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May 1, 2003
Assessing Business Opportunities
December 31, 2016
Grain Market Outlook
zilian feedgrain harvest and lack of exportable supplies in earlier in 2016, as well as other World
coarse grain market factors, and 4) the always present possibility of broader U.S. and Foreign economic and/or
financial system disruptions impacting grain, energy, and other commodity markets in 2017.
For example, U.S. financial policy announcements by the U.S. Federal Reserve in 2017 could lead to increases
in U.S. interest rates and the value of the U.S. dollar relative to other World currencies, which could in turn
have a negative impact on U.S. grain sorghum exports. Also, World geo‐political events could provide
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unanticipated “shocks” to U.S. and World energy and grain markets. The impact on the direction of U.S. and
World grain sorghum and corn markets from these potential disruptions is difficult to anticipate or predict.
USDA Supply‐Demand Forecast for “Current” MY 2016/17: The USDA has projected of 2016 U.S. sorghum
plantings of 6.761 ma, harvested acres of 6.045 ma, record high yields of 76.5 bu/ac (vs 76.0 bu/ac in 2015 and
67.6 bu/ac in 2014), resulting in a 2016 U.S. grain sorghum production is forecast to be 462 mb – down from
597 mb in 2015, but above 433 mb in 2014, and 392 mb in 2013.
With forecast “current” MY 2016/17 total supplies of 500 mb, total use of 465 mb, and projected ending stocks
of 35 mb (7.48% S/U), U.S. grain sorghum prices are projected by the USDA to be in the range of $2.80‐$3.30
(midpoint = $3.05 /bu). Ending stocks of 35 mb (7.48% S/U) in “current” MY 2016/17 compare to 37 mb
(6.28% S/U) in MY 2015/16, and 18 mb (4.10% S/U) in MY 2004/05. United States grain sorghum prices of
$3.05 /bu in “current” MY 2016/17 continue the downward trend from $3.31 /bu in MY 2015/16, $4.03 in MY
2014/15, $4.28 in MY 2013/14, and the record high of $6.33 /bu in the drought year of MY 2012/13.
USDA Supply‐Demand Forecast for “Next Crop” MY 2017/18: With early USDA projections of 2017 U.S.
sorghum plantings of 6.300 ma (down 461,000 acres), harvested acres of 5.400 ma (down 645,000 acres),
projected yields of 67.1 bu/ac (vs the record high of 76.5 bu in 2016), 2017 U.S. grain sorghum production is
forecast to be 362 mb – down from 462 mb in 2016, and 597 mb in 2015.
With forecast “next crop” MY 2017/18 total supplies of 397 mb (down from 500 mb last year and 620 mb the
year before), total use of 365 mb (down from 465 mb last year and 583 the year before), and projected ending
stocks of 32 mb (8.76% S/U) – down from 35 mb (7.48% S/U) in “current” MY 2016/17 – U.S. sorghum prices
are projected by the USDA to average $3.10 /bu.
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 2017 U.S. grain sorghum and corn production will drive the U.S.
grain sorghum market in “next crop” MY 2017/18.
World Coarse Grain Supply‐Demand: Record high World coarse grain production of 1,329.35 million metric
tons (mmt) is projected for “current” MY 2016/17, up 6.4% from 1,249.65 mmt in MY 2015/16, and up 1.8%
from 1,306.1 mmt in MY 2014/15. Record high World coarse grain total supplies of 1,574.15 mmt are
projected for “new crop” MY 2016/17, up from 1,495.0 mmt in MY 2015/16, and from 1,517.2 mmt in MY
2014/15. “Coarse grains” include grain sorghum, corn, barley, oats, rye, millet, and mixed grains.
World coarse grain exports of 185.2 mmt are projected for “new crop” MY 2016/17, up 12.4% from 164.8 mmt
in MY 2015/16, and down 0.5% from 186.1 mmt in MY 2014/15. Projected record high World coarse grain
ending stocks of 254.9 mmt (19.3% S/U) in “new crop” MY 2016/17 are up from 244.8 mmt (19.6% S/U) in MY
2015/16, but down from 245.4 mmt (19.3% S/U) in MY 2014/15.
Although World coarse grain ending stocks are projected to be a record high in “new crop” MY 2016/17 at
254.9 mmt, World coarse grain percent ending stocks‐to‐use in “new crop” MY 2016/17 are forecast to
actually decline marginally to 19.3% ‐ indicative that strong World demand for coarse grains at low prices is
expected to continue – especially in Europe where grain production has been hampered by extreme weather
conditions in the last year.
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May 19, 2017
Grain Market Outlook
for sale through the winter into at least early‐spring and some into summer 2017. Second,
anticipation of continued strong use of 2016 crop U.S. corn for domestic U.S. ethanol production and livestock
feeding through spring‐summer 2017. Third, at least moderate continued strength in U.S. corn exports – at
least until what is forecast to be a sizable 2nd crop of corn from South America becomes available on global
markets during Summer 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 have the potential to provide “shocks” to U.S. and World energy and grain
markets – with the impact on the direction of U.S. and World corn markets being difficult to anticipate
depending on which countries may be involved and their role in global corn export trade.
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USDA Supply‐Demand & Price Forecast for “Next Crop” MY 2017/18
Early USDA projections are for 2017 U.S. corn plantings of 89.996 million acres or ‘ma’ (down 4.0 ma).
Harvested acres of approximately 82.4 ma (down 4.35 ma) are forecast, with projected yields of 170.7 bu/ac
(vs the record high of 174.6 in 2016), leading to a 2017 U.S. corn production is forecast of 14.065 bb – down
from the record high of 15.148 bb in 2016.
The USDA forecast “next crop” MY 2017/18 total supplies to be 16.410 bb – down 530 mb from last year’s
record high. Total use is forecast at 14.300 bb – down 345 mb from last year’s record high. Ending stocks are
projected to be 2.110 bb (14.76% S/U) – down from 2.295 bb (15.67% S/U) in “current” MY 2016/17. United
States’ corn prices are projected to average $3.40 /bu (range of $3.00‐$3.80). This equals the midpoint
estimate of $3.40 /bu from “current” MY 2016/17. This scenario is given a 45% likelihood of occurring by KSU
Extension Ag Economist D. O’Brien.
Alternative KSU Supply‐Demand & Price Forecast 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 May 10, 2017 WASDE report 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, 15.901 bb total
supplies, 14.255 bb total use, 1.646 bb ending stocks, 11.55% S/U, & $3.95 /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, 15.715 bb total supplies,
14.155 bb total use, 1.560 bb ending stocks, 11.02% S/U, & $4.10 /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, 80.535 ma harvested, 150.0 bu/ac yield, 12.080 bb production, 14.375 bb total supplies,
13.460 bb total use, 915 million bushels (mb) ending stocks, 6.80% S/U, & $6.00 /bu U.S. corn average price for
“next crop” MY 2017/18;
World Corn Supply‐Demand: World corn production of 1,033.7 million metric tons (mmt) is projected for
“next crop” MY 2017/18, down 3.0% from the record high of 1,065.1 mmt in “current” MY 2016/17, but still up
6.8% from 968.1 mmt in MY 2015/16. Near record World corn total supplies of 1,257.6 mmt are projected for
“next crop” MY 2017/18, down marginally from the record high of 1,278.1 mmt in “current” MY 2016/17, but
up from 1,177.5 mmt in MY 2015/16.
World corn exports of a near record 151.9 mmt are projected for “next crop” MY 2017/18, down 4.2% from
the record high of 158.6 mmt in MY 2015/16, and up 26.6% from 119.95 mmt in MY 2015/16. Projected World
corn ending stocks of 195.3 mmt (18.4% S/U) in “next crop” MY 2017/18 are down from the record high 223.9
mmt (21.3% S/U) in “current” MY 2016/17, and from 212.4 mmt (22.0% S/U) in MY 2015/16.
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
May 10th USDA Crop Production & WASDE Reports
On May 10th the USDA World Agricultural Outlook Board (WAOB) released its May 2017 World
Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World corn supply‐demand
and price projections for the 2015/16, “current” 2015/16, and “next crop” 2017/18 marketing years (MY) for
corn. The “next crop” MY 2017/18 for U.S. corn will begin on September 1, 2017 and will last through August
31, 2018. Earlier, on March 31st, the USDA National Agricultural Statistics Service (NASS)
(https://www.nass.usda.gov/) had 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. Planted
acreage estimates from the Prospective Plantings report were used by the USDA WAOB to develop the May
10th projection of 2017 U.S. corn production in the WASDE report. The grain stocks estimates released on
March 31st were used to calculate U.S. corn livestock feed and residual usage in “current” MY 2016/17.
Following its normal procedures, the next supply‐demand and price forecasts for “next crop” 2017/18
from the USDA will be released in the June 9, 2017 USDA WASDE report.
CME JULY 2017 & DECEMBER 2017 Corn Futures Trends
JULY 2017 CME Corn Futures
Following a low of $3.40 ¼ on August 31, 2016, JULY 2017 Chicago Mercantile Exchange (CME) corn
futures prices trended up to a high of $3.81 ¾ on October 20, 2016 (Figure 1). Following that high, JULY 2017
corn futures prices declined to a low of $3.57 ¼ on December 1, 2016, before moving to an eventual high of
$3.93 ¾ on February 16, 2017. Since then, JULY 2017 corn futures traded in the range from lows $3.61 ¾ on
March 27th and $3.60 ¾ on April 21st to highs of $3.79 ¼ on April 3rd, $3.79 ¼ on April 13th, and $3.79 on May
1st, before closing at $3.71 ½ on May 17, 2017.
DECEMBER 2017 CME Corn Futures
In a similar trading pattern to JULY 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 ¼ 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 and $4.04 on February 28th. Since then, DECEMBER 2017 corn futures traded in the range
from lows $3.78 ¼ on March 27th and $3.79 ¼ on April 21st to highs of $3.95 on April 3rd, $3.95 ¾ on April 13th,
and $3.95 ¾ on May 1st, before closing at $3.89 on May 17, 2017.
CME Corn Futures 2017 Contract Spreads
The total futures carrying charge or “term spread” between JULY 2017 and SEPTEMBER 2017 corn futures
on Wednesday, May 17th was $0.07 ¾ per bushel (i.e., $3.79 ¼ for SEPTEMBER 2017 Corn less $3.71 ½ for JULY
2017 Corn), or $0.03875 per bushel per month. This compares to commercial grain storage charges in Kansas
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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.
Figure 1. JULY 2017 & DECEMBER 2017 CME Daily Corn Futures Price Charts (as of May 17, 2017)
ne …
September 21, 2017
Grain Market Outlook
s to the USDA projection are
presented for “new crop” MY 2017/18. Each forecast scenario presents the likelihood that exists of higher U.S.
soybean acreage, lower yields and lower production, and higher prices than projected by the USDA in the
September 12, 2017 WASDE report.
A ‐ KSU “New Crop” MY 2017/18 “Lower Yield” Scenario #1) “48.0 bu/ac – 4.278 bb” Scenario (30%
probability) assumes: 89.901 ma planted, 89.116 ma harvested, 48.0 bu/ac yield, 4.278 bb production,
4.648 bb total supplies, 4.226 bb total use, 422 mb ending stocks, 9.99% S/U, & $9.70 /bu U.S. average
soybean price;
B ‐ KSU “New Crop” MY 2017/18 “Very Low Yield” Scenario #2) “45.85 bu/ac – 4.085 bb” Scenario (5%
probability) assumes: 89.901 ma planted, 89.116 ma harvested, 45.85 bu/ac yield, 4.085 bb production,
4.455 bb total supplies, 4.106 bb total use, 349 mb ending stocks, 8.50% S/U, & $10.20 /bu U.S. average
soybean price;
C ‐ KSU “New Crop” MY 2017/18 “Wildcard World Event” Scenario #3) “48.0 bu/ac – 4.278 bb” Scenario (5%
probability) assumes: 89.901 ma planted, 89.116 ma harvested, 48.0 bu/ac yield, 4.278 bb production,
4.648 bb total supplies, 3.861 bb total use, 787 mb ending stocks, 20.38% S/U, & $7.00 /bu U.S. average
soybean price;
Note: The presence of large beginning stocks of 345 mb in “new crop” MY 2017/18 limit the “tightness” of
supply‐demand balances along with prospects for a record large 2017 U.S. soybean crop of 4.431 bb (USDA).
Prospects for such large supplies of soybeans hinders any upward price responses in the KSU Scenarios A, B and
C above.
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July 1, 2011
Financial Management
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