general session i grain market situation and outlook dan o ...€¦ · australia, china, russia,...
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2015 Risk and Profit Conference General Session Speakers
GENERAL SESSION I
Grain Market Situation and Outlook Dan O’Brien, Kansas State University
Daniel O’Brien was raised on a grain and livestock farm in south central Nebraska. He received bachelors and masters degrees in Agricultural Economics from the University of Nebraska-Lincoln. After completing his Ph.D. at Iowa State, he worked as the Extension Agricultural Economist at the Northwest Research and Extension Center in Colby and was Northwest Area Extension Administrative Director starting in 2003 before returning to his Extension Agricultural Economist position in January 2007. His ongoing extension and applied research interests and efforts are in the areas of a) grain market supply-demand analysis, bioenergy impacts and risk management strategies, b) grain industry market structure, conduct and performance – focusing on grain handling and transportation issues, and c) economic analysis of irrigated and dryland cropping systems, and associated cropland leasing arrangements.
Abstract/Summary Since January 2015 the prevailing concensus in feedgrain, oilseed and wheat markets has been that a "buyers market" exists, and that the current "large stocks - low price" situation in grain markets will continue through the remainder of 2015 into 2016 and possibly longer. Although over the next 12-18 months a number of possible threats to the size of U.S. and foreign corn, sorghum, soybean, sunflower, cotton, and wheat crops either now exist or have a tangible possibilitie of occurring that could change this current "large crop - low price" scenario, none of them has materially occurred to date to such a degree that grain markets have perceived the need to respond to them. In addition, the over-arching negative impact of financial and currency market trends (i.e., a high value for trade weighted U.S. dollars) and weak or uncertain demand for U.S. grain exports have also been negative factors affecting U.S. grain market price prospects. In this session we will first describe the current grain market situation, and then examine the key grain factors to watch in determining the path of grain markets from fall 2015 through 2016. The likelihood of alternative outcomes for corn, sorghum, wheat and soybean markets will be examined, with the probability of each scenario provided.
Grain Market Outlook in 2015-2016
DANIEL O’BRIENEXTENSION AGRICULTURAL ECONOMIST
Grain Market “Drivers”Key issues affecting grain markets over 1998-2015 Period
Soybean exports (to China) & ethanol use (U.S.) have “driven” grain Supply-Demand “Demand-pull” has caused higher prices, crop acreage
competition, & higher crop production
Transportation Logistics have Impacted Grain Exports U.S. exports have been limited by higher shipping costs to key
markets versus the Black Sea, Australia, & other competitors
Panama Canal improvements may help the U.S. to Asia mkts
More Grain Market “Drivers”Key issues
Wheat has increasingly substituted for Feedgrains in World Livestock Feed Markets since 2012
Issues of “Food” versus “Feed” quality wheat, & the degree of adoption by foreign livestock feeders
U.S. Grain Exports have been limited by U.S. Dollar More impact for wheat (several export competitors) than corn
& soybeans (competing mainly with South America & Ukraine)
U.S. Dollar Index (ICE Futures)Monthly Chart: June 2006 – July 2015 + 8/18/2015
96.2
SEP 201596.23 on 8/20/2015 am
Grain Market Price Behavior Economic principles shown in market patterns over time
Prices tend to return to breakeven cost over time
High grain prices & profits lead to economic responses that eventually cause lower prices & losses (& vice verse)
Evidence in Corn, Soybean & Wheat markets over 2005-2015
Market response to Supply Prospects & Prices Price = f(Supply): Varying $ response to “short” vs “abundant” Stocks/Use
Use = f(Prices): Usage affected conversely by “high” vs “low” prices
Wheat Markets
World Wheat Market Prospects:Large Supplies A “Buyer’s Market”
• Record World Supplies & Usage Forecast in 2015/16o 3 consecutive record large World wheat crops
• Varying 2015/16 Crop Prospects by Country Australia, China, Russia, Kazakhstan, Ukraine, Turkey, Iran, U.S.
Canada, E.U., India, Pakistan, Argentina
• World wheat exports likely to remain a “buyer’s market” unless or until World supplies & stocks declineo U.S. & World Crop Uncertainty in 2016? (El Nino…??)
CME Kansas HRW Wheat - DEC 2015Weekly Chart: May 2014 – August 20, 2015
DEC 2015$4.96
8/20/2015 am
World Wheat Supply & Use – August 12th WASDE
2014/15 Estimate
2015/16 Forecast
2015/16 vs2014/15
mmt mmt percent
Beginning Stocks 193 *Record* 210 +8.4%
Production 725 *Record* 727 +0.2%
Total Supply 919 *Record* 936 +1.9%
Food Use 574 *Record* 579 +0.7%
Feed Use 135 *3 yr high* 136 +1.2%
Total Use 709 *Record* 715 +0.8%
Export Trade 165 156 -5.4%
Ending Stocks 210 *Record* 222 +5.6%
% Stocks / Use 29.6% *6 yr high* 31.0% +1.4%
August 12, 2015
World Wheat Supply, Use & Stocks
613 615
116 129
687650
137203
696 689
158198166
725 704
165
210
727 714
156221
0
300
600
900
Production Usage Trade End Stocks
Mil
lio
n M
etri
c T
on
s
2007/08 2008/09 2009/10 2010/11 2011/122012/13 2013/14 2014/15 2015/16
2.3% /yr 2.0% /yr
4.3% /yr3 year uptrendin End Stocks
“New Crop” MY 2015/16 End Stocks = 221.5 mmtEnd Stks/Use = 31.0% (6 yr high)
Vs. “Benchmark” MY 2007/08 End Stocks = 128.8 mmtEnd Stks/Use = 21.0%
World Wheat Exporters
32 32
2319
2
19
8 10
2123
35
24
17
6
23
611
2025
31
18 19
6
23
6
1316
0
50M
illi
on
Met
ric
To
ns
MY 2013/14 MY 2014/15 MY 2015/16
World Wheat Importers
2521
16
74
7 7
71
2522 20
6 6 8
2
72
2519 19
7 7 72
69
0
20
40
60
80
NorthAfrica
MiddleEast
SE Asia Brazil EU-28 FSU-12 China Others
Mil
lio
n M
etri
c T
on
s
MY 2013/14 MY 2014/15 MY 2015/16
World Wheat Ending Stocks & % Stx/Use
177 183 164 156 165199 210 210 207 204
169136
156 153134 129
169203 199 198
177 193 210 221
32 33
30
29 29
3536 36 35 35
28
23
26 25
22 21
27
31 3029
26
2829.8 31.0
0
100
200
300
400
500
600
0
10
20
30
40
Mill
ion
Me
tric
To
ns
% E
nd
ing
Sto
cks-
to-U
se
Marketing Year
U.S. Wheat Market Prospects:Slow Exports, Growing Stocks, & Weak Prices
• U.S. wheat exports are likely to remain weak until the high U.S. dollar &/or record World stocks situation changeso U.S. & World Crop Uncertainty in 2016? (El Nino…??)
• U.S. Spring Wheat2015 Record yields, Large crop forecast
• U.S. HRW Wheat2015 12.3% protein, 58.9 lb test, 0.5% damageo Versus 13.3% protein, 60.7 lb test wt, 0.5% damage in 2014
• U.S. SRW Wheat2015 9.9% protein & 56.9 lb test, 3.4% damageo Versus 9.9% protein, 58.1 lb test wt, 0.9% damage in 2014
U.S. Wheat Production in 2015
Production = 2.136 bln bu2015
vs 2.026 bln bu2014 (record)
Yield = 44.1 bu/ac2015
vs 43.7 bu/ac2014
Harvested Acres = 48.4 million2015
vs 46.4 million2014
Planted Acres = 56.1 million2015
vs 56.8 million2014
U.S. Wheat Seeded Acreage
51.4 48.0 46.4 43.3 43.3 40.9 41.8 45.4 43.3 40.4 40.6 45.0 46.8 43.336.6 40.6 40.9 43.2 42.4 40.6
20.019.1
15.615.3 15.3 15.6 15.6
13.8 13.814.0 14.9
13.3 14.113.2
13.512.3 12.3 11.6 13.0 13.5
0
20
40
60
80
Mil
lio
n A
cres
Winter Wheat Other Spring Wheat Durum
2015 U.S. Wheat acreage 1.3% vs 2014USDA Est. of All U.S. Wheat Acres in 2015 = 55.079 thsd ac. (743,000 acres)
U.S. Wheat Acreage
63.659.0
52.6 54.3 55.3 56.2 56.8 56.1
56.049.8 46.9 45.7 48.8 45.3 46.4 48.5
84.8%
81.6%76.0%
85.4% 83.8%87.6%
81.6%
84.4%88.1%
84.5%89.1%
84.2%88.2%
80.6% 81.6%
84.1%
0%
20%
40%
60%
80%
100%
0
25
50
75
100
125
% H
arv
est
ed
/Pla
nte
d
Mill
ion
Ac
res
Planted Acres Harvested Acres % Harvested of Planted
U.S. Wheat Yields
31.6
27.3
34.2
39.4
32.7
39.5
35.8
43.2
35
44.2
38.6
46.1
43.6
47.1
43.7
44.146.1
U.S. Wheat Yield Trend (1973-2015)Yield = 30.50 bu + 0.353 bu/yr
0
10
20
30
40
50
60
Yie
ld: B
u /
Ac
re
Year
U.S. Wheat Yields KSU 2016
Record High
U.S. Wheat Production & Supplies
2.1031.808 2.051
2.5122.209 2.163 1.993 2.252 2.135 2.026 2.136
0.5400.571
0.456
0.306 0.657 0.9760.863
0.743 0.7180.590
0.753
2.7252.501 2.620
2.945 2.9843.236
2.9683.118 3.022
2.7603.014
0
1
2
3
4
Billi
on
Bush
els
Production Beginning Stocks Imports Total Supply
U.S. Wheat Use by Category
919 926 941 951 955 958 967
8791,291
1,051 1,012 1,176854 925
142
85157 364
223
115 200
0
500
1,000
1,500
2,000
2,500
3,000
Mil
lio
n B
ush
els
Marketing Years
Feed +Residual
Seed
Exports
Food
All U.S. Wheat Supply-Use & Prices2011/12 2012/13 2013/14 2014/15 2015/16
Area Planted (mil. acres) 54.3 55.3 56.2 56.8 56.1
Yield (bu./acre) 43.6 46.2 47.1 43.7 44.1
Production (mil. bu.) 1,993 2,252 2,134 2,025 2,136
Beginning Stocks (mil. bu.) 863 743 718 590 753
Imports (mil. bu.) 112 123 169 144 125
Total Supply (mil. bu.) 2,968 3,118 3,022 2,760 3,014
Food Use (mil. bu.) 941 951 955 958 967
Seed Use (mil. bu.) 76 73 77 81 72
Exports (mil. bu.) 1,051 1,012 1,176 854 925
Feed & Residual (mil. bu.) 157 364 223 115 200
Total Use (mil. bu.) 2,226 2,400 2,431 2,008 2,164
Ending Stocks (%S/U) (mil. bu.) 33.4% 743 29.9% 718 24.3% 590 37.5% 753 39.3% 850
Season-Avg. Price ($/bu.) $7.24 $7.77 $6.87 $5.99 $5.10
U.S. HRW Wheat Supply-Use & Prices2011/12 2012/13 2013/14 2014/15 2015/16
Area Planted (mil. acres) 28.5 29.6 29.7 30.5 29.6
Yield (bu./acre) 36.4 40.6 36.6 33.7 36.3
Production (mil. bu.) 782 998 747 738 856
Beginning Stocks (mil. bu.) 387 317 343 237 294
Imports (mil. bu.) 0.5 18 19 10 10
Total Supply (mil. bu.) 1,170 1,333 1,109 985 1,160
Food Use (mil. bu.) 404 404 370 370 395
Seed Use (mil. bu.) 33 33 34 33 31
Exports (mil. bu.) 397 382 446 269 285
Feed & Residual (mil. bu.) 19 171 22 19 85
Total Use (mil. bu.) 853 990 872 691 796
Ending Stocks (%S/U) (mil. bu.) 37.2% 317 34.6% 343 27.2% 237 42.5% 294 45.7% 364
Season-Avg. Price ($/bu.) $6.92 $7.56 $7.03 $6.02 $5.10
U.S. Wheat Ending Stocks & % Stx/Use
571456
306
657
976863
743 718590
753 850
2722
13
29
49
3633
30
24
37.5 39.3
0
500
1,000
1,500
2,000
2,500
0
5
10
15
20
25
30
35
40
45
50M
illio
n Bu
she
ls
% E
nd
Sto
cks-
to-U
se
Marketing Year
U.S. Wheat Ending Stocks & Prices
27 2213
29
4936 33 30
2437.5 39.3 39.3 33.1
$3.42
$4.26
$6.48 $6.78
$4.87$5.70
$7.24 $7.77
$6.87$5.99
$5.10
KSU 70% prob
$5.50
KSU30% prob
$6.00
$0
$2
$4
$6
$8
$10
0
25
50
75
100
125
150
U.S
. Pric
e$
/ b
u
% E
nd S
toc
ks-t
o-U
se
Marketing Year
U.S. Wheat Price vs U.S. Stocks-to-Use
1985/86
1995/96
2007/08
2008/09
2009/10
2012/13MY 2013/14
24.3% S/U, $6.87 /bu
$2
$3
$4
$5
$6
$7
$8
$9
$10
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
U.S. W
heat $ per bushel
U.S. Wheat % Ending Stocks‐to‐Use
USDA “New Crop” MY 2015/1639.3% S/U, $5.10 /bu
KSU “New Crop” MY 2015/1639.3% S/U, $5.50 /bu
“Old Crop” MY 2014/1537.5% S/U, $5.99 /bu
2011/12
2010/11
U.S. Wheat Price ($) vs World %Stx/UseMY 1973/74 – “New Crop” MY 2015/16
2007/08
2013/14$6.87 @ 28.0% S/U
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$10.00
20 25 30 35 40
U.S
. Whe
at P
rice
World Wheat % Ending Stocks-to-Use
2011/12
2014/15$5.99 @
29.8% S/U
USDA 2015/16$5.10 @ 31.0% S/U
2012/13$7.77 @ 25.8% S/U
Corn & Sorghum Markets
World Corn & Sorghum Market Prospects:Large Supplies A “Buyer’s Market”
• Record World Supplies & Usage in 2015/16o 3 consecutive record large World coarse grain crops (like wheat)
• Varying 2015/16 Crop Prospects by Country Canada, No. Africa/Middle East, SE Asia, China, & Russia
U.S., Argentina*, Australia, Brazil*, E.U., Mexico, Ukraine
• Coarse grain exports likely to remain a “buyer’s market” until World stocks declineo U.S. & World Crop Uncertainty in 2016? (El Nino…??)
CME Corn Futures - DEC 2015Weekly Chart: May 2014 – August 20, 2015
DEC 2015$3.81
8/20/2015 am
World Corn Supply & Use – August 12th WASDE
2014/15 Estimate
2015/16 Forecast
2015/16 vs2014/15
mmt mmt percent
Beginning Stocks 175 *2nd highest* 197 +12.8%
Production *record* 1,006 986 +0.2%
Total Supply 1,181 *record* 1,183 +0.2%
Feed Use 597 *record* 606 +1.4%
Food, Seed, Industrial 387 *record* 382 -1.2%
Total Use 984 *record* 988 +0.4%
Export Trade *2nd highest* 129 123 -4.4%
Ending Stocks *3rd highest* 197 *4th highest* 195 -1.2%
% Stocks / Use 20.1% 19.8% +0.3%
World Corn Supply, Use & Stocks
796 775
99 130
825 819
97144
888 867
117 132131
1,006 973
129
197
986 986
123195
0
600
1,200
Production Usage Trade End Stocks
Mil
lio
n M
etri
c T
on
s
2007/08 2008/09 2009/10 2010/11 2011/122012/13 2013/14 2014/15 2015/16
3.0% /yr 3.4% /yr
3.2% /yrHigh last 3 yearsin Ending Stocks
“New Crop” MY 2015/16 End Stocks = 195.1 mmtEnd Stks/Use = 19.8% (2nd highest)
Vs. “Benchmark” MY 2007/08 End Stocks = 129.9 mmtEnd Stks/Use = 16.8%
Coarse Grain Exporters
54
21
7 5
21
7
2326
56
20
74
27
8
2427
58
19
73
24
8
22 24
0
10
20
30
40
50
60
U.S. Argentina Australia Canada Brazil Russia Ukraine Other
Mil
lio
n M
etri
c T
on
s
2013/14 2014/15 2015/16
Coarse Grain Importers
31
18
11 1211 11
16
12
1
3433
17
11 1210 10 9
21
1
35
29
17
11 1210 9
15
21
1
35
0
10
20
30
40
NAfrica-M
East
Japan Mexico SaudiArabia
SouthKorea
SE Asia EU China Brazil Other
Mil
lio
n M
etri
c T
on
s
MY 2013/14 MY 2014/15 MY 2015/16
1,000
Total EU Corn Production 2015/2016 (Aug): 62.25 (million metric tons)
Corn Production (1,000 MT) for 2015/2016 (Aug)
39
August 12, 2015
U.S. Feedgrain Market Prospects:Strong domestic use, Exports, & Weak Prices
• Strong U.S. sorghum exports to China to continueo Depends on Chinese Ag Policy wrt managing corn reserves
• Low Corn Prices have supported U.S. domestic use o Livestock Feed2015/16 = 5.300 bln bu (tied for high since 2007/08)
o Corn Ethanol2015/16 = 5.250 bln bu (record, up 50 mb vs 2014/15)
o Other FSI2015/16 = 1.375 bln bu (up 20 mb, = average since 1998/99)
o Exports2015/16 = 1.850 bln bu (down vs 2.437 bb high in 2007/08)
o Uncertainty about 2015 U.S. corn crop through harvest
U.S. Corn Production in 2015
Production = 13.686 bln bu2015
vs 14.216 bln bu2014 (record)
Yield = 168.8 bu/ac2015
vs 171.0 bu/ac2014 (record)
Harvested Acres = 81.1 million2015
vs 83.1 million2014
Planted Acres = 88.9 million2015
vs 90.6 million2014
U.S. Corn Acreage
81.8 78.3
93.586.0 86.4 88.2 91.9 97.3 95.4 90.6 88.9
75.1 70.6
86.578.6 79.5 81.4 83.9 87.4 87.5 83.1 81.1
91.9% 90.2% 92.5% 91.4% 92.0% 92.4% 91.2% 89.8% 91.7% 91.8% 91.2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
30
60
90
120
150%
Ha
rve
ste
d-t
o-P
lant
ed
Mill
ion
Ac
res
Planted Acres Harvested Acres % Harvested/Planted
U.S. Corn YieldsUSDA 2015 = 168.8 bu/ac; 2015 Trend1973-2014 = 162.3
138
160151
165
123
159
171 168.8
162.3
Yield Trend (1973-2014)Yield = 85.11 bu + 1.84 bu/yr
0255075
100125150175200225
Yie
ld: B
u /
Ac
re
1973-2015 U.S. Corn Yields KSU 2015 Trend
U.S. Corn Production & Supplies
11.112 10.53113.038 12.043 13.067 12.425 12.314
10.75513.829 14.216 13.686
2.1141.967
1.3041.624
1.6731.708 1.128
0.989
0.8211.232 1.77213.235
12.510
14.36213.681
14.749 14.16113.471
11.904
14.68615.472 15.531
0
3
6
9
12
15
18
Billi
on
Bush
els
Production Beginning Stocks Imports Total Supply
U.S. Corn Use - With estimated DDGS #s
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
Billi
on
bu
Co
rn E
qui
vale
nts
Marketing Year
Livestock Feed Use
DDGS Feed
Other FSI
Ethanol Product
Corn Exports
End StocksDDGS Exports
U.S. Corn Supply-Use & Prices2011/12 2012/13 2013/14 2014/15 2015/16
Area Planted (mil. acres) 91.9 97.3 95.4 90.6 88.9
Yield (bu./acre) 147.2 123.1 158.1 171.0 168.8
Production (mil. bu.) 12,360 10,755 13,829 14,216 13,686
Beginning Stocks (mil. bu.) 1,128 989 821 1,232 1,772
Imports (mil. bu.) 29 160 36 30 30
Total Supply (mil. bu.) 13,517 11,904 14,686 15,477 15,488
Ethanol (mil. bu.) 5,000 4,641 5,134 5,200 5,250
Food, Seed, & Other (mil. bu.) 1,428 1,397 1,369 1,355 1,375
Exports (mil. bu.) 1,543 730 1,917 1,850 1,850
Feed & Residual (mil. bu.) 4,557 4,315 5,034 5,300 5,300
Total Use (mil. bu.) 12,528 11,083 13,454 13,705 13,775
Ending Stocks (%S/U) (mil. bu.) 7.9% 989 7.4% 821 9.2% 1,232 12.9% 1,772 12.4% 1,713
Season-Avg. Price ($/bu.) $6.22 $6.89 $4.46 $3.70 $3.65
U.S. Corn Ending Stocks & % Stx/Use
1,967
1,3041,624 1,673 1,708
1,128 989 8211,232
1,772 1,713
17.0
12.0 12.813.9 13.1
8.7 7.9 7.49.2
12.9 12.4
0
1,000
2,000
3,000
4,000
5,000
0
5
10
15
20
Mill
ion
Bush
els
% E
nd
Sto
cks-
to-U
se
Marketing Year
U.S. Corn % Stocks/Use vs Price$
11.6 12.8 13.9 13.18.7 7.9 7.4 9.2 12.9 12.4
$3.04
$4.20 $4.06$3.55
$5.18
$6.22$6.89
$4.46$3.70 $3.65
$0
$2
$4
$6
$8
0
20
40
60
80
100U
.S. C
orn
Pric
e$
/ b
u
% E
nd S
toc
ks-t
o-U
se
Marketing Year
U.S. Corn Price$ vs U.S. % Stocks-to-UseMY 1973/74-2015/16
2010/11
$1
$2
$3
$4
$5
$6
$7
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70
U.S
. Co
rn P
rice
U.S. Corn % Ending Stocks-to-Use
2012/13: 7.4% S/U, $6.89 /bu
2013/14: 9.2% S/U, $4.46 /bu2011/12
2014/15: 12.9% S/U @ $3.70 /bu
2015/16: 12.4% S/U, $3.65 /bu1995/96
U.S. Corn$ vs World Coarse Grain %S/UMY 1973/74 - 2015/16
2011/12
$1
$2
$3
$4
$5
$6
$7
$8
10 15 20 25 30 35 40 45 50
U.S
. Co
rn P
rice
World Coarse Grain % Ending Stocks-to-Use
2012/13: 14.8% S/U & $6.89 /bu
2014/15: 18.2% S/U & $3.70 /bu
2013/14: 17.1% S/U & $4.46 /bu
2015/16: 17.6% S/U & $3.50 /bu
1973/74
13%-15% “Floor”
in World Coarse Grain
% Stocks/Use
World Sorghum Supply & Use – 8/12 WASDE
2014/15 Estimate
2015/16 Forecast
2015/16 vs2014/15
mmt mmt percent
Beginning Stocks 6 4 -21.8%
Production 63 *high since 1996* 69 +9.3%
Total Supply 79 *high since 1987* 86 +8.7%
Feed Use 30 *high since 1996* 33 +10.9%
Food, Seed, Industrial 34 34 +0.5%
Total Use 64 *record* 67 +5.4%
Export Trade 11 *high since 1980* 14 +22.3%
Ending Stocks 4 5 +20.4%
% Stocks / Use 7.1% 8.1% +1.0%
World Sorghum Supply, Use & Stocks
57 57
7 5
58 59
6 5
61 59
8 6
63 64
114
69 67
14
5
0
50
100
Production Usage Trade End Stocks
Mil
lio
n M
etri
c T
on
s
2007/08 2008/09 2009/10 2010/11 2011/122012/13 2013/14 2014/15 2015/16
5.2% /yrsince 2011/12
4.4% /yrSince 2011/12
28.3% /yrSince 2011/12 “Sideways”
Ending Stocks
“New Crop” MY 2015/16 End Stocks = 5.4 mmtEnd Stks/Use = 8.1%
Vs. MY 2011/12 End Stocks = 4.65 mmtEnd Stks/Use = 8.2%
U.S. Sorghum Production in 2015
Production = 573 mln bu2015
vs 433 mln bu2014
Yield = 74.6 bu/ac2015
vs 67.6 bu/ac2014
Harvested Acres = 7.7 million2015
vs 6.4 million2014
Planted Acres = 8.7 million2015
vs 7.1 million2014
U.S. Sorghum Supply-Use & Prices2011/12 2012/13 2013/14 2014/15 2015/16
Area Planted (mil. acres) 5.5 6.3 8.1 7.1 8.7
Yield (bu./acre) 54.0 49.6 59.6 67.6 74.6
Production (mil. bu.) 213 248 392 432 573
Beginning Stocks (mil. bu.) 27 23 15 34 17
Imports (mil. bu.) 0.1 10 0.1 0.4 0
Total Supply (mil. bu.) 241 280 408 467 589
Alcohol-Industrial, Food (mil. bu.) 84 94 69 14 14
Seed (mil. bu.) 1 1 1 1 1
Exports (mil. bu.) 63 76 211 350 430
Feed & Residual (mil. bu.) 69 93 93 85 105
Total Use (mil. bu.) 218 265 374 450 550
Ending Stocks (%S/U) (mil. bu.) 10.6% 23 5.7% 15 9.1% 34 3.8% 17 7.1% 39
Season-Avg. Price ($/bu.) $5.99 $6.33 $4.28 $4.00 $3.90
Soybean Markets
World Soybean Market Prospects:Large Supplies A “Buyer’s Market”
• Record World Supplies & Usage in 2015/16o 3 consecutive record large World soybean crops (like wheat & corn)
• Varying 2015/16 Crop Prospects by Country Brazil, Paraguay, & the European Union
U.S., Argentina, & China
• World soybean exports to remain a “buyer’s market” until World supplies & stocks declineo U.S. & World Crop Uncertainty in 2016? (El Nino…??)
CME Soybean Futures NOV 2015Weekly Chart: May 2014 – August 20, 2015
NOV2015$9.05
8/20 am
World Soybean Supply & Use – 8/12 WASDE
2014/15 Estimate
2015/16 Forecast
2015/16 vs2014/15
mmt mmt percent
Beginning Stocks 63 *record* 81 +28.4%
Production *2nd highest* 319 *record* 320 +0.2%
Total Supply *2nd highest* 382 *record* 401 +4.8%
Domestic Crush *2nd highest* 258 *record* 272 +5.1%
Food, Seed, Other Use *2nd highest* 39 *record* 38 -0.1%
Total Use *2nd highest* 297 *record* 310 +4.4%
Export Trade *2nd highest* 124 *record* 127 +2.3%
Ending Stocks *2nd highest* 81 *record* 87 +7.8%
% Stocks / Use *3rd high* 27.4% *2nd high* 28.0% +0.6%
World Soybean Supply, Use & Stocks
212 222
77
43
261238
9161
240259
92
54
319297
124
81
320 310
127
87
0
200
400
Production Usage Trade End Stocks
Mil
lio
n M
etri
c T
on
s
2007/08 2008/09 2009/10 2010/11 2011/122012/13 2013/14 2014/15 2015/16
5.8% /yr 4.4% /yr
7.8% /yr 4 year uptrendin Ending Stocks
“New Crop” MY 2015/16 End Stocks = 86.9 mmtEnd Stks/Use = 28.0% (2nd highest)
Vs. “Benchmark” MY 2008/09 End Stocks = 43.2 mmtEnd Stks/Use = 19.5%
Soybean Exporter Sales
45 47
85
9
50 50
95
11
47
54.5
105
11
0
30
60
U.S. Brazil Argentina Paraguay Rest of World
Mil
lio
n M
etri
c T
on
s
2013/14 2014/15 2015/16
Soybean Importer Purchases
0
50
100
China EU-28 Japan Mexico Rest of World
Mil
lio
n M
etri
c T
on
s
2010/11 2011/12 2012/13 2013/14 2014/15 2015/16
+10.2% /yr
+1.6% /yr ̶ 0.5% /yr +3.2% /yr
+7.3% /yr
U.S. Soybean Market Prospects:Strong Use & Exports, Large Stocks, & Weak Prices
• U.S. soybean exports to remain historically strong in spite of high U.S. Dollaro Depends on China import demand & 2016 South American crops
• Low Prices have supported U.S. Soybean Use o Crush2015/16 = 1.860 bln bu (record, up 15 mb vs 2014/15)
o Exports2015/16 = 1.725 bln bu (2nd highest, 100 mb vs 2014/15)
o Uncertainty about the 2015 U.S. corn crop through harvest
U.S. Soybean Production in 2015
Production = 3.916 bln bu2015
vs 3.969 bln bu2014
Yield = 46.9 bu/ac2015
vs 47.8 bu/ac2014
Harvested Acres = 83.5 million2015
vs 83.1 million2014
Planted Acres = 84.3 million2015
vs 83.7 million2014
U.S. Soybean Acreage
72.0 75.564.7
75.7 77.5 77.4 75.0 77.2 76.883.7 84.3
71.3 74.664.1
74.7 76.4 76.6 73.8 76.1 76.383.1 83.5
98.9% 98.8% 99.1% 98.6% 98.6% 99.0% 98.3% 98.6% 99.2% 99.2% 99.1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
25
50
75
100
125%
Ha
rve
ste
d-t
o-P
lant
ed
Mill
ion
Ac
res
Planted Acres Harvested Acres % Harvested/Planted
U.S. Soybean YieldsUSDA 2015 = 46.9 bu/ac; 2015 Trend1973-2014 = 45.2
41 4042 42
44
4440
44
47.8 46.9
45.2
Yield Trend (1973-2014)Yield = 25.74 bu + 0.45 bu/yr
0
25
50
Yie
ld: B
u /
Ac
re
U.S. Soybean Yields 1973-2015 KSU 2015 Trend
U.S. Soybean Production & Supplies
3.068 3.1972.677 2.967
3.361 3.331 3.097 3.042 3.3583.969 3.916
0.2560.449
0.574 0.205
0.138 0.1510.215 0.169
0.141
0.092 0.240
3.3273.655
3.261 3.1853.514 3.496 3.328 3.252
3.571
4.091 4.210
0.0
1.0
2.0
3.0
4.0
5.0
Billi
on
Bush
els
Production Beginning Stocks Imports Total Supply
U.S. Soybean Use & End Stocks
1,808 1,803 1,662 1,752 1,648 1,703 1,689 1,734 1,845 1,860
1,116 1,159 1,279 1,499 1,501 1,365 1,3171,638 1,825 1,725
574205 138
151 215 169 14192
240 470
0
1,000
2,000
3,000
4,000
5,000
Mil
lio
n B
ush
els
Marketing Years
Crush Exports Seed+Residual End Stocks
U.S. Soybean Supply-Use & Prices2011/12 2012/13 2013/14 2014/15 2015/16
Area Planted (mil. acres) 75.0 77.2 76.8 83.7 84.3
Yield (bu./acre) 42.0 40.0 44.0 47.8 46.9
Production (mil. bu.) 3,097 3,042 3,358 3,969 3,916
Beginning Stocks (mil. bu.) 215 169 141 92 240
Imports (mil. bu.) 16 41 72 30 30
Total Supply (mil. bu.) 3,328 3,252 3,570 4,091 4,186
Domestic Crush (mil. bu.) 1,703 1,689 1,734 1,845 1,860
Exports (mil. bu.) 1,365 1,317 1,638 1,825 1,725
Seed, Feed, Residual (mil. bu.) 91 105 106 181 132
Total Use (mil. bu.) 3,159 3,111 3,478 3,851 3,717
Ending Stocks (%S/U) (mil. bu.) 5.4% 169 4.5% 141 2.7% 92 6.2% 240 12.6% 470
Season-Avg. Price ($/bu.) $12.50 $14.40 $13.00 $10.05 $9.15
U.S. Soybean Ending Stocks & % Stx/Use
449 574205 138 151 215 169 141 92 240
470
15.6
18.6
6.7
4.5 4.56.6
5.4 4.52.7
6.2
12.6
0
1,000
2,000
3,000
4,000
5,000
0
5
10
15
20M
illio
n Bu
she
ls
% E
nd
Sto
cks-
to-U
se
Marketing Year
U.S. Soybean % Stocks/Use vs Price$
15.6 18.6
6.7 4.5 4.5 6.6 5.4 4.5 2.6 6.212.6
$5.66$6.43
$10.10 $9.97 $9.59
$11.30$12.50
$14.40$13.00
$10.05$9.15
$0
$4
$8
$12
$16
0
20
40
60
80
100
U.S
. So
ybe
an
Pric
e$
/ b
u
% E
nd S
toc
ks-t
o-U
se
Marketing Year
U.S. Soybean $ vs U.S. Stx-to-UseMY 1973/74 – 2015/16
2007/08
2008/09
2009/10
2012/13$14.40 @4.5% S/U “Current”
2014/15$10.05 @ 6.2% S/U
$3
$5
$7
$9
$11
$13
$15
$17
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30
U.S
. So
ybe
an
Pric
e
U.S. Soybean % Ending Stocks-to-Use
2010/11
2003/04
2011/12
“New Crop” 2015/16$9.15 @ 12.6% S/U
2013/14$13.00 @ 2.65% S/U
U.S. Soybean$ vs World %Stx/Use MY 1973/74 – 2015/16
2007/08
2008/09
2009/10
2012/13: $14.40 @ 21.5% S/U
2013/14 $13.00 @ 22.8% S/U
$3
$5
$7
$9
$11
$13
$15
$17
5 10 15 20 25 30 35 40 45
U.S
. So
ybe
an
Pric
e
World Soybean % Ending Stocks-to-Use
2010/11
1976/77
2011/12
2014/15$10.05
@ 28.5% S/U
2015/16$9.15
@ 30.5% S/U
World Cotton Supply & Use – 8/12 WASDE
2014/15 Estimate
2015/16 Forecast
2015/16 vs2014/15
Million bales Million bales percent
Beginning Stocks 103 111 +7.4%
Production 119 109 -8.4%
Total Supply 222 220 -1.1%
Domestic Use 112 115 +2.5%
Export Trade 35.5 34.5 -2.9%
World Ending Stocks 111 105 -5.0%
China Ending Stocks (60%) 67 (62%) 65 -3.4%
Non-China End Stocks (40%) 44 (38%) 41 -7.4%
U.S. Cotton Supply-Use & Prices2011/12 2012/13 2013/14 2014/15 2015/16
Area Planted (mil. acres) 14.7 12.3 10.4 11.0 8.9
Yield (Lbs./ hvstd. acre) 790 887 821 838 795
Production (thsd short tons) 15,573 17,314 12,909 16,319 13,082
Beginning Stocks (thsd 40# bales) 2,600 3,350 3,800 2,350 3,700
Imports (thsd 40# bales) 19 10 13 12 10
Total Supply (thsd 40# bales) 18,192 20,674 16,722 18,681 16,792
Domestic Use (thsd 40# bales) 3,128 3,848 3,842 3,781 3,692
Exports (thsd 40# bales) 11,714 13,026 10,530 11,200 10,000
Total Use (thsd 40# bales) 14,842 16,874 14,372 14,981 13,692
Ending Stocks (%S/U) (thsd 40# bales) 22.6% 3,350 22.5% 3,800 16.4% 2,350 24.7% 3,700 22.6% 3,100
Season-Avg. Price ($0.00/lb) $0.883 $0.720 $0.779 $0.605 $0.65
Questions?Daniel O’Brien – Extension Agricultural Economist
Kansas State university
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