KSU Wheat Market Outlook in Early September 2015 (via KSU AgManager)

An analysis of U.S. and World wheat supply-demand factors and 2015-2016 price prospects following the USDA’s August 12th Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports and the market actions that have followed those reports is available on the KSU AgManager website (http://www.agmanager.info/default.asp).

Following is a summary – with the full analysis-article for Wheat to be found at 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 August 12th, U.S. and World wheat market prices have traded sharply lower. For the “new crop” 2015/16 marketing year the USDA projected that 1) World wheat total supplies and total use would be at record high levels, 2) World wheat export trade would be down moderately from a year ago – with strong export sales competition occurring in what can be termed a “buyer’s market”, and c) World wheat ending stocks would be record high, with percent ending stocks-to-use at their highest level since MY 2009/10.

There are underlying concerns about key World wheat market factors, such as a) potential wheat production problems and supply prospects in Australia, India, Russia, and elsewhere in “new crop” MY 2015/16, b) the ongoing geopolitical problems in the Black Sea region and the potential for conflict in the Middle East, and c) uncertainty in World economic, financial and currency markets. However, the overriding “large crop-over-supply” situation that now exists in World & U.S. wheat markets continues to negatively influence wheat futures and cash prices. Recovery in wheat market prices may dependent on whether significant problems in wheat production and/or trade occur in major World wheat producing and exporting areas in year 2015 and beyond, and for the U.S. how long the strong value of the U.S. dollar relative to other currencies continues.

USDA U.S. Wheat Supply-Demand & Price Forecast

For U.S. wheat in the “new crop” 2015/16 marketing year, the USDA projected that there would be 55.079 million acres (ma) planted, 48.454 ma harvested, 44.1 bu/ac yields (down 0.2 bu), 2.136 billion bushels (bb) production (down 12 mb), 3.014 bb total supplies (down 17 mb), 925 million bushel (mb) exports (down 25 mb), 200 mb feed & residual use, 2.164 bb total use (down 25 mb), 850 mb end stocks (up 8 mb), with 39.3% ending-stocks-to-use (up from 38.5% in July, and up to the highest level since 48.6% in MY 2009/08). The USDA projected U.S. average wheat prices for “new crop” MY 2015/16 in the range of $4.65-$5.55 /bu. (midpoint =$5.10) – the lowest since $4.87 /bu in MY 2009/10.

Kansas State University U.S. Wheat Supply-Demand & Price Forecast

Key market factors to consider are the level of 2015 U.S. hard red spring wheat production, and prospects for improved U.S. wheat exports. Kansas State University projections of “new crop” MY 2015/16 supply-demand balances and prices are represented in two scenarios:

A) “Lower Exports” Scenario: 65% prob. of the same U.S. wheat production estimates as the USDA, but with U.S. exports dropping to “old crop” 2014/15 levels, i.e., 3.014 bb total supplies, 850 mb exports, 2.089 bb total use, 925 mb ending stocks, 44.3% S/U, and $4.75 /bu U.S. avg. price.

B) “Higher Exports” Scenario: 35% prob. of production prospects equal to the USDA’s but with higher U.S. wheat exports, i.e., 3.014 bb total supplies, 1.000 bb exports, 2.224 bb total use, 790 mb ending stocks, 35.2% S/U, and $5.75 /bu U.S. average price.

USDA World Wheat Supply-Demand & Market Impact

The expectation of large World wheat supplies and stocks are a “burden” on World wheat markets – driving them toward lower World wheat market prices. Record World total wheat supplies of 936.2 mmt in “new crop” MY 2015/16 are up from 918.6 mmt in “old crop” MY 2014/15, and from 892.1 mmt in MY 2013/14.

Projected World wheat ending stocks in “new crop” MY 2015/16 of 221.5 mmt (31.0% S/U) are also record high, and up from 209.7 mmt (29.6% S/U) in “old crop” MY 2014/15, and from 193.4 mmt (27.7% S/U) in MY 2013/14. For perspective, these recent supply-demand figures can be compared to the historic World wheat ending stocks and stocks-to-use minimums of 128.8 mmt and 21.0% S/U in MY 2007/08.

https://i0.wp.com/kansasagnetwork.com/wp-content/uploads/2013/09/Wheat-Planting-in-Kansas.jpg

Looking toward Winter Wheat Seeding in Kansas in Fall 2015 (Source: http://kansasagnetwork.com/2013/planting-conditions-for-the-2014-kansas-wheat-crop-surprising-in-some-areas/)

 

El Nino Impacts on Short Term and Long Term Weather (Elwynn Taylor – ISU Ag Climatologist)

Following is an article / interview of Elwynn Taylor, Agricultural Climatologist at Iowa State University discussing the expected impact of the El Nino weather pattern on U.S. crop production in 2016 and future years. http://www.ksre.ksu.edu/news/story/favorable_weather090115.aspx

Note: Photo available at https://www.flickr.com/photos/ksrecomm/21069158621/in/dateposted/

Climatologist Says Current El Niño Could Mean More Favorable Weather for Midwest Crops

Released: Sept. 1, 2015

MANHATTAN, Kan. – Much-needed precipitation through the U.S. heartland this year has replenished soil moisture, refilled ponds and promises to boost crop yields, thanks to the weather phenomenon known as El Niño, according to Iowa State University agricultural climatologist Elwynn Taylor. And the benefits for the Midwest may continue into 2016.

El Niño is associated with a warming of Pacific Ocean water, and tends to bring warmer, drier conditions to the northwest United States and cooler, wetter conditions to the Plains.

The conditions are a far cry from the recent La Niña – the opposite of El Niño, which brought drought to the central U.S., said Taylor, who spoke at the recent Kansas State University Risk and Profit Conference. We’ve just come out of the second strongest La Niña in recorded history, about 200 years, and that brought us a disastrous drought. That’s the drought we had in the Corn Belt in 2012. That’s the first widespread drought that we’ve had in the Corn Belt since 1988.

He likened the El Niño-La Niña phenomenon to a pendulum that swings from one extreme direction for a 14-month period and then to the extreme in the opposite direction. Because of the rainfall and mild temperatures in the central U.S., an El Niño gives a 70 percent chance of an above trend line yield for corn and soybeans in the Corn Belt, if other factors don’t come into play, he said, adding that when corn yields are high in the Midwest, wheat yields in northwest states tend to be below average, because El Niño tends to bring drought to those states.

It’s unclear how long the current El Niño will last, but in similar situations where one has followed a strong La Niña, the El Niño has lasted a full two years rather than 14 months, which is average. If it goes 14 months, that it gets us well into 2016. It could get us off to a good start with the crop, but it could go bad after that, Taylor said, noting that El Niño has sometimes gone on for 24 months – even 36 months, but that’s rare. In ancient history, they’ve gone on for four or five years, but we don’t expect to see that this time around, he said.

With El Niño, we tend to have closer to average conditions than extremes. That is, the summer’s not oppressively hot, the winter’s not bitterly cold, and that is good news for people with cattle outside and people with winter wheat, he said.

Taylor said scientists who study El Niño and La Niña have a good record for knowing four or five months in advance what conditions are coming: That’s good news, but it doesn’t get you all the way through a growing season.

That’s why people should pay attention, he said, adding, We don’t get a sudden change from La Niña to El Niño. That’s a gradual one over months – a gentle change. But, when a strong El Niño ends, it can suddenly go to a La Niña condition, such as the major drought we had in 1988 that began just weeks after we went into La Niña.”  That’s why risk management is so important, he said, adding that after El Niño, growers have to be ready for yields and prices to change quickly.

In an Agriculture Today radio interview during the conference, Taylor said that once an El Niño ends, there is often talk of high-pressure ridges forming that block precipitation. The weather forecasts reporting those are typically focused on urban areas, especially in the New England states. We need to pay attention to what’s going on in the Gulf of Alaska. If we have a high pressure system in the Gulf of Alaska, we’ve just cut off the rain in a line from Kansas City to Chicago and everything north of that. That’s a good chunk of Nebraska and Kansas, he said.

El Niño is the friend of the Midwest farmer, as well as the Argentine farmer, and those in southern Brazil and Uruguay and adjacent areas, he added. It is not the friend of the extreme northwest United States or the adjacent Canadian farmer, or farmers in northern Brazil.  In fact some Brazilian farmers try to cover this by owning as many acres in northern Brazil as in southern Brazil,” Taylor said. While one is suffering from El Niño, the other is benefiting from El Niño. That’s a form of risk management, by having farms in two locations. Also, if the Australian farmer has an enemy, it’s El Nino, he added.

Taylor said that based on studies going back hundreds of years, the upcoming year 2025 bears watching: 2025 isn’t necessarily the year we expect a “Dust Bowl” to peak, but it would be typical. The harshest years for weather for Midwest crops tend to be separated by 89 years. The worst year for the 1800s in Illinois and Iowa was 1847. Records were not kept that far back for Kansas and Nebraska. In the next century, the harshest weather year for crops was 1936. Tree rings indicate the 89-year tendency has existed for several centuries.

Taylor believes this means that weather will get increasingly volatile until we hit the extremes. Remember, volatility goes both ways, he said. Years with record-high yields or yields with half of that, and that’s a disaster. During the 18 years before 2010, we had consistent yields.

This is an advantage the farmer has, to look at what is the year’s volatility, what are the likely prices I can sell my grain at or buy my feed at this year, and what the likely low will be and the likely high, he continued. You’re not going to hit it exactly. Just realize this is likely to be a year that will have above trend line yields, and so we’re going to have prices that go along with a higher yield. You don’t know exactly how low they’ll go, but as long as you’re working on the correct side of the picture, you’ll make a profit. It’s hard to go bankrupt when you’re making a profit.

Taylor said weather conditions through the 2020s may be much like the volatile years during the 1980s.  Farmers will always deal with risk, but Taylor said U.S. farmers have good government support. The federal government does not want farmers to take such a beating one year that they’re not in business the next, as happened back during the Dust Bowl of the ‘30s. That’s why we have crop insurance. That is for most people their No. 1 risk management tool.

K State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the well being of Kansans. Supported by county, state, federal and private funds, the program has county Extension offices, experiment fields, area Extension offices and regional research centers statewide. Its headquarters is on the K State campus in Manhattan.
Story by:
Mary Lou Peter
mlpeter@ksu.eduK-State Research and Extension
http://www.ksre.ksu.edu/

For more information:
Elwynn Taylor – setaylor@iastate.edu

https://i2.wp.com/blogs.ei.columbia.edu/wp-content/uploads/2015/06/El-Nino_main.jpg

Source of image: http://blogs.ei.columbia.edu/features/future-el-nino/

KSU Corn Market Outlook in Early September 2015: Moderately Lower 2015 U.S. Corn Crop Scenarios to Examine

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

Following is a summary of the article on “Corn Market Outlook in Early September 2015″ with the full article and accompanying analysis will soon be available on the KSU AgManager website at the following web address: http://www.agmanager.info/marketing/outlook/newletters/archives/GRAIN-OUTLOOK_09-01-15_Corn.pdf

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Summary

Overview

When the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on August 12th, DEC 2015 corn futures prices dropped sharply, but have since traded in the $3.65-$3.85 /bu range. With prospects for a 13.2-13.8 billion bushel 2015 U.S. corn crop, and sizable 2015 foreign coarse grain crops, the likelihood of corn futures prices rising to $4.50-$5.00 or above in coming months is limited unless yield and/or maturity problems develop in late summer-early fall with the 2015 U.S. corn crop. Corn prices in the U.S. are likely to remain low relative to recent years – limiting U.S. corn enterprise profits in 2015. It is likely that current low prices will impact 2016 crop corn planting decisions of both South American and the U.S. farmers. Also, IF major geopolitical conflicts in key World ag production and usage areas and/or major financial market problems occur in late 2015-2016, grain markets could be volatile, with price direction uncertain to predict.

The development of volatile weather patterns in 2015 such as “El Nino” may cause production problems for corn and other coarse grains in parts of the U.S., South America, Australia, India, and elsewhere in the next 6-18 months. Low feedgrain prices – resulting in lower input costs for U.S. and Foreign livestock feeding and bioenergy users – have helped to increase profitability for corn-using industries, and led to increased feedgrain usage. A combination of these production and demand impacts over time are likely to eventually cause a change in the prevailing “large crop – low price” market scenario in U.S. and World coarse grain markets.

USDA U.S. Corn Market Forecast

The USDA projected lower U.S. corn production, higher usage, moderately tighter ending stocks and stocks-to-use, and marginally lower U.S. corn prices for “new crop” MY 2015/16 than for “old crop” MY 2014/15. Projected 2015 U.S. corn production of 13.686 billion bushels (bb) is up 156 million bushels (mb) from July, but still down from 14.216 bb in 2014, with total supplies of 15.488 bb in “new crop” MY 2015/16 being up from 15.477 bb in “old crop” MY 2014/15. Record forecast MY 2015/16 total corn usage of 13.775 bb (up from 13.705 bb in MY 2014/15), includes ethanol use of 5.250 bb (up 50 mb vs MY 2014/15), non-ethanol FSI use of 1.375 bb (up 20 mb vs last year), exports of 1.850 bb, and feed and residual use of 5.300 bb.

Ending stocks are forecast at 1.713 bb (12.4% S/U) in “new crop” MY 2015/16 – down from 1.772 bb (12.9% S/U) in “old crop” MY 2014/15, but still up from 1.232 bb (9.2% S/U) in MY 2013/14, and 821 mb (7.4% S/U) in MY 2012/13. “New crop” MY 2015/16 U.S. avg. cash prices are forecast in the range of $3.35-$3.95 /bu. (midpoint of $3.65) versus to $3.65-$3.75 /bu ($3.70 midpoint) in MY 2014/15, and $4.46 in MY 2013/14.

KSU U.S. Corn Market Forecasts

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

a) “2015 Normal Crop 13.568 bb Production” Scenario (40% prob.): 88.897 ma planted, 81.000 ma harvested, yield of 167.5 bu/ac, 2015 U.S. corn production of 13.568 bb, total supplies of 15.370 bb, total use of 13.775 bb, ending stocks of 1.595 bb, 11.6% S/U, & $4.25 /bu U.S. corn MYA prices;

b) “2015 Smaller Normal Crop 13.365 bb Production” Scenario (50% prob.): 88.897 ma planted, 81.000 ma harvested, yield of 165.0 bu/ac, 2015 U.S. corn production of 13.365 bb, total supplies of 15.167 bb, total use of 13.700 bb, ending stocks of 1.467 bb, 10.7% S/U, & $4.35 /bu U.S. corn MYA prices;

and c) “2015 Short Crop 12.555 bb Production” Scenario (10% prob.): Planted / harvested acres same as scenarios (a) & (b), but with a KSU low yield of 155.0 bu/ac, U.S. corn production of 12.555 bb, total supplies of 14.317 bb, total use of 13.415 bb, ending stocks of 902 mb, 6.72% S/U, & $6.90 /bu U.S. corn MYA prices.

World Corn Supply-Demand

World total supplies of 1,183 million metric tons (mmt) are projected for “new crop” MY 2015/16, up from 1,181 mmt in “old crop” MY 2014/15, and 1,128 mmt in MY 2013/14. Projected World corn ending stocks of 195.1 mmt (19.8% S/U) in “new crop” MY 2015/16 are down marginally from 197.4 mmt (20.1% S/U) in “old crop” MY 2014/15, but up from 175.0 mmt (18.4% S/U) in MY 2013/14.

https://i2.wp.com/southwestfarmpress.com/site-files/southwestfarmpress.com/files/imagecache/large_img/uploads/2015/01/combine-and-cart.jpg

An Image of Past U.S. Corn Harvests (Source: http://southwestfarmpress.com/grains/feed-grain-outlook-influenced-record-corn-yield)

https://i2.wp.com/oklahomafarmreport.com/wire/news/2015/01/media/00062_CornPile09122013.jpg

A large 2015 U.S. Corn Crop Appears to be Coming (Source: http://oklahomafarmreport.com/wire/news/2015/01/00061_USDAContinuesToPredictBigCrops011215_181835.php#.VeUmJ5daTGE)

KSU Weekly Grain Market Analysis: Slow grain markets – but unresolved questions remain

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, August 28th will be placed up on  the Kansas State University www.AgManager.info website at the following web address: http://www.agmanager.info/news/Articles/KSRN_GrainOutlook_08-28-15.pdf

The recorded radio program will be aired at 10:03 a.m. central time, Friday, August 28th on the K-State Radio Network (here) – web player available.  After airing of the program, the recording can also be listened to via a link from the following website in the “Radio Interviews” section: http://www.agmanager.info/news/default.asp

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https://i1.wp.com/www.kssos.org/images/Backgrounds/summer/irrigation.jpg

Irrigation Systems along I-70 near Wakeeney in Trego County, Kansas (Source: http://www.kssos.org/about/about_ks_archive.html)

U.S. Ethanol and Biodiesel Market-Profitability Graphics (via KSU AgManager)

Following are some graphics on price and profitability trends in the U.S. ethanol and biodiesel industries, which will soon be available on the KSU AgManager website: http://www.agmanager.info/    The full presentation titled “U.S. Ethanol & Biodiesel Market Situation” made for WILL (Illinois Public Radio) on Tuesday, August 25th and will be located at the KSU AgManager.info website – at the following web address:

http://www.agmanager.info/news/Articles/Ethanol-Market_WILL-Radio_08-25-15.pptx

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https://i2.wp.com/chooseethanol.com/page/-/ee/rfa-assoc/news/Ethanol_Plant.jpg

Ethanol Plant at Garnett, Kansas (Source: http://www.ethanolrfa.org/news/entry/epa-officials-observe-innovation-and-ingenuity-at-garnett-ethanol-plant/)

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

A KSU “quick analysis” worksheet of the key grain marketing-related information found in the August 12th USDA Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports can be found on the Kansas State University AgManager.info website (http://www.agmanager.info/). The specific web address for this downloadable MS Excel Spreadsheet is found here:  http://www.agmanager.info/marketing/outlook/newletters/default.asp

The spreadsheet presents the results of the USDA’s August 12th U.S., Foreign, and overall World grain supply-demand and market supply-demand forecasts for the “New crop” 2015/16 marketing year for corn, wheat, soybeans and grain sorghum, with comparisons provided to a) pre-report trade estimates, and b) the 2014/15 and 2013/14 marketing year estimates by the USDA .  Key information is contained on the following:

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

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

C. Updated U.S. & World ending stocks projections for both the “old crop” 2014/15 and  “new crop” 2015/16 marketing years, for major crops & crop categories (corn, coarse grains, wheat, and soybeans).

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https://i1.wp.com/www.circleofblue.org/waternews/wp-content/uploads/2013/04/Kansas-Monument-Rocks.jpg

Monument Rocks in Northwest Kansas (source: http://www.circleofblue.org/waternews/2013/commentary/editorial-in-the-circle-fresh-focus/dont-believe-the-hyperbole-kansass-reputation-as-a-backward-thinking-state-is-partly-wrong/)
 

KSU Weekly Grain Market Analysis: Slow grain markets ahead of Key August 12th USDA Reports

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, August 7th are up on the Kansas State University www.AgManager.info website at the following web address: http://www.agmanager.info/news/Articles/KSRN_GrainOutlook_08-07-15.pdf The recorded radio program will be aired at 10:03 a.m. central time, Friday, August 7th on the K-State Radio Network (here) – web player available.  At this time the program, the recording can also be listened to via a link from the following website in the “Radio Interviews” section: http://www.agmanager.info/news/default.asp Slide1 Slide2 Slide3 Slide4 Slide5 Slide6 Slide7 Slide8 Slide9 Slide10 Slide11 Slide12 Slide13 Slide14 Slide15 Slide16                                                                     A northwest Kansas sunset (source: https://www.facebook.com/TriStatePraiseKGCR?fref=photo)