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July 17, 2017
Grain Market Outlook
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predominates in local Kansas grain markets, it is a positive market signal that Kansas cash corn prices have
enough support to have avoided falling down to USDA loan rate levels.
Major Corn Market Considerations
First, large beginning stocks of U.S. corn coming into “next crop” MY 2017/18 have been a “mitigating” or
“limiting” factor affecting the response of the corn market to 2017 production risk. The corn market is less
anxious about having adequate corn supplies in the face of 2017 U.S. corn production risk when beginning
stocks are 2.370 bb rather than 1.000 bb. Second, it is anticipated that moderately low prices of U.S. corn will
help maintain strong usage for domestic U.S. ethanol and wet milling production, as well as livestock feeding
through at least summer‐fall 2017.
Third, at least moderate continued strength is expected in U.S. corn exports due to moderately low U.S. corn
prices. Exports of U.S. corn are expected to continue at a “decent” pace” even though South American corn
production will continue to be a competitive factor in World trade through at least the end of 2017. Fourth,
the possibility exists of broader U.S. and Foreign economic and/or financial system disruptions that could
impact grain, energy, and other commodity markets in 2017‐2018. World geo‐political events have the
potential to provide “shocks” to U.S. and World energy and grain markets. However, the impact on the
direction of U.S. and World corn markets of such disruptive events are difficult to anticipate – depending on
which countries may be involved and their role in global corn export trade.
USDA Supply‐Demand & Price Forecast for “Next Crop” MY 2017/18
The USDA has projected 2017 U.S. corn plantings to be 90.886 million acres or ‘ma’ (down 3.118 ma from
2016). Harvested acres in 2017 are forecast at 83.496 ma (down 3.252 ma), with projected yields of 170.7
bu/ac (vs the record high of 174.6 in 2016). This leads to a USDA 2017 U.S. corn production forecast of 14.255
bb – down from the record high of 15.148 bb in 2016.
The USDA forecast “next crop” MY 2017/18 total supplies to be 16.675 bb – down 265 mb from last year’s
record high. Total use is forecast at 14.350 bb – down 220 mb from last year’s record high. Ending stocks are
projected to be 2.325 bb (16.20% S/U) – down from 2.370 bb (16.27% S/U) in “current” MY 2016/17. United
States’ corn prices are projected to average $3.30 /bu (range of $2.90‐$3.70). This is down $0.05 /bu from the
midpoint estimate of $3.30 /bu from “current” MY 2016/17. This scenario is given a 45% likelihood of
occurring by KSU Extension Agricultural Economist D. O’Brien.
Alternative KSU Supply‐Demand & Price Forecast for “Next Crop” MY 2017/18
Four 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 July 12, 2017 WASDE report for “next crop” MY 2017/18.
A ‐ KSU “Next Crop” MY 2017/18 Scenario #1) “167.3 bu/ac – 13.815 bb” Scenario (25% probability) assumes:
89.886 ma planted, 82.577 ma harvested, 167.3 bu/ac trend yield, 13.815 bb production, 16.235 bb total
supplies, 14.245 bb total use, 1.990 bb ending stocks, 13.97% S/U, & $3.55 /bu U.S. corn average price for
“next crop” MY 2017/18;
B ‐ KSU “Next Crop” MY 2017/18 Scenario #2) “165.0 bu/ac – 13.652 bb” Scenario (20% probability) assumes:
89.886 ma planted, 82.577 ma harvested, 165.0 bu/ac yield, 13.625 bb production, 16.045 bb total supplies,
14.120 bb total use, 1.925 bb ending stocks, 16.63% S/U, & $3.60 /bu U.S. corn average price for “next crop”
MY 2017/18;
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C ‐ KSU “Next Crop” MY 2017/18 Scenario #3) “160.0 bu/ac – 13.212 bb” Scenario (5% probability) assumes:
89.886 ma planted, 82.577 ma harvested, 160.0 bu/ac yield, 13.212 bb production, 15.632 bb total supplies,
13.920 bb total use, 1.712 bb ending stocks, 12.30% S/U, & $3.80 /bu U.S. corn average price for “next crop”
MY 2017/18;
D ‐ KSU “Next Crop” MY 2017/18 Scenario #4) “150.0 bu/ac – 12.387 bb” Scenario (5% probability) assumes:
89.886 ma planted, 82.577 ma harvested, 150.0 bu/ac yield, 12.387 bb production, 14.807 bb total supplies,
13.400 bb total use, 1.407 bb ending stocks, 10.50% S/U, & $4.20 /bu U.S. corn average price for “next crop”
MY 2017/18;
Note: even with significant reductions in 2017 U.S. corn production as represented in KSU Scenarios C and D
above, the presence of large beginning stocks of 2.370 bb in “next crop” MY 2017/18 limit the “tightness” of
corn supplies, and lowers price prospects.
World Corn Supply‐Demand – With & Without China
World corn production of 1,036.9 million metric tons (mmt) is projected for “next crop” MY 2017/18, down
3.0% from the record high of 1,068.8 mmt in “current” MY 2016/17, but still up 7.0% from 968.8 mmt in MY
2015/16. Near record World corn total supplies of 1,264.4 mmt are projected for “next crop” MY 2017/18,
down marginally from the record high of 1,281.6 mmt in “current” MY 2016/17, but up from 1,178.4 mmt in
MY 2015/16.
World corn exports of a near record 152.5 mmt are projected for “next crop” MY 2017/18, down 4.6% from
the record high of 159.7 mmt in MY 2015/16, and up 27.5% from 119.6 mmt in MY 2015/16. Projected World
corn ending stocks of 200.8 mmt (18.9% S/U) in “next crop” MY 2017/18 are down from the record high 227.5
mmt (21.6% S/U) in “current” MY 2016/17, and from 212.8 mmt (22.0% 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 119.5 mmt (14.5%
S/U and 40.5% of World corn stocks) in “next crop” MY 2017/18, down from 126.2 mmt (15.4% S/U and 44.5%
of World stocks) in “current” MY 2016/17, but up from 102.0 mmt (13.6% S/U and 52.1% of World Stocks).
These figures show that World stocks of corn less China’s direct influence are projected to be down
approximately 23% (i.e., 14.5% S/U for the “World Less China” versus 18.9% S/U for the “World” overall in
“next crop” MY 2017/18).
These figures also show that Chinese ending stocks of corn as proportion of the World overall is declining –
down from 52.1% in MY 2015/16 to 44.5% in “current” MY 2016/17, and down to 40.5% in “next crop” MY
2017/18. The deliberate actions taken by the Chinese government in recent years to reduce feedgrain
stockpiles is impacting the relative amount of corn stocks they hold in the World corn market.
…
August 1, 2018
Breakout Sessions
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• …
September 28, 2017
Grain Market Outlook
… occurring by KSU Extension Agricultural Economist D. O’Brien.
U.S. grain sorghum prices of $2.90 /bu in “new crop” MY 2017/18 are only a “small relief” from the
multiple‐year downward price trend from the record high of $6.33 /bu in the drought year of MY 2012/13.
Since that record high, U.S. average grain sorghum prices have declined to $4.28 in MY 2013/14, $4.03 in MY
2014/15, $3.31 /bu in MY 2015/16, $2.85 /bu in “old crop” MY 2016/17, and to now to the forecast range of
$2.50‐$3.30 (midpoint ‐ $2.90 /bu) in “new crop” MY 2017/18.
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 2018 U.S. grain sorghum and corn production will play a large
part in driving the U.S. grain sorghum market in the later months of “new crop” MY 2017/18.
5. Alternative KSU Supply‐Demand & Price Forecast for “New Crop” MY 2017/18
Three alternative KSU‐Scenarios for U.S. grain sorghum supply‐demand and prices are presented for “new
crop” MY 2017/18. Each scenario presents the likelihood of lower U.S. grain sorghum acreage, varying yields
and alternative production outcomes than projected for “new crop” MY 2017/18 by the USDA in the
September 12th WASDE report.
A ‐ KSU “New Crop” MY 2017/18 Scenario #1) “Lower Acres – 69.8 bu/ac.” Scenario (15% probability)
assumes: 5.468 ma planted, 4.850 ma harvested, 69.8 bu/ac trend yield, 339 mb production, 368 mb total
supplies, 351 mb total use, 17 mb ending stocks, 4.95% S/U, & $3.05 /bu U.S. grain sorghum average price;
B ‐ KSU “New Crop” MY 2017/18 Scenario #2) “Lower Acres – 75.0 bu/ac.” Scenario (25% probability)
assumes: 5.468 ma planted, 4.850 ma harvested, 75.0 bu/ac trend yield, 364 mb production, 393 mb total
supplies, 370 mb total use, 23 mb ending stocks, 6.22% S/U, & $3.00 /bu U.S. grain sorghum average price;
C ‐ KSU “New Crop” MY 2017/18 Scenario #3) “Lower Acres – 75.0 bu/ac. – Higher Use” Scenario (10%
probability) assumes: 5.468 ma planted, 4.850 ma harvested, 75.0 bu/ac trend yield, 364 mb production,
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393 mb total supplies, 381 mb total use, 12 mb ending stocks, 3.15% S/U, & $3.15 /bu U.S. grain sorghum
average price;
6. World Coarse Grain Supply‐Demand
The USDA projected that “new crop” 2017/18 marketing year World coarse grain total supplies of 1,578.1
mmt will be down 2.3% from 1,615.9 mmt in “old crop” MY 2016/17, but still up 4.7% over 1,507.2 mmt in MY
2014/15. Projected World coarse grain total use of 1,347.8 mmt in “new crop” MY 2017/18 is down 0.5%
from “old crop” MY 2016/17, but up 7.3% over MY 2016/17. “Coarse grains” include grain sorghum, corn,
barley, oats, rye, millet, and mixed grains.
World coarse grain ending stocks are forecast to continue to decline, with the USDA projecting ending
stocks of 230.3 mmt in “new crop” MY 2017/18, down 2.0% from “old crop” MY 2016/17, and down 8.4% from
MY 2015/16. Although World coarse grain ending stocks are projected to be the fourth highest on record in
“new crop” MY 2017/18 at 230.2 mmt, World coarse grain percent ending stocks‐to‐use in “new crop” MY
2017/18 are forecast to actually decline to 17.1% ‐ to the lowest level in four (4) years. This is indicative that
strong World demand for coarse grains at low prices is expected to continue.
…
Breakout Sessions
classes in
Agricultural Policy, International Trade, Futures … commodityÙ of a specified commodity
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Price risk in commodity markets
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{ …
August 1, 2019
Breakout Sessions
http://www.fsa.usda.gov/programs-and-services/arcplc_program)
Commodity PLC ARC‐CO ARC‐ICBARLEY … Reserved8/21/2019
Payment Rates for MFP2
Commodity Units MFP1 Payment Rate ($/unit … Bill Titles
• Title I: Commodities• Title II: Conservation• …
September 5, 2017
Grain Market Outlook
d wet milling production, as well as livestock feeding through at least fall‐winter 2017.
Third, at least moderate continued strength is expected in U.S. corn exports due to low U.S. corn prices
and a moderate weakening of the U.S. dollar against other World currencies. Exports of U.S. corn are expected
to continue at a “decent” pace of 1.850 bb for “new crop” MY 2017/18 even though South American corn
production will continue to be a competitive factor in World trade through at least the end of 2017. Also,
preliminary forecasts for 2018 are that Brazilian corn acreage will be lower due to low prices and poor
profitability in 2017 – which may have a positive effect on U.S. corn exports and price prospects.
Fourth, a possibility exists of broader U.S. and Foreign economic and/or financial system disruptions that
could impact grain, energy, 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 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 169.5 bu/ac (vs the record
high of 174.6 in 2016), 2017 U.S. corn production is forecast to be 14.153 bb – down from the record high of
15.148 bb in 2016.
The USDA forecast “new crop” MY 2017/18 total supplies to be 16.573 bb – down 367 mb from last year’s
record high. Total use is forecast at 14.300 bb – down 270 mb from last year’s record high. Ending stocks are
projected to be 2.273 bb (15.90% S/U) – down from 2.370 bb (16.27% S/U) in “old crop” MY 2016/17. United
States’ corn prices are projected to average $3.30 /bu (range of $2.90‐$3.70). This is down $0.05 /bu from the
midpoint estimate of $3.35 /bu from “old crop” MY 2016/17. This scenario is given a 50% likelihood of
occurring by KSU Extension Agricultural Economist D. O’Brien.
5. Alternative KSU Supply‐Demand & Price Forecast for “New crop” MY 2017/18
Four 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 August 10, 2017 WASDE report for “new crop” MY 2017/18.
A ‐ KSU “New crop” MY 2017/18 Scenario #1) “167.3 bu/ac – 13.815 bb” Scenario (35% probability) assumes:
89.886 ma planted, 82.577 ma harvested, 167.3 bu/ac trend yield, 13.815 bb production, 16.235 bb total
supplies, 14.245 bb total use, 1.990 bb ending stocks, 13.97% S/U, & $3.60 /bu U.S. corn average price for
“new crop” MY 2017/18;
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B ‐ KSU “New crop” MY 2017/18 Scenario #2) “164.0 bu/ac – 13.543 bb” Scenario (10% probability) assumes:
89.886 ma planted, 82.577 ma harvested, 164.0 bu/ac yield, 13.543 bb production, 15.963 bb total
supplies, 14.120 bb total use, 1.843 bb ending stocks, 13.05% S/U, & $3.75 /bu U.S. corn average price for
“new crop” MY 2017/18;
C ‐ KSU “New crop” MY 2017/18 Scenario #3) “160.0 bu/ac – 13.212 bb” Scenario (4% probability) assumes:
89.886 ma planted, 82.577 ma harvested, 160.0 bu/ac yield, 13.212 bb production, 15.632 bb total
supplies, 13.920 bb total use, 1.712 bb ending stocks, 12.30% S/U, & $3.85 /bu U.S. corn average price for
“new crop” MY 2017/18;
D ‐ KSU “New crop” MY 2017/18 “Wildcard” Scenario #4) “167.3 bu/ac – 13.815 bb” Scenario (1%
probability) assumes: 89.886 ma planted, 82.577 ma harvested, 167.3 bu/ac trend yield, 13.815 bb
production, 16.235 bb total supplies, 14.085 bb total use, 2.150 bb ending stocks, 15.26% S/U, & $3.45 /bu
U.S. corn average price for “new crop” MY 2017/18;
Note: even with significant reductions in 2017 U.S. corn production as represented in the KSU Scenarios A, B, C
and D above, the presence of large beginning stocks of 2.370 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 1,033.5 million metric tons (mmt) is projected for “new crop” MY 2017/18, down
1.7% from the record high of 1,070.5 mmt in “old crop” MY 2016/17, but still up 7.1% from 969.5 mmt in MY
2015/16. Near record World corn total supplies of 1,262.1 mmt are projected for “new crop” MY 2017/18,
down marginally from the record high of 1,284.0 mmt in “old crop” MY 2016/17, but up from 1,178.7 mmt in
MY 2015/16.
World corn exports of a 152.0 mmt are projected for “new crop” MY 2017/18, down 6.4% from the record
high of 162.4 mmt in “old crop” MY 2016/17, and up 27.1% from 119.6 mmt in MY 2015/16. Projected World
corn ending stocks of 200.9 mmt (18.9% S/U) in “new crop” MY 2017/18 are down from the record high 228.6
mmt (21.7% S/U) in “old crop” MY 2016/17, and from 213.5 mmt (22.1% 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 119.6 mmt
(14.5% S/U) in “new crop” MY 2017/18, down from 127.3 mmt (15.5% S/U) in “old crop” MY 2016/17, but up
from 102.7 mmt (13.7% 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., 14.5% S/U for the “World Less China” versus 18.9% S/U for
the “World” overall in “new crop” MY 2017/18).
These figures also show that Chinese ending stocks of corn as proportion of the World overall is declining –
down from 51.9% in MY 2015/16 to 44.3% in “old crop” MY 2016/17, and down to 40.5% in “new crop” MY
2017/18. The deliberate actions taken by the Chinese government in recent years to reduce feedgrain
stockpiles is impacting the relative amount of corn stocks they hold in the World corn market.
…
October 25, 2017
Grain Market Outlook
uction, as well as livestock feeding through at least spring
2018 if not into the summer months.
Third, at least “moderate” continued strength is expected in U.S. corn exports due to low U.S. corn prices
and also to a moderate weakening of the U.S. dollar against other World currencies. Exports of U.S. corn are
expected to continue at a “decent” pace of 1.850 bb for “new crop” MY 2017/18 even though South American
corn production will continue to be a competitive factor in World trade through at least the end of 2017. Also,
preliminary forecasts for 2018 are that Brazilian corn acreage and production will be lower due to low prices
and poor profitability in 2017. Combined with emerging weather concerns in Brazil – these factors “could”
have a positive impact on U.S. corn exports and price prospects in spring‐summer 2018.
Fourth, a continuing threat exists of U.S. and Foreign economic and/or financial system disruptions that
could impact grain, energy, 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, the countries involved, and their role in global corn export trade.
4. USDA Supply‐Demand & Price Forecast for “New Crop” MY 2017/18
In the October 12th Crop Production report, the USDA adjusted its projection of a) 2017 U.S. corn plantings
at 90.429 million acres or ‘ma’ (down 3.575 ma from 2016), b) harvested acres of 83.119 ma (down 3.629 ma),
c) projected yields of 171.8 bu/ac (vs the record high of 174.6 in 2016), and d) 2017 U.S. corn production of
14.280 bb – down from the record high of 15.148 bb in 2016.
The USDA forecast “new crop” MY 2017/18 total supplies to be 16.625 bb – down 317 mb from last year’s
record high. Total use is forecast at 14.285 bb – down 362 mb from last year’s record high. Ending stocks are
projected to be 2.240 bb (16.38% S/U) – down from 2.295 bb (15.67% 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 $0.16 /bu from the
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midpoint estimate of $3.36 /bu from “old crop” MY 2016/17. This scenario is given a 75% likelihood of
occurring by KSU Extension Agricultural Economist D. O’Brien.
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 October 12, 2017 WASDE report for “new crop” MY 2017/18.
A ‐ KSU “New Crop” MY 2017/18 Scenario #1) “169.5 bu/ac – 14.059 bb” Scenario (20% probability) assumes:
90.404 ma planted, 82.941 ma harvested, 169.5 bu/ac trend yield, 14.059 bb production, 16.404 bb total
supplies, 14.241 bb total use, 2.164 bb ending stocks, 15.19% S/U, & $3.35 /bu U.S. corn average price;
B ‐ KSU “New Crop” MY 2017/18 Scenario #2) “167.3 bu/ac – 13.876 bb” Scenario (5% probability) assumes:
90.404 ma planted, 82.941 ma harvested, 167.3 bu/ac yield, 13.876 bb production, 16.221 bb total
supplies, 14.196 bb total use, 2.026 bb ending stocks, 14.27% S/U, & $3.45 /bu U.S. corn average price;
C ‐ KSU “New Crop” MY 2017/18 “Wildcard” Scenario #3) “169.5 bu/ac – 14.059 bb” Scenario (???% prob.)
assumes: 90.404 ma planted, 82.941 ma harvested, 169.5 bu/ac trend yield, 14.059 bb production, 16.404
bb total supplies, 13.926 bb total use, 2.479 bb ending stocks, 17.80% S/U, & ≈ $3.10 /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 2.295 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 1,038.8 million metric tons (mmt) is projected for “new crop” MY 2017/18, down
3.4% from the record of 1,075.3 mmt in “old crop” MY 2016/17, but still up 6.8% from 972.4 mmt in MY
2015/16. World corn total supplies of 1,265.8 mmt are projected for “new crop” MY 2017/18, down from the
record high of 1,289.3 mmt in “old crop” MY 2016/17, but up from 1,181.8 mmt in MY 2015/16.
World corn exports of a 150.7 mmt are projected for “new crop” MY 2017/18, down 8.0% from the record
high of 163.8 mmt in “old crop” MY 2016/17, and up 25.9% from 119.7 mmt in MY 2015/16. Projected World
corn ending stocks of 201.0 mmt (18.9% 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 214.0 mmt (22.1% 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 121.8 mmt
(14.8% S/U) in “new crop” MY 2017/18, down from 125.7 mmt (15.1% S/U) in “old crop” MY 2016/17, but up
from 103.2 mmt (13.8% S/U). These figures show that World stocks‐to‐use of corn less China’s direct influence
are projected to be down approximately 22% (i.e., 14.8% S/U for the “World Less China” versus 18.9% 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 39.4%
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.
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I. USDA Reports, Corn Futures, Seasonal Prices & U.S. Dollar
I‐a. October 12th USDA Crop Production & WASDE Reports
On October 12th the USDA World Agricultural Outlook Board (WAOB) released its October 2017 World
Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World corn supply‐demand
and price projections for the 2015/16, “old crop” 2016/17, and “new crop” 2017/18 marketing years (MY).
The “new crop” MY 2017/18 for U.S. corn began on September 1, 2017 and will last through August 31, 2018.
On the same day the USDA National Agricultural Statistics Service (NASS) released its October 2017 Crop
Production report. In this report the USDA used a combination of in‐field objective yield measurements and
farmer surveys conducted between September 26th and October 5th to estimate expected U.S. corn yields as of
October 1st. The objective yield surveys for corn were conducted in the major producing states for
approximately 75% of U.S. corn production. Counts were made within sample plots in person by USDA
enumerators, recording number of corn plants and ears, and ear weights in order to calculate the projected
2017 biological yields for each plot. Average percent harvest loss was then subtracted from these biological
yield estimates to obtain a net yield for each plot sampled.
The same corn plots which were sampled for the August and September USDA NASS Crop Production
reports were revisited for the October report. The upcoming November 9th USDA NASS Crop Production
report will also be based on a similar combination of farmers’ own crop observations and harvested yield
reports, and actual in‐the‐field yield measurements and conditions for fields remaining to be harvested. A final
USDA NASS Crop Production Summary report with an estimate of 2017 U.S. corn production will be reported
in January 2018.
I‐b. CME DECEMBER 2017 & JULY 2018 Corn Futures Trends
DECEMBER 2017 CME Corn Futures
Following a low of $3.58 ½ on August 31, 2016, DECEMBER 2017 Chicago Mercantile Exchange (CME) corn
futures prices trended upward over time to highs of $4.04 on February 28, 2017, $4.09 on June 8th, and $4.17
¼ on July 11th (Figure 1). Following that high, DEC 2017 corn futures prices have declined to lows of $3.44 ¼ on
August 31st, $3.42 ½ on October 12th, and $3.43 on October 23rd ‐ before closing at $3.52 ¾ on October 24th.
JULY 2018 CME Corn Futures
In a similar trading pattern to DEC 2017 corn futures, following a low of $3.79 on August 31, 2016, JULY
2018 CME corn futures prices trended upward over time to highs of $4.18 ¾ on February 28, 2017, $4.26 ½ on
June 8th, and $4.34 ¼ on July 11th (Figure 1). Following that high, JULY 2018 corn futures prices declined to
lows of $3.71 on August 31, 2017, $3.72 ½ on September 12th, $3.73 on October 12th, and $3.73 ¼ on October
23rd ‐ before closing at $3.82 ½ on October 24th.
CME Corn Futures DEC 2017 – JULY 2018 Contract Spreads
The total futures carrying charge or “term spread” between DEC 2017 and JULY 2018 corn futures on
Wednesday, October 25th in mid‐morning trading was $0.29 ½ per bushel (i.e., $3.83 ¼ for JULY 2018 Corn less
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$3.53 ¾ for DEC 2017 Corn), or $0.0421 per bushel per month over a 7‐month period. This compares to
commercial grain storage charges in Kansas grain elevators in the range of $0.04 to $0.05 per bushel per
month – before accounting for interest, additional handling costs, or other discounts.
Figure 1. DEC 2017 & JULY 2018 CME Daily Corn Futures Price Charts (as of October 24, 2017)
ne …
November 21, 2017
Grain Market Outlook
… The recent upward trend in the relative value of the U.S. dollar began in earnest after the dollar index was
valued at 77.5510 in August 2014. This upward trend continued throughout the remainder of 2014 and 2015
into early 2016 – with the index climbing to a high of 95.3919 in December 2016 (up 23.0% from August 2014).
Since then the index declined 8.7% down to 87.083 in September 2017, before moving higher again to an
average of 88.6866 in October, and 89.7282 during the November 1‐9, 2017 period.
In addition, since January 2007 the monthly price of Number 2 Yellow Corn in Central Illinois has averaged
$4.57 per bushel (in U.S. dollars) with a median value of $3.74 – which like the historic U.S. dollar index above
indicates positive skewness (i.e., a few extremely high values pulling up the average) (Figure 3). Over the same
period the monthly price of Number 2 Yellow Corn at U.S. Gulf Ports has averaged of $5.25 per bushel with a
median value of $4.49. The average difference between Central Illinois and U.S. Gulf Ports corn prices during
this period was $0.68, with a minimum of $0.05 in March 2007, and a maximum of $1.09 in November 2014.
Since January 2007 there has been a negative correlation of ‐0.617 between the U.S. Trade Weighted
dollar index and the Central Illinois price of corn – compared to ‐0.643 for the U.S. Gulf Coast corn price. This
indicates that U.S. corn prices tend to have a negative or inverse relationship over‐time with the value of the
U.S. dollar.
A higher U.S. dollar exchange rate relative to other major World currencies generally makes it more
expensive for foreign buyers of U.S. grains to exchange their country’s currencies for U.S. dollars – which they
would then in turn use to purchase U.S. grain exports (i.e., which are denominated or “priced” in U.S. dollars in
U.S. grain markets). Although this is not the only factor that had been negatively affecting U.S. grain exports, it
is a very important one – working against U.S. corn and especially wheat from being affordable, competitive
alternative export alternatives in the World grain trade. Conversely, the decline in the value of the U.S. dollar
relative to other World currencies since April 2017 has helped U.S. corn exports.
II. U.S. Corn Acreage, Yield, Production & Total Supplies
Table 1 shows the USDA U.S. corn supply‐demand balance sheet for the MY 2008/09 through “new crop”
MY 2017/18 period. Table 1a focuses exclusively on “new crop” MY 2017/18 with the November 9th USDA
projection plus three (3) alternative possible market scenarios from Kansas State University. United States’
corn harvested and planted acreage for the year 2000 – projected 2017 period are shown in Figure 4, with U.S.
corn yields for 2005‐2017 shown in Figure 5.
United States’ corn production & total supplies for the 2006/07 through projected “new crop” 2017/18
marketing years are shown in Figure 6. Table 1 and Figures 4‐6 illustrate the growth in U.S. corn production
and total supplies since the drought‐impacted short crop year of MY 2012/13, and the most recent …
December 21, 2017
Grain Market Outlook
the USDA maintains its optimism for “new crop” MY 2017/18 U.S. corn exports
because of a) low U.S. corn prices, b) expectations of significantly tighter foreign stocks and percent (%)
stocks‐to‐use for corn, and c) the eventual “using up” of competing South American corn exports in early 2018.
Early forecasts are for 2018 Brazilian corn production to be 95 million metric tons (mmt) in this marketing
year with harvests lasting from February through May. Early forecasts are for 2018 Argentina corn production
to be 42 mmt in this marketing year with harvests lasting from March through May. However, dry conditions
may limit 2018 corn production in Argentina and southern Brazil – and subsequently support U.S. corn exports.
Fourth, a continuing threat exists of U.S. and Foreign economic and/or financial system disruptions that
could impact grain, energy, and other commodity markets in 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, the countries involved, and their role in global corn export trade.
4. USDA Supply‐Demand & Price Forecast for “New Crop” MY 2017/18
In the December 12th Crop Production reports, the USDA left unchanged its projections of a) projected
yields up to a record high of 175.4 bu/ac (vs the previous record of 174.6 in 2016), and b) 2017 U.S. corn
production up to 14.578 bb – down from the record high of 15.148 bb in 2016. The also USDA left unchanged
its forecast “new crop” MY 2017/18 total supplies to 16.922 bb – down marginally (20 mb) from last year’s
record high. Total use is forecast at 14.485 bb – raised 50 mb from November on higher ethanol use, but still
down 162 mb from last year’s record high. Ending stocks are projected to be a 2.437 bb (16.8% S/U) – up from
2.295 bb (15.7% S/U) in “old crop” MY 2016/17. United States’ corn prices are projected to average $3.20 /bu
(range of $2.85‐$3.55). This is down $0.16 /bu from $3.36 /bu from “old crop” MY 2016/17. This scenario is
given an 80% likelihood of occurring by KSU Extension Agricultural Economist D. O’Brien.
5. Alternative KSU Supply‐Demand & Price Forecast for “New Crop” MY 2017/18
Two alternative KSU‐Scenarios for U.S. corn supply‐demand and prices are presented for “new crop” MY
2017/18. These projections are to show how varying corn export outcomes could affect the USDA’s projection
in the December 9, 2017 WASDE report.
A ‐ KSU “Higher Exports” MY 2017/18 Scenario: “2.250 bb Exports” Scenario (10% probability) assumes:
90.348 ma planted, 82.890 ma harvested, 175.4 bu/ac trend yield, 14.539 bb production, 16.884 bb total
supplies, 2.250 bb exports, 14.785 bb total use, 2.099 bb ending stocks, 14.20% S/U, & $3.55 /bu U.S. corn
average price;
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B ‐ KSU “Lower Exports” MY 2017/18 Scenario: “1.800 bb Exports” Scenario (10% probability) assumes:
90.348 ma planted, 82.890 ma harvested, 175.4 bu/ac trend yield, 14.539 bb production, 16.884 bb total
supplies, 1.800 bb exports, 14.360 bb total use, 2.524 bb ending stocks, 17.58% S/U, & $3.20 /bu U.S. corn
average price;
6. USDA Supply‐Demand & Price Forecast for “Next Crop” MY 2018/19
In the November 28th Long Term Baseline projections, the USDA forecast for “next crop” MY 2018/19 that
2018 U.S. corn planted and harvested acres would equal 91.0 million acres (ma) and 83.7 ma, respectively,
both up from 90.429 ma planted and 83.119 ma harvested in 2017. Corn yields in 2018 are forecast at 173.5
bu/ac, down from the record high of 175.4 bu/ac in 2017. U.S. corn production is 2018 is projected to be
14.520 bb – down from 14.578 bb now projected for 2017.
The USDA forecast “new crop” MY 2017/18 total supplies to 17.007 bb – adjusted for changes in the
December WASDE report in MY 2017/18 ending stocks. Total use is forecast at 14.450 bb – down 35 mb from
this current marketing year. Ending stocks are projected to be a 2.557 bb (17.7% S/U) – up from 2.437 bb
(16.8% S/U) in “new crop” MY 2017/18. United States’ corn prices are projected to average $3.30 /bu – up
from $3.20 /bu in “new crop” MY 2017/18.
5. World Corn Supply‐Demand – With & Without China
World corn production of 1,044.8 million metric tons (mmt) is projected for “new crop” MY 2017/18, down
2.9% from the record of 1,074.8 mmt in “old crop” MY 2016/17, but still up 7.3% from 973.5 mmt in MY
2015/16. World corn total supplies of 1,272.1 mmt are down marginally from the record high 1,290.5 mmt in
“old crop” MY 2016/17, but up from 1,183.2 mmt in MY 2015/16.
World corn exports of a 151.6 mmt are projected for “new crop” MY 2017/18, down 7.6% from the record
high of 164.1 mmt in “old crop” MY 2016/17, and up 26.7% from 119.7 mmt in MY 2015/16. Projected World
corn ending stocks of 204.1 mmt (19.1% S/U) in “new crop” MY 2017/18 are down from the record high 227.3
mmt (21.4% S/U) in “old crop” MY 2016/17, and from 214.9 mmt (22.2% S/U) in MY 2015/16. Projected
Foreign (Non‐U.S.) corn ending stocks of 142.2 mmt (16.5% S/U) in “new crop” MY 2017/18 are down from
169.0 mmt (19.8% S/U) in “old crop” MY 2016/17, and from 170.8 mmt (23.1% 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 124.5 mmt
(15.0% S/U) in “new crop” MY 2017/18, down from 126.6 mmt (15.2% S/U) in “old crop” MY 2016/17, but up
from 104.1 mmt (13.9% S/U) in MY 2015/16. These figures show that World stocks‐to‐use of corn less China’s
direct influence are projected to be approximately 21% lower (i.e., 15.0% S/U for the “World‐Less‐China”
versus 19.1% 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 51.5% in MY 2015/16, to 44.3% in “old crop” MY 2016/17, and down to 39.0%
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. These
actions may increase Chinese import demand for both U.S. corn and grain sorghum.
…
June 2, 2016
Grain Market Outlook
… acts into grain markets and other commodities from volatile World economies, and financial
and currency markets. Even so, the “large crop‐over supply” situation that exists in World and U.S. wheat
markets continues to have a strong prevailing negative influence on World wheat prices.
It is likely that significant World wheat production problems and/or trade disruptions would need to occur in
coming weeks and months in order to have wheat prices recover significantly in spring‐summer 2016. Ongoing
strength in the U.S. dollar exchange rate – although it has been weakening recently – also is a serious negative
factor that is limiting U.S. wheat exports, raising U.S. wheat ending stocks and % ending stocks‐to‐use, and
causing sharply lower U.S. wheat prices.
USDA U.S. Wheat S/D Forecast for “Old Crop” MY 2015/16: The USDA made minor changes in its supply‐
demand and price projections for U.S. wheat in the “old crop” 2015/16 marketing year – with 2.052 billion
bushels (bb) production, 2.924 bb total supplies, 960 mb million bushels (mb) of food use (down 7 mb), 780
mb of exports (up 5 mb), 140 mb wheat feed use, 1.946 bb of total use (down 2 mb), 978 mb ending stocks (up
2 mb), and 50.24% ending‐stocks‐to‐use (up from 50.09% in April to the highest level since 48.6% in MY
2009/10). The USDA forecast of “old crop” MY 2015/16 U.S. average wheat prices to be $4.90 /bu – the lowest
U.S. wheat marketing year average price since $4.87 /bu in MY 2009/10.
USDA U.S. Wheat S/D Forecast for “New Crop” MY 2016/17: Based on the May 10th WASDE and the March
31st Prospective Plantings report, the USDA projected 2016 U.S. wheat plantings of 49.559 million acres (ma) –
down 5.085 ma from 2015. Forecast 2016 harvested acres of 42.783 ma would be down 4.310 ma vs 2015.
Based on projected 2016 U.S. wheat yields of 46.7 bu/ac (up from 43.6 bu/ac in 2015), 2016 U.S. wheat
production is projected to be 1.998 bb (vs 2.052 bb in 2015), with “new crop” MY 2016/17 total supplies of
3.106 bb (up from 2.924 bb in “old crop” MY 2015/16), and projected “new crop” MY 2016/17 total use of
2.077 bb (up from 1.946 bb in “old crop” MY 2015/16). Given these numbers, the USDA projected “new crop”
MY 2016/17 ending stocks of 1.029 bb (vs 978 mb a year ago), with percent ending stocks‐to‐use of 49.52%
S/U (vs 50.24% last year). U.S. wheat average prices are projected to be in the range of $3.70 to $4.50
Page | 2
(midpoint = $4.10 /bu) – down from $4.90 /bu in “old crop” MY 2015/16. It is assumed by KSU that these
adjusted USDA projections for “New crop” MY 2016/17 is assumed to have a 45% probability of occurring.
KSU Forecasts for “New Crop” MY 2016/17: Three alternative KSU‐Scenarios for U.S. wheat supply‐demand
and prices are presented for “new crop” MY 2016/17, with each assuming the same 2016 planted acreage as
USDA, but 1.027 million less acres harvested than the adjusted USDA estimates based on historical percent
harvested‐to‐planted acres relationships. These KSU projections also assume at least a moderation in the high
value of the U.S. dollar, and some improvement in U.S. wheat exports as a result. A) KSU‐Scenario A (Trend
Yield) (35% probability) assumes for “new crop” MY 2016/17: 49.559 ma planted, 41.737 ma harvested, 46.0
bu/ac yield, 1.920 bb production, 3.028 bb total supplies, 850 mb exports, 2.031 bb total use, 997 mb ending
stocks, 49.09% S/U, & $4.40 /bu U.S. wheat average price; B) KSU‐Scenario B (Foreign Crop Problems –
Higher U.S. Exports) (10% prob.) assumes for “new crop” MY 2016/17: 49.559 ma planted, 41.737 ma
harvested, 46.0 bu/ac yield, 1.920 bb production, 3.028 bb total supplies, 1.100 bb exports, 2.272 bb total use,
756 mb ending stocks, 33.27% S/U, & $5.55 /bu U.S. wheat average price; and C) KSU‐Scenario C (Widespread
2016‐2017 U.S. Crop Problems) (10% prob.) assumes for “new crop” MY 2016/17: 49.559 ma planted, 41.737
ma harvested, 43.0 bu/ac yield, 1.753 bb production, 2.861 bb total supplies, 900 mb exports, 2.081 bb total
use, 780 mb ending stocks, 37.48% S/U, & $5.30 /bu U.S. wheat average price.
…