KSU Corn Market Outlook in February 2016: USDA and KSU Price Forecasts for MY 2016/17

An analysis of U.S. and World corn supply-demand factors and 2015/16 price prospects following the USDA’s February 9, 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 February 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 February 9th World Agricultural Supply and Demand Estimates (WASDE) report, corn futures have traded sideways-to-lower. With a third consecutive large U.S. corn crop in the 13.6 to 14.2 billion bushel (bb) range plus along with sizable foreign coarse grain crops in the “new crop” 2015/16 marketing year, it will be difficult for corn futures prices to rise to $4.25-$4.50+ by May-June 2016 unless unexpected crop production problems occur South America, larger than expected U.S. corn usage occurs in response to low U.S. and World corn prices, or significant planting and establishment problems occur for the 2016 U.S. corn crop. If low corn prices persist through spring 2016 – limiting corn net returns – U.S. farmers may reduce 2016 corn acreage and 2016 U.S. corn production prospects as a result.

Market factors such as a) international geopolitical conflicts, b) financial market disruptions, c) U.S. farmer resistance to selling at low February-March 2016 cash corn prices, and d) “El Nino” or “El Nino-La Nina transition”- related weather patterns in spring-summer 2016 with 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 increased feedgrain usage. 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.

USDA Estimate for “New Crop” MY 2015/16

The USDA estimated 2015 U.S. corn production of 13.601 bb, and for “new crop” MY 2015/16 that there would be total supplies of 15.382 bb. Total use of 13.545 bb (down 25 million bushels or ‘mb”) – which includes ethanol use of 5.225 bb (up 25 mb over 1 month ago), non-ethanol FSI use of 1.370 bb, exports of 1.650 bb (down 50 mb from January, and 100 mb from December projections), and feed and residual use of 5.300 bb. Ending stocks are forecast at 1.837 bb (13.56% S/U) in MY 2015/16 – up 35 mb from last month, and 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 the range of $3.35-$3.85 /bu. ($3.60 midpoint) versus $3.70 in “old crop” MY 2014/15, $4.46 in MY 2013/14, and $6.89 (record) in MY 2012/13.

USDA Forecast for “Next Crop” MY 2016/17

In their early release Agricultural Projections to 2025 the USDA provided an initial forecast of U.S. corn supply-demand and prices for the “next crop” 2016/17 marketing year beginning September 1, 2016. The USDA projected 2016 U.S. corn plantings of 90.500 million acres (ma) – up 2.501 ma from 2015. Forecast 2016 harvested acres of 82.700 ma would be up 1.951 ma vs 2015. With projected yields of 168.1 bu/ac, 2016 U.S. corn production is projected to be 13.900 billion bushels (bb) – 2nd highest on record behind 14.216 bb in 2014. With forecast MY 2016/17 total use of 13.935 bb (record high), and an adjusted projection of ending stocks of 1.832 bb (13.15% S/U), U.S. corn prices are projected by the USDA to be $3.60 /bu – unchanged from the $3.60 /bu midpoint estimate for “new crop” MY 2015/16.

KSU Forecast for “Next Crop” MY 2016/17

Based on adjustments to the USDA Agricultural Projections to 2025, KSU projections are for 2016 U.S. corn plantings of 90.500 (unchanged from the USDA), but with 2016 harvested acres of 83.079 ma (91.8% harvested-to-planted, equal to MY 2015/16), with trend yields of 164.5 bu/ac, and 2016 U.S. corn production of 13.666 bb. With forecast MY 2016/17 total use of 13.760 bb, and an adjusted projection of ending stocks of 1.773 bb (12.89% S/U), U.S. corn prices are projected by KSU to be $3.70 /bu – up $0.10 /bu from the USDA’s early projection for “next crop” MY 2016/17.

KSU 2016 U.S. Corn “Short Crop Scenario – 13.000 Billion Bushels

If significant corn production problems were to occur in the U.S. in the summer of 2016 resulting in a 13.000 bb corn (156.5 bu/ac yield on 83.079 ma harvested), then all else being equal, ending stocks in “next crop” MY 2016/17 could decline to 1.107 bb (8.0% S/U), with U.S. corn prices likely to increase to $5.00-$5.50 per bushel.

World Corn Supply-Demand

World total supplies of 1,176.1 million metric tons (mmt) are projected for “new crop” MY 2015/16, down marginally from 1,183.8 mmt in “old crop” MY 2014/15, but up from 1,124.1 mmt in MY 2013/14. Projected World corn ending stocks of 208.8 mmt (21.6% S/U) in “new crop” MY 2015/16 are up from 206.2 mmt (21.1% S/U) in “old crop” MY 2014/15, and from 174.8 mmt (18.4% S/U) in MY 2013/14.

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Soybean Market Outlook – KSU Ag Profitability Conference, Saint John, KS, January 21, 2016

Following is an updated presentation on “2016 Soybean Market Outlook” to be presented at the Kansas State University Ag Profitability Conference in Saint John, Kansas on Thursday, January 21, 2016.   The full presentation is available  on the KSU www.AgManager.info website at the following web address:

http://www.agmanager.info/marketing/outlook/crop_outlook/GrainOutlook_StJohn_01-21-16.pdf

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Corn and Sorghum Market Outlook – KSU Ag Profitability Conference, Saint John, KS, January 21, 2016

Following is an updated presentation on “2016 Corn and Sorghum Market Outlook” given at the Kansas State University Ag Profitability Conference in Saint John, Kansas on Thursday, January 21, 2016.   The full presentation is available  on the KSU www.AgManager.info website at the following web address:

http://www.agmanager.info/marketing/outlook/crop_outlook/GrainOutlook_StJohn_01-21-16.pdf

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Wheat Market Outlook – KSU Ag Profitability Conference, Saint John, KS, January 21, 2016

Following is an updated presentation on “2016 Wheat Market Outlook” to be presented at the Kansas State University Ag Profitability Conference in Saint John, Kansas on Thursday, January 21, 2016.   The full presentation is available  on the KSU www.AgManager.info website at the following web address:

http://www.agmanager.info/marketing/outlook/crop_outlook/GrainOutlook_StJohn_01-21-16.pdf

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KSU Soybean Market Outlook: Assessing Soybean Market Prospects in Mid-December 2015

An analysis of U.S. and World soybean supply-demand factors and late 2015-2016 price prospects following the USDA’s December 9th Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports, the USDA Agricultural Baseline projections to 2025 and the market actions that have followed those reports will be available soon 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 December 9th, soybean futures prices have moved higher.

Near term “weakness” in U.S. and World soybean market prices are limited by the cumulative effect of several market factors, including…

a) record 2014 South American and U.S. soybean crops leading to 24% growth in “old crop” MY 2014/15 World soybean stocks to 77.7 mmt (25.9% stocks/use),

b) record 2015 U.S. soybean production of 3.981 billion bushels (bb),

c) prospects for second consecutive record 2016 South American soybean crop,

d) projected “new crop” MY 2015/16 World soybean ending stocks of 82.6 mmt (26.4% stocks/use), and…

e) the high value of the U.S. dollar – putting U.S. soybeans at a disadvantage to exportable supplies from South America (with their “weaker” currencies).

Factors to Watch…

The development of dry growing conditions in key soybean production regions in northern Brazil, and changes in Argentine export taxation policies have added new elements of uncertainty to 2016 soybean market prospects. Developing South American crop prospects will continue to factor into soybean market prospects through spring 2016. Also, IF significant World geopolitical conflicts and/or financial market problems occur, their impact on soybean markets in terms of volatility and direction is difficult to predict.

Longer term, since MY 2008/09 the strong upward trend in World soybean production (up 7.3% annually) has “out-paced” the increase in World soybean use (up 5.8% per year), leading to record World soybean ending stocks and high percent stocks-to-use, with a dramatic reduction in price prospects in the coming year. Absent major unforeseen crop production problems in the U.S. and South America in year 2016, low prices and poor profitability are likely to cause a scaling back or “leveling” of World soybean production in 2017 and beyond.

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

The USDA forecast 2015 U.S. soybean production of a record 3.981 bb – up from the 2014 previous record of 3.969 bb. For “new crop” 2015/16, USDA projected U.S. total supplies at a record 4.203 bb (vs 4.052 bb in MY 2014/15), crush at 1.890 bb, exports at 1.715 bb (down from the record 1.843 bb in MY 2014/15), total use at 3.738 bb (vs record of 3.861 bb in MY 2014/15), and ending stocks at a 9 year high of 465 mb (up from 191 million bushels or ‘mb’ in MY 2014/15). Ending stocks-to-use are projected at 12.44% – up from 4.95% in MY 2014/15, and the record low of 2.65% in MY 2013/14. The USDA forecast “new crop” 2015/16 prices to be in the range $8.15-$9.65 (midpoint = $8.90 /bu) – down from $10.10 in MY 2014/15, $13.00 in MY 2013/14, and the record high of $14.40 in MY 2012/13.

Kansas State University U.S. Soybean Forecasts for “New Crop” MY 2015/16

A) KSU “Lower Price” Scenario: 70% probability of USDA supply-demand figures with a lower price, i.e., 465 mb end stocks, 12.44% ending Stx/Use, & $8.75 /bu.

B) KSU “Lower Yields & Production” Scenario: 25% probability of U.S. soybean yield of 47.5 bu/ac, 3.915 bb 2015 production, 4.136 bb total supplies, 3.710 bb total use, 426 mb end stocks, 11.5% Stx/Use, & $9.10 /bu.

C) KSU “Higher Exports” Scenario: 5% probability of 1.825 bb exports (up 110 mb vs USDA), 3.845 bb total use, 358 mb ending stocks, 9.3% ending Stx/Use, & $9.50 /bu.

USDA Forecast for “Next Crop” MY 2016/17

In their Agricultural Projections to 2025 the USDA provided an initial forecast of U.S. soybean supply-demand and prices for the “next crop” MY 2016/17. USDA forecast 2016 U.S. soybean plantings of 82.0 million acres (ma) – down 1.205 ma from 2015, with harvested acres of 81.1 ma down 1.329 ma vs 2015.

With projected yields of 46.7 bu/ac, 2016 U.S. soybean production is projected to be 3.785 bb. And with forecast MY 2016/17 total use of 3.859 bb, and ending stocks of 421 mb (10.9% S/U), U.S. soybean prices are projected to be $8.65 /bu – down $0.25 from $8.90 /bu in “new crop” MY 2015/16.

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https://willowhousechronicles.files.wordpress.com/2009/12/turkeygroup.jpg?w=548&h=364

Turkeys overwinter on soybean fields in 2009 (Source: https://willowhousechronicles.wordpress.com/2009/12/ )

 https://www.emporia.edu/dotAsset/0c64ae21-1882-481a-85d3-485bf4c08e22.jpg

Winter ice and snow in the Flint Hills, Wabaunsee Co., Kansas by Harlan Schuster (Source: https://www.emporia.edu/cgps/photo-project/harland-schuster-landscapes.html)

KSU Wheat Market Outlook: Assessing Wheat Market Prospects in Mid-December 2015

An analysis of U.S. and World wheat supply-demand factors and late 2015-2016 price prospects following the USDA’s December 9th Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports, the USDA Agricultural Baseline projections to 2025 and the market actions that have followed those reports will be available on the KSU AgManager website on Tuesday, December 22nd (http://www.agmanager.info/default.asp).

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

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Summary

Overview

Since USDA’s World Agricultural Supply and Demand Estimates (WASDE) and Crop Production reports on December 9th, U.S. and World wheat market prices have moved sideways-to-marginally higher. For the “new crop” 2015/16 marketing year the USDA projected that 1) World wheat total supplies (947.0 mmt) and total use (717.1 mmt) would be at record high levels, 2) World wheat export trade (161.7 mmt) would be down moderately from a year ago (164.4 mmt) – with World export sales competition occurring in what can be termed a “buyer’s market”, and c) World wheat ending stocks (229.9 mmt – up from 212.1 mmt a year ago) would be record high, with percent ending stocks-to-use (32.1% – up from 30.0% a year ago) at their highest level in 14 years (since MY 2001/02). The 38-year low in World wheat ending stocks of 128.6 mmt and percent ending stocks-to-use of 20.9% S/U occurred in the last major “short crop” marketing year in MY 2007/08.

There are ongoing concerns in the World wheat market about….

a) potential wheat production problems and supply prospects in the Black Sea region and elsewhere),

b) foreign geopolitical changes and conflicts,

and c) spillover impacts from volatile World economic, financial and currency markets.

Even so, the “large crop-over supply” situation currently existing in World & U.S. wheat markets continues to have a strong negative influence on World wheat prices. For wheat prices are to recover significantly before summer-2016 it is likely that significant World wheat production problems and/or trade disruptions would need to occur.

Ongoing strength in the U.S. dollar exchange rate is a serious negative factor that is limiting U.S. wheat exports, raising U.S. wheat ending stocks, and causing sharply lower U.S. wheat prices.

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

The USDA made no adjustments in its supply-demand forecasts for U.S. wheat in the “new crop” 2015/16 marketing year – with 2.052 billion bushels (bb) production, 2.930 bb total supplies, 800 million bushels (mb) of exports, 2.019 bb of total use, 911 mb ending stocks, and 45.1% ending-stocks-to-use (up to the highest level since 48.6% in MY 2009/10). A price range of $4.80-$5.20 /bu was forecast with a midpoint of $5.00 /bu –the lowest level since $4.87 /bu in MY 2009/10.

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

Two possible domestic wheat market scenarios are forecast by Kansas State University for “new crop” MY 2015/16:

A) “Lower Exports” Scenario: 80% prob. of the same U.S. wheat supply estimates as the USDA, but with U.S. exports dropping below “old crop” 2014/15 levels to 750 mb exports, with 961 mb ending stocks, 48.8% S/U, and $4.85 /bu U.S. average price; and

B) “Higher Exports” Scenario: 20% prob. of supply prospects again equal to the USDA’s, but with higher U.S. wheat exports, i.e., 900 mb exports, with 811 mb ending stocks, 38.3% S/U, and $5.85 /bu U.S. average price.

USDA U.S. Wheat Forecast for “Next Crop” MY 2016/17

In their Agricultural Projections to 2025 the USDA provided a forecast of U.S. wheat market outlook for the “next crop” 2016/17 marketing year beginning June 1, 2016.  The USDA projected 2016 U.S. wheat plantings of 53.0 million acres (ma) – down 1.644 ma from 2015. Forecast 2016 harvested acres of 44.9 ma would be down 2.194 ma vs 2015.

With projected yields of 45.9 bu/ac (up from 43.6 bu/ac in 2015), 2016 U.S. wheat production is projected to be 2.060 bb (up marginally vs 2015), with 2016/17 total supplies equaling 3.096 bb (up from 2.930 bb in “new crop” MY 2015/16).

With forecast “next crop” MY 2016/17 total use of 2.198 bb, and ending stocks of 928 mb (42.8% S/U), U.S. wheat prices are projected to be $4.40 /bu – down from $5.00 /bu in “new crop” MY 2015/16.

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https://i0.wp.com/kansasagnetwork.com/wp-content/uploads/2014/01/Winter-Wheat-with-Snow-Cover1.jpg

Kansas Wheat Fields – January 2014 (Source: http://kansasagnetwork.com/2014/k-states-jim-shroyer-on-evaluating-cold-injury-to-wheat-in-kansas/ )

https://i1.wp.com/www.nps.gov/wica/learn/photosmultimedia/images/Sunrise-in-Winter_2.jpg 

“Sunrise in Winter” – A National Park Service Photograph (Source: http://www.nps.gov/wica/learn/photosmultimedia/photo-gallery-park-scenes.htm )

KSU Corn Market Outlook: Assessing the U.S. Corn Market in Late 2015

An analysis of U.S. and World corn supply-demand factors and 2015/16 price prospects following the USDA’s December 9, 2015 USDA Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports, and the USDA Agricultural Baseline projections to 2025 will be available on the KSU AgManager website on Monday, December 21st  (http://www.agmanager.info/default.asp).

Following is a summary of the article on “Corn Market Outlook in Mid-December 2015″ 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 December 9th World Agricultural Supply and Demand Estimates (WASDE) report, corn futures have traded in a volatile sideways pattern. With expectations of a third consecutive 13.6 billion bushel (bb) plus U.S. corn crop in 2015 along with sizable foreign coarse grain crops in the “new crop” 2015/16 marketing year, it will be difficult for corn futures prices to rise to $4.50-$5.00+ by spring 2016 unless crop production problems occur South America or larger than expected U.S. corn usage occurs in response to low U.S. and World corn prices. If low corn prices persist through spring 2016 – limiting corn net returns – it is likely that U.S. farmers will reduce 2016 corn acreage and 2016 U.S. corn production prospects as a result.

Market factors such as a) international geopolitical conflicts, b) financial market disruptions, c) U.S. farmer resistance to selling at low winter 2016 cash corn prices, and d) “El Nino” or “El Nino-La Nina transition”- related weather patterns in spring-summer 2016 with 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 – supporting the profitability for U.S. and Foreign livestock feeding and bioenergy users and leading to increased feedgrain usage. The high value of the U.S. dollar has been a limiting factor for U.S. corn exports.

USDA Forecast for “New Crop” MY 2015/16

The USDA projected 2015 U.S. corn production of 13.654 billion bushels (bb), and for “new crop” MY 2015/16 that there would be total supplies of 15.415 bb, and total use of 13.630 bb (down 25 mb) – which includes ethanol use of 5.200 bb (up 25 mb over 1 month ago), non-ethanol FSI use of 1.380 bb, exports of 1.750 bb (down 25 mb from November and 75 mb from October projections) and feed and residual use of 5.300 bb. Ending stocks are forecast at 1.785 bb (13.54% S/U) in MY 2015/16 – up 25 mb from last month, and up from 1.731 bb (12.6% S/U) in “old crop” MY 2014/15. U.S. corn average cash prices are forecast the range of $3.35-$3.95 /bu. ($3.65 midpoint) versus $3.70 in “old crop” MY 2014/15, $4.46 in MY 2013/14, and $6.89 (record) in “drought stricken” MY 2012/13.

KSU U.S. Corn Market Forecasts

Projected supply-demand and price scenarios by KSU for “new crop” MY 2015/16 are as follows: a) “USDA S/D Estimates” Scenario (80% prob.): All supply-demand assumptions equal to the USDA’s, but with $3.60 /bu U.S. corn MYA prices; b) “2015 Smaller Crop” Scenario (10% prob.): U.S. corn yield of 167.0 bu/ac, 2015 U.S. corn production of 13.470 bb, total supplies of 15.232 bb, total use of 13.630 bb, ending stocks of 1.602 bb, 11.75% S/U, & $4.00 /bu U.S. corn MYA prices; and c) “2015 Economic Problems” Scenario (10% prob.): U.S. corn production and supplies equal to the USDA estimates, but lower total use of 13.435 bb, ending stocks of 1.980 bb, 14.7% S/U, & $3.40 /bu U.S. corn MYA prices.

USDA Forecast for “Next Crop” MY 2016/17

In their Agricultural Projections to 2025 the USDA provided an initial forecast of U.S. corn supply-demand and prices for the “next crop” 2016/17 marketing year beginning September 1, 2016. The USDA projected 2016 U.S. corn plantings of 90.5 million acres (ma) – up 2.119 ma from 2015. Forecast 2016 harvested acres of 82.7 ma would be 2.036 ma vs 2015. With projected yields of 168.1 bu/ac, 2016 U.S. corn production is projected to be 13.900 billion bushels (bb) – 2nd highest on record. With forecast MY 2016/17 total use of 13.935 bb (record high), and ending stocks of 1.780 bb (12.77% S/U), U.S. corn prices are projected to be $3.60 /bu – down marginally from $3.65 /bu in “new crop” MY 2015/16.

World Corn Supply-Demand

World total supplies of 1,182.1 million metric tons (mmt) are projected for “new crop” MY 2015/16, down marginally from 1,183.7 mmt in “old crop” MY 2014/15, but up from 1,124.3 mmt in MY 2013/14. Projected World corn ending stocks of 211.9 mmt (21.8% S/U) in “new crop” MY 2015/16 are up from 208.2 mmt (21.3% S/U) in “old crop” MY 2014/15, and from 174.9 mmt (18.4% S/U) in MY 2013/14.

Photo: Freight train going through the Rockies

Rail Service I