“Deep Numbers” Analysis of the June 9, 2017 USDA WASDE and Crop Production Reports (KSU Ag Economics))

A “deep numbers” analysis of the results of the June 9, 2017 USDA World Agricultural Supply and Demand Estimates (WASDE) report is available on the Agmanager.info website from Kansas State University. The USDA June WASDE and Crop Production reports considered “next crop” 2017/18 marketing year, “current” MY 2016/17, and MY 2015/16 supply-demand and price prospects for U.S. crops, and supply-demand prospects for global and country-by-country analysis.

Results are available on the KSU AgManager.info website at the following web address:

http://www.agmanager.info/wasde-deep-numbers-analysis-spreadsheet

This “deep numbers” analysis considers how the June 9th USDA WASDE and other National Agricultural Statistics Service (NASS) numbers compare to pre-report trade expectations, last month’s report estimates, and previous years.

World Wheat, Corn, Coarse Grain and Soybean supply demand numbers are also considered in an extended look at production, exports, imports, food-industrial and seed use (for corn and coarse grains), food use (for wheat), crush (soybeans), feed and residual use (corn, coarse grains and wheat), ending stocks, and % ending stocks to use.

Selections from this “deep numbers” WASDE report analysis are as follows:

 

“Deep Numbers” Analysis of the May 10, 2017 USDA WASDE Report (D. O’Brien KSU)

A “deep numbers” analysis of the results of the May 10, 2017 USDA World Agricultural Supply and Demand Estimates (WASDE) report is available on the Agmanager.info website from Kansas State University. The May WASDE report considered “next crop” 2017/18 marketing year, “current” MY 2016/17, and MY 2015/16 supply-demand and price prospects for U.S. crops, and supply-demand prospects for global and country-by-country analysis.

Results are available at the following web address:

http://www.agmanager.info/wasde-quick-analysis-spreadsheet

This “deep numbers” analysis considers how the May 10th USDA WASDE and other National Agricultural Statistics Service (NASS) numbers compare to pre-report trade expectations, last month’s report estimates, and previous years.

World Wheat, Corn, Coarse Grain and Soybean supply demand numbers are also considered in an extended look at production, exports, imports, food-industrial and seed use (for corn and coarse grains), food use (for wheat), crush (soybeans), feed and residual use (corn, coarse grains and wheat), ending stocks, and % ending stocks to use.

Selections from this “deep numbers” WASDE report analysis are as follows:

 

KSU Corn Market Outlook in Early-May: Alternative Crop Production and Price Scenarios for MY 2017/18

This article provides an analysis of U.S. and World corn supply-demand factors and price prospects for both the “new crop” 2016/17 marketing year following the USDA’s April 11, 2017 USDA Crop Production and https://www.usda.gov/oce/commodity/wasde/latest.pdf reports.

Following is a summary of the article on “Corn Market Outlook in Early-May 2017″ with the full article and accompanying analysis soon to be available on the KSU AgManager website (www.AgManager.info) at the following web address:

http://www.agmanager.info/grain-marketing/grain-market-outlook-newsletter/corn-market-outlook-early-may-2017

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Summary

Overview & Summary

Since the USDA’s April 11th World Agricultural Supply and Demand Estimates (WASDE) report, MAY 2017 CME corn futures have been moderately volatile – moving both higher and lower within the range of $3.54 ¼ to $3.73.  “Current” MY 2016/17 U.S. corn prices have found some support at levels above local marketing loan rates because of the positive impact that low prices have had on the use of U.S. corn in ethanol production, wet corn milling, exports and to a moderate degree in livestock feeding.   In addition, the February 23-24 USDA 2017 Agricultural Outlook Forum together with the March 31st Prospective Plantings report have forecast fewer U.S. corn planted acres in 2017, and with a return to trend line U.S. corn yields, lower 2017 U.S. corn production of 14.065 billion bushels (bb) versus the record highs of 15.148 bb in 2016.

However, projections of ending stocks of U.S. corn staying above 2 billion bushels (bb) coupled with ending stocks-to-use above 15% in both “current” MY 2016/17 and “next crop” MY 2017/18 has limited any significant corn futures or cash market price rallies to date in Spring 2017.   IF excessive moisture conditions that have developed in the U.S. Corn Belt in late April – very early May were to continue until mid-May and significantly delay planting progress – THEN increased concerns about 2017 U.S. corn production prospects could lead to higher U.S. corn prices in late-Spring – Summer 2017.

Cash corn prices at major grain elevators in central and western Kansas ranged from $3.04 to $3.31 on Monday, May 1st.  This represents a marked increase since October-December 2016 when prices had fallen below $3.00 per bushel – down to $2.66-$2.96 on December 23rd – although not as low as marketing loan rates near $2.05 (central KS) to $2.19 (western KS) per bushel.  Cash corn prices in east central and northeast Kansas – near river terminal locations – were near $3.55 on May 1st, up from the range of $3.26-$3.28 per bushel on 12/23/2016.  Cash corn prices at Kansas ethanol plants on May 1st ranged from $3.38 to $3.73 – indicating continuing strength in ethanol demand in Kansas and nationwide.  While the “large supply and tight storage availability” situation still predominates in local Kansas grain markets, it is a positive market signal that corn usage has not declined, and that Kansas cash corn prices have enough support to have avoided falling down to USDA loan rate levels.

Other Factors Potentially Affecting the U.S. Corn Market

Other factors that could affect the U.S. corn market in 2017 include the following:

  • First, the pace and timing of U.S. farmer marketing of the 2016 corn crop – much of which had been placed in storage after fall harvest and likely has been held for sale through the winter into at least early spring 2017.
  • Second, anticipation of continued strong use of 2016 crop U.S. corn for domestic U.S. ethanol production and livestock feeding through spring-summer 2017.
  • Third, at least moderate continued strength in U.S. corn exports – at least until what is forecast to be a sizable 2nd crop of corn from South America becomes available on global markets during Summer 2017.
  • Fourth, the always present possibility of broader U.S. and Foreign economic and/or financial system disruptions that could impact grain, energy, and other commodity markets in 2017.  World geo-political events have the potential to provide “shocks” to U.S. and World energy and grain markets – with the impact on the direction of U.S. and World corn markets being difficult to anticipate depending on which countries may be involved and their role in global corn export trade.

USDA Supply-Demand Forecast for “Next Crop” MY 2017/18

With early USDA projections of 2017 U.S. corn plantings of 89.996 million acres or ‘ma’ (down 4.0 ma).   Harvested acres of approximately 82.4 ma (down 4.35 ma) are forecast, with projected yields of 170.7 bu/ac (vs the record high of 174.6 in 2016), leading to a 2017 U.S. corn production is forecast to be 14.065 bb – down from the record high of 15.148 bb in 2016.

The USDA forecast “next crop” MY 2017/18 total supplies to be 16.435 bb – down 505 mb from last year’s record high.  Total use is forecast at 14.220 bb – down 400 mb from last year’s record high.  Ending stocks are projected to be 2.215 bb (15.58% S/U) – down from 2.320 bb (15.87% S/U) in “current” MY 2016/17.  United States’ corn prices are projected by the USDA to average $3.50 /bu – up from a midpoint estimate of $3.40 /bu from “current” MY 2016/17 – but within the range of $3.25-$3.55 /bu for this marketing year. This scenario is given a 55% likelihood of occurring by KSU Extension Ag Economist D. O’Brien.

Alternative KSU Forecasts for “Next Crop” MY 2017/18

Three alternative KSU-Scenarios for U.S. corn supply-demand and prices are presented for “next crop” MY 2017/18.  Each forecast scenario presents the likelihood of lower U.S. corn acreage, yields and production than projected by the USDA in the February 23-24, 2017 Agricultural Outlook Forum for “next crop” MY 2017/18.

  • KSU “Next Crop” MY 2017/18 Scenario #1) “167.3 bu/ac – 13.556 bb” Scenario (25% probability) assumes: 88.500 ma planted, 81.031 ma harvested, 167.3 bu/ac trend yield, 13.556 bb production, 15.926 bb total supplies, 14.185 bb total use, 1.741 bb ending stocks, 12.27% S/U, & $3.85 /bu U.S. corn average price for “next crop” MY 2017/18;
  • KSU “Next Crop” MY 2017/18 Scenario #2) “165.0 bu/ac – 13.370 bb” Scenario (15% probability) assumes: 88.500 ma planted, 81.031 ma harvested, 165.0 bu/ac yield, 13.370 bb production, 15.740 bb total supplies, 14.080 bb total use, 1.660 bb ending stocks, 11.21% S/U, & $4.05 /bu U.S. corn average price for “next crop” MY 2017/18;
  • KSU “Next Crop” MY 2017/18 Scenario #3) “150.0 bu/ac – 12.155 bb” Scenario (5% probability) assumes: 88.500 ma planted, 81.031 ma harvested, 150.0 bu/ac yield, 12.155 bb production, 14.525 bb total supplies, 13.460 bb total use, 1.065 bb ending stocks, 7.91% S/U, & $4.75 /bu U.S. corn average price for “next crop” MY 2017/18;

World Corn Supply-Demand

Record high World corn production of 1,053.8 million metric tons (mmt) is projected for “current” MY 2016/17, up 9.4% from 963.3 mmt in MY 2015/16, and up 3.7% from 1,016.0 mmt in MY 2014/15.  Record high World corn total supplies of 1,265.6 mmt are projected for “current” MY 2016/17, up from 1,173.1 mmt in MY 2015/16, and from 1,190.8 mmt in MY 2014/15.

World corn exports of 154.4 mmt are projected for “current” MY 2016/17, up 28.7% from 120.0 mmt in MY 2015/16, and up 8.6% from 142.2 mmt in MY 2014/15.  Projected record high World corn ending stocks of 223.0 mmt (21.4% S/U) in “new crop” MY 2016/17 are up from 211.8 mmt (22.0% S/U) in MY 2015/16, and from 209.8 mmt (21.4% S/U) in MY 2014/15.

  • Although World corn ending stocks are projected to be a record high in “current” MY 2016/17 at 223.0 mmt, World corn percent ending stocks-to-use are forecast to actually decline marginally to 21.4%.  Strong World demand for corn at low prices is expected to continue – especially in the United States, Argentina, Mexico, Southeast Asia, China, Ukraine, and other Former Soviet Union countries (less Ukraine).   An ongoing, strong demand base for corn could help cause sharply increased corn market volatility in the summer of 2017 IF any serious threats emerge to the 2017 U.S. corn crop.

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

 

 

 

Grain Market Update (3rd of 5 parts) – Graphics of U.S. Grain Sorghum Market Outlook

In the following charts is the third of five 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 third of five (5) related blog posts provides information on Grain Sorghum Market Situation and Outlook.

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Grain Market Update (2nd of 5 parts) – Graphics of U.S. Corn Market Outlook

In the following charts is the second 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 second of five (5) related blog posts provides information on Corn Market Situation and Outlook.

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KSU Grain Sorghum and World Coarse Grain Market Outlook in December 2016 – USDA Projections for “Next Crop” MY 2017/18

An analysis of U.S. Grain Sorghum and World Coarse Grain supply-demand factors and 2017 price prospects following the USDA’s December 9th World Agricultural Supply Demand Estimates (WASDE) reports will be available shortly on the KSU AgManager website (http://www.agmanager.info/default.asp).

Following is a summary of the article on U.S. Grain Sorghum & World Coarse Grain Market Outlook – with the full article and accompanying analysis 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 December 9th World Agricultural Supply and Demand Estimates (WASDE) report, MARCH 2016 CME corn futures have trended lower.  On the day of the report, MARCH 2016 corn futures closed at $3.59 ½ per bushel, and then moved to a high of $3.63 on December 15th, before declining to a close of $3.49 ¾ on Thursday, December 29th.  The USDA’s forecast of a 462 million bushel (mb) 2016 U.S. grain sorghum crop along with record large 2016 U.S. corn crop of 15.226 billion bushels (bb), along with large 2016/17 marketing year U.S. feedgrain ending stocks of 64.8 million metric tons (mmt) – up 35%-38% from the previous two marketing years – and have continued to pressure both U.S. grain sorghum and corn market prices.

Cash grain sorghum prices in Kansas

Cash bids for grain sorghum in Kansas on December 29th were near $2.50 per bushel in many locations, with ethanol plants and some export oriented locations at $2.85-$3.05 /bu..

At major grain elevators in western Kansas, cash grain sorghum prices were in the range of $2.40 – $2.55 /bu on Thursday, December 29th with basis levels $0.95 to $1.10 under CME MARCH 2017 Corn futures.  As low as these prices were, they were still markedly higher than county FSA marketing loan rates of $1.76-$1.90 per bushel.  Similarly, central Kansas cash grain sorghum prices were in the range of $2.48 – $2.84 /bu with basis levels $1.02 to $0.65 under MARCH 2017 Corn, but still above local FSA loan rates of $1.85-$1.93 /bu..  At Topeka in east central Kansas, a higher bid was reported of $3.05 /bu (basis = $0.45 under).  Kansas ethanol plant bids for grain sorghum ranged from $2.84 ¾ to $2.89 ¾, with basis at $$0.60-$0.65 under MARCH 2017 Corn futures.  Just as with corn, wheat, and soybeans, current cash bids for grain sorghum are below cost of production in most instances – although to a degree high yields in 2016 has helped to mitigating this factor.

Although the existing “large supply and tight storage availability” situation predominates in local Kansas grain sorghum and corn markets in late December 2016, it is a positive sign that usage of these crops has provided enough market support so that Kansas cash prices have not fallen down to USDA loan rate – price support levels during the 2016 harvest and immediate post-harvest period.

Other Feedgrain Market Considerations

Other market factors to consider that could affect the U.S. feedgrain markets in 2017 include: 1) the pace and timing of U.S. farmer marketing of the 2016 grain sorghum and corn crops – much of which had been placed in storage after the 2016 fall harvest and likely will be held for sale through the winter into at least early spring 2017, 2) anticipation of continued strong use of 2016 crop U.S. feedgrains for domestic U.S. ethanol production and livestock feeding, 3) at least moderate strength in U.S. grain sorghum exports – driven partly by a poor Brazilian feedgrain harvest and lack of exportable supplies in earlier in 2016, as well as other World coarse grain market factors, and 4) the always present possibility of broader U.S. and Foreign economic and/or financial system disruptions impacting grain, energy, and other commodity markets in 2017.

For example, U.S. financial policy announcements by the U.S. Federal Reserve in 2017 could lead to increases in U.S. interest rates and the value of the U.S. dollar relative to other World currencies, which could in turn have a negative impact on U.S. grain sorghum exports.  Also, World geo-political events could provide  unanticipated “shocks” to U.S. and World energy and grain markets.  The impact on the direction of U.S. and World grain sorghum and corn markets from these potential disruptions is difficult to anticipate or predict.

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

The USDA has projected of 2016 U.S. sorghum plantings of 6.761 ma, harvested acres of 6.045 ma, record high yields of 76.5 bu/ac (vs 76.0 bu/ac in 2015 and 67.6 bu/ac in 2014), resulting in a 2016 U.S. grain sorghum production is forecast to be 462 mb – down from 597 mb in 2015, but above 433 mb in 2014, and 392 mb in 2013.

With forecast “current” MY 2016/17 total supplies of 500 mb, total use of 465 mb, and projected ending stocks of 35 mb (7.48% S/U), U.S. grain sorghum prices are projected by the USDA to be in the range of $2.80-$3.30 (midpoint = $3.05 /bu).  Ending stocks of 35 mb (7.48% S/U) in “current” MY 2016/17 compare to 37 mb (6.28% S/U) in MY 2015/16, and 18 mb (4.10% S/U) in MY 2004/05.  United States grain sorghum prices of $3.05 /bu in “current” MY 2016/17 continue the downward trend from $3.31 /bu in MY 2015/16, $4.03 in MY 2014/15, $4.28 in MY 2013/14, and the record high of $6.33 /bu in the drought year of MY 2012/13.

USDA Supply-Demand Forecast for “Next Crop” MY 2017/18

With early USDA projections of 2017 U.S. sorghum plantings of 6.300 ma (down 461,000 acres), harvested acres of 5.400 ma (down 645,000 acres), projected yields of 67.1 bu/ac (vs the record high of 76.5 bu in 2016), 2017 U.S. grain sorghum production is forecast to be 362 mb – down from 462 mb in 2016, and 597 mb in 2015.

With forecast “next crop” MY 2017/18 total supplies of 397 mb (down from 500 mb last year and 620 mb the year before), total use of 365 mb (down from 465 mb last year and 583 the year before), and projected ending stocks of 32 mb (8.76% S/U) – down from 35 mb (7.48% S/U) in “current” MY 2016/17 – U.S. sorghum prices are projected by the USDA to average $3.10 /bu.

Note: This is a “large U.S. feedgrain crop” – “no major U.S. or Foreign crop problem” scenario.  Emerging production threats and the actual outcome of 2017 U.S. grain sorghum and corn production will drive the U.S. grain sorghum market in “next crop” MY 2017/18.

World Coarse Grain Supply-Demand

Record high World coarse grain production of 1,329.35 million metric tons (mmt) is projected for “current” MY 2016/17, up 6.4% from 1,249.65 mmt in MY 2015/16, and up 1.8% from 1,306.1 mmt in MY 2014/15.  Record high World coarse grain total supplies of 1,574.15 mmt are projected for “new crop” MY 2016/17, up from 1,495.0 mmt in MY 2015/16, and from 1,517.2 mmt in MY 2014/15.  “Coarse grains” include grain sorghum, corn, barley, oats, rye, millet, and mixed grains.

World coarse grain exports of 185.2 mmt are projected for “new crop” MY 2016/17, up 12.4% from 164.8 mmt in MY 2015/16, and down 0.5% from 186.1 mmt in MY 2014/15.  Projected record high World coarse grain ending stocks of 254.9 mmt (19.3% S/U) in “new crop” MY 2016/17 are up from 244.8 mmt (19.6% S/U) in MY 2015/16, but down from 245.4 mmt (19.3% S/U) in MY 2014/15.

Although World coarse grain ending stocks are projected to be a record high in “new crop” MY 2016/17 at 254.9 mmt, World coarse grain percent ending stocks-to-use in “new crop” MY 2016/17 are forecast to actually decline marginally to 19.3% – indicative that strong World demand for coarse grains at low prices is expected to continue – especially in Europe where grain production has been hampered by extreme weather conditions in the last year.

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