Crop Production and Grain Stocks Trends in the U.S. and Kansas – Following from Abundant U.S. Grain Harvests

One of the factors causing U.S. grain prices to stay at their current moderate-to-low levels is the total quantity of U.S. corn, grain sorghum, wheat and soybeans available relative to commercial off-farm storage capacity.  This “strain” on storage capacity can be described as a “high demand for grain storage space.”  The net result of strong demand for limited U.S. grain storage capacity is a high real cost of storage – a factor that is influencing the U.S. hard red winter wheat market located in the central and southern plains states (Kansas, Oklahoma, Texas, Colorado, etc.).

The following slides are meant to illustrate this “oversupply relative to grain storage” situation as it exists in the U.S. and in the state of Kansas in the 2016/17 marketing year.  In summary, large crop supplies relative to available storage capacity characterize the U.S. grain storage and handling industry at this point in time.  Looking into the future the remedy for this current situation will come from either reduced grain supplies or increased grain usage.  The quickest remedy would seem be some sort of short crop/short supply situation in the U.S. in the coming months of year 2017.  Although it would be a surprise to the market, some combination of foreign crop production problems and increased U.S. grain export demand would also help to alleviate the current oversupply situation.

So, the grain market waits to see whether some combination of these supply – demand factors may reduce supplies relative available to grain storage capacity.  It is not too much of a “stretch” to say that we should know the answer to that question by August-September 2017!

 

 

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

 

 

 

U.S. Ethanol and Biodiesel Profitability Graphics through March 6, 2017 (via KSU AgManager)

Following are some graphics on price and estimated profitability trends in the U.S. ethanol and biodiesel industries, which will soon be available on the KSU AgManager website: http://www.agmanager.info/

The full presentation titled “U.S. Ethanol & Biodiesel Market Situation” was made for WILL (Illinois Public Radio) with radio commentary to be aired on Tuesday, March 7, 2017.  The presentation will be available on the KSU AgManager.info website – at the following web address:

http://www.agmanager.info/grain-marketing/grain-market-outlook-newsletter/us-ethanol-and-biodiesel-market-situation

KSU Corn Market Outlook in Early March 2017: Looking Ahead to “Next Crop” MY 2017/18

An analysis of U.S. and World Corn supply-demand factors and “Next Crop” 2017/18 Marketing Year supply-demand and price prospects is provided in the following article summary.  This information follows the USDA’s February 23-24, 2017 Agricultural Outlook Forum, as well as USDA Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports on February 9, 2017.  A full version of this article is available on the KSU AgManager website:  http://www.agmanager.info

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

KSU Grain Market Outlook Newsletter

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Summary

Overview

Since the USDA’s February 9th World Agricultural Supply and Demand Estimates (WASDE) report, MAY 2017 CME corn futures have been volatile – moving both higher and lower within the range of $3.67 ¼ to $3.87 ¼.  The February 23-24, 2017 USDA 2017 Agricultural Outlook Forum forecast of lower 2017 U.S. corn production of 14.065 billion bushels (bb) and a moderate reduction in “next crop” 2017/18 marketing year ending stocks of 2.215 bb have provided moderate support for the U.S. corn market.

Cash corn prices in at major grain elevators in central and western Kansas ranged from $3.04 to $3.28 on Tuesday, March 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 $3.55 on March 1st, up from the range of $3.26-$3.28 per bushel on 12/23/2016.  While the “large supply and tight storage availability” situation still predominates in local Kansas grain markets, it is a positive sign that corn usage has provided support for prices.  Kansas cash corn prices on have increased since late December, having avoided falling down to USDA loan rate – price support levels through the recent fall and winter months.

Other Market Factors in 2017

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 – driven partly by the availability of exportable corn supplies from South America through spring 2017.

And 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 could provide an unanticipated “shock” 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.

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

With early USDA projections of 2017 U.S. corn plantings of 90.000 million acres or ‘ma’ (down 4.004 ma), harvested acres of 82.400 ma (down 4.348 ma), projected yields of 170.7 bu/ac (vs the record high of 174.6 in 2016), 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 of 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 a year ago – but within the range of $3.20-$3.60 /bu for “current” MY 2016/17. 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 alternative, lower U.S. corn 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 – 13.786 bb” Scenario (25% probability) assumes: 90.000 ma planted, 82.400 ma harvested, 167.3 bu/ac trend yield, 13.786 bb production, 16.156 bb total supplies, 14.185 bb total use, 1.971 bb ending stocks, 13.89% S/U, & $3.65 /bu U.S. corn average price for “next crop” MY 2017/18; 

KSU “Next Crop” MY 2017/18 Scenario #2) “165.0 bu/ac – 13.596 bb” Scenario (15% probability) assumes: 90.000 ma planted, 82.400 ma harvested, 165.0 bu/ac yield, 13.596 bb production, 15.966 bb total supplies, 14.080 bb total use, 1.886 bb ending stocks, 13.39% S/U, & $3.70 /bu U.S. corn average price for “next crop” MY 2017/18;

KSU “Next Crop” MY 2017/18 Scenario #3) “150.0 bu/ac – 12.360 bb” Scenario (5% probability) assumes: 90.000 ma planted, 82.300 ma harvested, 150.0 bu/ac yield, 12.3605 bb production, 14.680 bb total supplies, 13.460 bb total use, 1.220 bb ending stocks, 8.92% S/U, & $4.55 /bu U.S. corn average price for “next crop” MY 2017/18;

World Corn Supply-Demand:

Record high World corn production of 1,040.2 million metric tons (mmt) is projected for “current” MY 2016/17, up 8.3% from 960.7 mmt in MY 2015/16, and up 2.4% from 1,015.6 mmt in MY 2014/15.  Record high World corn total supplies of 1,250.6 mmt are projected for “current” MY 2016/17, up from 1,170.5 mmt in MY 2015/16, and from 1,190.3 mmt in MY 2014/15. 

World corn exports of 149.0 mmt are projected for “current” MY 2016/17, up 23.0% from 121.1 mmt in MY 2015/16, and up 4.8% from 142.2 mmt in MY 2014/15.  Projected record high World corn ending stocks of 217.6 mmt (21.1% S/U) in “new crop” MY 2016/17 are up from 210.4 mmt (21.9% 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 217.6 mmt, World corn percent ending stocks-to-use are forecast to actually decline marginally to 21.1%.  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).   Ongoing, strong demand could cause sharply increased corn market volatility in the summer of 2017 IF any threats to the 2017 U.S. crop emerge.

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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 (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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U.S. Ethanol and Biodiesel Market-Profitability Graphics as of January 24, 2017 (via KSU AgManager)

Following are some graphics on economic trends in the U.S. ethanol industry, which are available on the KSU AgManager website: http://www.agmanager.info/    The full presentation titled “U.S. Ethanol & Biodiesel Market Situation” made for WILL (Illinois Public Radio) on Tuesday, January 24th is located at the KSU AgManager.info website – at the following web address:

http://www.agmanager.info/grain-marketing/grain-market-outlook-newsletter/us-ethanol-and-biodiesel-market-situation

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