Wheat Outlook at the 2019 KSU Risk and Profit Conf. – Some promising demand for exports and feed use with strong basis, but falling HRW Wheat futures (4th of 4)

The following slides are part of the presentation on “Grain Market Outlook for Years 2019-2020” given at the 2019 Risk and Profit Conference in sponsored by the Kansas State University Department of Agricultural Economics in Manhattan, Kansas.  The whole presentation are available on the KSU www.AgManager.info website at the following web address:

http://www.agmanager.info/events/risk-and-profit-conference/previous-conference-proceedings/2019-risk-and-profit-conference-0

This forth of 4 sets of slides covers the Wheat market (slides 85-118).  This follows an Introductory section (slides #1-23), Feedgrain Outlook (slides 23-58), and Soybean Outlook (slikdes 59-84) covered in earlier posts.

Soybean Outlook at the 2019 KSU Risk and Profit Conf. – Projecting 50%-50% Probability of a 48.5 bu/ac (USDA) vs 46.5 bu/ac (KSU), 3.68 (USDA) vs 3.53 billion bu. 2019 U.S. Prodn, with $8.40 (USDA) vs $9.00 /bu Prices (3rd of 4)

The following slides are part of the presentation on “Grain Market Outlook for Years 2019-2020” given at the 2019 Risk and Profit Conference in sponsored by the Kansas State University Department of Agricultural Economics in Manhattan, Kansas.  The whole presentation are available on the KSU www.AgManager.info website at the following web address:

http://www.agmanager.info/events/risk-and-profit-conference/previous-conference-proceedings/2019-risk-and-profit-conference-0

This third of 4 posts or sets of slides covers the Soybean market (slides 59-84).  This follows an Introductory section (slides #1-23) and Feedgrain Outlook (slides 23-58) covered in an earlier post, with info for Wheat markets to be presented in a following post.

Corn and Sorghum Outlook at the 2019 KSU Risk and Profit Conf. – Projecting 70% Probability of a 12.5-12.9 billion bu. 2019 U.S. Corn Crop, with => $4.00 /bu Corn (2nd of 4)

The following slides are part of the presentation on “Grain Market Outlook for Years 2019-2020” given at the 2019 Risk and Profit Conference in sponsored by the Kansas State University Department of Agricultural Economics in Manhattan, Kansas.  The whole presentation are available on the KSU www.AgManager.info website at the following web address:

http://www.agmanager.info/events/risk-and-profit-conference/previous-conference-proceedings/2019-risk-and-profit-conference-0

This second of 4 posts or sets of slides covers the Feedgrain market (Corn & Grain Sorghum – slides 24-58).  This follows an Introductory section (slides #1-23) covered in an earlier post, with info for Soybeans and Wheat markets to be presented in following posts.

Grain Outlook at the 2019 KSU Risk & Profit Conference – Prevailing Issues in U.S. Grain Markets, Including 2019 Acreage Issues (1st of 4)

The following slides are part of the presentation on “Grain Market Outlook for Years 2019-2020” given at the 2019 Risk and Profit Conference in sponsored by the Kansas State University Department of Agricultural Economics in Manhattan, Kansas.  The whole presentation are available on the KSU www.AgManager.info website at the following web address:

http://www.agmanager.info/events/risk-and-profit-conference/previous-conference-proceedings/2019-risk-and-profit-conference-0

This first of 3 posts or sets of slides cover the Introductory section (slides #1-21).   Feedgrain market (Corn and Grain Sorghum) information, and info for Soybeans and Wheat markets will be presented in following posts.

Weekly Grain Market Review – Strong Corn and HRW Wheat Basis in Kansas, Average for Sorghum, Weak for Soybeans

Grain Market Summary

by Daniel O’Brien – Extension Agricultural Economist, Kansas State University

A. Feedgrain Markets

While awaiting the acreage numbers to be released by USDA NASS in the August 12th Crop Production and WASDE reports, the corn market has now had to deal with yield worries brought on by high temperatures in the last week. With corn pollination approaching in most areas this is a key factor to watch, with cooler temperatures forecast for next week. Corn basis has been relatively strong, while grain sorghum basis has been so-so so far, BUT, would be expected to strengthen if U.S. corn supplies are as short as feared in “new crop” MY 2019/20.

B. Hard Red Winter Wheat Markets

Hard Red Winter wheat harvest is wrapping up in the central and southern plains with some areas having high yields and good/OK test weights. Average protein is estimated to be 11.0% to 11.5% (11.3% average by U.S. Wheat Associates), down from 12.3% estimated for the 2008 crop. Although in the midst of a harvest glut, positive news for U.S. HRW wheat on the demand side revolves around potentially strong wheat feeding to compensate for short feedgrain supplies in “new crop” MY 2019/20, strong forward sales of HRW wheat at this point in time, and uncertain foreign crop prospects among some U.S. wheat export competitors.

C. Soybean Markets

Soybean production and supply prospects have diminished with reductions in planted acres from earlier expectations in year 2019. And U.S. production worries are still a factor in projected 2019 production. Yet, weakness in U.S. soybean exports continue to be a negative factor in the U.S. soybean market, with unresolved U.S.-China trade issues directly hurting U.S. soybean exports (to China) in the World market. Accordingly, Kansas soybean basis levels are as weak as they have been since at least year 2015.

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Grain market summary notes, charts and comments supporting the Weekly Grain Market Review from KSU Ag Economics presented in the KSU Agriculture Today radio program to be played on Friday, July 19, 2019 are available on the Kansas State University www.AgManager.info website at the following KSU web address:

http://www.agmanager.info/grain-marketing/grain-market-outlook-newsletter

The recorded radio program will be aired at 10:03 a.m. central time, Friday, July 19, 2019 on the K-State Radio Network (KSU Agriculture Today Radio) – web player available. A copy of the May 10th recording is be available at the KSU Agriculture Today website at this time.

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

Weekly Grain Market Review – Post 7/11/2019 USDA Reports Price and S-D Situation

Grain Markets after the July 11th USDA Reports

Daniel O’Brien, Extension Agricultural Economist – Kansas State University

July 12, 2019

Feedgrain Markets

The most noteworthy grain market response to the July 11th USDA reports was the recognition that a more accurate forecast U.S. corn planted acreage numbers was “on hold” until the upcoming August 12th USDA NASS Crop Production report.  With the coming re-survey of 2019 U.S. corn planted acreage in early August combined with a more accurate assessment of 2019 prevented plantings for corn, the grain market took at rational, informed approach and implicitly said “we’ll just wait” until the August 12th USDA reports to determine feedgrain market direction for what is likely to be at least the remainder of calendar year 2019.

The manner in which this 2019 crop planting information will be released on August 12, 2019 seems likely to cause substantial grain market volatility at least on the day of the report, and likely in the days following.  It would not be surprising to see increased position taking occur in the U.S. corn options market ahead of that report in an effort by market participants to protect themselves from possible wide price swings that could occur.

Soybean Markets

The results of this report were positive for U.S. soybean market prospects, as lower acreage and production prospects caused a decline in projected ending stocks of 250 million bushels for “new crop” 2019, with projected percent ending stocks-to-use declining by over 5%.  The USDA raised its price projection for “new crop” MY 2019/20 (starting on September 1, 2019) by $0.15 per bushel – which at this point is perhaps as much or more of an indicator of price direction and general level than the “final word” on what U.S. soybean price prospects are for the “new crop” marketing year.

Kansas Hard Red Winter Wheat Markets

Regarding wheat, it seems from a hard red winter wheat perspective that U.S. wheat markets in general and hard red winter wheat prices in particular are “holding up” surprisingly well given that the HRW wheat harvest is still occurring in Kansas.  With wheat production problems for some U.S. export competitors, and “healthy” U.S. wheat export shipments and purchases for later shipments, CME Kansas HRW wheat futures have held up well.  Plus, with prospects for a higher U.S. wheat feeding stemming from constrained corn supplies, wheat prices have found some support.  It will be interesting to see what happens with wheat cash basis and prices in the U.S. central and southern plains states (Kansas, Oklahoma, Texas, Colorado, and Nebraska after the harvest is complete, and more information is known about the sizes of some of these other crops.

So, stay tuned – as it seems there is a every likelihood that grain markets will be volatile from now through August-September 2019.

*****

Grain market summary notes, charts and comments supporting the Weekly Grain Market Review from KSU Ag Economics presented in the KSU Agriculture Today radio program to be played on Friday, July 12, 2019 are available on the Kansas State University www.AgManager.info website at the following KSU web address:

http://www.agmanager.info/grain-marketing/grain-market-outlook-newsletter

The recorded radio program will be aired at 10:03 a.m. central time, Friday, July 12, 2019 on the K-State Radio Network (KSU Agriculture Today Radio) – web player available. A copy of the May 10th recording is be available at the KSU Agriculture Today website at this time.

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

FAO Projection for 2019 U.S. Corn Crop at 12.99 billion bu (330 mmt) + World Wheat S-D

Here is an article from the Foreign Agricultural Service regard their projections for the size of the 2019 U.S. corn crop.  They project a crop of 330 mmt or 12.99 billion bushels.

http://www.fao.org/worldfoodsituation/csdb/en/?utm_source=Ag+Insider+Subscribers&utm_campaign=a412282389-EMAIL_CAMPAIGN_2019_06_06_08_45_COPY_01&utm_medium=email&utm_term=0_b0e8c666dd-a412282389-120343085

Diminishing maize production prospects in the United States dampen the global cereal production outlook this year

Release date: 06/06/2019

FAO’s latest forecast for world cereal production in 2019 points to an increase of 1.2 percent from 2018, to 2 685 million tonnes.

However, the year-on-year expansion is now much less significant than earlier predicted, as global maize production is now seen to fall in 2019, largely because of sharp downward revisions since the previous report concerning maize production prospects in the United States.

Due to prolonged excessive wet conditions resulting in major delays in crop plantings, this year’s maize production in the United States is now pegged at 330 million tonnes, down 45 million tonnes from FAO’s first production forecast published in May and almost 10 percent (36 million tonnes) short of last year’s level.

The recent USDA crop progress report pointed to a sharply reduced planted area of only 58 percent of planting intentions as of 26 May, well below the 5-year average level of 90 percent and the slowest pace ever recorded.  (Note: this has been updated to 67% planted as of June 2, 2019 – down from the recent 5 year average of 96%.  Daniel O’Brien, Extension Agricultural Economist, Kansas State University)

Most of the expected rebound in global cereal production in 2019 is attributed to expected expansions in wheat and barley production, with year-on-year increases of 5.3 percent and 5.8 percent, respectively. Total rice production is likely to remain close to last year’s record level as expectations of area-driven expansions in Asia could offset foreseen contractions in most other regions, triggered by inclement weather and prospects of reduced profit margins.

World cereal utilization in 2019/20 is forecast to reach 2 707 million tonnes, down 15.5 million tonnes, or 0.6 percent, from the May forecast but still 1 percent (26 million tonnes) higher than in 2018/19. Most of this month’s downward adjustment again concerns the United States, where, because of deteriorating production prospects, total domestic utilization of maize is seen to fall below the 2018/19 level. Following the revision for the United States, world utilization of coarse grains in 2019/20 is now anticipated to reach 1 434 million tonnes, down 0.9 percent from the previous forecast but 0.7 percent higher than in 2018/19. Global wheat utilization is expected to grow by 1.2 percent, reaching 755 million tonnes, while that of rice is predicted to reach 518 million tonnes, 1.4 percent higher than in 2018/19.

Based on the latest production and utilization forecasts, world cereal stocks could decline by as much as 26 million tonnes, or 3 percent, in the new season to a four-year low of 830 million tonnes. This figure is around 18 million tonnes, or 2 percent, below the FAO’s May forecast. The sharp month-on-month downward revision is mostly associated with maize, whereas the forecasts for wheat and rice inventories have been raised slightly since the previous report. The projected fall in cereal stocks would result in a drop in the global cereal stock-to-use ratio to just below 30 percent, which still points to a relatively comfortable supply level.

Globally, coarse grain inventories are seen heading towards a second consecutive annual decline in 2019/20, falling by 9 percent to just over 369 million tonnes, the lowest level since 2014/15. By contrast, total wheat stocks could expand by 4.6 percent year-on-year and approach a near-record level of 281 million tonnes. The increase of 1 percent in wheat stocks since May reflects upward adjustments made for the EU and the United States, outweighing downward revisions in Australia and the Russian Federation.  World rice stocks at the close of 2019/20 are still envisaged to fall slightly (0.9 percent) from their record opening levels, to 179 million tonnes, despite some upward revisions to forecasts for the United States and Viet Nam.

World trade in cereals in 2019/20 is forecast at around 414 million tonnes, up 1.2 million tonnes, or 0.3 percent, from the previous forecast and nearly 6 million tonnes, or 1.4 percent, higher than the estimated total shipments of cereals in 2018/19. Most of the predicted expansion in world cereal trade is associated with greater wheat and rice trade, while trade in coarse grains, most notably maize, is expected to fall below the 2018/19 level, mainly on expectations of reduced imports by the EU and a sharp reduction in exports by the United States. By contrast, wheat trade is predicted to rebound by 3.3 percent from the 2018/19 reduced level, driven by stronger import demand by several countries, especially in Africa and Asia, and supported by the expectation of large export availabilities in the Black Sea region and the EU. World rice trade, on the other hand, is likely to contract by 3.5 percent in 2019 before a possible rebound in 2020 on expectation of greater purchases by several countries in Africa.