grain market outlook for 2017 - 2018 - agmanager.info...u.s. hard red winter wheat exports - weekly...
TRANSCRIPT
Grain Market Outlook for 2017 - 2018
2017 KSU Ag Lenders Conferences
Garden City & Manhattan, Kansas
DANIEL O’BRIEN
EXTENSION AGRICULTURAL ECONOMIST
Topics to be discussed…..
1) Grain Market Analysis & Outlook
• Corn & Grain Sorghum
• Wheat
• Soybeans & Cotton
2) Economic “forces at work” in the grain markets& where they are taking us…
U.S. Dollar Index (ICE Futures)
Monthly Chart: January 1973 through September 29, 2017
87.11Avg. Index #
September 2017
Corn & Sorghum Markets
U.S. Corn & Sorghum Supply-Use
• Prospects for a “large” 14 billion bu+ 2017 U.S. Corn Crop
• Large Supplies & Stocks are limiting Feedgrain Price$’s
• Low Price$’s are supporting Corn Use
o Livestock Feed 2017/18 = 5.475 bln bu (10 year high – vs 5.858 bb in 2007/08)
o Ethanol 2017/18 = 5.475 bln bu (Record high – vs 5.435 bb last year)
o Other FSI 2017/18 = 1.450 bln bu (4 year high – vs 1.435 bb in 2016/17)
o Exports 2017/18 = 1.850 bln bu (vs 2.295 bb in ‘16/17 & 1.901 in ‘15/16)
U.S. Corn & Grain Sorghum Stocks…..
• Corn: “Large” Stocks & % S/U
o End Stocks 2017/18 2.335 bln bu (2nd highest since 1987/88)
o % Stocks/Use 2017/18 16.4% S/U (Highest since 2005/06)
• Grain Sorghum: “Tighter” S/D & Stocks than for Corn
o End Stocks 2017/18 29 Mln bu (15 - 55 mb since 2008/09)
o % Stocks/Use 2017/18 7.8% S/U (Highest since 2005/06)
CME Corn FuturesWeekly Chart: August 2008 – September 2018 + 10/6/2017 a.m.
$3.01$3.18 ¼ $2.90
$3.50
DEC 2017$3.50 ¼ 10/6/2017
Corn Cash & Futures $’sSalina & Garden City, KS Local Elevators – October 6, 2017
$3.50 $3.63 $3.72 $3.80 $3.87
$3.00
$3.36 $3.40
$2.04 $2.04
$0
$1
$2
$3
$4
$5
$6
Pric
e $
/bu
Futures Salina $ Garden City $ Mktg Loan-Salina
$0.0425 /mo $0.0450 /mo $0.0388 /mo$0.0363 /mo
Kansas Corn Seasonal Cash $ IndexMonthly: 17 yr Avg thru 2015/16 + MY 2016/17 & MY2017/18
2017/18
2016/17
Grain Sorghum Cash & Futures $’sSalina & Garden City, KS Local Elevators – October 6, 2017
$3.50 $3.63 $3.72 $3.80 $3.87
$3.16
$2.97 $2.93 $2.91
$1.91 $1.91
$0
$1
$2
$3
$4
$5
Pric
e $
/bu
Futures Salina $ Garden City $ Mktg Loan-Salina
Crop
BUT still
Large Supply
Domestic Use&
Exports
Stocks/Use&
Prices
U.S. Corn Acreage
For 2018???U.S. Corn Planted Acres
Up ≈ 3 million ac.
U.S. Corn YieldsUSDA 2017 USDA Forecast = 169.9 bu/ac
Final 2017???Likely Impact of Drought
Q? Is 167-168 bu/ac possible?
U.S. Corn Yields: 2000-2017Accuracy of September 1st USDA Forecasts
(4.9)
4.7 3.9 3.7 10.9
4.7
(5.6) (5.1)
1.0 2.5
(9.9)(1.3)
0.3 2.8
(0.7)
0.9 0.2
(20)
0
20
40
60
80
100
120
140
100
110
120
130
140
150
160
170
180
Fore
ca
st E
rro
r (Bu
/ac
)
U.S
. Co
rn Y
ield
–Bu
/Ac
re
Year
Difference (bu/ac) September 1 USDA Forecast Final Yield
U.S. Corn Production & Supplies
Final 2017???U.S. Corn Production of
13.8-14.3 bln buseems possible
U.S. Corn Use – By Category
U.S. Corn Exports – Weekly thru Sept. 28, 2017
U.S. Corn Ending Stocks & % Stx/Use
1,967
821
1,232
1,731 1,737
2,350 2,335
17.0
7.4
9.2
12.6 12.7
16.1 16.4
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. Corn % Stocks/Use vs Price$
U.S. Corn % Stocks/Use vs Price$
Corn $Prices responding
either strongly or weakly
to % Stocks/Use Changes
due to flexibility differences
MORE Flexible $ responses
LESS
Fle
xib
le $
resp
ons
es
World Corn (Maize) Production Regions
World Corn Supply, Use & Stocks
World Crop
BUT still
Large Supply
China & EU
BUT
Argentina
Russia
U.S. Corn Price$ vs World % Stocks-to-UseMY 1973/74 through “New Crop” MY 2016/17
U.S. Sorghum Acreage
U.S. Sorghum YieldsUSDA 2016 USDA Forecast = 69.8
Wheat Markets
U.S. Wheat Market Overview• U.S. Wheat Production trending lower (to a 15 year low in 2017)
• Large U.S. & World Stocks continue to limit Wheat Price$’s **
• “Moderate” Exports limiting 2017/18 Wheat Disappearance
o Exports 2017/18 = 975 mln bu (778 mb – 1.291 bb range since 2008/09)
o Food Use 2017/18 = 950 mln bu (Level Food Use since MY 2012/13)
o Feed Use+ 2017/18 = 150 mln bu (Down from 228-365 mb in 2012 - 2013)
o HRW Exports 2017/18 = 400 mln bu (Down from 455 mb in MY 2016/17)
U.S. Wheat Stocks…..
• All U.S. Wheat: “Large” Stocks (but declining)
o End Stocks 2017/18 933 mln bu (1.184 bb last year)
o % Stocks/Use 2017/18 43.6% S/U (53.4% S/U last year)
• U.S. HRW Wheat: “Large” Carryovers (but also declining)
o End Stocks 2017/18 463 mln bu (593 mb last year)
o % Stocks/Use 2017/18 51.7% S/U (63.2% S/U last year)
U.S. Wheat Quality & Grade
• U.S. HRW Wheat 2017 11.4% protein, 60.8 lb test, 1.1% defects
o Versus 11.2% protein, 60.7 lb test wt, 1.2% defects in 2016
• U.S. SRW Wheat 2017 9.5% protein, 58.8 lb test, 1.7% defects
o Versus 9.4% protein, 58.6 lb test wt, 1.4% defects in 2016
• U.S. Soft White 2017 9.6% protein, 60.9 lb test, 0.6% defects
o Versus 10.1% protein, 60.8 lb test wt, 0.6% defects in 2016
• U.S. HRS Spring Wheat 2017 14.6% protein, 61.2 lb test, 1.0% defects
o Versus 14.2% protein, 61.3 lb test wt, 0.9% defects in 2016
World Wheat Market Prospects:Large Supplies A “Buyer’s Market”
• Record Supplies & Large Usage Forecast for 2017/18
o 4 consecutive record high World wheat crops
• Varying 2017/18 Crop Prospects by Country
• Still a “buyer’s market” for World Wheat Trade….but….
o Uncertainty about U.S. & World Crops in 2017-2018?
o BUT a TIGHT “World-Less-China” supply situation has emerged***
CME Kansas Hard Red Winter WheatMonthly Chart: August 2008 – September 2017 + 10/6/2017
$4.59
$6.01
$4.33 $3.67
DEC 2017$4.37 ¼ 10/6/2017
Wheat Cash & HRW Wheat FuturesSalina & Garden City, KS Local Elevators - October 6, 2017
$4.37 $4.55 $4.69 $4.87 $5.06
$3.16 $3.10$2.91 $2.90
$2.84 $2.84
$0$1$2$3$4$5$6$7$8$9
Pric
e $
/bu
Futures Salina $'s Garden City $'s Mktg Loan (Finney Co.)
$0.06 /mo$0.07 /mo $0.09 /mo
$0.09375 /mo
Anticipated VSR Affect!!!
Crop
BUT still
Large Supply
Same Domestic Use&
Exports
Stocks/Use&
Prices
U.S. Wheat Seeded Acreage
2018 U.S. Winter Wheat Acres 5%+- Low Profits
- Disease pressure
- Wet Seeding Time (vs Fall Harvest)
U.S. Wheat Acreage
U.S. Wheat YieldsRecord High
U.S. Wheat Production & Supplies
U.S. Wheat Use by Category
U.S. All Wheat Exports – Weekly thru Sept. 28, 2017
U.S. Hard Red Winter Wheat Exports - Weekly
U.S. Wheat Ending Stocks & % Stx/Use
876
456306
657976
590 752976
1,184933
37
22
13
29
49
24
37
5053
44
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0
10
20
30
40
50
60M
illio
n Bu
she
ls
% E
nd
Sto
cks-
to-U
se
Marketing Year
U.S. Wheat Ending Stocks & Prices
U.S. Wheat Price vs U.S. Stocks-to-Use
World Wheat Production Regions
World Wheat Supply, Use & Stocks
World Crop
BUT still
Large Supply
China & EU
BUT
Argentina
Russia
World & U.S. Crops
BUT
Foreign Wheat
Russia, Turkey,
EU, India, China
BUT
Canada, Australia
Kazakhstan
Beg. Stocks
Production
Supplies
Total Use
&
Ending Stocks
World Wheat Ending Stocks & % Stx/Use
210 203
136 128
204178
195218
241 256 263
3635
2321
31
26
28
3134 35 36
0
100
200
300
400
500
600
0
10
20
30
40M
illio
n M
etr
ic T
ons
% E
nd
ing
Sto
cks-
to-U
se
Marketing Year
U.S. Wheat Price ($) vs World % Stx/UseMY 1973/74 – “New Crop” MY 2017/18
In total aggregate -
World Wheat % S/U
are “dismally” large
U.S. Wheat $ vs Non-China % Stx/UseMY 1973/74 – “New Crop” MY 2017/18
BUT “World-Less-China”
% Stocks/Use
are 2nd TIGHTEST
since 2007/08
(≈ MY 2012/13)
Soybean & Cotton Markets
U.S. Soybean Market Prospects
• Strong Use & Exports, Large Stocks, & Weaker Prices
U.S. soybean exports in 2017/18 to remain historically
large in spite of large 2017 South American Production
Depends on continued growth in import demand from
China, EU, Southeast Asia, Mexico, elsewhere
Questions & concerns to emerge in fall-winter 2017-2018
re: 2018 South American soybean crop size
U.S. Soybean Supply-Use• 2017 U.S. Soybean Production & Supplies @ a record high
• Large Soybean Stocks in U.S. & So. America limit Price$’s
• Low Price$’s supporting “New Crop” MY 2017/18 Usage ***
o Soy Crush 2017/18 = 1.940 bln bu (Record – vs 1.895 bb 1 year ago)
o Exports 2017/18 = 2.250 bln bu (Record – vs 2.170 bb 1 year ago)
o Total Use 2017/18 = 4.326 bln bu (Record – vs 4.183 bb 1 year ago)
o SBM Use 2017/18 = 46.4 mln tons (vs 44.9 in MY 2016/17 & 45.1 in MY 2015/16)
U.S. Soybean & Cotton Stocks…..
• Soybean: “Large” Stocks & % S/U
o End Stocks 2017/18 475 mln bu (High vs 574 mb in 2006/07)
o % Stocks/Use 2017/18 11.0% S/U (High vs 18.6% in 2006/07)
• Cotton: “Large” 2017 Crop & “Growing” Stocks
o Production 2017/18 21.8 mln bales (17.2 & 12.9 mb last 2 years)
o End Stocks 2017/18 6.0 mln bales (2.8 & 3.8 mb last 2 years)
o % Stocks/Use 2017/18 32.9% S/U (14.9% & 30.2% last 2 years)
CME Soybean Futures Monthly Chart: August 2008 – September 2017 + 10/6/2017
$7.76 ¼ $8.53 $9.00 ¼
$9.72
NOV 2017$9.72 ¼ 10/6/2017
Soybean Cash & Futures Price$’sSalina & Garden City, KS Local Elevators - October 6, 2017
$9.72 $9.83 $9.92 $10.01 $10.09$8.82
$8.62 $8.62
$5.01 $5.01
$0
$3
$6
$9
$12
$15
$18
Pric
e $
/bu
Futures Salina $'s Garden City $'s Mktg Loan (Saline Co.)
$0.0538/mo $0.0463 /mo $0.0450 /mo $0.0388 /mo
Kansas Soybean Seasonal Cash $ IndexMonthly Prices: 1999/00 – 2014/15 + “New Crop” MY 2016/27
2016/17
2017/18
Record Crop
and
Large Supply
Record Use&
Exports
Stocks/Use&
Prices
U.S. Soybean Acreage
For 2018???U.S. Soybean Planted Acres
down ≈ 2 to 3 million ac.
U.S. Soybean YieldsUSDA 2017 = 49.4 bu/ac; 2017 Trend1973-2016 = 46.85
Final 2017???Impact of Dry Regions???
47-48 bu/ac is still possible
U.S. Soybean Yields: 2000-2017Accuracy of September 1st USDA Forecasts
(1.4)
1.4 1.0
(2.5)
3.7 3.5 1.1 0.3
(0.3)
1.7
(1.2)
0.2 4.7 2.8 0.9 0.9 1.5
(10)
0
10
20
30
40
50
60
20
25
30
35
40
45
50
55
Fore
ca
st E
rro
r (Bu
)
U.S
. So
ybe
an
Yie
ld –
Bu/A
cre
Year
Difference (bu/ac) August 1 USDA Forecast Final Yield
U.S. Soybean Production & Supplies
U.S. Soybean Use & End Stocks
U.S. Soybean Exports - Weekly
U.S. Soybean Ending Stocks & % Stx/Use
138 151 169 141 92 191 197345 475
4.5% 4.5%5.4%
4.5%
2.6%
5.0% 5.0%
8.3%
11.0%
0
500
1,000
1,500
2,000
2,500
3,000
0%
4%
8%
12%
Mill
ion
Bu.
% E
nd
Sto
cks-
to-U
se
Marketing Year
U.S. Soybean % Stocks/Use vs Price$
U.S. Soybean $ vs U.S. Stx-to-UseMY 1973/74 through “Next Crop” MY 2017/18
World Soybean Supply, Use & Stocks
U.S. Soybean$ vs World %Stx/Use MY 1973/74 through “New Crop” MY 2017/18
Soybean Importer Purchases
52
126 3
16
95
159
4
26
0
50
100
China EU-28 SE Asia 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 2016/17 2017/18
+12% /yr
+1.4% /yr+7.8% /yr +3.3% /yr
+9.5% /yr
Chinese increase of 39.7 mmtin soybean imports over 7 years
Up 9.0 mmtover 7 years
Questions?
Daniel O’Brien – Extension Ag Economist
Blog: www.ksugrains.wordpress.com
KSUGrains on Twitter & Facebook
www.AgManager.info