U.S. Ethanol and Biodiesel Market-Profitability Graphics through April 26, 2016

Following are some graphics on price and profitability trends in the U.S. ethanol and biodiesel industries, which will soon be available on the KSU AgManager website: http://www.agmanager.info/

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KSU Soybean Market Outlook: Examining Market Prospects for “Next Crop” MY 2016/17

An analysis of U.S. and World soybean supply-demand factors and late 2015-2016 price prospects is provided following the USDA’s April 12th World Agricultural Supply Demand Estimates (WASDE) reports, the March 31st USDA NASS Prospective Plantings report, the March 31st USDA quarterly Grain Stocks Report, and the February 25-26 USDA Agricultural Outlook Forum .   The full KSU Soybean Market Outlook in April 2016 will be available on March 26, 2016 on the KSU AgManager website (http://www.agmanager.info/default.asp).

Following is a summary – with the full analysis-article for soybean to be found at this web location:  http://www.agmanager.info/marketing/outlook/newletters/Soybean.asp

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Summary

Overview

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on April 12th, soybean futures prices have moved sharply higher.  To date in the “current” 2015/16 marketing year, soybean market prices in the U.S. and World have been limited by the current “large crop – low price” scenario, caused by consecutive record 2014, 2015 and projected 2016 South American and U.S. soybean crops.  However, recent significant crop production problems have occurred in key South American production areas such as Argentina and parts of Brazil.  The current market oversupply situation is illustrated by 28% growth over a two year period in World soybean stocks, from 61.8 mmt (22.4% stocks/use) in the MY 2013/14 up to 79.0 mmt (25.0% stocks/use) in the “current crop” MY 2015/16.  To make export sales of U.S. soybeans even more challenging, the high value of the U.S. dollar relative to declining or low currency exchange rates of foreign soybean export competitors in South America has had some negative impact on U.S. exports and prices. However, with limited numbers of major exporting countries available to buy from in the World market, the negative impact has been more limited than it has been for U.S. wheat trade.

In April excessive rainfall has caused problems with the Argentina 2016 soybean crop, adding to ongoing dry conditions in some key Brazilian soybean production areas in recent months. Once the extent of these threats to soybean production in these countries is adequately quantified, then World soybean markets will turn their attention to spring-summer-fall soybean crop prospects in the United States.  The key issue will be to determine whether any weather or disease problems end up driving U.S. soybean production low enough to alter the current “large supply” “buyer’s market” situation that now exists in U.S. and World soybean markets.

Longer term, since MY 2008/09 a strong upward trend in World soybean production (up 7.3% annually) has “out-paced” the increase in World soybean use (up 6.1% per year), leading to record World soybean ending stocks and growth in percent ending stocks-to-use, and consequently to a dramatic reduction in soybean price prospects in the “current” and anticipated “next” crop years.  Absent any major unforeseen crop production problems in the U.S. and South America in year 2016, low prices and poor profitability this coming fall are likely to cause either a scaling back or “leveling” of World soybean production in 2017 and beyond.

USDA U.S. Soybean Forecast of “Current Crop” MY 2015/16

The USDA maintained its forecast 2015 U.S. soybean production of a record 3.929 billion bushels (bb) – up marginally from 3.927 bb in 2014.  For “current crop” 2015/16, USDA projected U.S. total supplies at a record 4.150 bb (vs 4.052 bb in MY 2014/15), crush at 1.870 bb, exports at 1.705 bb (up 15 mb from March, but still down from the record 1.843 bb in “old crop” MY 2014/15), total use at 3.705 bb (up 15 mb but less than the record of 3.862 bb in “old crop” MY 2014/15), and ending stocks at a 9-year high of 445 mb (down 15 mb, but still up from 191 million bushels or ‘mb’ in “old crop” MY 2014/15, and 92 mb in MY 2013/14).   Ending stocks-to-use are projected at 12.01% – up dramatically from 4.95% in “old crop” MY 2014/15, and the record low of 2.65% in MY 2013/14.  The USDA forecast “current crop” MY 2015/16 prices to be in the range $8.50-$9.00 (midpoint = $8.75 /bu) – down from $10.10 in “old crop” MY 2014/15, $13.00 in MY 2013/14, and the record high of $14.40 in MY 2012/13.

USDA Forecast for “Next Crop” MY 2016/17

An adjusted version of the USDA’s “next crop” MY 2016/17 forecast for U.S. soybeans is presented here, building on the information presented by the USDA at its Agricultural Outlook Forum in Arlington, VA on February 25-26, with 2016 U.S. soybean planted acres equal to the March 31st Prospective Planting report forecast.  The USDA projected 2016 U.S. soybean plantings of 82.236 million acres (ma) – down 414,000 acres from 2015.  Forecast 2016 harvested acres of 81.257 ma is developed using longer term KSU harvested-to-planted acreage estimates (98.8%), and would be down 1.592 ma vs 2015.

With projected yields of 46.7 bu/ac, 2016 U.S. soybean production is projected to be 3.795 bb – 3rd highest on record behind 3.927 bb in 2014 and 3.929 bb in 2015.   With forecast “next crop” MY 2016/17 total use of 3.850 bb (2nd highest behind 3.862 bb in “old crop” MY 2014/15), and an adjusted projection of ending stocks of 420 mb (10.91% S/U), U.S. soybean prices were estimated by the USDA to be $8.50 /bu at the 2016 Ag Outlook Forum – down from the USDA’s $8.75 /bu midpoint estimate for “current” MY 2015/16.

KSU Forecasts for “Next Crop” MY 2016/17

Three alternative KSU-Scenarios for U.S. soybean supply-demand and prices are presented for “next crop” MY 2016/17, with each assuming a 1.500 ma upward adjustment in 2016 U.S. soybean planted acres from the USDA’s March 31st Prospective Plantings report.

A) KSU-Scenario A (Higher Acres & Trend Yield) (30% probability) assumes for “next crop” MY 2016/17: 83.736 ma planted, 83.739 ma harvested, 45.85 bu/ac yield, 3.794 bb production, 4.269 bb total supplies, 3.726 bb total use, 546 mb ending stocks, 14.57% S/U, & $8.25 /bu U.S. soybean average price;

B) KSU-Scenario B (Higher Acres & Moderate Crop Stress) (25% prob.) assumes 83.736 ma planted, 82.739 ma harvested, 44.0 bu/ac yield, 3.641 bb production, 4.116 bb total supplies, 3.653 bb total use, 463 mb ending stocks, 12.67% S/U, & $8.60 /bu U.S. soybean price; and

C) KSU-Scenario C (Higher Acres & Extreme Drought) (10% prob.) assumes 83.736 ma planted, 82.739 ma harvested, 39.0 bu/ac yield, 3.227 bb production, 3.702 bb total supplies, 3.426 bb total use, 276 mb ending stocks, 8.1% S/U, & $10.00 /bu U.S. soybean price.

World Soybean Supply-Demand

World total supplies of 397.9 million metric tons (mmt) are projected for “current” MY 2015/16, up 4.3% from 381.3 mmt in “old crop” MY 2014/15, and up 17.8% from 337.9 mmt in MY 2013/14.  Projected World soybean ending stocks of 79.0 mmt (25.0% S/U) in “current” MY 2015/16 are up moderately from 77.7 mmt (25.9% S/U) in “old crop” MY 2014/15, and from 61.8 mmt (22.4% S/U) in MY 2013/14.

World soybean supplies and ending stocks have been growing in recent marketing years, but usage has grown at an equal or greater pace.  These trends have led to the result that percent ending stocks-to-use is lower in “current crop” MY 2015/16 (25.0%) than in “old crop” MY 2014/15 (25.8%) – a positive sign for future trends in World soybean markets.

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https://i0.wp.com/www.hoosieragtoday.com/wp-content/uploads//2014/05/soybean-planting.jpg

Considering Narrow Row Soybeans in the Eastern Corn Belt (Source: http://www.hoosieragtoday.com/narrow-row-soybeans-have-yield-advantage/ )

 https://ksugrains.files.wordpress.com/2016/04/72550-pond-on-flint-hill-kansas-232717.jpg?w=586&h=330

Picturesque Western Kansas near Scott Lake State Park (Source: http://www.tourist-destinations.com/2015/01/kansas-usa.html)

KSU Corn Market Outlook in April 2016: USDA and KSU Price Forecasts for “Next Crop” MY 2016/17

An analysis of U.S. and World corn supply-demand factors and 2015/16 price prospects following the USDA’s April 12, 2016 USDA Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports is available on the KSU AgManager website:  http://www.agmanager.info/default.asp

Following is a summary of the article on “Corn Market Outlook in April 2016″ with the full article and accompanying analysis soon to be available on the KSU AgManager website at the following web address: http://www.agmanager.info/marketing/outlook/newletters/Corn.asp

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Summary

Overview

Since the USDA’s April 12th World Agricultural Supply and Demand Estimates (WASDE) report, corn futures have traded first sharply higher through early in the day on Thursday, April 21st, but then fell sharply through April 22nd – giving back much of the prices increases since the WASDE report was released.  With a third consecutive large U.S. corn crop in the 13.6 to 14.2 billion bushel (bb) range in 2015 along with sizable foreign coarse grain crops in the “current” 2015/16 marketing year, it will be difficult for corn futures prices to rise to $4.25-$4.50+ by May-June 2016 unless a) unexpected late season corn production problems are shown to have occured South America, b) larger than expected U.S. corn usage occurs in response to low U.S. and World corn prices during the March-May 2016 quarter, and/or c) significant planting and establishment problems occur for the 2016 U.S. corn crop – leading to reduced corn acreage and production prospects.  Low corn prices and limited corn net returns prospects may reduce U.S. 2016 corn acreage and production prospects.

Market factors such as a) economic and financial system disruptions impacting grain, energy, and other commodity markets, b) U.S. farmer resistance to selling at low late-April and May 2016 cash corn prices, and c) concerns about possible “El Nino” or “El Nino-La Nina transition”- related weather patterns in spring-summer 2016 with an eye toward their possible negative impacts on 2016 crop production, could each still impact corn market prices through summer-fall 2016.  Also, low feedgrain prices have resulted in lower input costs for U.S. and Foreign livestock feeding and bioenergy users – leading to strong domestic and foreign feedgrain usage and providing underlying support for U.S. corn exports.  In the “current” 2015/16 marketing year the high value of the U.S. dollar and prospects for a large 2016 South American corn crop have been significant limiting factors for U.S. corn exports – although the U.S. dollar has been trending lower in recent weeks.

USDA Estimate for “Current” MY 2015/16

The USDA made several changes to the U.S. corn supply-demand balance sheet for “current crop” MY 2015/16 – with 2015 U.S. corn production of 13.601 bb, and total supplies of 15.382 bb for MY 2015/16.  Total use is projected to be 13.521 bb (down 24 million bushels or ‘mb’)  Ethanol use was projected to be 5.250 bb (up 25 mb), with non-ethanol Food, Seed, and Industrial (FSI) use of 1.371 bb (up 1 mb), exports of 1.650 bb, and feed and residual use of 5.250 bb (down 25 mb).  Ending stocks are forecast to be up 25 mb to 1.862 bb (13.77% S/U) in “current” MY 2015/16 – up from 1.731 bb (12.6% S/U) in “old crop” MY 2014/15, and 1.232 bb (9.2% S/U) in MY 2013/14.  U.S. corn average cash prices are forecast to be in the range of $3.40-$3.70 /bu. ($3.55 midpoint) versus $3.70 in “old crop” MY 2014/15, $4.46 in MY 2013/14, and $6.89 (record high) in MY 2012/13.

Adjusted USDA Forecast for “Next Crop” MY 2016/17

An adjusted version of the USDA’s “next crop” MY 2016/17 forecast for U.S. corn is presented here, building on the information presented by the USDA at its Agricultural Outlook Forum in Arlington, VA on February 25-26, with 2015 U.S. corn planted acres matching the higher March 31st Prospective Planting report planted acreage forecast.   Projected 2016 U.S. corn plantings equal 93.601 ma – up 5.602 ma from 2015.  Forecast 2016 harvested acres of 85.413 ma would be up 4.664 ma vs 2015.  With projected yields of 168.0 bu/ac, 2016 U.S. corn production is projected to be a record 14.349 billion bushels (bb) – up from 13.829 bb in 2013, 14.216 bb in 2014, and 13.601 bb in 2015.   With forecast MY 2016/17 total use of 13.725 bb (2nd highest behind 13.748 bb in “old crop” MY 2014/15), and projected ending stocks of 2.486 bb (18.11% S/U) – up from 1.862 bb (13.77% S/U) in “current crop” MY 2015/16, U.S. corn prices are projected by the USDA to be $3.45 /bu – down from the $3.55 /bu midpoint estimate for “current” MY 2015/16 and subject to lowering in future USDA WASDE reports. This scenario is given a 35% likelihood of occurring by KSU.

KSU Forecast for “Next Crop” MY 2016/17

Three alternative KSU-Scenarios for U.S. corn supply-demand and prices are presented for “next crop” MY 2016/17, with each assuming a 1.5 ma downward adjustment in 2016 U.S. corn planted acres from the USDA’s March 31st Prospective Plantings report.

A) KSU-Scenario A (Lower Acres & Trend Yield) (30% probability) assumes for “next crop” MY 2016/17: 92.101 ma planted, 84.404 ma harvested, 164.5 bu/ac yield, 13.825 bb production, 15.727 bb total supplies, 13.640 bb total use, 2.087 bb ending stocks, 15.30% S/U, & $3.20 /bu U.S. corn average price;

B) KSU-Scenario B (Lower Acres & Moderate Drought) (25% prob.) assumes 92.101 ma planted, 84.404 ma harvested, 158.0 bu/ac yield, 13.279 bb production, 15.186 bb total supplies, 13.575 bb total use, 1.611 bb ending stocks, 11.87% S/U, & $3.70 /bu U.S. corn price;  and

C) KSU-Scenario C (Lower Acres & Extreme Drought) (10% prob.) assumes 92.101 ma planted, 84.404 ma harvested, 150.0 bu/ac yield, 12.607 bb production, 14.519 bb total supplies, 13.382 bb total use, 1.137 bb ending stocks, 8.5% S/U, & $4.75 /bu U.S. corn price.

World Corn Supply-Demand

World total supplies of 1,179.7 million metric tons (mmt) are projected for “current” MY 2015/16, down from 1,187.9 mmt in “old crop” MY 2014/15, but up from 1,123.9 mmt in MY 2013/14.  Projected World corn ending stocks of 208.9 mmt (21.5% S/U) in “current” MY 2015/16 are up from 207.6 mmt (21.2% S/U) in “old crop” MY 2014/15, and from 175.0 mmt (18.4% S/U) in MY 2013/14.

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KSU Weekly Grain Market Analysis: MY 2016/17 S-D and Price Scenarios for U.S. Corn, Sorghum, Wheat and Soybeans

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, April 22, 2016 are available on the Kansas State University www.AgManager.info website at the following web address: http://www.agmanager.info/news/Articles/KSRN_GrainOutlook_04-22-16.pdf

The recorded radio program will be aired at 10:03 a.m. central time, Friday, April 22nd on the K-State Radio Network (here) – with the program available to listen to online.  After the program airs, a recording can also be listened to from the KSU AgManager.info website via a link  in the “Radio Interviews” section: http://www.agmanager.info/news/default.asp

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KSU “Quick Numbers Analysis” of the USDA April 10, 2016 WASDE Report for Grains

A KSU “quick analysis” worksheet of the key grain marketing-related information found in the April 10th USDA Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports can be found on the Kansas State University AgManager.info website (http://www.agmanager.info/). The specific web address for this downloadable MS Excel Spreadsheet is found here:  http://www.agmanager.info/marketing/outlook/newletters/default.asp

The spreadsheet contains a comparison of USDA April 10th U.S. and Foreign grain supply-demand and market supply-demand forecasts for the “current crop” 2015/16 marketing year for corn, wheat, soybeans and grain sorghum, with comparisons to a) pre-report trade estimates, and b) last month’s (March 9, 2016) USDA grain production and other supply-demand projections.  Key information is contained on the following:

A. Brazil, Argentina and Total World crop production forecasts for 2016 corn, grain sorghum, wheat and soybeans.

B. Updated U.S. & World ending stocks projections for the “old crop” 2014/15 marketing year as well as for the “current” 2015/16 marketing year for major crops (corn, sorghum, wheat, and soybeans).

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

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March 1st Grain Stocks and Dec-Feb Usage Tables-Charts following the 3/31/2016 USDA Grain Stocks Report

Following are KSU Summary Tables and Charts following the USDA National Agricultural Statistical Service (NASS) Quarterly Stocks report.  The full USDA report is available the following web address: https://www.ksre.k-state.edu/news/radio-network/ag-today.html

These charts and tables are available on the KSU AgManager Website in a couple of alternative forms.

First, these particular tables and charts are available on as part of the KSU Weekly Grain Market Update for April 9th at the following web address:

http://www.agmanager.info/news/Articles/KSRN_GrainOutlook_04-08-16.pdf

Second, a broader, comprehensive set of World and U.S. corn, wheat and soybean market supply-demand and price information is available on AgManager.info in the “Spreadsheets with USDA WASDE (World Agricultural Supply and Demand Estimates” part of the “Crops: Supply and Demand (WASDE)” section at the following web address:

http://www.agmanager.info/marketing/outlook/WASDE/default.asp

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https://i2.wp.com/reifwelding.com/communities/7/000/001/781/647//images/10420142.jpg

Modern Grain Storage Facilities in Western Kansas.  Source of image: http://reifwelding.com/grain-bins/3652540

https://retiredroadtrippers.files.wordpress.com/2014/10/1018-grain-storage.jpg?w=561&h=315

Grain Storage View “from the Highway” in the Texas / Oklahoma / Kansas area in Fall 2014.  Source of image: https://retiredroadtrippers.wordpress.com/2014/10/18/texas-oklahoma-kansas/

KSU Weekly Grain Market Analysis: “Edgy” Markets – Fearful of large 2016 U.S. Crops

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, April 9th are available on the Kansas State University www.AgManager.info website at the following web address: http://www.agmanager.info/news/Articles/KSRN_GrainOutlook_04-08-16.pdf

The recorded radio program was aired at 10:03 a.m. central time, Friday, April 9th on the K-State Radio Network (here) – web player available.

Following are key excerpts from these working notes:

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