This Weekly Grain Market Review from the Kansas State University Agricultural Economics Department (Daniel O’Brien – Author) is available on the www.AgManager.info website for the market week ending September 13, 2019 at the following web address:
Weekly Grain Market Commentary
by Daniel M. O’Brien, Extension Agricultural Economist – Kansas State University
September 13, 2019
Grain markets responded positively to the events of Thursday, September 12th, including the outcome of the USDA Crop Production and World Agricultural Supply-Demand Estimates (WASDE) reports, and positive news about ongoing U.S.-China Trade negotiations.
A. Soybean Market Factors
The USDA projected that ending stocks of U.S. soybeans would tighten further in the “New Crop” 2019/20 marketing year (which began on September 1, 2020). Ending stocks were projected to decline from 1.005 billion bushels (bb) (25.16% ending stocks-to-use) in “old crop” MY 2018/19 to 640 million bushels (mb) (15.93% ending stocks-to-use) in “new crop” MY 2019/20 – to end on August 31, 2020. The USDA raised its projection of the U.S. average farm price by $0.10 up to $8.50 per bushel in “new crop” MY 2019/20. In combination of new purchases of U.S. soybeans by China, exclusion of U.S. soybeans from planned tariffs, and the resumption of U.S.-China trade talks were all supportive of soybean market prices.
Within the USDA Crop Production report were indications of the lateness of U.S. soybean crop development – showing a 2-3 week delay in soybean crop development and maturity. The USDA highlighted a tool from NASA that helps to quantify or describe the degree of U.S. crop maturity – called the MODIS NDVI 8-day index for the U.S.. The acronym “NDVI” stands for “normalized difference vegetation index”. This tool shows how the development of the 2019 U.S. soybean crop compares to the 2001-2015 period, and will be helpful in coming weeks to asses U.S. soybean crop maturity going into fall harvest.
Information about the NASA MODIS NDVI product is available at the following web address:
In response to these and other soybean market factors, there was an increase of $0.29 to $8.95 1/2 per bushel occurred in NOV 2019 Soybean futures on September 12th.
B. Corn & Grain Sorghum Market Factors
DEC 2019 Corn futures also increased by $0.07 1/4 to $3.67 1/4 per bushel on September 12th – responding to a modest decline in projected 2020 U.S. Corn production by 102 mb down to 13.799 bb. There are continuing concerns about final U.S. corn planted and particularly harvested acres as well as corn maturity risks in delayed planting areas.
Corn market prices were also supported by the USDA’s forecast that World Corn ending stocks-to-use will continue a four year decline, from 33.1% in MY 2016/17, down to 31.2% in MY 2017/18, to 29.1% in “old crop” 2018/19, and down further to 27.2% in “new crop” MY 2019/20. United States’ Grain Sorghum ending stocks-to-use are projected to tighten from 15.94% in “old crop” MY 2018/19 down to 12.78% in “new crop” MY 2019/20.
The USDA made no changes its projection of the U.S. average farm price of Corn at $3.60 per bushel , and Grain Sorghum at $3.30 per bushel in “new crop” MY 2019/20.
Just as for soybeans, within the USDA Crop Production report were indications also of the lateness of U.S. corn crop development – again showing a 2-3 week delay in corn crop development and maturity. The MODIS NDVI (normalized difference vegetation index) 8-day index for the U.S. shows how the development of the 2019 U.S. corn crop compares to the 2001-2015 period. Just as for soybeans, this tool for corn development will be helpful in coming weeks to asses U.S. corn crop maturity going into fall harvest. Information about the NASA MODIS NDVI product is available at the following web address: https://modis.gsfc.nasa.gov/data/dataprod/mod13.php
C. Wheat Market Factors
DEC 2019 Hard Red Winter (HRW) Wheat futures also increased modestly by $0.05 to $4.03 1/2 per bushel on September 12th. There were no changes in the USDA’s forecast of “new crop” MY 2019/20 U.S. supply-demand factors. However, the USDA lowered its projection of the U.S. average farm price of wheat by $0.20 to $4.80 per bushel. The “new crop” 2019/20 wheat marketing year began on June 1, 2019, and will conclude on May 31, 2019.
Wheat market prices were also supported by the USDA’s forecast that World Wheat ending stocks-to-use will continue to increase. From a low of 26.1% in MY 2012/13, World wheat ending stocks-to-use trended higher to 28.6% in MY 2013/14, 31.8% in MY 2014/15, 34.3% in MY 2015/16, 35.7% in MY 2016/17, and a high of 38.0% in MY 2017/18. While World Wheat ending stocks have actually declined over the last few years when adjusted for Chinese stocks, still the overall focus of the World wheat market is seemingly on these aggregate figures.
Weather-related roduction problems for wheat are occurring some important producing regions of the World, such as eastern Australia, northern Europe, parts of the Former Soviet Union (western Russia and northern and western Ukraine), Argentina, and Canada have not “come together” at this time in an aggregate, World scale manner to bring declines to Wheat supply-demand balances.
D. Looking to Coming USDA Production Numbers
Overall, grain markets appear to still be waiting for some verification of 2019 U.S. feedgrain and oilseed crop prospects. While the September 12th USDA Crop Production and WASDE reports provided some information about crop prospects, the October 10th, November 8th, and January 2020 USDA reports with harvest information “in hand” will likely “tell the tale” of actual 2019 fall harvested crop size. So, again, stay tuned!
Access to the KSU Agriculture Today Radio Program was aired on Friday, September 13th at 10:00 a.m. CDT and can be found at the following web address:
On this program KSU Extension Agricultural Economist Daniel O’Brien and KSU Agricultural Communications and Education Specialist Eric Atkinson provide their analysis of current grain markets and their outlook for the remainder of year 2019. In particular, they discuss how how grain basis levels for corn, grain sorghum, hard red winter wheat, and soybeans in Kansas are reacting to recent lows in grain futures prices.
Following are selected figures for this market summary report, with tables and graphics.