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September 5, 2017
Grain Market Outlook
as ethanol plants on September 1st ranged from $3.22 ¾ ($0.35 under
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DEC) to $3.72 ¾ ($0.15 over DEC) – indicating continuing strength in ethanol demand for corn in Kansas and
nationwide. While the “large supply and tight storage availability” situation still predominates in local Kansas
grain markets, it is a positive that Kansas cash corn prices have avoided falling down to USDA loan rate levels.
3. Major Corn Market Considerations for Fall 2017 through Spring 2018
First, large beginning stocks of U.S. corn coming into “new crop” MY 2017/18 have been a “mitigating”
factor limiting the response of the corn market to 2017 summer production risk. The corn market has b …
September 19, 2017
Grain Market Outlook
… … ergy, and other commodity markets in 2017‐2018. World geo‐political events could
provide “shocks” to U.S. and World energy and grain markets which could in turn impact grain prices in either
direction depending on the circumstances and the countries involved and their role in global corn export trade.
4. USDA Supply‐Demand & Price Forecast for “New Crop” MY 2017/18
With the USDA’s continuing projection of 2017 U.S. corn plantings at 90.886 million acres or ‘ma’ (down
3.118 ma from 2016), harvested acres of 83.496 ma (down 3.252 ma), and projected yields of 169.9 bu/ac (vs
the record high of 174.6 in 2016), 2017 U.S. corn production is forecast to be 14.184 bb – down from the
record high of 15.148 bb in 2016.
The USDA forecast “new crop” MY 2017/18 total supplies to be 16.585 bb – down 355 mb from last year’s
record high. Total use is forecast at 14.250 bb – down 340 mb from last year’s record high. Ending stocks are
projected to be 2.235 bb (16.38% S/U) – down from 2.350 bb (16.11% S/U) in “old crop” MY 2016/17. United
States’ corn prices are projected to average $3.20 /bu (range of $2.80‐$3.60). This is down $0.15 /bu from the
midpoint estimate of $3.35 /bu from “old crop” MY 2016/17. This scenario is given a 60% likelihood of
occurring by KSU Extension Agricultural Economist D. O’Brien.
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5. Alternative KSU Supply‐Demand & Price Forecast for “New Crop” MY 2017/18
Three alternative KSU‐Scenarios for U.S. corn supply‐demand and prices are presented for “new 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 September 12, 2017 WASDE report for “new crop” MY 2017/18.
A ‐ KSU “New Crop” MY 2017/18 Scenario #1) “167.3 bu/ac – 13.930 bb” Scenario (35% probability) assumes:
90.753 ma planted, 83.261 ma harvested, 167.3 bu/ac trend yield, 13.930 bb production, 16.330 bb total
supplies, 14.215 bb total use, 2.115 bb ending stocks, 14.88% S/U, & $3.45 /bu U.S. corn average price;
B ‐ KSU “New Crop” MY 2017/18 Scenario #2) “164.0 bu/ac – 13.655 bb” Scenario (5% probability) assumes:
90.753 ma planted, 83.261 ma harvested, 164.0 bu/ac yield, 13.655 bb production, 16.055 bb total
supplies, 14.095 bb total use, 1.960 bb ending stocks, 13.91% S/U, & $3.60 /bu U.S. corn average price;
C ‐ KSU “New Crop” MY 2017/18 “Wildcard” Scenario #3) “167.3 bu/ac – 13.930 bb” Scenario (???% prob.)
assumes: 90.753 ma planted, 83.261 ma harvested, 167.3 bu/ac trend yield, 13.930 bb production, 16.330
bb total supplies, 13.935 bb total use, 2.395 bb ending stocks, 17.19% S/U, & $3.00 /bu U.S. corn average;
Note: even with moderate reductions in 2017 U.S. corn production as represented in the KSU Scenarios A, B
and C above, the presence of large beginning stocks of 2.350 bb in “new crop” MY 2017/18 limit the “tightness”
of corn supply‐demand balances, and hinders any upward price responses.
5. World Corn Supply‐Demand – With & Without China
World corn production of 1,032.6 million metric tons (mmt) is projected for “new crop” MY 2017/18, down
3.6% from the record high of 1,071.2 mmt in “old crop” MY 2016/17, but still up 6.5% from 969.6 mmt in MY
2015/16. Near record World corn total supplies of 1,259.6 mmt are projected for “new crop” MY 2017/18,
down marginally from the record high of 1,285.1 mmt in “old crop” MY 2016/17, but up from 1,179.2 mmt in
MY 2015/16.
World corn exports of a 150.6 mmt are projected for “new crop” MY 2017/18, down 8.9% from the record
high of 165.3 mmt in “old crop” MY 2016/17, and up 25.8% from 119.7 mmt in MY 2015/16. Projected World
corn ending stocks of 202.5 mmt (19.2% S/U) in “new crop” MY 2017/18 are down from the record high 227.0
mmt (21.4% S/U) in “old crop” MY 2016/17, and from 213.9 mmt (22.2% S/U) in MY 2015/16.
An alternative view of the World corn supply‐demand is presented if Chinese corn usage and ending stocks
are isolated from the World market. “World‐Less‐China” corn ending stocks are projected to be 121.2 mmt
(14.8% S/U) in “new crop” MY 2017/18, down from 125.7 mmt (15.2% S/U) in “old crop” MY 2016/17, but up
from 103.1 mmt (13.4% S/U). These figures show that World stocks‐to‐use of corn less China’s direct influence
are projected to be down approximately 23% (i.e., 14.8% S/U for the “World Less China” versus 19.2% S/U for
the “World” overall in “new crop” MY 2017/18).
At the same time, these figures also show that Chinese ending stocks of corn as proportion of the World
total are declining – down from 51.8% in MY 2015/16, to 44.6% in “old crop” MY 2016/17, and down to 40.1%
in “new crop” MY 2017/18. The deliberate actions in recent years ‐ taken by the Chinese government to
reduce feedgrain stockpiles – is impacting the relative amount of World total corn stocks they hold.
…
April 19, 2017
Grain Market Outlook
at a
record high 252.3 mmt up from 241.7 mmt last year, and 217.6 mmt two years ago. And fourth, World wheat
percent ending stocks‐to‐use (S/U) of 34.05% ‐ up from 34.0% last year, and from 30.85% two years ago –the
highest since MY 2005/06.
For a perspective on how historically large World total wheat stocks and World wheat percent stocks‐to‐use
now are, in MY 2007/08 the 34‐year low in World wheat ending stocks of 128.1 mmt and at least a 57‐year low
in percent ending stocks‐to‐use of 20.9% stocks/use both occurred – the last major World wheat “short crop”
marketing year. The situation in MY 2007/08 compares to projections of 252.3 mmt ending stocks and 34.05%
ending stocks‐to‐use projected for “current” MY 2016/17. The present “large crop‐over supply” situation in
World and U.S. wheat markets have a prevailing negative influence on U.S. and World wheat prices.
However, the broader “large crop‐over supply‐low price” situation in the World wheat market may be
“obscuring” at least a couple of other important market issues. First, while the quantity of wheat available in
the World is plentiful, the available supply of high protein milling wheat is less so. This factor helps exports of
both U.S. Hard Red Spring (HRS) wheat (higher protein – good quality) relative to World wheat export
competitors. Second, while the aggregate supply of wheat in World markets has grown, the supply of wheat in
the “World Less China” is projected to have actually “contracted” or “diminished” in “current crop” MY
2016/17 compared to a year ago – down to the tightest supply‐balances only marginally larger than existed in
MY 2013/14. If this “China factor” eventually leads to noticeably tighter available global supplies of exportable
wheat to occur in coming months, it could have a positive impact U.S. wheat market prices in late‐Spring 2017.
Even so, given the broader World wheat market’s current focus – it is likely that significant World wheat
production problems and/or trade disruptions would need to occur in year 2017 in order to have wheat prices
recover significantly by spring‐summer 2017. Ongoing strength in the U.S. dollar exchange rate is a serious
negative factor limiting the competitive affordability of U.S. wheat exports. These factors have resulted in
higher U.S. wheat ending stocks and % ending stocks‐to‐use, and have caused U.S. and Kansas wheat cash
prices to fall sharply – down near to and below the marketing loan rate in many Kansas locations.
USDA U.S. Wheat Supply/Demand Forecast for “Next Crop” MY 2017/18: On February 23‐24, 2017 at the
Agricultural Outlook Forum in Arlington, Virginia, the USDA released their grain market supply‐demand and
price projections for “next crop” MY 2017/18. With additional acreage and usage information the March 31st
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USDA Prospective Plantings and Grain Stocks reports, and the April 11th USDA World Agricultural Supply and
Demand Estimates (WASDE) report, the following projections for “next crop” MY 2017/18 are figured. For
“next crop” MY 2017/18, 2017 U.S. wheat plantings are projected to be 46.059 million acres (ma) – down from
50.154 ma in 2015. Harvested acres for 2016 are forecast to be 39.050 ma – down from 43.890 ma a year ago.
Trendline 2017 wheat yields for 2017 are projected at 47.1 bu/a, down from the 2016 record of 52.6 bu/ac,
while the adjusted 2017 U.S. wheat production forecast is 1.839 billion bushels (bb), down from 2.310 bb in
2015. Projected “next crop” MY 2017/18 total supplies are 3.118 bb (down from 3.395 bb in “current” MY
2016/17), with total use of 2.191 bb (down from 2.236 bb in “current” MY 2016/17).
Given these numbers, the adjusted USDA projection of “next crop” MY 2017/18 ending stocks equals 927
million bushels (mb) (vs 1.159 bb a year ago), with percent ending stocks‐to‐use of 42.3% S/U (vs 51.8% last
year and 50.0% the previous year). United States’ wheat prices are projected to average approximately $4.25
/bu – up from $3.85 in “current” MY 2016/17, but down from $4.89 /bu in MY 2015/16, and $5.99 /bu in MY
2014/15. It is assumed by Kansas State University that these adjusted USDA projections for “next crop” MY
2016/17 have a 50% probability of occurring.
Three Alternative KSU U.S. Wheat S/D Forecast for “Next Crop” MY 2017/18: As an alternative to the USDA’s
projection, three potential KSU‐Scenarios for U.S. wheat supply‐demand and prices are presented for “next
crop” MY 2017/18.
KSU Scenario 1) “Trend Yield” Scenario (25% probability) assumes for “next crop” MY 2017/18 that the
following occurs. It is assumed that there will be 46.059 ma planted, 39.334 ma harvested, 47.0 bu/ac trend
yield, 1.849 bb production, 3.128 bb total supplies, 975 mb exports, 190 mb feed & residual use, 2.191 bb total
use, 937 mb ending stocks, 42.8% S/U, & $4.20 /bu U.S. wheat average price.
KSU Scenario 2) “Higher U.S. Wheat Exports” Scenario (15% probability) assumes for “next crop” MY 2017/18
the following. The following is forecast for “next crop” MY 2017/18, i.e., 46.059 ma planted, 39.334 ma
harvested, 47.0 bu/ac trend yield, 1.849 bb production, 3.128 bb total supplies, 1.150 bb exports, 190 mb feed
& residual use, 2.326 bb total use, 802 mb ending stocks, 24.10% S/U, & $4.90 /bu U.S. wheat average price;
KSU Scenario 3) “Short U.S. Wheat Crop” Scenario (10% probability) assumes for “next crop” MY 2017/18 that
the following happens. This scenario assumes 46.059 ma planted, 37.124 ma harvested, 40.0 bu/ac low yield,
1.485 bb production, 2.769 bb total supplies, 975 mb exports, 175 mb feed & residual use, 2.175 bb total use,
594 mb ending stocks, 27.31% S/U, & $5.50 /bu U.S. wheat average price.
…
October 25, 2017
Grain Market Outlook
… 250 bb??) in “next crop”
MY 2018/19. And that risk again is likely to provi … midst of the 2017 Kansas corn harvest.
3. Major Corn Market Considerations for Fall 2017 through Spring 2018
First, large beginning stocks of U.S. corn coming into “new crop” MY 2017/18 have been a “mitigating”
factor limiting the response of the corn market to 2017 summer‐early fall production risks that occurred. The
cor …
November 21, 2017
Grain Market Outlook
ough winter 2017‐
2018 on into early Spring 2018 are likely to be limited by ending stocks of U.S. corn in the 2.250‐2.500 bb
range, coupled with ending stocks‐to‐use of 16.0%‐17.5% for the 2017/18 marketing year. However, in
Spring‐early Summer 2018 the U.S. corn market is likely again to have to weigh the annual risk of weather‐
limiting 201 …
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