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December 30, 2016
Grain Market Outlook
The total futures carrying charge or “term spread” between MARCH 2017 and JULY 2017 CME Kansas
Wheat futures contracts on Wednesday, December 28th was $0.22 ½ per bushel (i.e., $4.32 for JULY 2017 less
$4.09 ½ for MARCH 2017 Wheat), or $0.05625 per bushel per month. This compares to commercial storage
charges in Kansas grain elevators in the range of $0.04 to $0.05 per bushel per month – before interest or
additional handling costs or other discounts are accounted for.
Given these futures carrying charges, commercial storage of wheat from MARCH 2017 to JULY 2017 would
at least break even and/or cover costs (i.e., carry of $0.05625 /bu/mo is greater than $0.04‐$0.05 /bu/mo
storage cost) IF local cash wheat basis levels would at least stay unchanged and not weaken further over the
March‐July 2017 period. Along these same lines of reasoning, it may be profitable to actually place a stor …
April 19, 2017
Grain Market Outlook
DECEMBER (DEC) 2017 CME Kansas hard red winter wheat futures traded as high as $5.90 ¼ on
April 20, 2016, and $5.90 on June 8, 2016 before declining approximately $0.90 per bushel by early
July. Then, following lows of $4.74 per bushel on August 31st, $4.72 ½ on October 12th, and $4.59 ½
DEC 2017 CME KS HRW Wheat Futures
February 18, 2016 – April 18, 2017
Close = $4.74 ¼ on 4/18/2017
MAY 2017 CME KS HRW Wheat Futures
February 18, 2016 – April 18, 2017
Close = $4.19 ¼ on 4/18/2017
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on December 1, 2016, DEC 2017 CME Kansas hard red winter wheat futures prices traded up to a high
of $5.30 ¾ on February 16, 2017. From that February 16th high, DEC 2017 CME KS HRW Wheat
futures then traded lower – down to a low of $4.68 ½ on March 31st and $4.69 on April 18th before
closing at $4.74 ¼ that same day (Figure 1).
The total futures carrying charge or “term spread” between MAY 2017 and JULY 2017 CME Kansas Wheat
futures contracts on Tuesday, April 18th was $0.12 ¾ per bushel (i.e., $4.32 for JULY 2017 less $4.19 ¼ for MAY
2017 Wheat), or $0.06375 per bushel per month. This compares to commercial storage charges in Kansas grain
elevators in the range of $0.04 to $0.05 per bushel per month – before interest or additional handling costs or
other discounts are accounted for.
Given these futures carrying charges, commercial storage of wheat from MAY 2017 to JULY 2017 would at
least break even and/or cover costs (i.e., carry of $0.06375 /bu/mo is greater than $0.04‐$0.05 /bu/mo storage
cost) IF local cash wheat basis levels would at least stay unchanged and not weaken further over the May‐July
2017 period. Along this same lines of reasoning, it may be profitable to actually place a stor …
Breakout Sessions
2012 Risk and Profit Conference
Breakout Session … work in cropping systems profitability, since the passage of the2008 Farm Bill, he has focused … Troy Dumler
Extension Ag Economist
Kansas State …
March 2, 2017
Grain Market Outlook
ding
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
unantic …
May 22, 2017
Grain Market Outlook
n
the World is plentiful, the available supply of high protein milling wheat is less so. This factor helps exports of
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 “next crop” MY 2017/18. “World Less
China” wheat percent stocks‐to‐use have declined to the tightest level since at least MY 2008/09 when
average U.S. wheat cash prices averaged $5.70 /bu. If this “China supply isolation factor” eventually leads to
noticeably tighter global supplies of available exportable wheat occurring in coming months, it would likely
have a positive impact U.S. wheat market prices in “next crop” MY 2017/18.
However, unless there is a change in the broader, overriding focus of the World wheat market away from
aggregate global supplies to available “World Less China” supplies – 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 in later 2017. Also, ongoing strength in the U.S. dollar exchange rate continues to be a
negative factor limiting the competitive affordability of U.S. wheat exports in World markets. These factors
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together 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 still be only $0.30 /bu above the marketing loan rate in many Kansas locations
in mid‐May 2017 (after earlier having to fallen below loan rates in Fall 2016).
USDA U.S. Wheat Supply/Demand Forecast for “Next Crop” MY 2017/18: The USDA released their grain
market supply‐demand and price projections for “next crop” MY 2017/18 in the May 10th World Agricultural
Supply and Demand Estimates (WASDE) report. United States’ wheat plantings are projected to be 46.059
million acres (ma) – down from 50.154 ma in “current” MY 2016/17. Harvested acres are forecast to be 38.500
ma (83.59% harvested‐to‐planted) – down from 43.890 ma a year ago. The 2017 U.S. average wheat yield is
projected at 47.2 bu/ac, down from the 2016 record of 52.6 bu/acre.
Wheat production in the U.S. in 2017 is forecast to be 1.820 billion bushels (bb), down from 2.310 bb in 2015.
Projected “next crop” MY 2017/18 total supplies are 3.105 bb (down from 3.400 bb in “current” MY 2016/17),
with total use of 2.191 bb (down from 2.241 bb in “current” MY 2016/17).
The USDA projected “next crop” MY 2017/18 ending stocks to be 914 million bushels (mb) (vs 1.159 bb a year
ago), with percent ending stocks‐to‐use of 41.7% S/U (vs 51.7% last year and 50.0% the previous year). United
States’ wheat prices are projected to average $4.25 /bu – up from $3.90 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, 82.50% harvested‐to‐planted, 37.999 ma
harvested, 47.0 bu/ac trend yield, 1.786 bb production, 3.070 bb total supplies, 1.000 bb exports, 180 mb feed
& residual use, 2.200 bb total use, 870 mb ending stocks, 39.6% S/U, & $4.45 /bu U.S. wheat average price.
KSU Scenario 2) “Higher U.S. Wheat Exports” Scenario (15% probability) assumes the following for “next
crop” MY 2017/18. Planted acres of 46.059 ma are associated with 39.334 ma harvested (82.50% harvested‐
to‐planted), 47.0 bu/ac trend yield, 1.786 bb production, 3.070 bb total supplies, 1.150 bb exports, 180 mb
feed & residual use, 2.350 bb total use, 720 mb ending stocks, 30.6% S/U, & $5.10 /bu U.S. wheat average
price;
KSU Scenario 3) “Short U.S. Wheat Crop” Scenario (10% probability) assumes the following for “next crop” MY
2017/18. Planted acres of 46.059 ma, 80.60% harvested‐to‐planted, 37.124 ma harvested, 40.0 bu/ac low
yield, 1.485 bb production, 2.769 bb total supplies, 950 mb exports, 125 mb feed & residual use, 2.095 bb total
use, 674 mb ending stocks, 32.17% S/U, & $5.00 /bu U.S. wheat average price.
…
May 2, 2017
Grain Market Outlook
… corn prices are projected by the USDA to average $3.50 /bu – up from a midpoint estimate of $3.40 /bu
from “current” MY 2016/17 – but within the range of $3.25‐$3.55 /bu for this marketing year. 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 lower U.S. corn acreage, 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 – 13.556 bb” Scenario (25% probability) assumes:
88.500 ma planted, 81.031 ma harvested, 167.3 bu/ac trend yield, 13.556 bb production, 15.926 bb total
supplies, 14.185 bb total use, 1.741 bb ending stocks, 12.27% S/U, & $3.85 /bu U.S. corn average price for
“next crop” MY 2017/18;
KSU “Next Crop” MY 2017/18 Scenario #2) “165.0 bu/ac – 13.370 bb” Scenario (15% probability) assumes:
88.500 ma planted, 81.031 ma harvested, 165.0 bu/ac yield, 13.370 bb production, 15.740 bb total supplies,
14.080 bb total use, 1.660 bb ending stocks, 11.21% S/U, & $4.05 /bu U.S. corn average price for “next crop”
MY 2017/18;
KSU “Next Crop” MY 2017/18 Scenario #3) “150.0 bu/ac – 12.155 bb” Scenario (5% probability) assumes:
88.500 ma planted, 81.031 ma harvested, 150.0 bu/ac yield, 12.155 bb production, 14.525 bb total supplies,
13.460 bb total use, 1.065 bb ending stocks, 7.91% S/U, & $4.75 /bu U.S. corn average price for “next crop” MY
2017/18;
World Corn Supply‐Demand: Record high World corn production of 1,053.8 million metric tons (mmt) is
projected for “current” MY 2016/17, up 9.4% from 963.3 mmt in MY 2015/16, and up 3.7% from 1,016.0 mmt
in MY 2014/15. Record high World corn total supplies of 1,265.6 mmt are projected for “current” MY 2016/17,
up from 1,173.1 mmt in MY 2015/16, and from 1,190.8 mmt in MY 2014/15.
World corn exports of 154.4 mmt are projected for “current” MY 2016/17, up 28.7% from 120.0 mmt in MY
2015/16, and up 8.6% from 142.2 mmt in MY 2014/15. Projected record high World corn ending stocks of
223.0 mmt (21.4% S/U) in “new crop” MY 2016/17 are up from 211.8 mmt (22.0% 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 223.0 mmt,
World corn percent ending stocks‐to‐use are forecast to actually decline marginally to 21.4%. 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). An ongoing, strong
demand base for corn could help cause sharply increased corn market volatility in the summer of 2017 IF any
serious threats emerge to the 2017 U.S. corn crop.
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I. U.S. Corn Market Situation and Outlook
April 11th USDA Crop Production & WASDE Reports
On April 11th the USDA World Agricultural Outlook Board (WAOB) released its April 2017 World
Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World corn supply‐demand
and price projections for the 2014/15, 2015/16, and “current crop” 2016/17 marketing years (MY) for corn.
The “current” MY 2016/17 for U.S. corn began on September 1, 2016 and will last through August 31, 2017.
On March 31st, the USDA’s National Agricultural Statistics Service (NASS) (https://www.nass.usda.gov/) released
it’s Prospective Plantings (http://usda.mannlib.cornell.edu/usda/current/ProsPlan/ProsPlan‐03‐31‐2017.pdf) and Grain Stocks
(http://usda.mannlib.cornell.edu/usda/current/GraiStoc/GraiStoc‐03‐31‐2017.pdf) reports. These USDA reports were preceded by
the USDA 2017 Agricultural Outlook Forum in Arlington, Virginia on February 23‐24, 2017
(https://www.usda.gov/oce/forum/). At this forum the USDA provided an initial set of supply‐demand and price
forecasts for U.S. corn and other crops for the upcoming 2017/18 marketing year. “Next crop” MY 2016/17 for
U.S. corn will begin on September 1, 2017 and will last through August 31, 2018.
Following its normal procedures, the next supply‐demand and price forecasts for “next crop” 2017/18
from the USDA will be released in the May 10, 2017 USDA WASDE report.
CME MAY 2017 & DECEMBER 2017 Corn Futures Trends
MAY 2017 CME Corn Futures
Following a low of $3.32 1/2 on August 31, 2016, MAY 2017 Chicago Mercantile Exchange (CME) corn
futures prices trended up to a high of $3.75 ¾ on October 20, 2016 (Figure 1). Following that high, MAY 2017
corn futures prices declined to a low of $3.49 ¼ on December 1, 2016, before moving to an eventual high of
$3.87 ¼ on February 16, 2017. Since then, MARCH 2017 corn futures first trended lower to $3.67 ¼ on
February 27th, and then to a high of $3.86 ¼ on February 28th before closing at $3.82 on March 1, 2017
DECEMBER 2017 CME Corn Futures
In a similar trading pattern to MARCH 2017 Corn futures, following a low of $3.58 1/2 on August 31, 2016,
DECEMBER 2017 Chicago Mercantile Exchange (CME) corn futures prices trended up to a high of $3.95 ½ on
October 20, 2016 (Figure 1). Following that high, DECEMBER 2017 corn futures prices declined to lows of
$3.74 ¼ on November 15th and $3.74 ½ on December 1, 2016, before moving to an eventual high of $4.03 ¾ on
February 16, 2017. Since then, DECEMBER 2017 corn futures first trended lower to $3.88 on February 27th,
and then to a high of $4.04 on February 28th before closing at $4.01 ¼ on March 1, 2017.
CME Corn Futures 2017 Contract Spreads
The total futures carrying charge or “term spread” between MARCH 2017 and JULY 2017 corn futures on
Wednesday, March 1st was $0.16 ¾ per bushel (i.e., $3.89 ¼ for JULY 2017 Corn less $3.75 ¾ for MARCH 2017
Corn), or $0.0419 per bushel per month. 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 or additional
handling costs or other discounts. The MARCH 2017 Corn futures contract was entering the early stages of its
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contract delivery period at that time, with grain elevators “rolling” to the MAY 2017 Corn futures contract for
local basis determination purposes. The spread from the MAY 2017 to JULY 2017 Corn futures contracts was
$0.07 ¼ ($3.89 ¼ ‐ $3.82) or $0.03625 per month.
Figure 1. MAY 2017 & DECEMBER 2017 CME Daily Corn Futures Price Charts (as of May 2, 2017)
ne …
February 20, 2020
Outlook
Glynn T. Tonsor
Dept. of Ag. Economics,
Kansas State … information:
https://www.asi.k-state.edu/events/stocker-
conference.html
https://www.youtube.com/watch?v=DpTyq3SuZn
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February 21, 2020
Outlook
Glynn T. Tonsor
Dept. of Ag. Economics,
Kansas State … information:
https://www.asi.k-state.edu/events/stocker-
conference.html
https://www.youtube.com/watch?v=DpTyq3SuZn
8&list=PLst4YxRiGX9RSG0UO4WcavXCkwJmQz7Iw
&index=2&t=0s
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September 6, 2017
Grain Market Outlook
ies of wheat available in the World market, the available
supply of high protein milling wheat is typically less so. This situation had been exacerbated earlier this year by
drought conditions occurring in U.S. and Canadian Hard Red Spring (HRS) wheat production areas. These
drought conditions had raised the demand and price premiums offered for high protein wheat supplies –
whether they are from hard red winter wheat supplies or elsewhere. However, with recent reports show less
impact of dry conditions on 2017 North American Hard Red Spring Wheat production than expected, wheat
protein premiums declining sharply in recent weeks.
Third, while the aggregate supply of wheat in World markets has grown, the supply of wheat from a
“World‐Less‐China” perspective is projected to have actually “contracted” or “diminished” further in “new
crop” MY 2017/18. “World‐Less‐China” wheat percent stocks‐to‐use have declined to the tightest level since
at least MY 2008/09 when U.S. wheat cash …
October 1, 2018
2018 Ag Lenders Conference Presentations
Grain Market Outlook
2018 Ag Lenders Conferences
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Grain Market Events to Come ….
1) 2018 U.S … HRW wheat $’s in 2018?
o Profits for 2018 Kansas HRW Wheat …