“Soybean Market Outlook for 2017” Presentation at KSU Ag Lender’s Conferences, October 4-5, 2016

As part of the Kansas State University Agricultural Lenders Conferences to be held on Tuesday, October 4th in Garden City, Kansas and on Wednesday, October 5th in Manhattan, Kansas, a “Grain Market Outlook in 2017” presentation will be given by Daniel O’Brien, KSU Extension Agricultural Economist.

Following are the full set of slide for the first part of that presentation pertaining to Soybean Market Outlook for 2017.

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“Wheat Market Outlook for 2017” Presentation at KSU Ag Lender’s Conferences, October 4-5, 2016

As part of the Kansas State University Agricultural Lenders Conferences to be held on Tuesday, October 4th in Garden City, Kansas and on Wednesday, October 5th in Manhattan, Kansas, a “Grain Market Outlook in 2017” presentation will be given by Daniel O’Brien, KSU Extension Agricultural Economist.

Following are the full set of slide for the first part of that presentation pertaining to Wheat Market Outlook for 2017.

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“Corn and Grain Sorghum Market Outlook for 2017” Presentation at KSU Ag Lender’s Conferences, October 4-5, 2016

As part of the Kansas State University Agricultural Lenders Conferences to be held on Tuesday, October 4th in Garden City, Kansas and on Wednesday, October 5th in Manhattan, Kansas, a “Grain Market Outlook in 2017” presentation will be given by Daniel O’Brien, KSU Extension Agricultural Economist.

Following are the full set of slide for the first part of that presentation pertaining Corn and Grain Sorghum Market Outlook for 2017.

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KSU Soybean Market Outlook in September 2016 – Positive U.S. Crush and Exports Offer Hope to Soybean Market

An analysis of U.S. and World soybean supply-demand factors and 2016-2017 price prospects following the USDA’s September 12th Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports either is available on the KSU AgManager website (http://www.agmanager.info/default.asp).

Following is a summary of the article on Soybean Market Outlook – with the full article and accompanying analysis available on the KSU AgManager website at the following web address;

http://www.agmanager.info/soybean-market-outlook-september-2016

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Summary

Market Overview

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on September 12th, soybean futures prices have moved both higher and lower within approximately a $0.50 range.  From the September 12th close of $9.64 ¼, 2016 when CME NOV 2016 soybean futures prices have traded from a low of $9.40 ½ on 9/14 to a high of $9.94 on 9/20, before closing at $9.49 ¼ on 9/27/2016.

Since 2014, World soybean market prices have been limited by a developing “large crop – low price” supply-demand regime, caused by consecutive record World soybean production years for 2014 and 2015, with large but not record crop in South America and a record high in the United States.  Lower than expected 2016 production in Brazil has led to record high U.S. soybean export trade prospects in “new crop” MY 2016 (starting 9/1/2016).

World Production, Ending Stocks & % Stocks-to-Use

Longer term, from MY 2008/09 to projected “new crop” MY 2016/17, the USDA forecasts a strong upward trend in World soybean production (up 7.0% annually) which will have “out-paced” the increase in World soybean use (up 6.0% per year) if it holds true.  However, the shortfall in South American’s soybean production in “old crop” MY 2015/16 has at least temporarily interrupted these trends, and has caused projected World soybean ending stocks and percent ending stocks-to-use to fall since MY 2014/15.

As this trend toward larger supplies has “abated” in “old crop” MY 2015/16 and for projected “new crop” MY 2016/17, U.S. and World soybean prices have received at least moderate support.  Since World soybean ending stocks of 62.0 mmt (22.4% S/U) in MY 2013/14, stocks grew sharply in MY 2014/15 to 78.5 mmt (26.1% S/U), but have since declined to an estimate of 72.9 mmt (23.0% S/U) in “old crop” MY 2015/16, and are forecast to decline further marginally to 72.2 mmt (22.0% S/U) in “new crop” MY 2016/17.

Key Focus in 2017 on Weather in South America and the U.S.

A key World soybean market issue will be to find out if 2017 weather or disease problems in South America end up driving southern hemisphere soybean production low enough to alter the existing “large supply – buyer’s market” situation that has existed in U.S. and World soybean markets in recent years.

Markets will also be focusing on the degree to which the record large 2016 U.S. soybean crop will “rectify” this short run trend toward lower World soybean ending stocks and lead to a re-establishment of the “large supply – low price” situation in fall 2016 that had existed during the 2014-2015 time period.

USDA U.S. Soybean Supply-Demand Forecast of “Old Crop” MY 2015/16

The USDA raised its forecast of U.S. soybean exports and sharply tightened ending stocks to use in “old crop” MY 2015/16.  With a projection of U.S. total supplies at 4.145 bb and domestic crush at 1.900 bb, the USDA forecast U.S. exports to be 1.940 bb – up 60 mb from August. With this change, total use increased 60 mb to 3.949 bb, with ending stocks declining to 195 mb (down 60 mb.

Ending stocks-to-use are projected at 4.94% – down from 6.56% in August, and 9.225% in July, and essentially equal to 4.95% in MY 2014/15, but still above the record low of 2.65% in MY 2013/14.  The USDA forecast “old crop” MY 2015/16 U.S. soybean average prices to be $8.95 /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.

USDA Forecast for “New Crop” MY 2016/17 (65% LikelihoodKSU)

The USDA left unchanged its projection of 2016 U.S. soybean plantings of a record high 83.688 million acres (ma) – up from 82.650 ma in 2015.  Forecast 2016 harvested acres of a record 83.037 ma is also up from 81.814 ma in 2015.  With record high projected yields of 50.6 bu/ac (up 1.7 bu from August), 2016 U.S. soybean production is projected to be a record high 4.201 bb – up from 3.929 bb in 2015 and 3.927 bb in 2014.   With forecast “new crop” MY 2016/17 domestic crush at a record 1.950 bb (up 10 mb) and exports at a record 1.985 bb (up 35 mb), projected total use equals 4.061 bb (a new record high ahead of 3.949 bb in “old crop” MY 2015/16 and 3.862 bb in MY 2014/15).

Given these results,  ending stocks are forecast to be 365 mb (8.99% S/U), while U.S. soybean prices are estimated by the USDA to be in the range of $8.30-$9.80 (midpoint = $9.05 /bu) – up from the $8.95 /bu in “old” MY 2015/16.  This USDA projection is thought to have a 65% probability of occurring according to Kansas State University Extension.

Alternative KSU Forecast for “New Crop” MY 2016/17 (35% LikelihoodKSU)

An alternative KSU-Scenario for U.S. soybean supply-demand and prices is presented for “new crop” MY 2016/17.  In this market perspective U.S. soybean domestic crush is projected to be 2.000 bb – up 50 mb from the USDA’s projection.  Also, U.S. soybean exports are forecast to be 2.035 bb – also up 50 mb from USDA estimates.  Taken together, U.S. soybean total use is forecast to be 4.161 bb – up 100 mb from USDA.

Ending stocks are forecast to be 265 mb – down 100 mb vs USDA #s, with % ending stocks-to-use estimated to be 6.37% – down from 8.99% S/U according to USDA projections.  Under this scenario, “new crop” MY 2016/17 U.S. soybean average prices would likely average $9.70 /bu – compared to the USDA’s midpoint projection of $9.05 per bushel.  This scenario is thought to have a 35% likelihood of occurring – compared to a 65% probability of occurrence for the USDA supply-demand and price projection for U.S. soybeans in “new crop” MY 2016/17.

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KSU Weekly Grain Market Analysis: Early KSU Wheat Supply-Demand and Price Forecasts for MY 2017/18

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, September 23rd will be up on the Kansas State University www.AgManager.info website at the following web address:

https://www.agmanager.info/sites/default/files/pdf/KSRN_GrainOutlook_09-23-16.pdf

The recorded radio program will be aired at 10:03 a.m. central time, Friday, September 23rd on the K-State Radio Network (here) – web player available.  Later today the program can also be listened to via a link from the following website in the “Radio Interviews” section: http://www.agmanager.info/news/default.asp

Following are sections of the Working notes for this week’s radio program up on the KSU AgManager.info website…

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KSU Corn Market Outlook in September 2016: Comparing “Likely” USDA vs “Possible” KSU 2016 Corn Market Outcomes

This article provides an analysis of U.S. and World corn supply-demand factors and price prospects for the “new crop” 2016/17 marketing year following the USDA’s September 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 September 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/grain-marketing/grain-market-outlook-newsletter

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Summary

Overview

Since the USDA’s September 12th World Agricultural Supply and Demand Estimates (WASDE) report, DEC 2016 CME corn futures first trended lower from a close of $3.39 ½ per bushel on the day of the report, to a low of $3.26 ½ on September 14th, before trending back higher to close at $3.40 on September 22nd with the bulk of fall harvest approaching.   The USDA’s continued forecast of a record large 2016 U.S. corn crop over 15 billion bushels (bb) and ending stocks of near 2.4 bb have continued to be the focus of the U.S. corn market.

Cash corn prices in Kansas have declined below $3.00 per bushel, but have not yet fallen to the marketing loan rate.  For example, on September 22nd, cash corn prices near Salina, Kansas in the central part of the state ranged from $2.63 to $2.80 per bushel – still above the Saline County marketing loan rate of $2.05 per bushel.  Similarly, cash corn prices near Garden City in southwest Kansas ranged from $2.80 to $2.98 per bushel – above the Finney County marketing loan rate of $2.19 per bushel.  When fall harvest begins in earnest it is possible that cash prices could fall to the loan rate in these areas due to tight local commercial storage.

Other market factors to consider that could affect the U.S. corn market in what remains of 2016 through mid-2017 include:

1) the pace and timing of U.S. farmer marketing of the 2016 corn crop – much of which will be placed in storage after fall harvest,

2) anticipation of continued strong use of carryover 2015 and new 2016 crop U.S. corn in domestic U.S. ethanol production and livestock feeding,

3) at least moderate strength in U.S. corn exports – driven largely by a poor harvest and lack of exportable supplies in Brazil in 2016, and

4) the possibility of broader U.S. and Foreign economic and/or financial system disruptions impacting grain, energy, and other commodity markets.  For example, unanticipated U.S. financial policy announcements by the U.S. Federal Reserve could affect U.S. interest rates, or geo-political events could occur that would “shock” World energy and grain markets.

USDA Supply-Demand Forecast for “New Crop” MY 2016/17

With USDA projections of 2016 U.S. corn plantings of 94.148 ma (up 6.149 ma from 2015), harvested acres of 86.550 ma (up 5.801 ma from 2015), record high projected yields of 174.4 bu/ac (vs 168.4 bu/ac in 2015 and the current record high of 171.0 bu/ac in 2014), 2016 U.S. corn production is forecast to be a record high 15.093 bb – up from 13.601 bb in 2015, the current record of 14.216 bb in 2014, and 13.829 bb in 2013.

With forecast “new crop” MY 2016/17 total supplies of 16.859 bb (record high), total use of 14.475 bb (record high), and projected ending stocks of 2.384 bb (16.47% S/U) – up from 1.716 bb (12.54% S/U) in “old crop” MY 2015/16 and the highest since 4.259 bb (54.90% S/U) in MY 2004/05 – U.S. corn prices are projected by the USDA to be in the range of $2.90-$3.50 (midpoint = $3.20 /bu) – being down from $3.60 /bu for “old crop” MY 2015/16. This scenario is given a 50% likelihood of occurring by KSU Extension Ag Economist D. O’Brien.

KSU Forecasts for “New Crop” MY 2016/17

Three alternative KSU-Scenarios for U.S. corn supply-demand and prices are presented for “new crop” MY 2016/17, with each assuming a lower U.S. corn yields and production than the September 12th USDA WASDE report

KSU Scenario A) “Minor Crop Problems – 14.9 bb” Scenario (30% probability) assumes: 94.148 ma planted, 86.550 ma harvested, 172.0 bu/ac yield, 14.887 bb production, 16.653 bb total supplies, 14.450 bb total use, 2.203 bb ending stocks, 15.25% S/U, & $3.35 /bu U.S. corn average price for “new crop” MY 2016/17; 

KSU Scenario B) “Moderate Crop Problems – 14.5 bb” Scenario (15% probability) assumes: 94.148 ma planted, 86.550 ma harvested, 168.0 bu/ac yield, 14.540 bb production, 16.306 bb total supplies, 14.344 bb total use, 1.962 bb ending stocks, 13.68% S/U, & $3.50 /bu U.S. corn avg. price for “new crop” MY 2016/17;

KSU Scenario C) “More Serious Crop Problems – 14.2 bb” Scenario (5% probability) assumes: 94.148 ma planted, 86.550 ma harvested, 164.0 bu/ac yield, 14.194 bb production, 15.190 bb total supplies, 14.239 bb total use, 1.721 bb ending stocks, 12.09% S/U, & $3.80 /bu U.S. corn avg. price for “new crop” MY 2016/17;

World Corn Supply-Demand:

World corn production of 1,026.6 million metric tons (mmt) is projected for “new crop” MY 2016/17, up from 959.0 mmt in “old crop” MY 2015/16, and up from 1,013.6 mmt in MY 2014/15.

World corn total supplies of 1,235.9 mmt are projected for “new crop” MY 2016/17, up from 1,167.3 mmt in “old crop” MY 2015/16, and up from 1,188.9 mmt in MY 2014/15.  World corn exports of 139.8 mmt are projected for “new crop” MY 2016/17, up from 119.2 mmt in “old crop” MY 2015/16, but down from 141.7 mmt in MY 2014/15.  Projected World corn ending stocks of 219.5 mmt (21.6% S/U) in “new crop” MY 2016/17 are up from 209.25 mmt (21.8% S/U) in “old crop” MY 2015/16, and from 208.3 mmt (21.2% S/U) in MY 2014/15.

Brazil Corn Production Trends

Brazil corn production in “old crop” MY 2015/16 (1st crop harvested in January-May 2016, 2nd crop harvested in May-August) is estimated to be 67.0 mmt, down 18.0 mmt (down 21.2%) from 85.0 mmt in MY 2014/15.  This shortfall in Brazilian corn production in 2016 has provided some support for U.S. corn exports and even ethanol production (via exports). But expectations of a record large 2016 U.S. corn crop have had a predominant negative impact on U.S. corn market prices to date.  Brazilian corn production is forecast by the USDA to rebound back to 82.5 mmt in MY 2016/17 (2017 production).

China Corn Production & Ending Stocks Trends

China corn production in “new crop” MY 2016/17 (harvested in September-October 2016) is estimated to be 216.0 mmt, down 8.6 mmt (down 3.8%) from 224.6 mmt in MY 2015/16, but marginally higher than 215.65 mmt in MY 2014/15.

Most of the focus in World corn markets is on Chinese ending stocks.  Ending stocks of corn in China are projected to be 103.65 mmt (45.9% SU) in “new crop” MY 2016/17, down from 110.7 mmt (50.9% S/U) in “old crop” MY 2015/16, but up from 110.5 mmt (49.7% S/U) in MY 2014/15.

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KSU Weekly Grain Market Analysis: Updated Corn and Soybean Market Probability Scenarios

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, September 16th  will be placed up on  the Kansas State University www.AgManager.info website at the following web address:

https://www.agmanager.info/sites/default/files/pdf/KSRN_GrainOutlook_09-16-16.pdf

The recorded radio program will be aired at 10:03 a.m. central time, Friday, September 16th on the K-State Radio Network (here) – web player available.  Later today the program can also be listened to via a link from the following website in the “Radio Interviews” section:

http://www.agmanager.info/news#ksrn-radio-interviews

Following are sections of the Working notes for this week’s radio program up on the KSU AgManager.info website…

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