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March 25, 2019
Grain Market Outlook
Wheat Market Overview
Hard red winter wheat market prices in the U.S. have weakened considerably since late January
2019. Ongoing weakness in export shipments of U.S. wheat on the one hand, and declining prospects
for future U.S. wheat export sales on the other, have been the main causes along with general
bearishness across grain futures prices.
In Fall‐Winter 2018 prospects for short wheat crops among some major World wheat exporters
improved prospects for U.S. export sales in the later part of the “current” 2018/19 marketing year
(MY). “Current” MY 2018/19 began on 6/1/2018 and will finish on 5/31/2019. In particular, short
crops in the Black Sea Region countries of Russia, Ukraine and Kazakhstan, parts of the European
Union (France and other countries), and Australia were of concern.
However, a combination of #1) large carryover stocks in World markets from “old crop” MY
2017/18, #2) successful wheat crops in many other exporting and importing countries in the World,
and #3) the willingness of the Black Sea Region countries to sell down their domestic reserve stocks
to maintain their export market shares, worked together to limit any improvement in U.S. wheat
exports, and consequently limit any price gains from such an event.
The selling off of domestic inventories may have allowed Russia and other countries to have
maintained their export market shares in “current” MY 2018/19, but it makes them more vulnerable
to any repeated crop shortfalls that could occur in “new crop” MY 2019/20 – which will begin on June
1, 2019. The risk of tightening stocks is that these countries place themselves at risk to the effect of
market shortfalls in the future – because they have reduced their “buffer” stocks.
Going forward, it seems that wheat production risk in the major exporting countries – including
the United States, Russia, Ukraine, Australia, and the European Union – will be the key driving factor
in U.S. grain markets in year 2019. The possibility of rumored sizable increases in Chinese purchases
of U.S. wheat and other agricultural products IF a trade agreement between the U.S. and China is
completed could provide a surprise boost to U.S. wheat exports in coming months. But it seems
judicious to not count on that occurring until such a trade agreement is finalized.
B. Trends in CME Kansas Hard Red Winter Wheat Futures
Prices for the MAY 2019 Chicago Mercantile Exchange (CME) Kansas Hard Red Winter (HRW)
Wheat futures contract declined from a high of $5.23 per bushel (/bu) on January 25, 2019 to a low of
$4.18 ¼ /bu on March 12th, a drop of $1.04 ¼ or 20%. Since then, MAY 2019 CME HRW wheat has
moved higher to a close of $4.45 on March 22nd – down 15% from late‐Jan. 2019 highs (Figures 1‐2‐
3abc).
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Currently CME MAY 2019 Kansas HRW Wheat futures are trading near historic lows since the
beginning of year 2007. Prices for MAY 2019 futures in the $4.40‐$4.50 range compare to longter
term lows of: a) $4.33 /bu for the MAY 2007 contract on 4/2/2007; b) $3.98 ¾ /bu for MAY 2017 on
4/21/2019; and $4.04 /bu for DEC 2017 on 11/28/2018. IF crop conditions and crop progress for the
2019 U.S. HRW Wheat crop are “good” in April 2019 it is possible that prices could AGAIN decline to
$4.00 /bu or less (Figures 1‐2).
It is notable that a record large net short (or sell) position is held by Management Money
(Speculator) traders in CME HRW wheat according to the most recent March 19th Commodity Futures
Trading Commission (CFTC) Commitment of Traders Report (Figures 3abc). Actual short (sell)
positions held by Management Money (Spec) traders are near record levels, combined with declining
long positions on these contracts. This report can be found at the following web address:
https://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm
Taken together, these data indicate a predominant “bearishness” among Management Money
(Spec) traders in the CME Kansas HRW Wheat futures contract. This consensus “bearish market
narrative” or “pessimistic group mindset” would have to be overcome or changed by some
combination of World and U.S. wheat supply‐demand factors in the wheat market for CME futures to
begin to move appreciably higher. The key issue to watch in these markets will likely be whether
there continue to be successful aggregate crop production prospects among major World wheat
producing, exporting, and importing countries throughout calendar year 2019.
C. Kansas HRW Wheat Cash Price & Basis Levels
In central Kansas on March 22nd – the 10th trading day a full two weeks after the USDA reports –
Kansas cash wheat price terminal quotes for ordinary U.S. no. 1 HRW ranged from $4.19 to $4.55 per
bushel – with basis ranging from $0.26 under to $0.10 over MAY 2019 KS HRW Wheat futures. Cash
wheat prices in eastern Kansas grain terminals ranged from $4.30 to $4.50 /bu with basis ranging
from $0.15 under to $0.05 over MAY 2019 futures. These prices are still up 19% to 22% from the
range of $3.42 ¼ to $3.83 ¼ /bu in late December 2017 in eastern and central Kansas – with basis at
that time being from $0.80 under to $0.39 under nearby MARCH 2018 futures (Figure 2).
In comparison, in western Kansas on March 22nd, bids for ordinary U.S. no. 1 HRW wheat at
selected grain elevators ranged from $3.92 to $4.19 /bu, with basis being $0.55 under to $0.28 under
MAY 2019 futures. Recent wheat cash price bids in western Kansas are up 13% to 15% from $3.47 to
$3.64 /bu in late December 2017 in this same area – when local basis varied from $0.85 under to
$0.58 under MARCH 2018 futures.
A Hard White Wheat (HWW) grain terminal bid was available in Wichita, Kansas on 3/22/2019
for $4.4000 /bu, with a basis of $0.05 /bu under MAY 2019 Kansas HRW wheat futures.
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D. World Wheat Production
In aggregate, forecast global World wheat production in “current” MY 2018/19 of 733.00 mmt is
down 3.9% from last year’s record high of 763.07 mmt. Lower production has occurred in the
“current” 2018/19 marketing year (which began June 1, 2018) in some major exporting countries
such as Australia (down 18.8% to 17.30 million metric tons or ‘mmt’ from a year ago) and the
European Union (down 9.0% in total to 137.60 mmt). In the Black Sea Region, wheat production is
down in Russia (down 15.6% to 71.69 mmt), Ukraine (down 7.3% to 25.00 mmt), and Kazakhstan
(down 5.5% to 13.95 mmt) (Figures 13, 14a‐b & 15a‐b).
These declines were partially offset by production increases projected for exporters such as the
United States (up 8.3% to 51.29 mmt or 1.884 billion bushels, i.e., ‘bb’), Argentina (up 5.4% to 19.5
mmt), and Canada (up 6.1% to 31.80 mmb). Production in China is projected to be down 2.2% to
134.43 mmt, while India wheat production is forecast to be up 1.2% to 99.70 mmt.
E. World Wheat Ending Stocks & % Stocks‐to‐Use
Record large carryover ending stocks of 279.61 mmt (37.56% stocks‐to‐use) from “old crop” MY
2017/18 have upheld total World supplies and supply‐demand balances – which are projected to be
270.53 mmt (36.45% stocks‐to‐use) in “current” MY 2018/19. Percent ending stocks‐to‐use of
37.56% in “old crop” MY 2017/18 were record high in the modern era since the early 1970s, while
34.46% stocks/use in “current” MY 2018/19 are the 2nd highest since the farm crisis years of the mid‐
1980s, and the 4th highest in the modern era (Figures 13, 14a‐b & 15a‐b).
In response to lower production, Russia has chosen to “sell down” it’s carryover wheat stocks to
maintain market position in global trade. Russia wheat ending stocks are projected to be 6.55 mmt in
“current” MY 2018/19, down from 11.87 mmt in “old crop” MY 2017/18, and from 10.83 mmt in MY
2016/17. In the short run this strategy of “mining” of carryover stocks by Russia DOES allow it to
maintain World export market share in “current” MY 2018/19. HOWEVER, this strategy ALSO may
leave future Russian supply‐demand balances more vulnerable to any domestic crop shortfall that
may occur in “new crop” MY 2019/20 and succeeding years.
F. “World‐Less‐China” Wheat Ending Stocks & % Stocks‐to‐Use
Considering World wheat ending stocks adjusted for Chinese reserves (i.e., “World‐Less‐China”)
provides a much tighter picture of “accessible” or “available” World wheat supply‐demand balances
than the aggregate “World” measure. “World‐Less‐China” wheat carryover ending stocks are
calculated to be 130.53 mmt in “current” MY 2018/19 – down from 148.35 mmt in “old crop” MY
2017/18. These figures compare to World ending stocks of 270.61 mmt in “current” MY 2018/19,
and 249.61 mmt in “old crop” MY 2017/18 (Figure 15ab).
“World‐Less‐China” percent (%) ending stocks‐to‐use are estimated to be and 11 year low of
21.15% in “current” MY 2018/19 – down from 23.80% in “old crop” MY 2017/18. This compares to
aggregate World Stocks‐to‐Use of 36.45% in “current” MY 2017/18, and 37.56% in “old crop” MY
20017/18.
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This “tightness” in “World‐Less‐China” wheat stocks along with tighter exportable supplies in the
European Union and the Black Sea region appear to have provided quiet support to World wheat
market prices, but has not as of yet caused any major rallies.
G. 2019 U.S. Winter Wheat Conditions
Prospects for the 2019 U.S. winter wheat crop are mostly “Fair to Good” at this time in the
southern and central plains region of the country. Reports from the USDA National Agricultural
Statistics Service (NASS) in Kansas for the week ending March 17, 2019 indicated that a survey of
observers in the state of winter wheat acreage rated the crop as 5% “excellent”, 44% “good”, 40%
“fair”, 8% “poor”, and 3% “very poor”. In Oklahoma, the HRW wheat crop was rated as 5%
“excellent”, 55% “good”, 35% “fair”, 5% “poor”, and 0% “very poor”. Similarly, in Texas, the HRW
wheat crop was rated as 6% “excellent”, 27% “good”, 44% “fair”, 17% “poor”, and 6% “very poor”.
As the 2019 hard red winter wheat crop breaks dormancy and begins spring growth in late March‐
early April, the condition in which the crop survived somewhat challenging winter conditions will
become apparent. The USDA’s National Agricultural Statistics Service (NASS) Crop Production
reports first and preliminarily on April 9th, and then especially as the crop is more developed on May
10th, June 11th and July 11th will provide more substantiated information on 2019 U.S. HRW Wheat
production prospects.
H. U.S. Wheat Exports
Export shipments of U.S. wheat have been running behind the pace needed to meet USDA export
projections for U.S. Wheat overall, and for Hard Red Winter (HRW) wheat in particular. According to
USDA Foreign Agricultural Service (FAS) data, through March 14th forward sales of U.S. exports are
still on track to meet USDA forecasts of 965 million bushels (mb) in the “current” 2018/19 marketing
year (MY) – ending on May 31, 2019 (Tables 1‐1a, Figures 9ab‐10ab).
Total shipments to date plus forward sales are projected to have reached 88.1% (850.4 mb) of the
USDA’s forecast on March 14th with 78.8% of the marketing year completed (i.e., 41/52 weeks).
However, actual physical shipments to date of 638.4 mb amount to only 66.1% of the USDA forecast,
with a shipment rate of 29.7 mb per week needed through the end of “current” MY 2018/19 to meet
the USDA target of 965 mb. For the weeks of March 7th and 14th, U.S. Wheat shipments of 27.3 mb
and 13.1 mb were behind the weekly average of 29.7 mb needed to meet the USDA’s projections by
May 31, 2019. Shipments of U.S. HRW Wheat are in a similar situation, as strong weekly shipments
are still needed through August 31st to attain the USDA U.S. export projection of 320 mb in “current”
MY 2018/19.
I. U.S. Wheat Supply‐Demand & Prices
The USDA released their wheat production, supply‐demand, and price projections for the U.S. for
“current” MY 2018/19 in the March 8th WASDE (World Agricultural Supply and Demand Estimates
report) (Tables 1‐1a). The USDA also released its preliminary projections for the “new crop” MY
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2019/20 at it’s February 22nd Agricultural Outlook Conference (Table 1a). The “new crop” 2019/18
marketing year for wheat represents the June 1, 2019 through March 31, 2020 period. These
preliminary forecasts indicate USDA’s expectations of 1%‐2% lower planted acreage in 2019,
approximately 1% higher production and total use in “new crop” MY 2019/20, and marginally higher
prices.
U.S. Wheat Acreage
U.S. wheat plantings are forecast to be 47.000 million acres (ma) in 2019, down 1.67% from
47.800 million acres (ma) in 2018, up from the record low of 46.052 ma in 2017, but down from
50.119 ma in 2016 (Tables 1‐1a, Figures 5‐6). Harvested acres are forecast at 39.800 ma in 2019
(84.68% harvested‐to‐planted). This amount of harvested acres is projected to be up 0.5% from
39.605 ma in 2018 (82.86% harvested‐to‐planted), and the record low of 37.555 ma (81.55%
harvested‐to‐planted) in 2017, but still down from 43.848 ma in 2016 (87.49% harvested‐to‐planted)
(Tables 1a‐b, Figure 6). The 2019 U.S. average wheat yield is forecast to be 47.8 bu/ac, up from 47.6
bu/ac in 2018, and 46.4 bu/ac in 2017, but down from the 2016 record high of 52.7 bu/acre (Tables
1a‐b, Figure 7).
The USDA’s Prospective Plantings report will be released by the USDA on Friday, March 29, 2019.
Average pre‐report projections of U.S. total wheat for 2019 seedings total 46.9 million acres (ma),
with estimates ranging from 45.9 to 48.0 ma. Preliminary estimates of 2019 winter wheat seedings
(average = 31.5 ma, 30.6 – 32.5 ma range), spring wheat (average = 13.4 ma, 12.3 – 13.9 ma range),
and durum acreage (average 2.0 ma, 1.6 – 2.3 ma range).
In its Winter Wheat and Canola Seedings report on January, 11, 2019, the USDA projected that
31,290,000 acres of Hard Red Winter (HRW) wheat were seeded in the U.S. in fall 2018 – down from
32,535,000 acres in fall 2017, and 32,726,000 acres in fall 2016 (Figure 6). The upcoming March 29th
Prospective Plantings report will provide more information on HRW wheat seedings, as well as for
soft red winter (SRW), hard red spring (HRS) wheat, and white wheat (WW) varieties.
U.S. Wheat Production & Total Supplies
Wheat production in the U.S. in 2019 is forecast to be 1.902 billion bushels (bb), up from 1.884 bb
in 2018, and up from 1.741 bb in 2017, but down from 2.309 bb in 2016 (Tables 1a‐b, Figure 8).
Projected “new crop” MY 2019/20 total supplies are forecast to be 3.097 bb, down from forecast
“current” MY 2018/19 total supplies of 3.128 bb, and up from 3.079 bb in “old crop” MY 2017/18.
However, 3.097 bb in U.S. total wheat supplies in “new crop” MY 2019/20 would be down from 3.402
bb in MY 2016/17.
U.S. Wheat Total Use
U.S. Wheat total use is projected to by 2.108 bb in “new crop” MY 2019/20, up from a projection
of 2.073 bb in “current” MY 2018/19, and from 1.980 bb in “old crop” MY 2017/18, but down from
2.222 bb in MY 2016/17 (Tables 1a‐b, Figures 9a‐b).
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U.S. Exports
In “new crop” MY 2019/20, U.S. wheat exports are forecast to be 975 million bushels (bu), up
from 965 mb in “current” MY 2018/19, and up from 901 mb in “old crop” MY 2017/18, while being
down from 1.051 bb in MY 2016/17 (Tables 1‐1a, Figures 9a‐b, & 10a).
CommentaryKSU: U.S. wheat exports fell to 47‐year lows of 778 mb and 864 mb in MY 2015/16
and MY 2014/15, respectively, down to levels just marginally above those pre‐“Russian Grain Deal”
levels in 1972. This is more evidence of the only marginally competitive position that U.S. wheat
exports find themselves in among foreign export competitors in recent years.
U.S. Food Use
Food Use of U.S. wheat is projected to be 980 million bushels (mb) in “new crop” MY 2019/20, up
marginally from 965 mb in “current” MY 2018/19, from 964 mb in “old crop” MY 2017/18, and 949
mb in MY 2016/17 (Table 1‐1a, Figure 9ab).
U.S. Feed & Residual Use
Feed & Residual Use of U.S. wheat is projected to be 90 mb in “new crop” MY 2019/20, up from
80 mb in “current” MY 2018/19, up from 51 mb in “old crop” MY 2017/18, but less than 160 mb in
MY 2016/17 (Table 1‐1a, Figure 9ab).
CommentaryKSU: With the USDA’s forecast of moderately tighter U.S. corn and total feedgrain
supplies along with moderate support for feedgrain prices, they are anticipating that feeding wheat to
livestock will become more marginally more economical in “new crop” MY 2019/20 than in the current
marking year.
U.S. Ending Stocks & % Stocks‐to‐Use
With an adjustment by KSU for new WASDE report information, USDA projected “new crop” MY
2019/20 ending stocks to be 989 mb (46.92% S/U). This projection is down from “current” MY
2018/19 ending stocks of 1.055 bb (50.89% S/U), both of which are down from 1.099 bb in “old crop”
MY 2017/18 (55.50% S/U), and from 1.181 bb in MY 2016/17 (53.14% stocks/use) (Tables 1‐1a,
Figures 11 & 12).
CommentaryKSU: This projection of 989 mb in U.S. wheat ending stocks in “new crop” MY 2019/20
is the lowest in four (4) years – since 976 mb (49.99% stocks/use) in MY 2015/16. However, it remains
that until either a major wheat production shortfall or what could be an “anticipated” surge in U.S.
wheat exports occurs, the U.S. will likely remain in the current “large supply – large ending stocks”
situation.
U.S. Wheat Prices
United States’ wheat prices are projected to be $5.20 /bu in “new crop” MY 2019/20, up from the
midpoint of $5.15 /bu in the range of $5.10‐$5.20 /bu in “current” MY 2018/19. This would be up
from $4.72 /bu in “old crop” MY 2017/18, from $3.89 in MY 2016/17, and $4.89 /bu in MY 2015/16,
but still down from $5.99 /bu in MY 2014/15 (Tables 1‐1a, Figures 11 & 12).
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J. “Alt” KSU Scenario for U.S. Wheat S/D in “New Crop” MY 2019/20
To represent possible alternative outcomes from the USDA’s March 8th WASDE and February 22nd
Agricultural Profitability Conference projections. One potential KSU‐Scenario for U.S. wheat supply‐
demand and prices is presented in comparison to the USDA forecast for “new crop” MY 2019/20
(Tables 1‐1a & Figure 11).
USDA Scenario (50% probability): This scenario assumes:
2019 U.S. Planted Acres …
May 7, 2019
Grain Market Outlook
Overall World Wheat Market Situation
Prospects for continued large World wheat supplies and ending stocks, ongoing weakness in U.S. wheat
export shipments, and declining prospects for future U.S. wheat export sales have been the main causes of
this downtrend in U.S. HRW wheat prices. A general “malaise” in U.S. grain markets and grain prices may also
be having a spillover impact on wheat markets. “Malaise” is defined as “a general feeling of discomfort, illness, or
uneasiness whose exact cause is difficult to identify.”
The current ongoing, large ending stocks situation that exists in the U.S. and World wheat markets has
developed over the last 5‐6 years. This situation extends back to the historically important “short crop / tight
stocks” situation that occurred in the 2012/13 marketing year. Prior to that, the last “watershed” event in U.S.
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and World wheat markets were the record tight supply‐demand 2007/08 marketing year for the U.S. and
World wheat market.
A combination of market factors have all worked together to limit any improvement in U.S. wheat exports
in “current” MY 2018/19 and any significant price improvement in current U.S. wheat markets. These include:
#1) Large World carryover ending stocks from “old crop” MY 2017/18 which became “beginning stocks” in
“current” MY 2018/19;
#2) Successful wheat crops in many other exporting and importing countries in the World; and
#3) The willingness of the Black Sea Region countries (i.e., Russia, Ukraine, Kazakhstan) to sell down their
domestic reserve stocks to maintain their export market shares.
The selling off of domestic inventories has allowed Russia, Ukraine and Kazakhstan maintain their export
market shares in “current” MY 2018/19. However, this strategy also makes them more vulnerable to any
repeated crop shortfalls that could occur in “new crop” MY 2019/20 – which will begin on June 1, 2019. The
risk of this action by Russia and other countries is that by deliberately allowing their domestic stocks to decline
below normal levels in this marketing year they place themselves at risk to the effect of unforeseen short
crops and tight supply situation in the future. As a result, they and the broader global wheat export market
are more vulnerable to market volatility and supply‐demand disruptions because of their reduction in
protective “buffer” carryover ending stocks.
4 …
September 5, 2017
Grain Market Outlook
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.
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January 31, 2013
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June 13th
$7.02 Low
June 12th
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eventually impact 2014 World wheat markets if such conditions prolong and cause more pronounced crop
damage in coming weeks and months (such as occurred in both 2010 and 2012 in that region of the World).
“Next crop” or “new crop” JULY 2014 Kansas City wheat futures prices have responded to the release of
the May 9th USDA reports by trading generally lower. JULY 2014 CBOT Kansas City wheat efutures prices
opened at $7.28 on Wednesday, June 11th – the day of the release of the USDA reports at midday (i.e., 11 a.m.,
central time), and traded in a low‐high range of $7.03 ¼ to $7.31 ¼ during the session before closing $0.21 ¾
lower for the day at $7.04 ¼ /bu (Figure 1). On Thursday (June 12th) and Friday (June 13th), JULY 2014 Kansas
City wheat efutures prices traded in the range from a low of $7.02 on June 12th up to a high of $7.19 ½ on June
13th, before closing at $7.13 ¼ on Friday, June 13th – up $0.07 ¼ per bushel from the previous trading day.
Longer term, after trading at a low of $5.99 ¾ on January 29th, electronic July 2014 Kansas City Hard Red
Winter Wheat futures prices trending sharply higher up to $7.94 ¼ on March 20th, and up to $8.55 ½ on May
6th. Since then, July 2014 Kansas Wheat futures have trended lower, trading as low as $7.02 on Jto since.
Futures trended generally higher since the low, moving as high as $8.55 ½ on May 6th prior to the lower closes
following the May 9th USDA reports.
I‐C. U.S. Wheat Production
U.S. All Wheat Acreage, Yield & Production
Following the results of March 31st USDA NASS Prospective Plantings Report, the USDA projected that
2014 U.S. wheat total planted acreage would be 55.815 million acres (ma), down from 56.156 ma in 2013 and
55.666 ma in 2012, but up from 54.409 ma in 2011 (Table 1 and Figures 1‐2). In addition, in the WASDE
report the USDA projected 2014 U.S. wheat harvested acreage to be 45.9 ma, up from 45.157 ma in 2013,
down from 48.921 ma in 2012, and up from 45.705 ma in 2011. Updated estimates of U.S. wheat planted and
harvested acreage will be given in the USDA NASS Acreage report to be released on Monday, June 30, 2014.
The forecast 2014 proportion of harvested‐to‐planted acreage for all U.S. wheat is projected to be 82.2%,
up from 80.4% in 2013, but down from 87.9% in 2012 and 84.0% in 2011. The proportion of harvested‐to‐
planted U.S. wheat acreage in 2013 of 80.4% was the lowest since 81.6% in 2006 and 76.0% in 2002.
The projected 2014 U.S. average wheat yield of 42.3 bushels per acre (bu/ac) is down 0.4 bu/ac from May,
and down from the record high of 47.2 bu/ac in 2013, the previous records of 46.3 bu/ac in 2012 and 2010,
and 43.7 bu/ac in 2011 (Table 1 and Figure 3). The USDA projected 2014 U.S. wheat production to be 1.942
billion bushels (bb) – down 21 million bushels (mb) from May, and down from 2.130 bb in 2013, 2.266 bb in
2012, and 1.999 bb in 2011 (Table 1).
U.S. Winter Wheat Acreage, Yield, and Production for 2014
In its June 11th USDA Crop Production report the USDA projected U.S. winter wheat planted acreage to be
42.007 million acres (ma). These acres of winter wheat were seeded in the fall of 2013 with the intention of
harvesting them in the summer of 2014. This projection of 42.007 ma planted in the U.S. in 2014 is down from
43.090 ma in 2013, but greater than 41.224 ma in 2012, and 40.646 ma in 2011 (Figure 1). As indicated above,
updated estimates of U.S. winter wheat planted and harvested acreage will be given in the USDA NASS
Acreage report to be released on Monday, June 30, 2014. Winter wheat harvested acreage in the U.S. in 2014
is projected to be 32.572 ma – with an implicit 2014 U.S. winter wheat percent harvested‐to‐planted acres of
77.5%. This compares to U.S. winter wheat harvested acreage in 2013 of 32.402 ma – with an implicit 2013
U.S. winter wheat percent harvested‐to‐planted acres of 75.2%. The extreme drought conditions and freeze
Page | 4
damage that have occurred this past fall and winter in the U.S. Great Plains states of Texas, Oklahoma, Kansas,
Colorado and Nebraska have been the primary factors leading to a lower than normal forecast of percent
harvested‐to‐planted acreage in 2014. Even with recent moisture received in parts of Kansas in recent weeks,
it is possible that the carryover impact of earlier wheat crop development problems in these states will cause
the proportion of 2014 harvested‐to‐planted acres to decline even further, possibly even below the 75.2%
level of 2013.
Winter wheat yields in 2014 in the U.S. are projected to be 42.4 bu/ac, down from 43.1 bu/ac in May,
down from the record high of 47.4 bu/ac in 2013. United States’ 2014 winter wheat production is forecast to
be 1.381 bb, down 0.021 bb (21.445 million bushels or ‘mb’) from May, and down from 1.534 bb in 2013. Of
the 2014 total U.S. All Wheat Production of 1.963 bb, 2014 U.S. hard red winter wheat production is forecast
to be 720 mb – down 26 mb from May – but down marginally from 744 mb in 2013. U.S. 2014 soft red winter
wheat production is forecast to be 454 mb, down from 565 mb a year ago – primarily due to lower U.S. soft
red winter wheat planted acreage in 2014. White winter wheat production in the U.S. in 2014 is projected to
be 206 mb, down 3 mb from May, and down from 225 mb in 2013.
U.S. Other Spring & Durum Wheat Acreage, Yield and Production for 2014
The USDA projection of 2014 U.S. other spring wheat planted acreage is equal to the March 31st USDA
Prospective Plantings report forecast of 12.009 ma. Similarly, 2014 U.S. durum wheat planted acreage is
forecast to be 1.799 ma. The USDA’s estimate of 2014 U.S. other spring wheat planted acreage to 12.009 ma is
down from both 12.289 ma in 2012, and 12.394 ma in 2011. The USDA’s estimate of 2013 U.S. durum wheat
planted acreage to 1.799 ma is down from 2.153 ma in 2012, but up from 1.369 ma in 2011. Updated
estimates of U.S. spring and durum wheat planted and harvested acreage will be given in the USDA NASS
Acreage report to be released on Monday, June 30, 2014.
Based on its internal projections that have not been formally released to the public, the USDA World
Agricultural Outlook Board has calculated 2014 U.S. other spring wheat and durum harvested acres using 10‐
year harvested‐to‐planted ratios by state off of its state‐level planted acreage projections. Similarly, spring
wheat and durum wheat yields were estimated using 1985‐2013 yield trends by state (except for durum wheat
in Arizona, California, and Idaho). The combined 2014 production forecast for U.S. spring and durum wheat
together is approximately 560.5 mb, down from 595.4 mb (533.5 mb of other spring wheat, and 61.9 mb or
durum wheat) in 2013.
I‐D. U.S. Wheat Total Supplies
Total supplies of 2.695 bb are projected by the USDA for “new crop” MY 2014/15, resulting from beginning
stocks of 593 mb, projected 2014 production of 1.942 bb, and projected imports of 160 mb (Table 1). Total
supplies of U.S. wheat would be 2.695 bb in MY 2014/15 are down 11 mb from May, down to the lowest
amount of U.S. wheat supplies since the 2006/07 and 2007/08 marketing years. Projected total supplies of
2.695 bb in “next crop” MY 2014/15 is comparable to 2.501 bb in MY 2006/07, 2.620 bb in MY 2007/08, 2.932
bb in MY 2008/09, 2.993 bb in MY 2009/10, 3.279 bb in MY 2010/11, 2.974 bb in MY 2011/12, 3.131 bb in MY
2012/13, and 3.018 bb in “current year” MY 2013/14.
Forecast U.S. wheat beginning stocks of 593 mb in “next crop” MY 2014/15 is up 10 mb from May, and is
down 17.4% from 718 mb beginning stocks in “current” MY 2013/14, and down from 743 mb in MY 2013/14.
This would be the lowest level of U.S. wheat beginning stocks since 306 mb in MY 2008/09 (following the tight
Page | 5
ending stocks situation that developed in MY 2007/08. This projected decline in U.S. wheat ending stocks into
the “new crop” 2014/15 marketing year is a continuance of the steadily increasing tightness of U.S. wheat
supplies that has occurred over the last four marketing years (since the recent high in beginning stocks of 976
mb in MY 2010/11).
Projected U.S. wheat imports of 160 mb for “new crop” MY 2014/15 would be the second highest amount
on record, down from the record high of 170 mb in “current” MY 2013/14. The next highest amounts since MY
1973/74 have been: 1) 127 mb in MY 2008/09; 2) 123 mb in MY 2012/13; 3) 122 mb in MY 2006/07; and 4) 119
mb in MY 2009/10. Record large 2013 Canadian wheat production of 37.5 million metric tons (mmt) (or
1,377.5 million bushels in 60 lb/bu units) has had and likely will continue to have an impact on U.S. wheat
imports until the 2014 U.S. wheat harvest period. The next largest Canadian wheat crops since 1960 that were
over 30.0 mmt were in 1990 (32.098 mmt), 1991 (31.946 mmt), and 1986 (31.359 mmt). Projected Canadian
wheat production in the “new crop” 2014/15 marketing year is lower – down to 28.5 mmt.
I‐E. U.S. Wheat Total Use & Use by Category
Food Use: Projected U.S. wheat food use of 960 mb in “new crop” MY 2014/15 has been trending steadily
higher over time due to steady growth in the U.S. population and associated food demand for processed
wheat products. This projected amount of 960 mb food use in “new crop” MY 2014/15 is down 10 mb from
May, but up from 950 mb in “old crop” MY 2013/14 (which is also down 10 mb from May), from 945 mb in MY
2012/13, and from 941 mb in MY 2011/12 (Table 1 and Figure 4).
Seed Use: Forecast seed use of 76 mb in “new crop” MY 2014/15 is up marginally from 74 mb in “old crop”
MY 2013/14, and from 73 mb in MY 2012/13, but equal to 76 mb in MY 2011/12 (Table 1 and Figure 4). The
USDA forecast U.S. wheat seed use of approximately 76 mb for “next year” MY 2014/15 extends the historic
pattern of the existence of a relatively small but inelastic demand for U.S. wheat seed. Seed wheat demand is
driven primarily by the amount of U.S. wheat seed needed to plant adequate U.S. wheat acreage each year
(from on‐farm and commercial seed sources) and also the need for adequate wheat seed stocks to cover
possible seed wheat production shortfalls.
Exports: Projected U.S. wheat exports of 925 mb in “new crop” MY 2014/15 (down 25 mb from May) are
down sharply from 1.180 bb for “old crop” MY 2013/14 (which is down 5 mb from May). This amount of U.S.
wheat exports would be the lowest since 879 mb in MY 2009/10. The anticipation of lower available supplies
of U.S. hard red winter wheat for export sales in “new crop” MY 2014/15, along with the likelihood of more
than adequate foreign wheat supplies for export trade purposes, are factors in this lower U.S. export
projection of 925 mb in 2014/15 (Table 1 and Figure 4). That said, the risk of lower “new crop” MY 2014/15
Australian wheat production with the forecast onset of an El Nino weather pattern in coming months, as well
as the uncertain impact on World wheat trade in the future from geopolitical conflicts (between Russian and
Ukraine) and dry weather in parts of the Black Sea Region (Russia) are factors that may eventually support
increased U.S. wheat exports and higher World wheat prices in the new crop marketing year.
In the very beginning week of the “new crop” 2014/15 marketing year (starting on June 1st), as of June 5th
cumulative U.S. wheat export shipments totaled 12.067 mb, which is 1.3% of the USDA’s projected “new crop”
MY 2014/15 exports of 925 mb with 1.9% (1 of 52 weeks) of the marketing year completed. “New crop” MY
2014/15 ends on May 31, 2015. United States’ export shipments will need to average 17.9 mb per week
through the remainder of the “new crop” 2014/15 marketing year to attain the USDA’s June WASDE projection
of 925 mb. Wheat export shipments by the U.S. of 12.067 mb occurred during the week ending June 5th, were
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“behind pace” to meet the USDA forecast of 925 bb in the “new crop” 2014/15 marketing year. (Source: USDA
Foreign Agricultural Service U.S. Weekly Export Sales report ‐ http://apps.fas.usda.gov/export‐
sales/esrd1.html).
However, accounting for unshipped forward sales of exports of 227.7 mb in U.S. wheat for “new crop” MY
2014/15 (that had not yet been shipped as of June 5th), total U.S. wheat shipped plus outstanding shipments
added up to 239.8 mb (i.e., 12.1 mb shipped plus 227.7 mb forward sales with rounding) for “new crop” MY
2014/15. This amounts to 25.9% of the USDA’s projection of 925 mb for “new crop” MY 2014/15 with 1.9% of
the marketing year having already occurred (i.e., 1 of 52 weeks).
Feed & Residual Use: The USDA projected that U.S. feed and residual use would be 160 mb in “new crop”
MY 2014/15, down 10 my from May, and down from 220 mb for “old crop” MY 2013/14, from the recent high
of 388 mb in MY 2012/13, and up marginally from 162 mb in MY 2011/12 (Table 1 and Figure 4). Domestic
U.S. wheat feeding has declined due to sizable 2013 U.S. corn and grain sorghum crops – leading to more
abundant U.S. feedgrain supplies at lower market prices than during the “drought stricken” MY 2012/13.
Subsequently, there is now lower cross‐market demand for U.S. wheat in livestock feed rations – in both
domestic and foreign markets.
Total U.S. Wheat Use: Summing the categories together, total use of U.S. wheat for “new crop” MY
2014/15 is projected to be 2.121 bb, down 45 mb from May (Table 1 and Figure 4). U.S. wheat total use of
2.121 bb in “new crop” MY 2014/15 would be the 3rd smallest amount of U.S. wheat total usage over the last
decade (since MY 2005/06). Total U.S. wheat u …
July 17, 2017
Grain Market Outlook
Page | 2
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 p …
January 1, 2006
Animal ID & Traceability
exporter
in the world in 2005 (behind only Brazil).
Because … liability recourse in
the event of a legal claim by future …