KSU Weekly Grain Market Analysis: U.S. 2017/18 S-D/ Price Scenarios for U.S. Corn, Ethanol S-D, U.S. Weather/Soil Moisture Conditions

Grain market summary notes, charts and comments ahead of the Grain Market Update to played on the KSU Agriculture Today Radio Program on Friday, March 17, 2017 are available on the Kansas State University www.AgManager.info website at the following web address:

http://www.agmanager.info/sites/default/files/pdf/KSRN_GrainOutlook_03-17-17.pdf

The recorded radio program will be aired at 10:03 a.m. central time, Friday, March 17th on the K-State Radio Network (here) – with the program available to listen to online.  After the program airs, a recording can also be listened to from the KSU AgManager.info website via a link  in the “News” section: http://www.agmanager.info/news

Key Supply-Demand Factors “Driving” Grain Markets (KSU Extension Ag Economics)

The following presentation on “Key Supply-Demand Factors ‘Driving” Grain Markets” was given on Tuesday, March 14, 2017 to the AgEcon 605 class on “Price Analysis and Forecasting” as a guest lecture.  The class is regularly taught by Dr. Richard Llewelyn of the Kansas State University Department of Agricultural Economics.

This presentation focuses on the key factors that have been “driving” or influencing grain markets over the last 15-25 years.   The full presentation will be available on the KSU Agricultural Economics website at the following web location:

http://www.agmanager.info/sites/default/files/pdf/OBrien_GrainMarketDrivers_03-15-17.pdf

 

 

 

KSU Weekly Grain Market Analysis: “Grinding” Thru February in the U.S. on the way to Spring Planting

Grain market summary notes, charts and comments ahead of the KSU Agriculture Today Grain Outlook to played on Friday, February 17, 2017 are available on the Kansas State University www.AgManager.info website at the following web address:

https://www.agmanager.info/sites/default/files/pdf/KSRN_GrainOutlook_02-17-17.pdf

The recorded radio program will be aired at 10:03 a.m. central time, Friday, February 17 on the K-State Radio Network (here) – with the program available to listen to online.  After the program airs, a recording can also be listened to from the KSU AgManager.info website via a link  in the “Radio Interviews” section: http://www.agmanager.info/news/default.asp

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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.

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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…

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KSU Wheat Market Outlook in December 2016: USDA and KSU Price Forecasts for “Next Crop” MY 2017/18

An analysis of U.S. and World wheat supply-demand factors and 2017 price prospects following the USDA’s December 9th World Agricultural Supply Demand Estimates (WASDE) report, and the market actions that have followed those reports will be available on the KSU AgManager website in the next few days (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/grain-marketing/grain-market-outlook-newsletter

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Summary

Wheat Market Prices

Since the USDA’s December 9th World Agricultural Supply and Demand Estimates (WASDE) report, U.S. and World wheat futures market prices have traded higher – with CME MARCH 2017 Kansas HRW Wheat futures gaining $0.08 ¾ /bu to close at $4.13 ½ on 12/9/2016 – the day of the report – and trading as high as $4.20 ¾ per bushel through Wednesday, December 28th before closing down to $4.09 ½ that same day.

World Wheat Supply-Demand

For the “current crop” 2016/17 marketing year (MY), the USDA projected: 1) World wheat total supplies of 991.9 million metric tons (mmt) and total use of 739.8 mmt – both at record high levels, 2) that World wheat exports are continuing to trend higher to 176.8 mmt in the “current” marketing year – up from 172.5 mmt last year, and up from 164.4 mmt two years ago, 3) World wheat ending stocks at a record high 252.1 mmt up from 240.65 mmt last year, and 217.2 mmt two years ago, and 4) World wheat percent ending stocks-to-use (S/U) of 34.1% – up from 33.8% last year, and from 30.8% two years ago – up to the highest level since MY 2005/06.

For a perspective on how historically large World total wheat stocks and World wheat percent stocks-to-use now are, in MY 2007/08 the 34-year low in World wheat ending stocks of 128.1 mmt and at least a 57-year low in percent ending stocks-to-use of 20.75% stocks/use both occurred – the last major World wheat “short crop” marketing year.  The situation in MY 2007/08 compares to projections of 252.1 mmt ending stocks and 34.1% ending stocks-to-use projected for “current” MY 2016/17.  The “large crop-over supply” situation that now exists in World and U.S. wheat markets continues to have a strong prevailing negative influence on U.S. and World wheat prices.

Factors that Could Change the “Large Crop – Over-Supply” Wheat Market Situation

However, the broader large crop-over supply-low price” situation in the World wheat market may be “hiding” at least a couple of other important market issues.  First, while the quantity of wheat available in the World is plentiful, the available supply of high protein milling wheat is less so.  This factor may eventually help exports of both U.S. Hard Red Spring (HRS) wheat (higher protein – good quality) and U.S. Hard Red Winter (HRW) wheat (moderate protein – good quality) relative to World wheat export competitors.  As evidence of this, exports of U.S. HRW wheat have been occurring at the pace needed to meet USDA projections – helped by both low purchase prices and acceptable protein and quality.  This raises the outside possibility of improved U.S. HRW prices in coming months.  Second, while the supply of wheat in World markets overall has grown, the supply of wheat in the “World Less China” is projected to have actually “contracted” or “diminished” in “current crop” MY 2016/17 compared to a year ago – down to the tightest supply-balances situation since MY 2013/14.  If this “China factor” eventually leads to noticeably tighter available global supplies of exportable wheat to occur in coming months, it could have a positive impact U.S. wheat market prices in Spring 2017.

Even so, given the broader World wheat market’s current focus – it is likely that significant World wheat production problems and/or trade disruptions would need to occur in year 2017 in order to have wheat prices recover significantly by spring-summer 2017.  Ongoing strength in the U.S. dollar exchange rate is a serious negative factor that is limiting the competitive affordability of U.S. wheat exports.  These factors have resulted in higher U.S. wheat ending stocks and % ending stocks-to-use, and have caused U.S. and Kansas wheat cash prices to fall sharply – down to and below the marketing loan rate in most of Kansas in fall / early winter 2016.

USDA U.S. Wheat Supply/Demand Forecast for “Next Crop” MY 2017/18

On December 1, 2016 the USDA released their preliminary Long Term Agricultural Projections to 2026, in which they projected 2017 U.S. wheat plantings of 48.500 million acres (ma) – down from 50.154 ma in 2015.  The USDA also forecast 2016 harvested acres of 41.100 ma which would be down from 43.890 ma a year ago.  Trendline 2017 wheat yields for 2017 are projected at 47.1 bu/a, down from the 2016 record of 52.6 bu/ac, while 2017 U.S. wheat production is forecast to be 1.936 billion bushels (bb), down from 2.310 bb in 2015.  Projected “next crop” MY 2017/18 total supplies are 3.199 bb (down from 3.410 bb in “current” MY 2016/17), with total use of 2.206 bb (down from 2.267 bb in “current” MY 2016/17).

Given these numbers, the USDA projected “next crop” MY 2017/18 ending stocks of 933 million bushels (mb) (vs 1.143 bb a year ago), with percent ending stocks-to-use of 45.0% S/U (vs 50.4% last year and 50.0% the previous year).  United States wheat average prices are projected to average $4.00 /bu – up from $3.70 in “current” MY 2016/17, but down from $4.89 /bu in MY 2015/16 and $5.99 /bu in MY 2014/15.   It is assumed by Kansas State University that these USDA projections for “next crop” MY 2016/17 have a 50% probability of occurring.

Three Alternative KSU U.S. Wheat S/D Forecast for “Next Crop” MY 2017/18

As an alternative to the USDA’s projection, three potential KSU-Scenarios for U.S. wheat supply-demand and prices are presented for “next crop” MY 2017/18.  These scenarios assume lower 2017 U.S. planted (47.624 ma) and harvested (38.385 ma) wheat acres than the USDA – due to larger than normal amounts of “graze out” and “crop switching” in 2017.

KSU Scenario 1) “Lower Acres, Trend Yield” Scenario (30% probability) assumes for “next crop” MY 2017/18: 47.624 ma planted, 38.385 ma harvested, 47.0 bu/ac trend yield, 1.804 bb production, 3.067 bb total supplies, 960 mb exports, 200 mb feed & residual use, 2.191 bb total use, 876 mb ending stocks, 39.98% S/U, & $4.00-$4.50 /bu U.S. wheat average price;

KSU Scenario 2) “Lower Acres, Trend Yield, +20% Exports” Scenario (10% probability) assumes for “next crop” MY 2017/18: 47.624 ma planted, 38.385 ma harvested, 47.0 bu/ac trend yield, 1.804 bb production, 3.067 bb total supplies, 1.152 bb exports***, 200 mb feed & residual use, 2.383 bb total use, 684 mb ending stocks, 24.10% S/U, & $5.25-$5.75 /bu U.S. wheat average price;

KSU Scenario 3) “Lower Acres, Short Crop Yield” Scenario (10% probability) assumes for “next crop” MY 2017/18: 47.624 ma planted, 38.385 ma harvested, 43.6 bu/ac low yield***, 1.674 bb production, 2.937 bb total supplies, 925 mb exports, 200 mb feed & residual use, 2.156 bb total use, 781 mb ending stocks, 36.22% S/U, & $4.40-$4.90 /bu U.S. wheat average price.

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KSU Weekly Grain Market Analysis: End of 2016 Supply-Demand and Prices for U.S. Corn, Sorghum, Wheat and Soybeans

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

http://www.agmanager.info/news/weekly-grain-market-outook-dan-obrien

The recorded radio program will be aired at 10:03 a.m. central time, Friday, January 8th on the K-State Radio Network (here) – web player available.  Later on 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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