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February 18, 2013
Risk Management Strategies
tdiscounts.
5. Assumes zero basis.
204B Ag Consultants & Kansas … qzero or sales with a zero basis on production plus indemnity …
September 25, 2013
Risk Management Strategies
revenue, and farmers bear the basis risk. Large farms are the …
April 26, 2016
Grain Market Outlook
August 31)
Domestic
Use
Ending
Stocks
Soybean
Production
Soybean
Exports
Page | 7
U.S. soybean ending stocks for 2016 from the USDA 2016 Agricultural Outlook Forum of 440 mb or 12.0 mmt
would be up 378% larger than the record short supply amount of 92 mb in MY 2013/14, and a continuation of
the large U.S. soybean ending stocks situation of “current crop” MY 2015/16.
Clearly one of the key negative factors affecting U.S. soybean market prices is the major increase in U.S.
soybean ending stocks – to the degree that a “buyer’s market” exists in which there is limited motivation for
potential buyers to bid soybean prices sharply higher in an effort to secure soybean supplies for usage.
The Necessity to the Soybean Market of Continued Strength in Chinese Imports
It is widely acknowledged by soybean market analysts that continued growth and/or at least “level
sustainability” of Chinese soybean imports at current and projected levels is necessary for continuance of the
historically high World soybean market prices that have occurred since the 2012/13 marketing year. The USDA
has continued to project that strong growth would occur in Chinese soybean imports in “current crop” MY
2015/16 and beyond. If recent strength in Chinese soybean imports and import demand were to falter or even
to “moderate”, it would have a substantial negative impact on U.S. and World soybean market prices.
Kansas Cash Soybean Market Situation
As a result of a record large fall harvest of soybeans in the United States in 2015 spot cash soybean prices
at a selected local location such as Farmers Grain Coop in Hutchinson, Kansas (Hutchinson being a major grain
market hub in the south central part of the state) had fallen to as low as $8.04 per bushel on October 1, 2015,
and ultimately to $7.82 on both November 10 and 13, 2015, and March 1, 2016. Since March 1st, cash soybean
prices at this location have traded in the range of $7.86 (on March 2, 2016) to $9.38 (on April 21st), with a cash
spot price of $9.06 ($0.81 under basis) offered on Friday, April …
February 11, 2016
Grain Market Outlook
DEC 2016 CME Corn Futures
June 15, 2015 – Feb. 10, 2016
Close = $3.83 ½ on 2/10/2016
MARCH 2016 CME Corn Futures
June 15, 2015 – Feb. 10, 2016
Close = $3.60 ¼ on 2/10/2016
Page | 3
I‐C. Kansas Corn Seasonal Average Price Trends
Seasonal average price index trends for Kansas corn over the last 5, 10, and 15 years indicate definite
seasonal price trends (Figure 2). In the current “new crop” 2015/16 marketing year for U.S. corn, U.S. corn
prices have followed pattern inconsistent with seasonal price patterns over the previous fifteen years in
Kansas. Steady‐to‐declining prices during September‐December 2015 were followed by a sharp decline in
January 2016, differing from the historic pattern of harvest lows in October followed by rising prices
thereafter. Corn prices in the U.S. are forecast to trade sideways through February and March 2016 by USDA
futures and basis history based corn price models, but then to increase strongly through the April‐August
period.
Figure 2. Kansas Corn Seasonal Price Index – Last 15 Marketing Years (MY 1999/00 – “Old Crop” MY
2014/15) plus “New Crop” MY 2015/16 Estimate (Source: KSU www.AgManager.info)
I‐D. U.S. Trade Weighted Dollar Index
Appreciation in the value of the U.S. dollar relative to the currencies of U.S. trading partner countries
began in earnest in August 2014, and continued through January 2016 (Figure 3). A moderate decline occurred
in early February 2016.
This trend in the value of the U.S. trade weighted dollar index is significant to the U.S. corn and other U.S.
grain markets, because a higher U.S. dollar exchange rate relative to other major 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 negatively impacting U.S. grain exports, it is a
very important one – working against U.S. corn being an affordable, competitive alternative export seller in
World grain trade.
…
May 28, 2015
Grain Market Outlook
total). Projected U.S. soybean production of
104.8 mmt (3.850 billion bushels or ‘bb’) in “new crop” MY 2015/16 is projected to be down 3.0% from 108.0
mmt (3.969 bb) in “current” MY 2014/15, but up 10.8% from 91.4 mmt (3.358 bb) in MY 203/14.
United States’ soybean exports have grown from 35.85 mmt in MY 2012/13 (35.7% of World total), to 44.8
mmt (1.647 bb) in MY 2013/14 (39.7% of World total), to 49.0 mmt (1.800 bb) in “current” MY 2014/15 (41.7%
of the World total), with a projection of 48.3 mmt (1.775 bb) in “new crop” MY 2015/16. Projected U.S.
soybean exports of 48.3 mmt in “new crop” MY 2015/16 are projected to be down 1.4% from “current” MY
2014/15, but up 7.8% from MY 2013/14.
The Necessity to the Soybean Market of Continued Strength in Chinese Import Demand
It is widely acknowledged by soybean market analysts that continued growth and/or at least “level
sustainability” of Chinese soybean imports at current and projected levels is necessary for continuance of the
historically high World soybean market prices that have occurred since the 2012/13 marketing year. The USDA
has continued to project that strong growth would occur in Chinese soybean imports in “new crop” MY
2015/16 and beyond. If this recent upward trend in Chinese soybean imports and import demand were to
falter, it would unquestionably have a substantial negative impact on U.S. and World soybean market prices.
Page | 4
As a result of a record large fall harvest of soybeans in the United States in 2014 and another anticipated
large crop in 2015, spot cash soybean prices at Farmers Grain Coop in Hutchinson, Kansas (Hutchinson being a
major grain market hub in the south central part of the state) had fallen to as low as $8.44 per bushel on
September 26, 2015, before moving above $9.00 on October 24, 2015. Cash soybean prices at this location
have traded in the range of $8.86 (on May 26, 2015) to $9.93 (on November 11, 2014 and January 6, 2015)
since then, with a cash spot price of $8.86 ($0.36 under basis) offered on Wednesday, Ma …
February 23, 2015
Grain Market Outlook
United States’ soybean production in “current crop” MY 2014/15 is projected to be up 18.2% over last
year, and up 30.5% over two years ago.
United States’ soybean exports have grown from 35.9 mmt in MY 2012/13 (35.7% of World total), to 44.8
mmt in MY 2013/14 (39.8% of World total), and a projected amount of 48.7 mmt in “current crop” MY
2014/15 (41.6% of the World total). United States’ soybean exports in “current crop” MY 2014/15 are
projected to be up 8.7% over last year, and up 35.9% over two years ago.
The Necessity to the Soybean Market of Continued Strength in Chinese Import Demand
It is widely acknowledged by soybean market analysts that continued growth and/or at least “level
sustainability” of Chinese soybean imports at current and projected levels is necessary for continuance of the
historically high World soybean prices that have occurred since the 2012/13 marketing year. Market analysts
have speculated that Chinese soybean import demand growth may eventually slow due to swine industry
production issues or other broad, systematic economic and/or financial factors within the country. However,
the USDA has continued to project that strong growth would occur in Chinese soybean imports in “current
crop” MY 2014/15 and “next crop” MY 2015/16, and beyond. If this recent upward trend in Chinese soybean
imports and import demand were to falter, it would undoubtably have a substantial negative impact on U.S.
and World soybean market prices.
As a result of a record large fall harvest of soybeans in the United States in 2014, cash soybean prices had
fallen below $9.00 per bushel in late November, but have since moved higher. Central Kansas Terminal cash
bids were in the range of $9.44 ¼ ($0.55 under basis) to $9.54 ¼ ($0.45 under …
December 17, 2014
Grain Market Outlook
rs. Therefore it is still possible that prices may trend lower again sometime before spring,
2015. However, the $3.18 ¼ low attained by the CME DECEMBER 2015 corn contract on October 1st could be a
key point of support for CME MARCH 2015 corn futures prices should such a seasonal price decline occur in
coming months.
The “current crop” MARCH 2015 corn futures market contract initially responded in a neutral‐to‐negative
manner to the information in the December 10th USDA reports, but since then has trended higher. On the day
of the report – Wednesday, December 10th – Chicago Mercantile Exchange (CME) MARCH 2015 corn futures
prices opened at $3.94 ¼ per bushel, and traded in a range of $3.89 ¼ ‐ $3.98 ¼ during the session, before
settling at $3.93 ¾ – down $0.01 ½ for the day (Figure 1). The USDA report findings were publicly released at
approximately mid‐session, i.e., 12:00 noon eastern time (11:00 a.m. central) that day. Since then, MAR 2015
has traded from a low of $3.92 ¼ on Thursday, December 11th to a high of $4.12 ½ on Monday, December 15th
before closing at $4.08 ½ on that same day.
Page | 3
The CME MARCH 2015 corn contract is now the “lead” corn futures contract, representing current grain
market price prospects through mid‐March 2015 – being the futures contract which local basis adjustments
are made off …
March 19, 2014
Grain Market Outlook
arketing year. As a result, “current” MY 2013/14 ending stocks were projected to be 1.456 bb – down 25 mb
from February, and down 336 mb from December 2013, but still up from 821 mb in “last year’s” MY 2012/13.
Projected ending stocks‐to‐use of 10.9% for “current” MY 2013/14 has continued to trend lower on a monthly
basis since a projection of 14.7% in the November 2013 WASDE, but is still up sharply from 7.4% for “last
year’s” MY 2012/13 and 7.9% in MY 2011/12. U.S. average corn prices for “current” MY 2013/14 are forecast
to be in the range of $4.25‐$4.75 / bu, down from a record high $6.89 /bu in “last year’s” MY 2012/13.
USDA U.S. Corn Forecasts for “Next Crop” MY 2014/15: Based on projections from the Feb. 21 USDA
Agricultural Outlook Conference, with small adjustments made in the beginning stocks estimate, forecast 2014
U.S. corn production and “next crop” MY 2014/15 supply‐demand and price scenarios are: 92.0 ma planted,
84.6 ma harvested, 165.3 bu/ac yields, a 13.985 bb 2014 U.S. corn crop, 13.380 bb total use, 2.086 bb ending
stocks, 15.6% S/U, & ≈$3.90 average price per bu.
KSU U.S. Corn Forecasts for “Next Crop” MY 2014/15: KSU projections of 2014 U.S. corn production and “next
crop” MY 2014/15 supply‐demand and price scenarios are: a) KSU “Low Production” Scenario: 20% prob. of
90.0 ma planted, 81.9 ma harvested, 154.4 bu/ac yields, a 12.645 bb 2014 U.S. corn crop, 12.775 bb total use,
1.366 bb ending stocks, 10.7% S/U, & $4.30‐$5.30 ($4.80 average) /bu; b) KSU “Likely Production” Scenario:
60% prob. of 92.5 ma planted, 84.2 ma harvested, 159.4 bu/ac yields, a 13.421 bb 2014 U.S. corn crop, 13.275
bb total use, 1.632 bb ending stocks, 12.3% S/U, & $3.75‐$4.75 ($4.25 average) /bu; and c) KSU “High
Production” Scenario: 20% prob. of 95.0 ma planted, 86.5 ma harvested, 164.4 bu/ac yields, a 14.221 bb 2014
U.S. corn crop, 13.650 bb total use, 2.057 bb ending stocks, 15.1% S/U, & $3.40‐$4.40 ($3.90 average) /bu.
World Corn: World corn total supplies of 1,102 mmt in “current” MY 2013/14 are up from 996 mmt in “last
year’s” MY 2012/13, and up from 1,015 mmt in MY 2011/12. Projected World corn ending stocks of 158.5
mmt (16.8% S/U) in “current” MY 2013/14 are up from 134.7 mmt (15.6% S/U) in “last year’s” MY 2012/13,
and up from 132.8 mmt (15.0% S/U) in MY 2011/12. Corn production in major export competitors Brazil and
Argentina is projected to be lower in the coming year in favor of increased soybean production. Conversely,
corn production in China and Ukraine are projected to be sharply higher in the coming year – injecting a
degree of caution on U.S. corn market prospects for both the remainder of “current” MY 2013/14 and for
“next crop” MY 2014/15. …
May 4, 2015
Grain Market Outlook
in MY 2012/13 (35.7% of World total), to 44.8
mmt in MY 2013/14 (39.7% of World total), and a projected amount of 48.7 mmt (1.790 bb) in “current crop”
MY 2014/15 (41.45% of the World total). Projected United States’ soybean exports of 48.7 mmt in “current
crop” MY 2014/15 are projected to be up 8.7% over last year, and up 35.9% over two years ago.
The Necessity to the Soybean Market of Continued Strength in Chinese Import Demand
It is widely acknowledged by soybean market analysts that continued growth and/or at least “level
sustainability” of Chinese soybean imports at current and projected levels is necessary for continuance of the
historically high World soybean market prices that have occurred since the 2012/13 marketing year. Market
analysts have speculated that Chinese soybean import demand growth may eventually slow due to swine
industry production issues or other broad, systematic economic and/or financial factors within the country.
However, the USDA has continued to project that strong growth would occur in Chinese soybean imports in
“current crop” MY 2014/15 and “next crop” MY 2015/16, and beyond. If this recent upward trend in Chinese
soybean imports and import demand were to falter, it would unquestionably have a substantial negative
impact on U.S. and World soybean market prices.
As a result of a record large fall harvest of soybeans in the United States in 2014, cash soybean prices at
Farmers Grain Coop in Hutchinson, Kansas (Hutchinson being a major grain market hub in the south central
part of the state) had fallen to as low as $8.44 per bushel on October 26, 2015, before moving above $9.00 on
October 24, 2015. Cash soybean prices at this location have traded in the range of $9.00 (on March 17, 2015)
to $9.95 (on January 6, 2015) since then, with a cash spot price of $9.30 ($0.36 under basis) offered on
midmorning o …
March 29, 2016
Grain Market Outlook
Page | 4
I. U.S. Grain Sorghum Market Situation and Outlook
I‐A. March 9th USDA WASDE Report & December 14, 2015 Forecasts
On March 9th the USDA World Agricultural Outlook Board (WAOB) released its March World Agricultural
Supply and Demand Estimates (WASDE) report – containing U.S. grain sorghum and World coarse grain
supply‐demand and price projections for the 2013/14, “old crop” 2014/15, as well as the “current” 2015/16
marketing years. The “current” 2015/16 marketing year for U.S. grain sorghum began on 9/1/2015 and will
last through 8/31/2016. The March 9th USDA WASDE report followed earlier U.S. grain supply‐demand and
price projections for the “next crop” MY 2016/17 provided by the USDA on December 14, 2015, and at the
USDA Agricultural Outlook Forum on February 25‐26, 2016 in Arlington, Virginia.
I‐B. Kansas Grain Sorghum Seasonal Average Price Trends
Seasonal average price index trends for Kansas grain sorghum over the last 15 years indicate definite
seasonal price patterns (Figure 2). In the “current” 2015/16 marketing year for U.S. grain sorghum, price
movements from month‐to‐month have been inconsistent with historic seasonal price patterns that have
occurred over the previous fifteen grain sorghum marketing years in Kansas. Sorghum prices in the U.S. have
declined on a month‐to‐month basis from the beginning of “current crop” MY 2015/16 in Sept. 2015 through
Feb. 2016, and are projected to fall further in March 2016, but then to trend higher from April through August.
Figure 2. Kansas Grain Sorghum Seasonal Price Index: MY 1999/00 – “Old Crop” MY 2014/15 plus
U.S. Estimates for “Current Crop” MY 2015/16 (Source: KSU www.AgManager.info)
Since MY 1999/2000 Kansas grain sorghum prices have typically been weakest during the harvest month of
October, with an average seasonal price index of 93.3% of the unweighted average Kansas sorghum price for
94.1 …