Grain Market Update (4th of 5 parts) – Graphics of U.S. Wheat Market Outlook

In the following charts is the fourth of five (5) blog posts illustrating parts of the “Grain Market Outlook for 2017” presentation given by Kansas State University Extension Agricultural Economist Daniel O’Brien.  The complete presentation will be available on the www.AgManager.info website provided by the Department of Agricultural Economics at Kansas State University .

This fourth of five (5) related blog posts provides information on Wheat Market Situation and Outlook.

slide65 slide66 slide67 slide68 slide69 slide70 slide71 slide72 slide73 slide74 slide75 slide76 slide77 slide78 slide79 slide80 slide81 slide82 slide83 slide84 slide85 slide86 slide87 slide88 slide89 slide90

 

KSU Weekly Grain Market Analysis: Lower U.S. Winter Wheat Acres and Tighter U.S. Corn-Soybean Supply-Demand

Grain market summary notes, charts and comments supporting the KSU Agriculture Today Grain Outlook to be played on Friday, January 13th is available on the Kansas State University www.AgManager.info website at the following KSU web address:

https://www.agmanager.info/sites/default/files/pdf/KSRN_GrainOutlook_01-13-17.pdf

The recorded radio program was aired at 10:03 a.m. central time, Friday, January 13th on the K-State Radio Network (KSU Agriculture Today Radio) – 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…

slide1 slide2 slide3 slide4 slide5 slide6 slide7 slide8 slide9 slide10 slide11 slide12 slide13 slide15 slide16 slide16 slide17 slide1

USDA Grain Stocks Report on June 30th – Stocks and Use Trends for the U.S.

On June 30th the USDA National Agricultural Statistics Service (NASS) released its Grain Stocks Report – providing information on June 1st stocks and March-May 2016 use of U.S. of corn, grain sorghum, soybeans and wheat.  A copy of the full report will be released on July 5th on the www.AgManager.info website by the Kansas State University Department of Agricultural Economics (http://www.ageconomics.k-state.edu/).

Following is the article:

*****

A. U.S. Corn June 1st Stocks & March-May Usage

U.S. Corn Stocks on June 1, 2016 = 4.722 billion bushels (bb)……..Up 194 million bushels (mb) from pre-report trade expectations, and up 6.0% from 4.453 bb on 6/1/2015, up 22.6% from 3.852 bb on 6/1/2014, and up from 2.766 bb on 6/1/2013, and 3.148 bb on 6/1/2012 (See Table 1).

U.S. Corn Usage during March-May 2016  3.100 bb……..Down ≈ 180 mb from implied pre-report trade expectations, and less than 3.307 bb in Mar-May 2015, and 3.165 bb in Mar-May 2014, but still up from 2.674 bb in Mar-May 2013, and 2.886 bb in Mar-May 2012 (See Table 2).

On-Farm Storage of U.S. corn on June 1, 2016 is estimated to be 2.471 bb, up 8.6% from a year earlier, and indicative of a large amount of unsold U.S. corn yet in “current crop” 2015/16.  Large on-farm and off-farm carryover supplies of U.S. corn are likely to continue to be a limiting factor for U.S. corn cash prices in coming months – absent a weather-related, negative set of production factors in July-August 2016.

Off-Farm Commercial Storage of U.S. corn on June 1, 2016 is estimated to be 2.251 bb, up 3.3% from a year earlier, and also indicative of large available yet-unused U.S. corn supplies and of limited prospects for U.S. corn prices this summer.

Market Implications => Higher than expected June 1, 2016 U.S. corn stocks resulting from lower than expected March-May 2016 U.S. corn use are negative factors for U.S. corn price prospects for the remainder of 2016.  United States’ corn stocks of 4.722 bb on June 1, 2016 are from 6% to 71% larger than June 1 stocks over the 2012-2015 period, and likely to be a limiting factor in any potential major corn price rallies – absent major U.S. corn production problems in the summer of 2016.

Slide1 Slide2

 

B. U.S. Grain Sorghum June 1st Stocks & March-May Usage

U.S. Grain Sorghum Stocks on June 1, 2016 = 88 mb……..Down 32 mb from pre-report trade expectations, but up 158.8% from 34 mb on 6/1/2015, marginally smaller than 92 mb on 6/1/2014, but still up from 41 mb on 6/1/2013, and 59 mb on 6/1/2012 (See Table 1).

U.S. Grain Sorghum Usage during March-May 2016  113 mb……..Up 32 mb from implied pre-report trade expectations, and up from 96 mb in Mar-May 2015, 83 mb in Mar-May 2014, 56 mb in Mar-May 2013, and 50 mb in Mar-May 2012 (See Table 2).

On-Farm Storage of U.S. grain storage on June 1, 2016 is estimated to be 9.700 mb, up 6,740 mb or +227.7% from a year earlier, and indicative of a relatively large amount of unsold U.S. grain sorghum yet in “current crop” 2015/16.

Off-Farm Commercial Storage of U.S. grain storage on June 1, 2016 is estimated to be 78.565 mb, up 47.236 mb or +150.8% from a year earlier, and also indicative of large available yet-unused U.S. grain sorghum supplies available to the market.

Market Implications => A continuation of at least moderately strong exports of U.S. grain sorghum during the first three quarters of the “current” 2015/16 marketing year (i.e., September 2015 through August 2016) have been a major factor in usage being higher than during the previous four (4) March-May periods.

This is a supportive, bullish result for U.S. grain sorghum markets – but given the current oversupply of U.S. corn as well as at least moderate supplies of U.S. grain sorghum – has not had a noticeable positive impact of U.S. grain sorghum basis levels in Kansas and elsewhere in the U.S. central and southern plains states of Oklahoma and Texas.

U.S. Wheat June 1st Stocks & March-May Usage

U.S. Wheat Stocks on June 1, 2016 = 981 mb……..down 1 mb from pre-report expectations, and up from 752 mb on 6/1/2015, 590 mb on 6/1/2014, 718 mb on 6/1/2013, and 743 mb on 6/1/2012 (See Table 1).

U.S. Wheat Usage during March-May 2016 391 mb……..Up 1 mb from implied pre-report trade expectations, and down from 423 in Mar-May 2015, 514 mb in Mar-May 2014, 548 mb in Mar-May 2013, and 486 mb in Mar-May 2012 (See Table 2).

On-Farm Storage of U.S. wheat on June 1, 2016 is estimated to be 197.2 mb, up 27.1% from a year earlier, and indicative of a large amount of unsold U.S. wheat yet available in “current crop” MY 2015/16.  These carryover supplies are likely to continue to be a limiting factor for U.S. wheat cash prices in coming months.

Off-Farm Commercial Storage of U.S. corn on June 1, 2016 is estimated to be 784.1 bb, up 4.2% from a year earlier, also indicative of large available yet-unused U.S. wheat supplies and of limited prospects for U.S. wheat prices at this time for this summer.

Market Implications => Continued weak exports of U.S. wheat during both the Dec-Feb and Mar-May 2016 periods and only moderate wheat feeding to-date have been major factors in U.S. wheat usage being less than during the previous three (3) March-May periods. This is a negative, bearish result for U.S. wheat market prices.

However, the possibility of extreme World weather patterns causing wheat production problems in major foreign wheat producing nations could still mitigate and overcome these negative U.S. supply-demand factors to some degree, and begin to play a positive role in U.S. wheat market direction in coming weeks and months. But as of yet – other than some reports of there being too much moisture for wheat development in parts of Europe and also of reports from China of wheat production problems – significant World wheat production shortfalls and supply-demand disruptions have not occurred yet in 2016.

Also, it is possible that a weather-related, negative set of production factors in the U.S. Corn Belt during July-August 2016 could impact U.S. feedgrain markets and in turn have a positive spill-over, cross-market impact on U.S. wheat feeding – leading to larger than anticipated feeding of low-priced U.S. wheat in Kansas and the southern plains states of Oklahoma and Texas.

D. U.S. Soybean June 1st Stocks & March-May Usage

U.S. Soybean Stocks on June 1, 2016 = 870 mb……..Up 37 mb from pre-report trade expectations, and up sharply from 627 mb on 6/1/2015, 405 mb on 6/1/2014, 435 mb on 6/1/2013, and 668 mb on 6/1/2012 (See Table 1).

U.S. Soybean Usage during March-May 2016  661 mb……..Down ≈ 37 mb from implied pre-report trade expectations, and down from 708 mb in Mar-May 2015, while being up from 614 mb in Mar-May 2014, and 571 mb in Mar-May 2013, while down from 712 mb in Mar-May 2012 (See Table 2).

On-Farm Storage of U.S. soybeans on June 1, 2016 is estimated to be 281 mb, up 14.2% from a year earlier, and indicative of sizable supplies of unsold U.S. soybeans yet in “current crop” 2015/16 – that (similar to corn and wheat markets) is likely to be a somewhat of a negative factor in U.S. soybean cash prices in coming months.

However, 2016 production problems in parts of Brazil have provided market support for U.S. soybean exports and domestic soybean crush – making U.S. soybean demand stronger on a relative basis than for U.S. corn and wheat – and has provided at least moderate support to date for U.S. soybean prices.  Also, production risk still exists for the 2016 U.S. soybean crop through late-summer / early fall 2016.

Off-Farm Commercial Storage of U.S. soybeans on June 1, 2016 is estimated to be 589 mb, down 6.1% from a year earlier, and also indicative of commercial demand for U.S. soybeans for the reasons explained immediately above.

Market Implications => At face value, this grain stocks report is “moderately negative” for U.S. soybean markets, with higher than expected June 1st U.S. soybean stocks, and moderately lower than expected Mar-May 2016 usage.  However, a recent surge in demand for U.S. soybean exports and domestic crush brought about by South American soybean production problems has provided support of U.S. soybean prices.  This support will likely continue until more is known about 2016 U.S. soybean production prospects – in particular whether any problems or shortfalls will occur in 2016 U.S. soybean production during the summer of 2016.