Ethanol and Biodiesel Plant Profitability Turn Lower (U.S. Ethanol and Biodiesel Market-Profitability Graphics)

Ethanol Price and Profitability Trends Through Late-November 2018

By Kansas State University estimates, ethanol plants in Iowa and other Midwest states have continued to operate below breakeven during September and October, and to date in November 2018.  This follows from continued weakness in the selling price of ethanol.

During the November 1-23, 2018 period, corn input purchase prices for Iowa ethanol plants averaged $3.32 1/2 /bu (up from $3.17 /bu in September and $3.29 /bu in October).  Selling prices of distillers dried grains (DDGS) (10% moisture) have averaged $132.35 /ton during the November 1-23 period, up from $131.11-$131.30 /ton in September-October. The selling price ethanol via tank car and truck shipment out of Iowa ethanol plants has averaged $1.23 /gallon, up modestly from $1.22 & $1.21 /gallon in September-October, respectively. .

During this period, the cost of production at representative ethanol plants in Iowa has averaged $1.35 per gallon – up from $1.30 per gallon in September and $1.34 in October.  This has lead to an estimated negative net return of minus $0.12 per gallon produced so far in November, with is comparable to losses of $0.08 /gallon in September and losses of $0.14 /gallon in October 2018.

 

Biodiesel Price & Profitability Trends Through Late-November 2018

Reductions have also occurred in the estimated profitability of Biodiesel plants in Iowa and nearby states – although they are still estimated to have in essence broken even during the November 1-23, 2018 period.

During November 1st to 23rd, soybean oil input purchase prices for Iowa biodiesel plants averaged $28.83 per cwt – up from $28.42 /cwt from September and from $29.92 /cwt in October.   This occurred while Biodiesel selling prices averaged $2.84 /gallon during 11/1-23/2018, being down from $3.05 /cwt in September and $3.00 /cwt in October.

During the November 1-23 period, the cost of production at representative biodiesel plants in Iowa has averaged $2.84 per gallon – up from $2.82 per gallon in September, but down from $2.94 in October.  As a result, net returns of soy biodiesel product turned marginally negative, down to a loss of $0.01 per gallon produced – down significantly from an estimated profit of $0.23 per gallon in September and a profit of $0.06 /gallon in October 2018.

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Following are some graphics on U.S. Ethanol and Biodiesel Market price and profitability trends in the , 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, November 27th and will be located at the KSU AgManager.info website – at the following web address:

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

 

Following are the graphics of this presentation.

KSU Corn Market Outlook in Late-November 2018: Corn Market Drivers Through Spring 2019

An analysis of Corn Market Situation & Outlook in Late-November 2018 for the remainder of the “new crop”  2018/19 and “next crop” 2019/20 marketing years is provided in the following article from Kansas State University .  This information follows the USDA World Agricultural Supply and Demand Estimates (WASDE) report on November 8, 2018.

A full version of this article is or will shortly be available on the KSU AgManager website http://www.agmanager.info/ at the following web address:

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

Following is a summary of the article on “Corn Market Situation & Outlook in Late-November 2018″

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Corn Market Outlook in Late-November 2018

Daniel O’Brien – Extension Agricultural Economist, K-State Research and Extension

November 26, 2018

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  1. Overview of U.S. Corn Market Prospects in Late-November 2018

Corn market prices in the U.S. seem to be in an attitude of “resigned acceptance” during this end-of-harvest winter period.  In the corn market there appears to be an “acceptance” of the fact that there will most likely be large, abundantly available supplies of U.S. corn through at least mid-summer 2019 – and that these sizable supplies are likely to be a limiting factor on U.S. corn prices.   That said, there are a number of factors to consider that could affect the direction of U.S. corn market prices either higher or lower from late-November 2018 through Fall 2019. 

Negative U.S. Corn Market Factors

  • S. Corn Production in 2018: The most important negative market factor continues to be the projected size of the 2018 U.S. corn crop at 14.626 billion bushels (bb) – forecast to be the second highest on record behind 15.148 bb in 2016, but up from 14.601 bb in 2017 (Table 1 & Figures 5-7).
  • Total U.S. Corn Supplies in “new crop” MY 2018/19: In addition, the USDA projects total supplies of U.S. corn in the “new crop” 2018/19 marketing year (MY) starting 9/1/2018 to be 816 bb – maintaining downward pressure on U.S. corn prices. Total supplies of U.S. corn in MY 2016/17 were a record high of 16.942 bb, and were only marginally lower at 16.934 bb in “old crop” MY 2017/18 which ended on August 31, 2018 (Table 1 & Figure 7).

Positive Corn Market Factors

A number of factors are providing positive support for U.S. corn supply-demand and price prospects – including strong exports, lingering harvest delays from wet fall weather in some parts of the U.S. corn belt, ongoing strong ethanol usage, and uncertain South American corn production prospects in in 2019.

  • Moderate Strength in U.S. Corn Exports: In recent weeks, S. corn export shipments have been neutral – marginally behind the pace needed to meet the USDA’s November 8th updated forecast of 2.450 bb in exports for “new crop” MY 2018/19. For the weeks ending November 8th and 15th the U.S. had corn export shipments of 43.8 and 32.9 mb, respectively, with an additional USDA Agricultural Marketing Service (AMS) estimate of 44.0 million bushels (mb) for the week ending November 22nd.  These were moderately behind the pace of 48.9 mb needed to meet the USDA forecast of 2.450 bb – which had already been raised by 75 mb in the October 11th USDA WASDE report, but then subsequently lowered by 25 mb in the November 8th WASDE. 
  • Accumulated exports of 494.0 mb as of November 15th were 20.2% of the 2.450 bb USDA projection for “new crop” MY 2018/19 with 23.1% (i.e., 12 of 52 weeks) of the marketing year completed.   Total shipments and forward sales as of 11/15/2018 were approximately 956.8 mb – equaling 39.05% of the USDA’s 2.450 bb projection with 23.1% (i.e., 12 of 52 weeks) of “new crop” MY 2018/19 completed (Table 1 & Figures 10-11)

As a result, positive signals persist for U.S. corn exports to provide movement in usage in coming months – giving support for U.S. corn prices. 

  • Lingering 2018 U.S. Fall Harvest Delays: As of November 25, 2018 the U.S. corn harvest was estimated to be 94% complete in the 18 major states – compared to the recent 5 year average of 95% completed.   Moderate end of season harvest delays still lingered in states such as Kansas (94% harvested vs 99% 5-yr avg.); Nebraska (94% harvested vs 97% average); North Dakota (80% harvested vs 93% avg.); Ohio (86% harvested vs 93% avg.); Pennsylvania (82% harvested vs 89% avg.); and South Dakota (90% harvested vs 97% avg.);   To complicate matters in these areas, precipitation in the form of snow had fallen in parts of Nebraska, Kansas, Iowa, Illinois, and North and South Dakota over the November 19-26 period – further slowing harvest in these areas. 

The accumulated result of these slow harvest and recent precipitation events will be to delay the final part of the 2018 U.S. corn harvest to some degree – providing at least moderate uncertainty about final 2018 U.S. corn production and some support for corn prices through the conclusion of the U.S. Fall harvest.

  • Ongoing Strength in U.S. Ethanol Use of Corn: According to Energy Information Administration (EIA) data, for the period of September 1st through November 16th, 2018, U.S. ethanol production has averaged 1.039 million barrels per day (range of 1.02 to 1.068 mb/d).  Assuming 42 gallons of ethanol per barrel, and 2.8 gallons of ethanol per bushel of either corn or grain sorghum used in the production process, this rate of U.S. ethanol production would result in 5.630 bb of U.S. feedgrain use for ethanol.  Assuming approximately 100 mb of U.S. grain sorghum to be used for ethanol production in “new crop” MY 2018/19, at the current pace of usage there would be 5.530 bb of U.S. corn used for ethanol production over the same period.  This amount of ethanol use would be down 120 mb from the USDA’s projection of record high 5.650 bb use for ethanol (Table 1, Figures 9abc-10)

However, the Environmental Protection Agency’s (EPA’s) recent action to approve the use of E15 on a season-round basis in U.S. motor fuels may lead to increased feedgrain use for ethanol during the remainder of “new crop” MY 2018/19 through August 31, 2019.  

Taken together, these results indicated continued strong use of U.S. feedgrains in general and U.S. corn in particular in domestic ethanol production.  

  • Uncertain Prospects for South American Corn Production in 2019:  As a result of what can be formally termed to be a “trade war” between China and the United States, China’s soybean export purchases have shifted completely away from the U.S. to Argentina, Brazil and other non-U.S. World soybean producing countries.  The export price difference between locations in Brazil and the U.S. are estimated to be more than $2.00 per bushel when converted to U.S. dollars.  Given this price differential favoring South American soybeans, it makes sense that South American farmers will have an incentive to increase their soybean acreage and production in 2019 (Figures 14 & 15abc).  

Early planting progress for soybeans in Brazil is ahead of historical pace, with indications that soybean acreage will be increased – likely drawing acres away from first crop Brazilian corn (which typically accounts for 1/3 of the Brazil corn crop).   The second Brazilian corn crop – much of which typically enters World export markets – will be planted on harvested soybean acres in early 2019.   

Consequently, IF there is a sizable acreage shift toward soybean acres in South America in 2019, and if those acres come from corn, THEN lower World corn production will help support prices in late Winter – Spring 2019.     

Corn Market Factors “Taken Together”

Considering all these factors together, it seems appropriate to reason that the outlook for U.S. corn markets through Spring 2018 to continue to be conservative due to large domestic corn supplies, but with upward potential based on prospects for strong domestic use and strong exports as a result of reduced foreign export competition”.  

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  1. CME Corn Futures & Kansas Cash Corn Prices & Basis Bids

  • Corn Futures Price Trends

Since the release of the USDA’s November 8th World Agricultural Supply and Demand (WASDE) report, “new crop DECEMBER 2018 CME corn futures prices initially moved higher, but have since trended lower.   On November 8th, the day of the report, DEC 2018 corn initially traded sharply higher up to $3.79, and also lower down to $3.66, before closing modestly higher – up $0.01 ¼ to $3.73 ½ per bushel.  Since that day, DEC 2018 corn has traded lower – down to a close of $3.56 ¼ on Monday, November 26th (Figure 1).   Considering long term trends in monthly, continuous Chicago Mercantile Exchange (CME) corn futures, recent lows of $3.18 ¼ (on 10/1/2014), $3.01 (on 8/31/2016), $3.38 (on 9/1/2017), and $3.36 ¼ per bushel (on 9/13/2018) have occurred, and are comparable to the close of $3.56 ¼ on November 26, 2018  (Figure 1).  

  • Corn Futures Positions of Traders (CFTC Data)

Position of traders data released by the Commodity Futures Trading Commission (CFTC) is available from the CFTC at the following web address:  https://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm      The CFTC position of traders data on November 13th shows a more stable picture of corn futures trader sentiments that may have been otherwise expected.  This is especially true in regards to the quantity of long futures positions held by Management Money (Speculator or “Spec”) traders than otherwise expected given harvest time futures prices.

  • Net Positions of Commercial, Spec, & Index Traders: The net “long” or “buy” position of CME Corn futures speculative or “management money” traders was 79 million bushels (mb) on November 13, 2018 – following net “short” positions being held throughout the June 12th through October 9th period (Figure 3a). This may be due to a perception that a “harvest low” may have been reached in DEC 2018 corn futures entering the month of October.  The net short position of commercial hedgers on November 13th was 1.376 bb, down marginally from net short positions in the range of 1.407-1.472 bb during the October 16-November 6 period.  The net position of index traders were consistently long during the 6/12/2018-11/13/2018 period, in the 822 mb-1.023 bb range (with 934 mb net long on 11/13/2018). 
  • Commercial Hedgers Long & Short Positions: Both the “short / sell” and “long / buy” positions of CME Corn futures commercial hedgers has remained relatively consistent since early July 2018 (Figure 3b). Total commercial hedger “short / sell” positions have ranged from 3.532 bb to 3.890 bb during the 10/2/2018-11/13/2018 period, with 3.890 bb in “short / sell” positions on 11/13/2018.  The typical grain futures transactions and positions of commercial grain elevators and/or farmer hedgers would fall in this “short position” category.   Commercial hedger “long / buy” positions have ranged from 2.237 bb to 2.514 bb during the same period, with 2.514 bb in “long / buy” positions on 11/13/2018. The typical grain futures transactions and positions of commercial grain processors, ethanol plants, and livestock feeders would fall in this “long position” category.  
  • Managed Money (Specs) Long & Short Positions: Both the “short / sell” positions of CME Corn futures management money (speculative) traders been declining since early October 2018 (Figure 3c). Total speculator’s “short / sell” positions have ranged from 1.116 bb to 1.579 bb during the 10/2/2018 to 11/13/2018 period, with 1.579 bb in “short / sell” positions on 10/2/2018 declining to 1.122 bb on 11/13/2018.   Conversely, speculator’s “long / buy” positions have been relatively consistent, ranging from 1.189 bb to 1.296 bb during the same period, with 1.242 bb in “long / buy” positions on 10/2/2018, and 1.201 bb in such positions on 11/13/2018.  

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  • Corn Cash Price & Basis Trends in Kansas

In Western Kansas on Monday, November 26th cash corn bids at major grain elevators ranged from $3.20 ($0.36 per bushel under DEC 2018 futures) to $3.61 ($0.05 over), and ranged from $3.09 ($0.47 under CME DEC 2018 corn) to $3.25 ($0.31 under) in Central Kansas.  These prices are still higher than when corn bids statewide had fallen to $2.66-$2.96 /bu on December 23, 2016, and above marketing loan rates near $2.05 in Central Kansas and $2.19 per bushel in Western Kansas

Cash corn price bids in East Central and Northeast Kansas at major terminal locations were $3.56 /bu on November 26th, with basis bids being “even” or “level with” DEC 2018 corn futures.  These eastern Kansas cash corn prices are still up from the range of $3.26-$3.28 per bushel on 12/23/2016 – though not by as much as in western and central Kansas.  Cash corn bids at Kansas ethanol plants on November 26th ranged from $3.40 ¾ /bu ($0.15 under DEC) to $3.80 ¾ ($0.25 over JULY) – continuing to indicate strength in ethanol demand for corn in Kansas and nationwide. 

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  1. USDA & KSU S-D & Price Forecast for “New Crop” MY 2018/19

The USDA’s projection and three alternative KSU-Scenarios to the USDA’s forecast for U.S. corn supply-demand and prices are presented in what follows for “new crop” MY 2018/19 (Tables 1-1a & Figures 12-12a).  These projections show how varying 2018 U.S. corn production and export / total use scenarios could affect U.S. corn supply-demand and price outcomes in “new crop” MY 2018/19.  Probability-weights are added to reflect judgements about how likely each scenario is to occur in “new crop” MY 2018/19, i.e., during the September 1, 2018 through August 31, 2019 time period.

Scenario AMY 2018/19USDA WASDE Corn S-D Scenario for “New Crop” MY 2018/19:       (75% prob.):

Assumptions are: 89.140 ma planted, 81.767 ma harvested, 178.9 bu/ac yield, 14.626 bb production, 16.816 bb total supplies, 5.650 bb ethanol use, 1.450 bb food & industrial use, 2.450 bb exports, 5.550 bb feed & residual use, 15.080 bb total use, 1.736 bb ending stocks, 11.51% Stocks/Use, & $3.60 /bu U.S. corn average price

Scenario BKSU “Lower 2018 U.S. Corn Exports” Scenario for “New Crop” MY 2018/19         (10% prob.):

Assumptions are: 89.140 ma planted, 81.767 ma harvested, 178.9 bu/ac yield, 14.626 bb production, 16.816 bb total supplies, 5.650 bb ethanol use, 1.450 bb food & industrial use, 2.300 bb exports (down 150 mb vs USDA’s 2.450 bb), 5.550 bb feed & residual use, 14.930 bb total use (down 150 mb vs USDA’s 15.080 bb), 1.886 bb ending stocks (up 150 mb vs USDA’s 1.736 bb), 11.51% Stocks/Use (up vs USDA’s 11.51% S/U), & $3.35 /bu U.S. corn average price (down vs USDA’s $3.60 per bushel),   

Scenario CKSU “Higher 2018 U.S. Corn Exports” Scenario for “New Crop” MY 2018/19        (10% prob.):

Assumptions are: 89.140 ma planted, 81.767 ma harvested, 178.9 bu/ac yield, 14.626 bb production, 16.816 bb total supplies, 5.650 bb ethanol use, 1.450 bb food & industrial use, 2.600 bb exports (up 150 mb vs USDA’s 2.450 bb), 5.550 bb feed & residual use, 15.230 bb total use (up 150 mb vs USDA’s 15.080 bb), 1.586 bb ending stocks (down 150 mb vs USDA’s 1.736 bb), 10.41% Stocks/Use (down vs USDA’s 11.51% S/U), & $3.90 /bu U.S. corn average price (up vs USDA’s $3.60 per bushel).   

Scenario DKSU “Lower 2018 U.S. Corn Production” Scenario for “New Crop” MY 2018/19     (5% prob.):

Assumptions are: 89.140 ma planted, 81.767 ma harvested, 177.0 bu/ac yield (down 1.89 bu/ac vs USDA’s 178.9 bu/ac), 14.472 bb production (down 154 mb vs USDA’s 14.626 bb production), 16.662 bb total supplies (down 154 mb vs USDA’s 14.626 bb production), 5.650 bb ethanol use, 1.450 bb food & industrial use, 2.450 bb exports, 5.550 bb feed & residual use, 15.230 bb total use, 1.582 bb ending stocks (down 154 mb vs USDA’s 1.736 bb), 10.49% Stocks/Use (down vs USDA’s 11.51% S/U), & $3.85 /bu U.S. corn average price (up vs USDA’s $3.60 per bushel).  

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  1. USDA Preliminary Market Forecast for “Next Crop” MY 2019/20

An adjusted version of USDA’s projection for U.S. corn supply-demand and prices for “next crop” MY 2019/20 (Table 1a).  These projections show the USDA’s projections for U.S. corn in the “next” marketing year, based on the U.S. corn harvest in year 2019, with the marketing year beginning on September 1, 2019 and lasting through August 31, 2020.  Liberty has been taken to make minor adjustments to the USDA’s projections following from the results of the November 8, 2018 USDA WASDE report.

Scenario AUSDA November 9th WASDE Corn S-D Scenario for “Next Crop” MY 2019/20:

Assumptions are: 92.000 ma planted (up 2.860 ma vs MY 2018/19), 84.600 ma harvested (up 2.833 ma vs MY 2018/19), 176.5 bu/ac yield (down 2.4 bu/ac vs MY 2018/19), 14.930 bb production (up 304 mb vs MY 2018/19), 16.666 bb total supplies (down 150 mb vs MY 2018/19), 5.700 bb ethanol use (up 50 mb vs MY 2018/19), 1.450 bb food & industrial use (up 10 mb vs MY 2018/19), 2.450 bb exports (down 25 mb vs MY 2018/19), 5.550 bb feed & residual use (up 75 mb vs MY 2018/19), 15.190 bb total use (up 110 mb vs MY 2018/19), 1.476 bb ending stocks (down 260 mb vs MY 2018/19), 9.72% Stocks/Use (down vs 11.51% S/U in MY 2018/19), & $3.90USDA – $4.00KSU /bu U.S. corn average price (up $0.30-$0.40 /bu vs MY 2018/19); 

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  1. World Corn Supply-Demand – Both With & Without China

World Production:  World corn production of 1,098.95 million metric tons (mmt) is projected for “new crop” MY 2018/19, up 2.1% from 1,076.23 mmt in “old crop” MY 2017/18, but down 2.1% from the record high of 1,122.45 mmt in MY 2016/17 (Figures 14).  The “new crop” 2018/19 marketing year began September 1, 2018 and continues through August 31, 2019. 

Forecast corn production in Argentina of 42.5 mmt in 2019 would be a “rebound” from the short crop of 32.0 mmt projected in 2018, and above 41.0 mmt produced in 2017.  Similarly, production in Brazil of 94.5 mmt in 2019 would also be a “rebound” from the short crop of 82.0 mmt projected in 2018, but down from 98.5 mmt in 2017.  A large portion of the corn harvests for Argentina and Brazil occur in the later half of September 1st – August 31st marketing years, i.e., February through August.  For “new crop” MY 2018/19, the Argentina and Brazil corn harvests will be during February-August, 2019.

World Total Supplies:  World corn total supplies of a record high 1,439.87 mmt in “new crop” MY 2018/19 are forecast to be up 0.9% from 1,426.50 mmt in “old crop” MY 2017/18, but up marginally from the previous record high of 1,433.87 mmt in MY 2016/17.   The estimates of World corn total supplies were adjusted approximately 14% higher in the November 8th WASDE report to changes in Chinese domestic corn supply-demand balance sheets.

World Exports: World corn exports of a record high 165.64 mmt are projected for “new crop” MY 2018/19, up 12.8% from 146.80 mmt in “old crop” MY 2017/18, and up 3.5% from the previous record high of 160.05 mmt in MY 2016/17 (Figure 14).

World Ending Stocks (% Stocks/Use):  Projected World corn ending stocks of 307.51 mmt (27.16% S/U) in “new crop” MY 2018/19 are down from 340.92 mmt (31.40% S/U) in “old crop” MY 2017/18, down from the record high 350.27 mmt (32.32% S/U) in MY 2016/17, and 311.42 mmt (31.13% S/U) in MY 2015/16 (Figures 14 & 15a).    Projected Foreign (Non-U.S.) corn ending stocks of 263.41 mmt (28.79% S/U) in “new crop” MY 2018/19, are down from 286.55 mmt (33.45% S/U) in “Old Crop” MY 2017/18, and is down from 292.02 mmt (33.51% S/U) in MY 2016/17.  Just as for total supplies, changes in Chinese corn ending stocks increased World corn ending stocks estimates by 93.0%, and increased World ending stocks-to-use estimates from 14.39% in October 2018 up to 27.16% in the November 8, 2018 WASDE report.

World-Less-China Ending Stocks (% Stocks/Use): An alternative view of the World corn supply-demand is presented IF Chinese corn usage and ending stocks are isolated from the World market (Figures 15b-c).  “World-Less-China” corn ending stocks are projected to be 100.84 mmt (11.78% S/U) in “New Crop” MY 2018/19, down from 118.65 mmt (14.42% S/U) in “Old Crop” MY 2017/18, and down from 127.08 mmt (15.34% S/U) in MY 2016/17.  These figures show that World stocks-to-use of corn less China’s direct influence are projected to be 24.8% lower (i.e., 11.78% S/U for the “World-Less-China” versus 15.67% S/U for the “World” overall in “New Crop” MY 2018/19). 

World versus China Corn Ending Stocks: After the changes in World corn supply-demand reported in the November 8th WASDE report, the USDA showed that estimates of Chinese ending stocks of corn as proportion of the World total have increased significantly from a month earlier.   The updated figures show the percent of World corn stocks held by China to be 61.91% in MY 2014/16, 68.08% in MY 2015/16, 63.67% in MY 2016/17, 65.28% in “old crop” MY 2017/18, and now are projected to be 67.47% in “new crop” MY 2018/19. 

While China’s percent of World corn stocks is estimated to have increased with these new USDA figures,  “World-Less-China” percent corn ending stocks-to-use are estimated to be 11.68% in “new crop” MY 2018/19, the lowest percentage in 6 years (Figures 15a-b)“World-Less-China” corn stocks-to-use was 9.5%-9.9% during the years of MY 2011/12 – MY 2012/13, but increased to the range of 12.2% to 13.8% during the MY 2013/14 through MY 2015/16 period.  Then after a high of 15.4% in MY 2016/17, “World-Less-China” corn ending stocks-to-use declined to 14.4% in “old crop” MY 2017/18, and to a projected level of 11.7% in “new crop” MY 2018/19.   This decline supports the idea that corn stocks outside of China are “tightening up” – and that the overall World corn market has an increasing possibility of seeing higher prices (eventually) as a result.

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  1. Final Thoughts re: Corn Market Focus in “New Crop” MY 2018/19

From late-November 2018 through January 2019, the “narrative focus” of the corn market will likely focus on corn planting progress and early season development in Argentina and Brazil – particularly in tandem with a focus on similar reports about their planted acreage and the progress of their soybean crops.  It is possible if not likely that news about the pace of usage of U.S. domestic corn and other feedgrains will also have the attention of the U.S. corn markets during late-November 2018 through February-March 2019. 

The impact of this news will be exacerbated IF U.S. corn exports are spurred higher by worries about potentially lower South American corn supplies for export in spring 2019.  Then from late winter into spring 2019, U.S. corn markets will be simultaneously paying attention to the pace of U.S. corn domestic and export usage and to 2019 U.S. corn planting progress.  The corn market will likely then be driven by 2019 U.S. corn production prospects from what remains of Spring through Summer and early fall 2019. 

During this anticipated “normal seasonal” price pattern for corn in “new crop” MY 2018/19, U.S. producers will be making marketing decisions under conditions of “uncertainty” as profitable seasonal pricing opportunities present themselves.  For those with a “risk averse” perspective on corn price risk management, there will likely be a tendency to price corn “earlier” and in “greater quantities” to avoid the possibility of being forced to sell at lower prices later on at harvest during fall 2019.  This early action” approach contrasts to those corn producers who are less worried (i.e., “less risk averse”) about being in what is essentially a “speculative post-harvest storage” position in the corn market – i.e., holding unpriced corn in storage longer while waiting for the possibility of a better price that may come later.   

The key point to consider is that the likelihood exists of there being greater price strength in U.S. corn markets through the Winter and Spring 2019 months than many may now be taking into account.  Any such optimism in the U.S. corn market depends on the likelihood of more South American crop area being planted into soybeans to the exclusion of corn, and the strong domestic demand base that seems to exist for the U.S. corn crop.

KSU Wheat Market Outlook in Late-November 2018 – World Wheat Supplies Weighing on the U.S. Wheat Market

This report provides an analysis of U.S. & World wheat supply-demand factors and 2019 wheat market price prospects following the USDA’s November 9, 2018 Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports.  It also incorporates U.S. wheat market supply-demand and price projections for the “next crop” 2019/20 marketing year from the USDA’s preliminary Long Term Agricultural Projections also released in November 2018. This article will be available in full on the KSU AgManager website in coming days (http://www.agmanager.info/).

Following is a summary – with the full analysis-article for Wheat Market Outlook in Late-November 2018 to be found at this web location:

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

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Wheat Market Outlook in Late-November 2018

Daniel O’Brien – Extension Agricultural Economist, K-State Research and Extension

November 26, 2018 (to be placed on KSU AgManager Website on this date)

 

A. Wheat Market Overview – Emphasis on World Wheat Market Factors

The United States’ wheat market has been “struggling” in recent weeks and months due to strong competition from foreign exports.  Although available supplies from major foreign exporters are historically “tight”, wheat supplies held by non-exporting countries in the rest of the World are large.  

Lower production has been experienced in the “new crop” 2018/19 marketing year (which began June 1, 2018) in major exporting countries such as Australia, parts of the European Union, Russia, and Ukraine (Figures 14a-b-c).  But large carryover stocks from “old crop” MY 2017/18 have upheld World supplies and supply-demand balances, and along with stronger U.S. currency values and adequate non-exporter supplies, and have limited further rises in U.S. wheat prices.    

Seeding of U.S. Hard Red Winter (HRW) wheat has occurred in fall 2018 – with preliminary USDA estimates that U.S. wheat seeded acres in “next crop” MY 2019/18 being up 6.7% (Table 1a).  Harvested acreage for “next crop” MY 2019/18 are projected to be up 8.8%, while ending stocks are forecast to decline by approximately 20 million bushels, and ending stocks-to-use by 2%.  The U.S. average farm price for “next crop” MY 2019/20 are projected to be $0.10 per bushel higher, up to $5.20 per bushels.

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B. Wheat Futures & Cash Market Trends Following the November 9th USDA Reports

Since the USDA’s November 9th Crop Production and World Agricultural Supply and Demand Estimates (WASDE) report, CME DECEMBER 2018 Kansas Hard Red Winter (HRW) Wheat futures have traded lower.  On the day of the reports DEC 2018 Kansas HRW wheat futures opened at $4.96 ½ /bu, and traded in the range of $4.87-$4.96 ¾ before closing $0.09 ¾ lower to $4.87 ½.  Since then, DEC 2018 HRW wheat futures have trended lower, trading as high as $4.96 ¼ on November 12th but then trending down to a low of $4.68 on November 21st, before closing at $4.69 /bu on that same day (Figure 1).   

On November 21st – the 8th trading day after the USDA reports – Kansas cash wheat price terminal quotes for ordinary U.S. no. 1 HRW in central Kansas ranged from $4.44 to $4.61 per bushel – with basis ranging from $0.25 under to $0.08 under DEC 2018 futures.  Cash wheat prices in eastern Kansas grain terminals ranged from $4.24 to $4.44 with basis ranging from $0.45 under to $0.25 under DEC 2018 futures.  These prices are still up 20%-24% from the range of $3.42 ¼ to $3.83 ¼ /bu in late December 2017 in eastern and central Kansas – with basis at that time being from $0.80 under to $0.39 under nearby MARCH 2018 futures.   

In western Kansas on November 21st bids for ordinary U.S. no. 1 HRW wheat at selected grain elevators ranged from $4.19 to $4.29 /bu, with basis being $0.50 under to $0.40 under DEC 2018 futures.  Recent wheat cash price bids in western Kansas are up 17.9% to 20.7% from $3.47 to $3.64 /bu in late December 2017 in this same area – when local basis varied from $0.85 under to $0.58 under MARCH 2018 futures.  

A Hard White Wheat (HWW) grain terminal bid was available in Wichita, Kansas on 11/21/2018 for $4.59 /bu, with a basis of $0.10 /bu under DEC 2018 Kansas HRW wheat futures.

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C. World Wheat Supply-Demand – “Large supplies & supply-demand balances”

The USDA in projects that the recent “large supply – large use” situation that has persisted for the global wheat market since the last “supply-demand” period in MY 2012/13 will continue (Figure 13).  Viewed in aggregate these World supply and use numbers do not bring light to periodic shortages of high protein wheat that is problematic in World markets, the sizable wheat stocks held by China that are isolated from the World wheat market and tend to distort World market perspectives, and declining stocks of wheat in major wheat exporting countries in the last 1-2 years.  For example, there are regular, annual concerns from the Black Sea Region about the amount of food versus feed quality wheat available for export on World markets this year.

World wheat production in “new crop” MY 2018/19 are projected to 733.51 million metric tons (mmt) is the fourth highest amount on record – being down 3.9% from the record high 763.06 mmt in “old crop” MY 2017/18, down 3.0% from 756.61 mmt in MY 2016/17, and down 1.0% from 738.42 mmt in MY 2015/16 (Figure 13)Total production of World wheat has increased on average from 612.23 mmt in MY 2007/08 to present levels at a rate of +11.0 mmt (+1.8% annually).

The supply-demand balance of the World wheat market is function of several major World wheat producing countries:  These countries and regions in order of size (i.e., largest to smallest) are as follows:

  • European Union wheat production is forecast to be 60 mmt in “new crop” MY 2018/19, down from 151.26 mmt in “old crop” MY 2017/18, and from 145.37 mmt in MY 2016/17.
  • China wheat production is forecast to be 50 mmt in “new crop” MY 2018/19, down from 134.33 mmt in “old crop” MY 2017/18, and from 133.27 mmt in MY 2016/17.
  • India wheat production is projected to be 70 mmt in “new crop” MY 2018/19, up from 98.51 mmt in “old crop” MY 2017/18, and 87.00 mmt in MY 2016/17.
  • Russian wheat production is projected to be 00 mmt in “new crop” MY 2018/19, down from 84.99 mmt in “old crop” MY 2017/18, and 72.53 mmt in MY 2016/17.
  • United States wheat production is forecast to be 29 mmt in “new crop” MY 2018/19, up from 47.35 mmt in “old crop” MY 2017/18, but down from 62.83 mmt in MY 2016/17.
  • Canadian wheat production is forecast to be 5 mmt in “new crop” MY 2018/19, up from 29.98 mmt in “old crop” MY 2017/18, but down from 32.14 mmt in MY 2016/17.
  • Pakistan wheat production is forecast to be 50 mmt in “new crop” MY 2018/19, down from 26.67 mmt in “old crop” MY 2017/18, and from 26.79 mmt in MY 2016/17.
  • Ukraine wheat production is forecast to be 00 mmt in “new crop” MY 2018/19, down from 26.98 mmt in “old crop” MY 2017/18, and from 25.63 mmt in MY 2016/17.
  • Australian wheat production is forecast to be 5 mmt in “new crop” MY 2018/19, down from 21.3 mmt in “old crop” MY 2017/18, and 31.82 mmt in MY 2016/17.
  • Argentina wheat production is forecast to be 5 mmt in “new crop” MY 2018/19, up from 18.50 mmt in “old crop” MY 2017/18, but up from 18.40 mmt in MY 2016/17.
  • Kazakhstan wheat production is forecast to be 0 mmt in “new crop” MY 2018/19, up from 14.50 mmt in “old crop” MY 2017/18, and from 14.99 mmt in MY 2016/17.

World wheat total supplies in “new crop” MY 2018/19 are projected to be a near record 1,012.51 million metric tons (mmt) – down 1.1% from 1,024.09 mmt in “old crop” 2017/18.  The “new crop” 2018/19 marketing year (MY) which began on June 1, 2018 and will last through May 31, 2019.  

World wheat exports are forecast to be 178.89 mmt in the “new crop” 2018/19 marketing year – down from a 181.25 mmt in “old crop” MY 2017/18, the record high of 183.35 mmt in MY 2016/17, but still up from 172.79 mmt in MY 2015/16 (Figure 13).  Although World wheat exports are forecast to increase by 7.8% since MY 2013/14 (i.e., 1 year after the short crop year of MY 2012/13), over the same period U.S. wheat exports are projected to decline by 12.8% from 1.176 billion bushels in MY 2013/14 to 1.025 bb in “new crop” MY 2018/19. 

World wheat exporting countries and regions are presented in order of size (i.e., largest to smallest): 

  • Russia wheat exports are projected to be 00 mmt in “new crop” MY 2018/19, down from 41.42 mmt in “old crop” MY 2017/18, but up from 27.81 mmt in MY 2016/17.
  • United States wheat exports are forecast to be 90 mmt in “new crop” MY 2018/19, up from 24.52 mmt in “old crop” MY 2017/18, but down from 28.60 mmt in MY 2016/17.
  • Canada wheat exports are forecast to be 00 mmt in “new crop” MY 2018/19, up from 21.95 mmt in “old crop” MY 2017/18, but down from 20.16 mmt in MY 2016/17.
  • European Union wheat exports are forecast to be 00 mmt in “new crop” MY 2018/19, down from 23.29 mmt in “old crop” MY 2017/18, and from 27.43 mmt in MY 2016/17.
  • Ukraine wheat exports are projected to be 50 mmt in “new crop” MY 2018/19, down from 17.78 mmt in “old crop” MY 2017/18, and 18.11 mmt in MY 2016/17.
  • Australia wheat exports are forecast to be 50 mmt in “new crop” MY 2018/19, down from 14.00 mmt in “old crop” MY 2017/18, and from 22.64 mmt in MY 2016/17.
  • Kazakhstan wheat exports are forecast to be 50 mmt in “new crop” MY 2018/19, down from 9.00 mmt in “old crop” MY 2017/18, but up from 7.40 mmt in MY 2016/17.

World total usage of wheat is projected to be a record high of 745.80 mmt in “new crop” MY 2018/19 – up marginally from 745.09 mmt in “old crop” MY 2017/18 (Figure 13).  Total use of World wheat has consistently increased from 614.35 mmt in MY 2007/08 to present levels at a rate of +12.0 mmt (+1.9% annually).

World wheat ending stocks are projected to be 266.71 mmt in “new crop” MY 2018/19 – the 2nd highest in history following the record high of 279.00 mmt in “old crop” MY 2017/18, and 261.04 mmt in MY 2016/17 (Figure 13).  Since MY 2007/08 World wheat ending stocks have been growing an average of 12.6 mmt per marketing year (by 9.8% annually) from the 10-year low of 177.02 mmt in MY 2012/13 – out-pacing the annual growth in total use of 12.0 mmt per year (+1.9% annually) (Figures 15a-b).   

The distorting effect perpetually large Chinese wheat ending stocks on World wheat ending stocks figures of will be examined in the following section.

World wheat percent ending stocks-to-use (% S/U) are forecast to be 35.76% in “new crop” MY 2018/19 – the 2nd highest on record (Figures 15a-b).  The record high is 37.45% in “old crop” MY 2017/18.  World wheat % stocks-to-use has consistently increased each year since MY 2012/13 to the present.  

Since a low of 26.0% stocks/use in ‘short crop’ MY 2012/13, World wheat percent ending stocks-to-use (% S/U) increased at an average rate of +12.6 mmt (+9.8% annually) up to 28.5% in MY 2013/14; 31.7% in MY 2014/15; 34.2% in MY 2015/16, 35.3% in MY 2016/17; and to the record high of 37.45% S/U in “old crop” MY 2017/18; before a projected moderate decline to 35.76% in “new crop” MY 2018/19.

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D. “World-Less-China” Wheat Supply-Demand – ““Tightening to an 11-Year Low”

The broader “large crop-over supply-low price” situation in the World wheat market continues to “obscure” or “mask” the effect of large but somewhat isolated Chinese wheat stocks on actually available World wheat supplies and stocks.  

From a World-Less-China perspective, forecast ending stocks-to-use of 19.8% for “new crop” MY 2018/19 would be the lowest level in 11 years – since 17.5% S/U in MY 2007/08 (Figures 16a-b)“World-Less-China” wheat ending stocks-to-use are forecast to be down sharply from 23.7% in “old crop” MY 2017/18, and from the range of 22.05% to 27.50% during the MY 2008/09 – MY 2017/18 period.   

This “World-Less-China” perspective compares to the aggregated World perspective, in which forecast World wheat ending stocks-to-use of 35.8% for “new crop” MY 2018/19 would be the 2nd highest level in 12 years – down only from 37.45% S/U in “old crop” MY 2017/18 (Figures 15a-b)

IF in coming months this China supply isolation factor eventually leads to noticeably tighter available global supplies of purchasable wheat for buyers to gain possession of to meet their domestic needs, it could yet have a significant positive impact on U.S. and World wheat market prices in “new crop” MY 2018/19.  However, unless there is such a noticeable “tightening” in accessible, available wheat supplies in the broader, World wheat market AWAY FROM large aggregate global supplies over TO tight available “World-Less-China supplies, the attention of this factor may not positively affect the pro-activeness of World wheat participants.  The information in the following section may be an impetus for that change.

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E. “Major Wheat Exporters” % Stocks/Use – “Also Tightening to an 11-Year Low”

Ending stocks among major global wheat exporters including Argentina, Australia, Canada, the European Union, Russia, Ukraine, and the United States are projected to decline to 51.99 mmt in “new crop” MY 2018/19.  This amount would be down from 69.02 mmt in “old crop” MY 2017/18, and from the recent high of 68.29 mmt in MY 2016/17 (Figure 14a-b-c)

Excluding the United States with its current large stocks situation, the ending stocks of the remaining six (6) major wheat exporters have declined to at least a 21-year low of 26.15 mmt in “new crop” MY 2018/19.  This amount would be down sharply from the recent high of 39.12 mmt in “old crop” MY 2017/18, and is comparable to 36.16 mmt in MY 2016/17, 34.30 mmt in MY 2015/16, and 41.24 mmt in MY 2014/15.

Top 7 Exporters Own % S/U:  The projected percent (%) ending stocks-to-use among global wheat exporters including Argentina, Australia, Canada, the European Union, Russia, Ukraine, and the United States are projected to decline to 13.0% in “new crop” MY 2018/19 – down from 16.8% in “old crop” MY 2017/18, from 17.4% in MY 2016/17 and the 21-year high of 22.2% in MY 2009/10 (Figure 14a-b-c).  This forecast of 13.0% S/U for the top 7 World wheat exporters is the second lowest in the last 21-years compared to 12.2% in the ‘short crop’ 2007/08 marketing year.  

Top 7 Exporters Own Stocks as a % of World Use:  Relative to total World wheat stocks, the ending stocks of the top 7 World wheat exporters is projected to decline to 13.65% in “new crop” MY 2018/19, down from 17.66% in “old crop” MY 2017/18 (2nd lowest), and the lowest proportion since 12.24% in MY 2007/18 (i.e., the last 12-years) (Figure 14a=b=c).

Rest of the World Less Major Exporters (ROW) Wheat ending stocks:  Excluding the major seven (7) global wheat exporters Argentina, Australia, Canada, the European Union, Russia, Ukraine, and the United States – wheat ending stocks for the Rest of the World (ROW) are projected to increase to a record high 214.725 mmt in “new crop” MY 2018/19 (Figure 14a-b-c).  This amount would be up from 209.98 mmt in “old crop” MY 2017/18, and up from 192.74 mmt in MY 2016/17, from 183.305 mmt in MY 2015/16, and from the range of 131.20 – 160.53 mmt during the MY 2011/12 through MY 2014/15 period. 

CommentaryKSU: These results show that while aggregate World wheat ending stocks have declined moderately, “under the surface” of those numbers, wheat stocks are projected to be “extremely tight” among World exporters – much tighter than for the rest of the World wheat market.   Tightening wheat stocks and % S/U among the top 7 wheat exporters is likely to eventually be a positive factor for U.S. wheat market price prospects – since it could lead to larger U.S. wheat exports in the last quarter of “new crop” MY 2018/19 (i.e., during March-May 2019).  

In other words, a significant increase in U.S. wheat export sales and shipments may be “back loaded” in “new crop” MY 2018/19 – after domestic supplies of wheat importing countries, and already tighter supplies from other major exporters with transportation cost and/or currency exchange rate advantages over the United States have “run short”.

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F. U.S. Wheat Supply/Demand “Tighter but still large stocks”

The USDA released their wheat production, supply-demand and price projections for the U.S. for “new crop” MY 2018/19 in the November 9th Crop Production & WASDE reports (Table 1a).   There is also a preliminary projection of the USDA supply-demand balance sheet for “next crop” MY 2019/20 which will begin on June 1, 2019.   These preliminary forecast indicate USDA’s expectations of 6%-8% higher acreage, and 2.060 billion bushels of production in 2019, but only marginal changes to usage, ending stocks, and prices.  

U.S. wheat plantings are forecast to be 47.800 million acres (ma) in 2018, up from the record low of 46.022 ma in 2017, but down from 50.119 ma in 2016 (Table 1, Figures 5-6)Harvested acres are forecast at 39.605 ma in 2018 (82.72% harvested-to-planted), up from the record low of 37.541 ma (81.69% harvested-to-planted) in 2017, but down from 43.850 ma in 2016 (87.49% harvested-to-planted) (Table 1, Figure 6).   The 2018 U.S. average wheat yield is estimated at 47.6 bu/ac, up from 46.3 bu/ac in 2017, but down from the 2016 record high of 52.7 bu/acre (Table 1, Figure 7)

Wheat production in the U.S. in 2018 is forecast to be 1.884 billion bushels (bb), up from 1.740 bb in 2017, but down from 2.309 bb in 2016.  Projected “new crop” MY 2018/19 total supplies are forecast at 3.123 bb, up from 3.078 bb in “old crop” MY 2017/18, and down from 3.402 bb in MY 2016/17 (Table 1, Figure 8)

U.S. Wheat total use of 2.174 bb is forecast for “new crop” MY 2018/19, up from 1.979 bb in “old crop” MY 2017/18, and from 2.222 bb in MY 2016/17 (Table 1, Figure 9a-b).  By usage category, in “new crop” MY 2018/19 U.S. wheat exports are projected to be 1.025 bb, which is up from 901 mb in “old crop” MY 2017/18, while being down from 1.051 bb in MY 2016/17 (Table 1, Figures 10 & 11)

CommentaryKSU: U.S. wheat exports fell to 47-year lows of 778 mb and 864 mb in MY 2015/16 and MY 2014/15, respectively, down to levels just marginally above those pre-“Russian Grain Deal” levels in 1972.  This is more evidence of the only marginally competitive position that U.S. wheat exports find themselves in among foreign export competitors in recent years.  However, tightening supplies of foreign wheat exporters may cause U.S. wheat exports to strengthen in the later part of “new crop” MY 2018/19 (i.e., likely fall 2018)

Food Use of U.S. wheat is projected to be 970 million bushels (mb) in “new crop” MY 2018/19, up marginally from 964 mb in “old crop” MY 2017/18, and trending higher from 949 mb in MY 2016/17 (Table 1, Figure 9).   Feed & Residual Use of U.S. wheat is projected to be 110 mb in “new crop” MY 2018/19, up from 50 mb in “old crop” MY 2017/18, but less than 161 mb in MY 2016/17 (Table 1, Figure 9a-b).  

CommentaryKSU: With the USDA’s forecast of moderately tighter U.S. corn and total feedgrain supplies along with moderate support for feedgrain prices, the USDA is anticipating that feeding wheat to livestock will become more economically viable compared to a year earlier. 

The USDA projected “new crop” MY 2018/19 ending stocks to be 949 mb (43.65% S/U), which are down substantially from 1.099 bb in “old crop” MY 2017/18 (55.53% S/U), and from 1.181 bb in MY 2016/17 (53.15% stocks/use) (Table 1, Figures 11a & 12)

CommentaryKSU: This projection of 949 mb in U.S. wheat ending stocks in “new crop” MY 2018/19 is the lowest in five (5) years – since 752 mb (37.3% stocks/use) in MY 2014/15.  Still, until either a major wheat production shortfall or what could be an “anticipated” surge in U.S. wheat exports occurs, the U.S. will likely remain in the current “large supply – large ending stocks” situation.

United States’ wheat prices are projected to be in the range of $4.90-$5.30 /bu – averaging $5.10 /bu in “new crop” MY 2018/19.  This would be up from $4.72 /bu in “old crop” MY 2017/18, from $3.89 in MY 2016/17, and $4.89 /bu in MY 2015/16, but still down from $5.99 /bu in MY 2014/15 (Table 1, Figures 11a & 12).  

CommentaryKSU: It is estimated by KSU that these USDA projections for “new crop” MY 2018/19 have a 70% probability of occurring.

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G. Three “Alt” KSU U.S. Wheat S/D Forecast Scenarios for “New Crop” MY 2018/19

To represent possible alternative outcomes from the USDA’s November 9th projection, three potential KSU-Scenarios for U.S. wheat supply-demand and prices are presented for “new crop” MY 2018/19 (Table 1a & Figure 11b).    

KSU Scenario 1) “MODERATELY Higher Exports” Scenario (10% probability):   This scenario assumes that there will be 1.884 bb production, 3.123 bb total supplies, 1.075 bb exports (up 50 mb vs USDA), 120 mb feed & residual use, 2.224 bb total use (up 50 mb vs USDA), 899 mb ending stocks (down 50 mb vs USDA), 40.42% Stocks/Use (down vs 43.65% S/U by USDA), & $5.35 /bu U.S. wheat average price (up $0.25 /bu vs USDA).

KSU Scenario 2) “MUCH Higher Exports” Scenario (5% probability):   This scenario assumes that there will be 1.884 bb production, 3.123 bb total supplies, 1.200 bb exports (up 125 mb vs USDA), 120 mb feed & residual use, 2.299 bb total use (up 125 mb vs USDA), 824 mb ending stocks (down 125 mb vs USDA), 35.84% Stocks/Use (down vs 43.65% S/U by USDA), & $5.90 /bu U.S. wheat average price (up $0.80 /bu vs USDA).

KSU Scenario 3) “Lower Exports” Scenario (15% probability):   This scenario assumes that there will be 1.884 bb production, 3.123 bb total supplies, 925 bb exports (down 100 mb vs USDA), 120 mb feed & residual use, 2.074 bb total use (down 100 mb vs USDA), 1,049 mb ending stocks (up 100 mb vs USDA), 50.58% Stocks/Use (up vs 43.65% S/U by USDA), & $4.80 /bu U.S. wheat average price (down $0.30 /bu vs USDA).

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H. CFTC Position of Traders Info for CME KS HRW Wheat Futures through 11/13/2018

Figures 3a-c present the latest available Position of Traders data through November 13, 2018 on CME Kansas Hard Red Winter Wheat futures from the Commodity Futures Trading Commission (CFTC).   

Figure 3a shows Net Position of Traders for CME KS HRW Wheat with Futures Prices from June 2006 through November 13, 2018.  This chart shows the positions of Commercial Hedgers, Managed Money (Specs), and Swaps (Indexes) over time, along with changes in lead KS HRW Wheat futures. 

Commercial hedgers are designated as those traders who are involved with cash wheat positions and are primarily managing the risk from futures movements in their positions (i.e., they are “hedging” futures).  This chart shows the net position of commercial hedgers, showing the balance of both long and short futures positions.  In Figure 3a, commercial hedgers have been net short or in predominantly “sell” positions in CME KS HRW Wheat futures throughout most of 2018, and on 11/13/2018 were net short by 283,110 contracts, representing 1,415,550,000 bushels in “short” futures positions.  

Managed Money (Specs) generally are involved in speculative trading positions in an effort to profit from their trading activities.   Speculative trades add volume or liquidity to the market – allowing commercial hedgers to manage their cash market price risks.  Figure 3a shows that managed money (specs) traders have been net long or in predominantly “buy” positions in CME KS HRW Wheat futures throughout most of 2018.  However, for the first time since late January 2018, on 11/13/2018 Managed Money (Spec) positions became net short by 22,245 contracts, representing 111,225,000 bushels in “short” futures positions.  

Swaps (Index) traders include commodity index traders who involve agricultural commodity futures such as KS HRW Wheat in their investment portfolios typically as an “inflation hedge.”  Figure 3a shows that swaps (index) traders have been consistently net long or in predominantly “buy” positions in CME KS HRW Wheat futures throughout most of 2018 and actually since June 2006 – which is consistent with their portfolio-risk management oriented strategies.   On 11/13/2018 Swaps (Index) traders were net long by 184,610 contracts, representing 923,050,000 bushels in “long” futures positions.  

Figure 3b provides Commercial Traders (Hedgers) Long & Short Positions for CME KS HRW Wheat with Futures Prices from June 2006 through November 13, 2018.  This chart shows that the “short” or “sell” positions of commercial hedgers have been consistently larger than “long” or “buy” positions since July 2017.  On 11/13/2018, Commercial Traders (Hedgers) held “short” or “sell” positions in CME Kansas HRW futures of 706,410 contracts (3,532,050,000 bu.), and “long” or “buy” positions of 423,300 contracts (2,166,500,000 bu.).

Figure 3c illustrates Managed Money Traders (Specs) Long & Short Positions for CME KS HRW Wheat with Futures Prices for the June 2006 through November 13, 2018.  This chart shows a large amount of volatility and change in the positions of “short” or “sell” positions of managed money traders (specs), but relative consistency in their aggregate amount of “long” or “buy” positions over the same period of time.  On 11/13/2018, Managed Money Traders (Specs) held “short” or “sell” positions in CME Kansas HRW futures of 345,260 contracts (1,726,300,000 bu.), and “long” or “buy” positions of 323,015 contracts (1,615,075,000 bu.).

KSU Soybean Market Outlook in Mid-November 2018 – Large Stocks, Export Hopes and Fears, and Languishing Prices in the U.S. to date

Soybean Market Outlook in Mid-November 2018

Daniel O’Brien – Extension Agricultural Economist, K-State Research and Extension

November 15, 2018

The “Knowns” & “Unknowns” of Soybean Market Prospects through Summer 2019

In October 2018 we penned an outlook for prices in the U.S. soybean market, and not a lot has changed.  The soybean market has been moving towards the end of Fall harvest 2018, and the outlook for U.S. soybeans from now through Summer 2019 continues to be dominated by two major knownand unknown” factors.  What is known is that the 2018 U.S. soybean crop is record large – although wet harvest conditions have caused quality problems the southern states and else-where.   What is “unknown” is the duration of the trade dispute between the U.S. and China, and plans and prospects for a large soybean crop in South American countries – particularly Brazil.  The price impact of Chinese tariffs on U.S. soybean exports to that country are likely to persist through at least mid-2019 given the lack of progress on trade negotiations between the countries.  Taken together, prospects for large U.S. soybean supplies and worries about U.S. export prospects are “driving” market expectations for record large ending stocks and low prices for the “new crop” 2018/19 marketing year ending August 31, 2019.  

What is “Known” – Record Large U.S. Soybean Production, Supplies, & % Stocks/Use :  In the November 8, 2018 USDA Crop Production report, the USDA projected that the 2018 U.S. soybean crop would be a record high 4.690 billion bushels (bb) – down 90 million bushels (mb) from the October 11th USDA reports, but up from the previous record of 4.411 bb in year 2017, and from 4.296 bb in year 2016.  The November 8th USDA World Agricultural Supply and Demand Estimates (WASDE) Report projected that “new crop” 2018/19 marketing year (MY) ending stocks – which began on September 1, 2018 – would be a record high 955 mb – 70 mb from October, and more than double the previous 11 year high of 438 mb in “old crop” MY 2017/18.  

Percent ending stocks-to-use are projected to be a 32 year high (since the farm crisis years of MY 1985/86 – 1986/87) of 23.25% – up sharply from 10.20% in “old crop” MY 2017/18.   Although the U.S.-China trade dispute is having a negative impact on U.S. soybean demand and price prospects, large supplies of U.S. soybeans in “new crop” MY 2018/19 have been having a dominant negative affect on U.S. soybean market prices throughout the 2018 Fall harvest (Table 1, Figure 7).

“Unknown #1” – The Strength of U.S. Soybean Exports Through Summer 2019:  The imposition by the Chinese government of a 25% tariff on U.S. soybean imports into their country has had and continues to have a decidedly negative impact on U.S. soybean market prices.  As a result, the USDA has lowered its projection of U.S. soybean exports in “new crop” MY 2018/19 first down to 2.060 bb in the October 2018 WASDE, and now down to 1.900 bb in the November 8, 2018 WASDE report.  This projection of 1.900 bb is down 10.8% from 2.129 bb in U.S. soybean exports in “old crop” MY 2018/19.  In terms of actual shipments of U.S. soybeans to date, U.S. soybean exports have running “on pace” to meet these marginally lower USDA projections for the “new crop” 2018/19 marketing year which began on September 1, 2018, but are markedly behind year ago levels of shipments and forward purchases.  However, once 2019 South American harvests become available in late Spring – early Summer of next year, the pace of U.S. soybean exports is vulnerable to strong competition and a significant slowing of pace.

The USDA Agricultural Marketing Service (AMS) reports that for the week ending November 9th that the U.S. shipped 364.1 mb of soybeans for export in this marketing year, up from the pace of 36.6 mb per week to meet the USDA’s forecast of 1.900 bb in U.S. soybean exports for “new crop” MY 2018/19 which began on September 1st (Figure 9).   Total shipments of 364.1 mb through November 9th were 19.2% of the USDA projection of 1.900 bb in “new crop” MY 2018/19, with 19.2% of the marketing year complete (i.e., 10/52 weeks).  This total of U.S. soybean shipments as of November 1, 2018 are down 41.9% from year ago levels.

In terms of forward purchases, the USDA Foreign Agricultural Service (FAS) reports that an additional 485.6 mb of U.S. soybeans have been “bought ahead” for export as of November 1st.  Adding the shipments-to-date of 364.1 mb through November 9th and forward purchases of 485.6 mb through November 1st together, total shipments and purchases amount to 849.7 mb, equal to 44.7% of the USDA’s projection of 1.900 bb for “new crop” MY 2018/19, with 19.2% of the marketing year complete (i.e., 10/52 weeks).  This total of shipments and purchases of U.S. soybeans through early November 2018 are down approximately 30%-31%  from year ago levels.

While U.S. soybean exports in “new crop” MY 2018/19 to China of 14.95 mb are down 96.0% from 378.4 mb from a year ago through November 1st, U.S. exports to all other countries of 301.9 mb in “new crop” MY 2018/19 are up 88.3% from 162.0 mb at this time a year earlier (Tables 2-3).   Among the countries that have tangibly increased U.S. soybean imports from a year ago are some in the European Union (i.e., Italy, the Netherlands, Portugal, Spain, Romania, and the United Kingdom), Japan, Taiwan, Iran, Malaysia, South Korea, Thailand, Saudi Arabia, Egypt, Argentina, Canada, Columbia, Mexico, and Peru. 

“Unknown #2” – The Size of South American Soybean Production in Early-Mid 2019:  With an opportunity to sell soybeans to China given their distinct preference for soybeans from non-U.S. sources, key South American soybean producing countries such as Argentina and Brazil have reported plans to increase soybean plantings for their 2019 crops.  In Brazil, initial estimates in October from private sources and the USDA are for a 1.0% increase in production to 120.4-120.5 million metric tons (mmt), up from the USDA estimate 119.8 mmt in 2018 (Figure 15).  Recent estimates in November have not varied from the October projections.  Weather risks / threats to South American 2019 production will have to be dealt with over the coming months.  However, current intentions are for South American soybean production to increase in 2019 – which would further negative prospects for U.S. soybean prices in “new crop” MY 2018/19 (Figures 17a-b).

Planting of the South American soybean crop started in late fall 2018.  This means that U.S. corn and soybean producers will have some amount of information on 2019 South American crop and market prospects when they make crop planting decisions in late winter – early spring 2019 here in the United States.   All else being equal, anticipated increases in 2019 South American soybean acreage and production prospects MAY lead U.S. farmers to take a more pessimistic view of U.S. soybean market price prospects for Fall 2019, and leader them to lower their 2019 U.S. soybean plantings and to raise their 2019 U.S. corn plantings.

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Other Factors to Consider in Soybean Market Outlook

Prior to the escalation of the U.S.-China trade dispute, U.S. soybean market prospects where described as “neutral-to-cautiously optimistic” for the “new crop” 2018/19 marketing year.  Now with the uncertainty and potential negative impacts of 25% soybean import tariffs by China against U.S. soybeans, and a record large 2018 U.S. soybean crop being harvested, the “narrative consensus opinion” of the market has turned pessimistic price-wise, which has been reflected in “new crop” NOVEMBER 2018 Soybean futures (Figures 3a-b-c)

Chicago Mercantile Exchange (CME) JANUARY 2019 Soybean futures declined from a high of $10.60 on May 29th, down to a low of $8.26 ¼ per bushel on September 18th (Figure 1).  Since then, JAN 2018 Soybean futures had increased to a high of $9.06 ¼ on October 15th before declining again to a low of $8.44 ½ on October 31st, before increasing to a close of $8.88 ¾ on Thursday, November 15th.   In similar manner, CME NOVEMBER 2019 Soybean futures closed at $9.36 ¾ per bushel on November 15th.

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Kansas Cash Soybean Prices & Basis Bids

Cash soybean price bids on Thursday, November 15th in Central Kansas at major terminal elevator locations were in the range of $7.54 ¾ to $7.93 ¾ per bushel ($1.35 to $0.95 under JAN 2019 CME soybean futures).  At Topeka and Atchison in Northeast Kansas, cash prices were both at $8.33 ¾ per bushel ($0.55 under JAN 2019).   These Central and Northeast Kansas prices on November 15th are down substantially from $9.88 – $9.93 ($0.35 to $0.30 under JULY 2018 soybean futures) on May 30th.  Cash soybean bids at Kansas soybean processing plants in Emporia and Wichita on November 15th ranged from $8.26 ¾ to $8.30 ¾ per bushel ($0.58 to $0.62 under JAN 2019) – also down substantially from May 30th when prices ranged from $9.86 ($0.37 under JULY 2018) to $9.93 ($0.30 under) (Figure 2)

In Western Kansas cash soybean bids at major grain elevators on November 15th ranged from $7.42 to $7.49 per bushel ($1.47 to $1.40 under JAN 2019), down substantially again from $8.88 ($1.35 under JULY 2018 futures) to $9.23 ($1.00 under) per bushel on May 30th.

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Reviewing South American Export Competition in “Old Crop” MY 2017/18

Soybean market signals from South American export competitors Argentina, Brazil and Paraguay have continued in their “improved” situation in recent months as a result of the U.S.-China trade dispute (Figures 15-16).  Serious drought had caused Argentina soybean production to decline by 31.3% from a USDA estimate of 55.0 million metric tons (mmt) in 2017 down to 37.8 mmt in 2018, and cut projected Argentine soybean exports by 70.1% to 2.11 mmt in the “old crop” 2017/18 marketing year (MY) which ended on August 31st.   Argentina soybean meal exports were also 19.1% lower (25.35 mmt) in “old crop” MY 2017/18, down from 31.32 mmt in MY 2016/17.

However, Brazilian soybean production was higher – offsetting Argentina’s declines to a degree.  Brazil is estimated by the USDA to have produced a record high 119.80 mmt of soybeans in year 2018, up 4.5% from the previous record of 114.60 mmt in year 2017.  Brazilian soybean exports are estimated to have been 76.19 mmt in “old crop” MY 2017/18 (ending August 31st), up 20.7% from 63.14 mmt in MY 2016/17.  Brazil soybean meal exports are projected to be 16.8% higher (16.07 mmt) in MY 2017/18, up from 13.76 mmt in MY 2016/17.  

Paraguay soybean production is estimated to be down marginally – providing a neutral influence to the market.  Paraguay is projected by the USDA to have produced 9.81 mmt of soybeans in year 2018 – down moderately from 10.34 mmt in year 2017.  Paraguay soybean exports are estimated to have been 6.25 mmt in “old crop” MY 2017/18 (ending August 31st), up 2.0% from 6.13 mmt in MY 2016/17. 

These three South American countries are the main competition in global soybean export markets for the United StatesArgentina, Brazil and Paraguay are forecast to comprise 55.2% (84.55 mmt) of estimated World soybean exports (153.19 mmt) in “old crop” MY 2017/18.  The U.S. is estimated to have made up 37.8% (57.95 mmt) of World soybean exports for “old crop” MY 2017/18, with other countries making up the remaining 7.0% (10.69 mmt) (Table 3). 

The trade dispute between the U.S. and China has “pushed” Chinese soybean export purchases toward Brazil and Argentina and away from the U.S. at least temporarily until the matter is either settled OR exportable South American supplies are eventually no longer available in fall 2018.  There has been both negative and positive news coming from these negotiations to date, with any final agreement still to come.

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U.S. Soybean Supply-Demand Projections for “New Crop” MY 2018/19

The USDA provided a forecast of U.S. soybean supply, demand, and prices for “new crop” MY 2018/19 In the November 8th USDA WASDE report.  Based on 2018 U.S. soybean production projections 89.145 million acres (ma) planted, 88.343 ma harvested, and 2018 U.S. soybean average yields of 52.1 bu/ac. (down 1.0 bu/ac from October), the USDA forecast 2018 U.S. soybean production to be 4.600 bb (down 90 mb from October).  This 2018 forecast of a record high 4.600 bb in U.S. soybean production would be up from the previous record of 4.411 bb in 2017, and the 2nd highest amount of 4.296 bb in 2016 (Table 1, Figures 5-6-7). 

Total Supplies of U.S. soybeans in “new crop” MY 2018/19 are forecast to be a record high 5.063 bb, based on 438 mb in beginning stocks, 4.600 bb in production, and 25 mb in imports.  This amount is up from the previous record highs of 4.734 bb and 4.515 bb in U.S. soybean Total Supplies in “old crop” MY 2017/18 and MY 2016/17, respectively (Table 1, Figure 7). 

Soybean crush in “new crop” MY 2018/19 is forecast to be a new record high of 2.080 bb – to be driven by expected ongoing domestic usage for livestock feed and ongoing strength in U.S. soybean meal exports (Table 1, Figures 8 & 10a-b).  This would be up 25 mb in U.S. soybean crush from the previous record of 2.055 bb in “old crop” MY 2017/18.  

Exports of U.S. soybeans in “new crop” MY 2018/19 are forecast to be 1.900 bb – down 160 mb from October, and down previous record highs of 2.129 bb in “old crop” MY 2017/18 and 2.166 bb in MY 2016/17 (Figures 9, 10a-b, & 11).  See the previous discussion on U.S. soybean export prospects in section #1 above. 

Seed usage of U.S. soybeans is projected to be 96 million bushels (mb) in “new crop” MY 2018/19 – down 7 mb from October.  Residual use is forecast at 32 mb.  Seed use of 96 mb is forecast to be down 7.7% from 104 mb in “old crop” MY 2017/18 and 8.6% from 105 mb in MY 2016/17 (Table 1, Figures 10a-b). 

Total Use is projected to be a near-record high of 4.107 bb – down 161 mb from October, and down 189 mb from the previous record high of 4.296 bb last year (Table 1, Figures 10a-b). 

As a result of these supply and use projections for “new crop” MY 2018/19, ending stocks are projected to be a record high 955 mb – up 70 mb from October, and percent ending stocks-to-use is projected to be 23.25%.  Both of these measures of U.S. soybean supply-demand balances are projected to be double from the previous marketing year, i.e., being up from 438 mb (10.20% S/U) in “old crop” MY 2017/18 (Table 1, Figures 10a-b, 12a-b, & 13). 

United States’ soybean prices for “new crop” MY 2018/19 are projected in the range of $7.60-$9.60 (midpoint = $8.60 /bu) – with the midpoint projection being down $0.73 /bu from $9.33 /bu in “old crop” MY 2017/18 (Table 1, Figures 12a-b, & 13).   This scenario is given a 60% likelihood of occurring by KSU Extension Agricultural Economist D. O’Brien.

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Alternative KSU Soybean Forecast Scenarios for “New Crop” MY 2018/19

Three alternative KSU-Scenarios to the USDA’s forecast for U.S. soybean supply-demand and prices are presented for “new crop” MY 2018/19 (Table 1a, Figure 12b).  These projections show how varying 2018 U.S. soybean export-use and production scenarios could affect U.S. soybean supply-demand and price outcomes in “new crop” MY 2018/19.  Probability-weights are added to reflect judgements about how likely each scenario is to occur in “new crop” MY 2018/19, i.e., during the September 1, 2018 through August 31, 2019 time period.

#1 – KSU “LOWER U.S. Soybean EXPORTS” Scenario for “new crop” MY 2018/19: (20% probability): Assumptions: 89.145 ma planted, 88.343 ma harvested, 52.1 bu/ac yield, 4.600 bb production, 5.063 bb total supplies, 2.080 bb domestic crush, 1.750 bb exports (down 150 mb from USDA’s forecast), 3.957 bb total use (down 150 mb vs USDA), 1.106 bb ending stocks (up 151 mb vs USDA), 27.95% Stocks/Use (up vs 23.25% for USDA), & $8.40 /bu U.S. soybean average price (down vs $8.60 /bu for USDA)

#2 – KSU “HIGHER 2018 U.S. Soybean EXPORTS” Scenario for “new crop” MY 2018/19: (15% probability): Assumptions: 89.145 ma planted, 88.343 ma harvested, 52.1 bu/ac yield, 4.600 bb production, 5.063 bb total supplies, 2.080 bb domestic crush, 2.200 bb exports (up 300 mb vs USDA), 4.410 bb total use (up 300 mb vs USDA), 653 mb ending stocks (down 302 mb vs USDA), 14.81% Stocks/Use (down vs 23.25% for USDA), & $9.00 /bu U.S. soybean average price (up vs $8.60 /bu for USDA)

#3 – KSU “LOWER 2018 U.S. Soybean PRODUCTION” Scenario for “new crop” MY 2018/19: (5% probability): Assumptions: 89.145 ma planted, 88.343 ma harvested, 50.0 bu/ac yield (down 2.1 bu/ac vs USDA), 4.417 bb production (down 273 mb vs USDA), 4.880 bb total supplies (down 273 mb vs USDA), 2.080 bb domestic crush, 1.900 bb exports, 4.107 bb total use, 773 mb ending stocks (down 182 mb vs USDA), 18.82% Stocks/Use (down vs 23.25% for USDA), & $9.05 /bu U.S. soybean average price (up vs $8.60 /bu for USDA);   

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World Soybean Supply-Demand Prospects

World soybean production of a record high 367.50 million metric tons (mmt) is projected for “new crop” MY 2018/19, up 8.5% from 338.57 mmt in “old crop” MY 2017/18, and up 5.3% from the current record high of 348.95 mmt in MY 2016/17 (Figure 13).  The “new crop” 2018/19 marketing year begins September 1, 2018 and continues through August 31, 2019.   World soybean total supplies of 467.19 mmt in “new crop” MY 2018/19 are forecast to be up 7.2% from 435.96 mmt in “old crop” MY 2017/18, and up 8.7% from 429.81 mmt in MY 2016/17. 

World soybean exports of a 155.44 mmt are projected for “new crop” MY 2018/19, up 1.5% from 153.19 mmt in “old crop” MY 2017/18, and up 5.5% from 147.39 mmt in MY 2016/17 (Figure 13).  China is expected to continue to be the key World soybean importer in the coming marketing year, although there are signs that the Chinese are seeking to moderate their annual soybean usage or import increases through changes in livestock feeding approaches.  Also, disease pressures in the Chinese swine heard are likely to moderate their overall soybean import demand.

Projected World soybean ending stocks of a record high 112.08 mmt (31.85% Stocks/Use) in “new crop” MY 2018/19 are up from the previous record high of 99.69 mmt (29.60% S/U) in “old crop” MY 2017/18, up from 97.39 mmt (29.57% S/U) in MY 2016/17, and 80.42 mmt (25.69% S/U) in MY 2015/16 (Figures 14 & 16a).  

On a “World-Less-China” basis (i.e., excluding China from World demand and ending stocks numbers), projected “World-Less-China” soybean ending stocks are a record high 92.24 mmt (38.1% Stocks/Use) in “new crop” MY 2018/19.  This amount of “World-Less-China” ending stocks are up substantially from 76.15 mmt (33.0% S/U) (3rd highest on record) in “old crop” MY 2017/18, 76.73 mmt (34.0% S/U) (2nd highest on record) in MY 2016/17, and 63.72 mmt (4th highest on record) (29.1% S/U) in MY 2015/16 (Figure 16b).   Together, Figures 14 and 16a-b illustrate the distorting impact the massive buildup in World soybean ending stocks that has occurred outside of China – which is a key factor in lower World soybean market prices.

Projected Foreign (Non-U.S.) soybean ending stocks of 86.09 mmt (21.8% S/U) in “new crop” MY 2018/19, are down 1.9% from 87.77 mmt (23.5% S/U) in “old crop” MY 2017/18, and is down 3.5% from 89.18 mmt (24.6% S/U) in MY 2016/17.

 

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Following are the graphics for the article on Soybean Market Outlook in Mid-November 2018 – with the full article and accompanying analysis to be available on the KSU AgManager website at the following web address:

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

 

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KSU Weekly Grain Market Analysis: U.S. and World Corn S-D and the Impact of China Corn Stocks Changes in the 11/8/2018 USDA Reports

Corn Market Impact from the 11/8/2018 WASDE Report

Daniel O’Brien – Extension Agricultural Economist, Kansas State University

November 9, 2018

The USDA Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports general provided neutral-to-positive information for the U.S. and World Corn Market.

 

A. United States Domestic Corn Supply-Demand & Prices

With projected 2019 U.S. corn yields dropping 1.8 bu/ac from a month earlier to 178.9 bu/ac, the USDA’s 2019 U.S. corn production forecast of 14.626 billion bushels (bb) was down 95 million bushels (mb) from average pre-report trade expectations, down 152 mb from the October 11th USDA forecast, and comparable to U.S. corn production of 14.604 bb in year 2017 and the record high of 15.148 bb in year 2016.  As a result, total supplies of U.S. corn are forecast to be 16.816 bb in “new crop” MY 2018/19, down from 16.934 bb in “old crop” MY 2017/18, and from 16.942 bb in MY 2016/17.

The USDA reduced forecast feed and residual use by 50 mb to 5.500 bb for “new crop” MY 2018/19 – still the highest amount in the last three marketing years (i.e., up from 5.470 bb in MY 2016/17 and 5.298 bb in “old crop” MY 2007/18).  The USDA also reduced its forecast of U.S. corn exports by 25 mb to 2.450 bb for “new crop” MY 2018/19 – which still would be the highest amount in the last three marketing years (i.e., up from 2.294 bb in MY 2016/17 and 2.438 bb in “old crop” MY 2007/18).  

Following lower forecast feed and export use, the USDA reduced forecast total U.S. corn use by 75 mb to 15.080 bb for “new crop” MY 2018/19 – also still the highest amount in the last three marketing years (i.e., up from 14.649 bb in MY 2016/17 and 14.793 bb in “old crop” MY 2007/18). 

Taking decreased U.S. corn supplies and U.S. total corn use together, the USDA ended up reducing its forecast of U.S. corn ending stocks for “new crop” MY 2018/19 by 77 mb to 1.736 bb – which would be the lowest amount in the most recent three marketing years (i.e., down from 2.293 bb in MY 2016/17 and 2.438 bb in “old crop” MY 2007/18).

U.S. corn percent ending stocks-to-use (S/U) is forecast to be 11.51% in “new crop” MY 2018/19, down from 11.96% in the October USDA report, 14.47% S/U in “old crop” MY 2017/18, and from 15.56% S/U in MY 2016/17. 

As a result of this “tightening” of U.S. corn percent ending stocks-to-use, the USDA raised its forecast price range for U.S. corn season average prices to $3.20-$4.00 (midpoint = $3.60 /bu up $0.10 /bu from October).  Although viewed as “low” and below full cost of production for most Kansas corn producers, a U.S. average corn price of $3.60 /bu in “new crop” MY 2018/19 is the highest in the last three years – compared to $3.36 /bu in both “old crop” MY 2017/18 and  MY 2016/17.

 

B. “World” & “World-Less-China” Corn Ending Stocks & % Stocks/Use

Following changes announced by the Chinese government in early November in the amounts of their domestic ending stocks of corn since 2007, the USDA “followed suit” and made similar changes in its November 8th WASDE report.

Following China’s lead, the USDA increased Chinese corn ending stocks in “new crop” MY 2018/19 by 145-150 million metric tons (mmt).  As a result, the USDA’s projection of World corn ending stocks increased by the amount of the increase in Chinese corn stocks, i.e., from 159.35 mmt in the October 11th WASDE to 307.51 mmt in the November 8th WASDE report.  As a result, World corn percent ending stocks-to-use jumped sharply from 15.7% in the October 11, 2018 USDA WASDE report, up to 27.2% in the November 11th report.

However, by examining World corn stocks and percent stocks-to-use with China excluded, i.e., from a “World-Less-China” perspective, the USDA WASDE estimates show that in “new crop” MY 2018/19 “World-Less-China” grain stocks of 100.02 mmt are projected to be the “tightest” level in 3 years – being down from 118.37 mmt in “old crop” MY 2017/18 and from 127.45 mmt in MY 2016/17. 

In addition, percent (%) ending stocks-to-use of corn for the “World-Less-China” are projected to be 11.7% in “new crop” MY 2018/19, down from 14.4% in “old crop” MY 2017/18 and from 15.4% in MY 2016/17.  

 

C. Summary Thoughts on Chinese-World Corn Stocks Increases

The increase in World corn ending stocks and percent ending stocks-to-use that occurred in the November 8th USDA WASDE report are likely to have minimal affect on the U.S. and World corn markets.  China is a strong domestic user of corn, and has an established pattern of using all supplies it produces domestically internally without entering into World corn trade to either buy or sell except perhaps during periods of sharply reduced Chinese domestic corn supplies.  Also, the intention of the Chinese government to increase domestic corn ethanol production in the near future will play a large role in increased usage of their domestic corn supplies and stocks. 

See Table D in the accompanying “Grain Market Update” notes for the November 9th KSU Agriculture Today radio program for details over the MY 2014/15 through “new crop” MY 2018/19 period.

 

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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, November 9, 2018 are available on the Kansas State University www.AgManager.info website at the following KSU web address:

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

The recorded radio program will be aired at 10:03 a.m. central time, Friday, November 9, 2018 on the K-State Radio Network (KSU Agriculture Today Radio) – web player available. A copy of the November 9th 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 Soybean Market Outlook in Early-November 2018 – Soybean Market Prospects through Summer 2019

An analysis of U.S. and World soybean supply-demand factors and 2018 price prospects following the USDA’s October 11th Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports is available on the KSU AgManager website (http://www.agmanager.info/) at the following web address:

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

Following is a summary of the article on Soybean Market Outlook in Early November 2018 – with the full article and accompanying analysis to be available on the KSU AgManager website.

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Soybean Market Outlook in Early November 2018

Daniel O’Brien – Extension Agricultural Economist, K-State Research and Extension

October 31, 2018

1. The “Knowns” & “Unknowns” of Soybean Market Prospects through Summer 2019

The outlook for soybean markets in from fall harvest 2018 through Summer 2019 is now dominated by two major knownand unknown” factors.  What is known is that the 2018 U.S. soybean crop is record large – although wet harvest conditions have caused quality problems the southern states and elsewhere.   Record large ending stocks are having a major negative impact on U.S. soybean prices.  What is “unknown” is the duration of the trade dispute between the U.S. and China, and plans and prospects for a large soybean crop in South American countries – particularly Brazil.  The price impact of Chinese tariffs on U.S. soybean exports to that country are likely to persist through at least mid-2019 given the lack of progress on trade negotiations between the countries.

What is “Known” – Record Large U.S. Soybean Production, Supplies, & % Stocks/Use :  In the October 11, 2018 USDA Crop Production report, the USDA projected that the 2018 U.S. soybean crop would be a record high 4.690 billion bushels (bb), up from the previous record of 4.411 bb in year 2017, and up from 4.296 bb in year 2016.  The October 11th USDA World Agricultural Supply and Demand Estimates (WASDE) Report projected “new crop” 2018/19 marketing year (MY) ending stocks – which began on September 1, 2018 – are projected to be a record high 885 million bushels (mb), more than double the previous 11 year high of 438 mb in “old crop” MY 2017/18.  Percent ending stocks-to-use are projected to be a 32 year high (since the farm crisis years of MY 1985/86 – 1986/87) of 20.74% up sharply from 10.20% in “old crop” MY 2017/18.   Although the U.S.-China trade dispute is having a negative impact on U.S. soybean demand and price prospects, large supplies of U.S. soybeans in “new crop” MY 2018/19 are having a dominant negative affect on U.S. soybean market prices – especially during harvest 2018 (Table 1, Figure 6).

“Unknown #1” – The Strength of U.S. Soybean Exports Through Summer 2019:  The imposition by the Chinese government of a 25% tariff on U.S. soybean imports into their country has had a decidedly negative impact on U.S. soybean market prices over the past months.  As a result, the USDA has lowered its projection of U.S. soybean exports in “new crop” MY 2018/19 to 2.060 bb – down 3.2% from 2.129 bb in U.S. soybean exports in “old crop” MY 2018/19.  In terms of actual shipments of U.S. soybeans to date, U.S. soybean exports are running “on pace” to meet these marginally lower USDA projections for the “new crop” 2018/19 marketing year which began on September 1, 2018, but are markedly behind year ago levels of shipments and forward purchases.  

The USDA Foreign Agricultural Service (FAS) reports that for the week ending October 18th the U.S. shipped 40.8 mb of soybeans for export, up marginally from the pace of 40.7 mb per week to meet the USDA’s forecast of 2.060 bb in U.S. soybean exports for “new crop” MY 2018/19 which began on September 1st (Figure 8).   Total shipments of 226.8 mb through October 18th were 11.0% of the USDA projection of 2.060 bb in “new crop” MY 2018/19, with 13.5% of the marketing year complete (i.e., 7/52 weeks).  This total of U.S. soybean shipments as of October 18, 2018 are down 35% from year ago levels.

In terms of forward purchases, the USDA reports that an additional 546.8 mb of U.S. soybeans have been “bought ahead” for export as of October 18th.  Adding the shipments-to-date of 226.8 mb and forward purchases of 546.8 mb together, total shipments and purchases amount to 773.6 mb, equal to 37.55% of the USDA’s projection of 2.060 bb for “new crop” MY 2018/19, with 13.5% of the marketing year complete (i.e., 7/52 weeks).  This total of shipments and purchases of U.S. soybeans as of October 18, 2018 are down 26% from year ago levels.

While U.S. soybean exports in “new crop” MY 2018/19 to China of 7.7 mb are down 96.7% from 235 mb (down 20.8%) from a year ago through October 18th, U.S. exports to all other countries of 219.4 mb in “new crop” MY 2018/19 are up 88.65% from 116.3 mb or 24.8% over a year earlier.   Among the countries that have tangibly increased U.S. soybean imports from a year ago are some in the European Union (i.e., Germany, Italy, the Netherlands, Spain, and the United Kingdom), Japan, Taiwan, Iran, South Korea, Saudi Arabia, Egypt, Argentina, Canada, Mexico, and Peru. 

“Unknown #2” – The Size of South American Soybean Production in Early-Mid 2019:  With an opportunity to sell soybeans to China given their distinct preference for soybeans from non-U.S. sources, key South American soybean producing countries such as Argentina and Brazil have reported plans to increase soybean plantings for their 2019 crops.  In Brazil, initial estimates from private sources and the USDA are for a 1.0% increase in production to 120.4-120.5 million metric tons (mmt), up from the USDA estimate 119.8 mmt in 2018.  Of course weather risks / threats to South American 2019 production will have to be dealt with over the coming months.  However, current intentions are for South American soybean production to increase in 2019 – which if it actually happens would further negative prospects for U.S. soybean prices in “new crop” MY 2018/19 (Figure 14).

Planting of the South American soybean crop has already began – starting in late fall 2018 here in the United States.  This means that U.S. corn and soybean producers will have some amount of information on 2019 South American crop and market prospects when they make crop planting decisions in late winter – early spring 2019 here in the United States.   All else being equal, anticipated 2019 South American acreage trends may lead U.S. farmers to lower their 2019 U.S. soybean plantings and to raise their 2019 U.S. corn plantings.

2. Other Factors to Consider in Soybean Market Outlook

Prior to the escalation of the U.S.-China trade dispute, U.S. soybean market prospects where described as “neutral-to-cautiously optimistic” for the “new crop” 2018/19 marketing year.  Now with the uncertainty and potential negative impacts of 25% soybean import tariffs by China against U.S. soybeans, and a record large 2018 U.S. soybean crop being harvested, the “narrative consensus opinion” of the market has turned pessimistic price-wise, which has been reflected in “new crop” NOVEMBER 2018 Soybean futures (Figures 15abcd)

NOV 2018 Soybean futures declined from a high of $10.43 ¾ on May 30th down to a low of $8.12 ¼ per bushel on September 18th (Figure 1).  Since then, NOV 2018 Soybean futures have increased to a high of $8.92 on October 15th before declining again to a close of $8.33 ½ on Tuesday, October 30th.

3. Kansas Cash Soybean Prices & Basis Bids

Cash soybean price bids on Tuesday, October 30th in Central Kansas at major terminal elevator locations were in the range of $7.04 ½ to $7.23 ½ per bushel ($1.29 to $1.10 under NOV 2018 CME soybean futures).  At Topeka and Atchison in Northeast Kansas, cash prices were both at $7.58 ½ per bushel ($0.75 under NOV 2018).   These Central and Northeast Kansas prices on October 30th are down substantially from $9.88 – $9.93 ($0.35 to $0.30 under JULY 2018 soybean futures) on May 30th.  Cash soybean bids at Kansas soybean processing plants in Emporia and Wichita on October 30th ranged from $7.63 ½ to $7.68 ½ per bushel ($0.70 to $0.65 under NOV 2018) – down substantially from May 30th when prices ranged from $9.86 ($0.37 under JULY 2018) to $9.93 ($0.30 under) (Figure 2)

In Western Kansas cash soybean bids at major grain elevators on October 30th ranged from $6.85 to $7.09 per bushel ($1.49 to $1.25 under NOV 2018), down substantially again from $8.88 ($1.35 under JULY 2018 futures) to $9.23 ($1.00 under) on May 30th.

4. Reviewing South American Export Competition in “Old Crop” MY 2017/18

Soybean market signals from South American export competitors Argentina, Brazil and Paraguay have improved in recent months as a result of the U.S.-China trade dispute (Figures 13-14).  Serious drought had caused Argentina soybean production to decline by 31.3% from a USDA estimate of 55.0 million metric tons (mmt) in 2017 down to 37.8 mmt in 2018, and cut projected Argentine soybean exports by 70.1% to 2.1 mmt in the “old crop” 2017/18 marketing year (MY) which ended on August 31st.   Argentina soybean meal exports were 19.4% lower (25.25 mmt) in “old crop” MY 2017/18, down from 31.3 mmt in MY 2016/17.

However, Brazilian soybean production was higher – offsetting Argentina’s declines to a degree.  Brazil is estimated by the USDA to have produced a record high 119.8 mmt of soybeans in year 2018, up 4.5% from the previous record of 114.6 mmt in year 2017.  Brazilian soybean exports are estimated to have been 76.2 mmt in “old crop” MY 2017/18 (ending August 31st), up 20.7% from 63.1 mmt in MY 2016/17.  Brazil soybean meal exports are projected to be 16.8% higher (16.1 mmt) in MY 2017/18, up from 13.8 mmt in MY 2016/17.  

Paraguay soybean production is estimated to be down marginally – providing a neutral influence to the market.  Paraguay is projected by the USDA to have produced 9.81 mmt of soybeans in year 2018 – down moderately from 10.34 mmt in year 2017.  Paraguay soybean exports are estimated to have been 6.25 mmt in “old crop” MY 2017/18 (ending August 31st), up 2.0% from 6.13 mmt in MY 2016/17. 

These three South American countries are the main competition in global soybean export markets for the United StatesArgentina, Brazil and Paraguay are forecast to comprise 54.0% (76.3 mmt) of estimated World soybean exports (147.4 mmt) in “old crop” MY 2017/18. The U.S. is estimated to have made up 37.8% (57.95 mmt) of World soybean exports for MY 2017/18, with other countries making up the remaining 8.2% (13.15 mmt) (Table 3). 

The trade dispute between the U.S. and China has “pushed” Chinese soybean export purchases toward Brazil and Argentina and away from the U.S. at least temporarily until the matter is either settled OR exportable South American supplies are eventually no longer available in fall 2018.  There has been both negative and positive news coming from these negotiations to date, with any final agreement still to come.

5. U.S. Soybean Supply-Demand Projections for “New Crop” MY 2018/19

The USDA provided a forecast of U.S. soybean supply, demand, and prices for “new crop” MY 2018/19 In the October 11th USDA WASDE report.  Based on 2018 U.S. soybean production projections 89.145 million acres (ma) planted, 88.348 ma harvested, and 2018 U.S. soybean average yields of 53.1 bu/ac., the USDA forecast 2018 U.S. soybean production to be 4.690 bb.  This 2018 forecast of a record high 4.690 bb in U.S. soybean production would be up from the previous record of 4.411 bb in 2017, and the 2nd highest amount of 4.296 bb in 2016 (Table 1, Figures 4-5-6). 

Total Supplies of U.S. soybeans in “new crop” MY 2018/19 are forecast to be a record high 5.153 bb, based on 438 mb in beginning stocks, 4.690 bb in production, and 25 mb in imports.  This amount is up from the previous record highs of 4.734 bb and 4.515 bb in U.S. soybean Total Supplies in “old crop” MY 2017/18 and MY 2016/17, respectively (Table 1, Figure 6). 

Soybean crush in “new crop” MY 2018/19 is forecast to be a new record high of 2.070 bb – to be driven by expected ongoing domestic usage for livestock feed and ongoing strength in U.S. soybean meal exports (Table 1, Figures 7 & 9ab).  This would be up 15 mb in U.S. soybean crush from the previous record of 2.055 bb in “old crop” MY 2017/18.  

Exports of U.S. soybeans in “new crop” MY 2018/19 are forecast to be 2.060 bb – down previous record highs of 2.129 bb in “old crop” MY 2017/18 and 2.166 bb in MY 2016/17 (Figures 8-9-10).  See the previous discussion on U.S. soybean export prospects in section #1 above. 

Seed usage of U.S. soybeans is projected to be 103 million bushels (mb) in “new crop” MY 2018/19, with Residual use forecast at 34 mb.  While seed use of 103 mb is forecast to be down slightly from 104 mb in “old crop” MY 2017/18, residual use of 34 mb is up from 8 mb in “old crop” MY 2017/18 (Table 1, Figures 9ab). 

Total Use is projected to be a near-record high of 4.268 bb – down 28 mb from the previous record high of 4.296 bb last year (Table 1, Figures 9ab). 

As a result of these supply and use projections for “new crop” MY 2018/19, ending stocks are projected to be a record high 885 mb, with percent ending stocks-to-use of 20.74% – both up from 438 mb (10.20% S/U) in “old crop” MY 2017/18 (Table 1, Figures 9ab & 10ab-11). 

United States’ soybean prices for “new crop” MY 2018/19 are projected in the range of $7.35-$9.85 (midpoint = $8.60 /bu) – with the midpoint projection being down $0.73 /bu from $9.33 /bu in “old crop” MY 2017/18 (Table 1, Figures 10ab-11).   This scenario is given a 60% likelihood of occurring by KSU Extension Agricultural Economist D. O’Brien.

6. Alternative KSU Soybean Forecast Scenarios for “New Crop” MY 2018/19

Three alternative KSU-Scenarios to the USDA’s forecast for U.S. soybean supply-demand and prices are presented for “new crop” MY 2018/19 (Table 1a, Figure 10).  These projections show how varying 2018 U.S. soybean export-use and production scenarios could affect U.S. soybean supply-demand and price outcomes in “new crop” MY 2018/19.  Probability-weights are added to reflect judgements about how likely each scenario is to occur in “new crop” MY 2018/19, i.e., during the September 1, 2018 through August 31, 2019 time period.

#1 – KSU “Lower 2018 U.S. Soybean Exports” Scenario for “new crop” MY 2018/19: (15% probability): Assumptions: 89.145 ma planted, 88.348 ma harvested, 53.1 bu/ac yield, 4.690 bb production, 5.153 bb total supplies, 2.070 bb domestic crush, 1.870 bb exports (down 200 mb from USDA’s forecast), 4.068 bb total use (down 200 mb from USDA’s forecast), 1.085 bb ending stocks (up 200 mb from USDA’s forecast), 26.67% Stocks/Use (up from the USDA’s forecast of 20.74%), & $8.40 /bu U.S. soybean average price (down from the USDA’s forecast of $8.60)

#2 – KSU “Higher 2018 U.S. Soybean Exports” Scenario for “new crop” MY 2018/19: (10% probability): Assumptions: 89.145 ma planted, 88.348 ma harvested, 53.1 bu/ac yield, 4.690 bb production, 5.153 bb total supplies, 2.070 bb domestic crush, 2.270 bb exports (up 200 mb from USDA’s forecast), 4.468 bb total use (up 200 mb from USDA’s forecast), 685 mb ending stocks (down 200 mb from USDA’s forecast), 15.33% Stocks/Use (down from the USDA’s forecast of 20.74%), & $9.00 /bu U.S. soybean average price (up from the USDA’s forecast of $8.60)

#3 – KSU “Low 2018 U.S. Soybean Production” Scenario for “new crop” MY 2018/19: (15% probability): Assumptions: 89.145 ma planted, 88.348 ma harvested, 50.0 bu/ac yield (down from the USDA’s forecast of 53.1 bu/ac), 4.417 bb production (down 273 mb from USDA’s forecast), 4.880 bb total supplies (down 273 mb from USDA’s forecast), 2.070 bb domestic crush, 2.060 bb exports, 4.268 bb total use, 612 mb ending stocks (down 273 mb from USDA’s forecast), 14.34% Stocks/Use (down from the USDA’s forecast of 20.74%), & $9.05 /bu U.S. soybean average price (up from the USDA’s forecast of $8.60).

7. World Soybean Supply-Demand Prospects

World soybean production of a record high 369.48 million metric tons (mmt) is projected for “new crop” MY 2018/19, up 9.5% from 337.45 mmt in “old crop” MY 2017/18, and up 6.1% from the current record high of 348.12 mmt in MY 2016/17 (Figure 13).  The “new crop” 2018/19 marketing year begins September 1, 2018 and continues through August 31, 2019.   World soybean total supplies of 466.13 mmt in “new crop” MY 2018/19 are forecast to be up 7.4% from 434.13 mmt in “old crop” MY 2017/18, and up 8.8% from 428.54 mmt in MY 2016/17. 

World soybean exports of a 157.40 mmt are projected for “new crop” MY 2018/19, up 2.8% from 153.12 mmt in “old crop” MY 2017/18, and up 6.8% from 147.36 mmt in MY 2016/17 (Figure 13).  China is expected to continue to be the key World soybean importer in the coming marketing year, although there are signs that the Chinese are seeking to moderate their annual soybean usage or import increases through changes in livestock feeding approaches.

Projected World soybean ending stocks of a record high 110.04 mmt (31.17% Stocks/Use) in “new crop” MY 2018/19 are up from 96.65 mmt (28.70% S/U) in “old crop” MY 2017/18, up from the previous record high 96.68 mmt (29.4% S/U) in MY 2016/17, and 80.42 mmt (25.62% S/U) in MY 2015/16 (Figures 13 & 16).  

Projected Foreign (Non-U.S.) soybean ending stocks of 85.96 mmt (21.8% S/U) in “new crop” MY 2018/19, are down 1.1% from 84.73 mmt (22.7% S/U) in “old crop” MY 2017/18, and is down from 88.47 mmt (24.5% S/U) in MY 2016/17.

KSU Weekly Grain Market Analysis: Corn & Grain Sorghum Basis Trends for Kansas in Fall 2018

Kansas Feedgrain Basis Trend Levels & Trends in Fall 2018

A. Corn Basis

According to the USDA Ag Marketing Service (AMS) Western Kansas Grain Markets Report on 10/25/2018, corn basis bids in Garden City and Dodge City in Southwest Kansas ranged from $0.08 to $0.03 /bu under DEC 2018 corn futures.   The strongest basis bids in Southwest Kansas are listed as $0.05 over DEC 2018 corn in the cattle feeding corn demand centers of Sublette and Ulysses.  Corn basis in selected Garden City locations have been trending “sideways” to slightly “stronger” since mid-July 2018.

Corn basis bids in Northwest Kansas in Colby and Goodland ranged from $0.39 to $0.36 /bu under DEC 2018 corn futures, with corn basis in Colby trending sideways since mid-August.

North Central Kansas corn basis bids at selected Concordia locations was $0.48 /bu under DEC 2018 corn futures on 10/25/2018, with basis in Salina to the south in the range of $0.50 to $0.45 under.  Corn basis bids at selected locations in Salina have widened or “weakened” by at least $0.35 /bu since mid-August.

South Central Kansas corn basis bids were at or near $0.35 /bu under DEC 2018 corn futures on 10/25/2018 in Hutchinson, Wellington, and Arkansas City locations.  Corn basis bids at selected locations in Hutchinson have widened or “weakened” by at least $0.35-$0.40 /bu since mid-August.

Corn basis bids in Northeast Kansas at Atchison and Topeka were $0.20 /bu under on 10/25/2018.  Corn basis at selected locations in Topeka trended “wider” or sharply “weaker” by approximately $0.50 /bu from mid-July to late September 2018, but have since strengthened by at least $0.15 per bushel.

Southeast Kansas corn basis bids were at or near $0.05 /bu under DEC 2018 corn futures on 10/25/2018 in Columbus.  Corn basis bids at selected locations in Columbus were $0.10 over lead futures in June-July.  But then after weakening sharply by $0.35-$0.40 for a 2 week period in late summer, strengthened again to $0.05 over lead futures during September and early October.  Recent, Columbus Kansas corn basis has widened or “weakened”again to by $0.05 /bu under DEC 2018 corn futures.

 

B. Grain Sorghum Basis

Grain sorghum basis bids in Garden City and Dodge City in Southwest Kansas ranged from $0.65 to $0.60 /bu under DEC 2018 corn futures.   The strongest basis bids in Southwest Kansas are listed as $0.50 over DEC 2018 corn in the cattle feeding feedgrain demand centers of Protection, Sublette, and Ulysses.  Grain sorghum basis in selected Garden City locations have been trending “sideways” to slightly “weaker” since mid-July 2018.

Grain sorghum basis bids in Northwest Kansas in Colby and Goodland ranged from $0.72 to $0.62 /bu under DEC 2018 corn futures, with grain sorghum basis in Colby trending “sideways to weaker” since mid-August.

North Central Kansas grain sorghum basis bids at selected Concordia locations was $0.75 /bu under DEC 2018 corn futures on 10/25/2018, with basis in Salina to the south in the range of $0.60 to $0.55 under.  Grain sorghum basis bids at selected locations in Salina have widened or “weakened” by at least $0.15-$0.20 /bu since early September.

South Central Kansas grain sorghum basis bids were at or near $0.70 to $0.60 /bu under DEC 2018 corn futures on 10/25/2018 in Hutchinson, and in the range of $0.52 to $0.45 /bu under at Wellington, Arkansas City, and Great Bend locations.  Grain sorghum basis bids at selected locations in Hutchinson have trended sideways to “weaker” in October.

Grain sorghum basis bids in Northeast Kansas in Topeka were $0.45 /bu under on 10/25/2018.  Grain sorghum basis at selected locations in Topeka trended “narrower” or “stronger” on week in late August by approximately $0.40-$0.50 /bu and maintained at that level through September.  But in October grain sorghum basis at this selected Topeka location has weakened by approximately $0.10 per bushel.

Southeast Kansas grain sorghum basis bids were at or near $0.40 /bu under DEC 2018 corn futures on 10/25/2018 in Columbus.  Grain sorghum basis bids at selected locations in Columbus were $0.20-$0.25 under lead futures in June-July, before weakening to $0.40 /bu during September-October.

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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 25, 2018 are available on the Kansas State University www.AgManager.info website at the following KSU web address:

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

The recorded radio program will be aired at 10:03 a.m. central time, Friday, October 25, 2018 on the K-State Radio Network (KSU Agriculture Today Radio) – web player available. A copy of the October 25th 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…