres for the lower and upper bounds of the range.

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