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February 13, 2019
Grain Market Outlook
Introduction – An Overview of the U.S. Corn Market & USDA Reports
Corn Market Overview
While the U.S. and World corn market has adequate supplies at this time, ending stocks have been
trending lower since the 2016/17 marketing year (MY). Market projections from the USDA are for this
“tightening up” to continue through “next crop” MY 2019/20 which begins on September 1, 2019 and will last
through August 31, 2020. By its’ behavior, it is evident that the U.S. corn market continues to have a group
“narrative view” that supplies of U.S. corn will remain plentiful through at least mid‐summer 2019.
Unless a short crop develops in South America in coming months, or there are serious corn planting delays
in April‐May 2019 in the United States – this predominant market narrative that there are“more than
adequate U.S. corn supplies” will continue to limit any major upward movement in U.S. corn prices throughout
Spring, Summer and Fall 2019.
Corn market price expectations in year 2019 are heavily influenced by seasonal grain futures price patterns
over the most recent years and decades. Over the last 20 years the frequency of economically important price
increases in DEC Corn futures from February to November is 25%. This occurred in years 2002 (up $0.20 /bu),
2006 (up $0.44 /bu), 2010 (up $1.47 /bu), 2011 (up $0.31 /bu), and 2012 (up $1.82 /bu). No such increase in
DEC Corn futures from the preceding February to the following November has occurred in the last six (6) years
– since the major U.S. drought and resulting short crop of year 2012. Since year 2012, February averages of
DEC Corn futures have been greater than average prices for the following month of November by $1.26 /bu in
2013, $1.13 in 2014, $0.32 in 2015, $0.37 in 2016, $0.47 in 2017, and $0.28 in 2018.
Consequently (and conversely), 75% of the time over the last two decades the monthly average of DEC
Corn futures during the previous February have been greater than during the following November just ahead
of the DEC Corn futures closing month. Taking all these things together, the “consensus narrative opinion” of
the corn market at this time seems to be that there will NOT be significant corn production problems in either
South America or the United States this year. As a result, DEC 2019 corn futures prices are most likely to end
up equal to or lower than current mid‐February levels near $4.00 per bushel once we get to Fall 2019.
U.S. Corn Market Factors “Taken Together”
Considering all these factors together, the outlook for U.S. corn markets in 2019 will continue to be
“conservative due to large domestic corn supplies, but with upward potential based on prospects for moderate
strength in domestic use and exports due to tighter foreign corn supply‐demand balances”.
The USDA’s Reports on February 8, 2019
On February 8, 2019 the United States Department of Agriculture (USDA) released a set of reports
providing market information that had been “back‐logged” since December 11, 2018 – the last USDA
agricultural market information released before the recent U.S. Federal government shutdown.
Page | 2
The World Agricultural Outlook Board (WAOB) released its World Agricultural Supply and Demand
(WASDE) estimates (https://www.usda.gov/oce/commodity/wasde/) after cancelling the scheduled January 11th report due …
permitted to issue adjusted Schedules K-1 to the partners of the … Report rental activity on Schedule E and no impact on SE income
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July 26, 2018
Grain Market Outlook
tion Prospects: Market expectations for the 2018
U.S. soybean crop are “positive” as of the date of this article in late July 2018. The USDA reports that 2018 U.S.
soybean crop development is ahead of schedule, with 78% blooming on July 22nd in the 18 major states
compared to the 2013‐2017 average of 63% as of July 22nd. Also, 44% of soybeans are blooming in the 18
major states compared to the 2013‐2017 average of 23%. The 2018 U.S. soybean crop is rated to be 70%
Good‐Excellent with 22% Fair, and only 8% Poor‐Very Poor in the 18 major states. This compares to 57%
Good‐Excellent, 29% Fair, and 14% Poor‐Very Poor at the same time in 2017 in these same states.
In the July WASDE report, the USDA projected that the 2018 U.S. soybean crop would be a near record
4.310 billion bushels (bb), down 82 million bushels (mb) from the record high of 4.392 billion bushels (bb) in
year 2017, but up from 4.296 bb in year 2016. The August 10th USDA Crop Production and World Agricultural
Supply and Demand Estimates (WASDE) reports will provide the first in‐the‐field samples and farmer survey
results for the 2018 U.S. soybean crop. There are of course opportunities for surprises to occur in the August
10th reports, which represent the USDA’s estimate of 2018 U.S. soybean crop production prospects near
August 1st.
What is “Unknown” – The Strength of U.S. Soybean Exports Through Fall 2018: The imposition by the
Chinese government of a 25% tariff on U.S. soybean imports into their country has had a decidedly negative
impact on U.S. soybean prices over the past few weeks. However, in terms of actual shipments of U.S.
soybeans at the current time, U.S. soybean exports are still running “on pace” to meet USDA projections for
the “old crop” 2017/18 marketing year ending August 31st.
The USDA Foreign Agricultural Service (FAS) reports that for the week ending July 19th the U.S. shipped
30.3 mb of soybeans for export, down marginally from the pace of 31.2 mb per week to meet the USDA’s
forecast of 2.085 bb in U.S. soybean exports for the “old crop” 2017/18 marketing year ending August 31st
(Figure 8). Total shipments of 1.898 bb through July 19th were 91.0% of the USDA projection of 2.085 bb in
“old crop” MY 2017/18, with 88.5% of the marketing year complete (i.e., 46/52 weeks).
In terms of forward purchases, the USDA reports that an additional 240 mb of wheat have been “bought
ahead” for export as of July 19th. Adding the shipments‐to‐date of 1.898 bb and forward purchases of 0.240 bb
together, total shipments and purchases amount to 2.138 bb, up 2.5% and 53 mb higher than the USDA’s
projection of 2.085 bb for “old crop” MY 2017/18.
Page | 2
As of July 19th a total of 361.2 mb of U.S. soybeans had also been purchased for shipment in the “new
crop” 2018/19 marketing year, beginning on September 1, 2018. This amount of pre‐sales equals 17.7% of the
USDA’s projection of 2.040 bb in U.S. soybean exports in “new crop” MY 2018/19. However, it should be
noted that the USDA lowered its projection of “new crop” MY 2018/19 U.S. soybean exports by 250 mb down
to the 2.040 bb projection in the July 12, 2018 WASDE report in response to U.S.‐Chinese trade actions.
Taken together, prospects for U.S. soybean exports in “new crop” MY 2018/19 have been reduced at this
point‐in‐time – down 10.9% from the June to the July WASDE report by the USDA’s estimates. However, the
current pace of U.S. soybean exports in “old crop” MY 2017/18 have not declined appreciably since the
announcement of the Chinese soybean import tariff.
While U.S. soybean exports in “old crop” MY 2017/18 to China are down 266 mb (down 20.8%) from a year
ago through July 19th, U.S. exports to all other countries in “old crop” MY 2017/18 are up 176.4 mb or 24.8%
over a year earlier. Among the countries that have tangibly increased U.S. soybean imports from a year ago
are some in the European Union (i.e., Germany, the Netherlands, and Portugal), Turkey, Taiwan, Indonesia,
Iran, Israel, Pakistan, Thailand, Vietnam, Egypt, Tunisia, Columbia, Mexico, Cuba, Peru, and Venezuela.
2. Other Factors to Consider in Soybean Market Outlook
Prior to the escalation of the U.S.‐China trade dispute, U.S. soybean market prospects where described as
“neutral‐to‐cautiously optimistic” for the “new crop” 2018/19 marketing year. Now with the uncertainty and
potential negative impacts of 25% soybean import tariffs by China against U.S. soybeans, the “narrative
consensus opinion” of the market has turned pessimistic price‐wise, which has been reflected in “new crop”
NOVEMBER 2018 Soybean futures. NOV 2018 Soybean futures declined from a high of $10.43 ¾ on May 30th
down to a low of $8.46 per bushel on July 17th (Figure 1). Since then, NOV 2018 Soybean futures have
increased moderately to a close of $8.76 on Thursday, July 26th.
There are still other unsettled questions about key U.S. soybean supply‐demand factors that need to be
answered between now and fall harvest 2018. These include: 1) remaining 2018 U.S. soybean production risk
in Summer 2018; 2) expectations of continued strength in U.S. soybean domestic crush and to some degree
exports in coming months; and 3) the possibility of tighter U.S. soybean supplies in terms of reduced ending
stocks and percent ending stocks‐to‐use if a short crop develops in the U.S. this summer.
Looking forward, it is possible that Brazilian soybean producers may respond to the current high prices
they are receiving from Chinese purchases of their 2018 crop by sharply increasing their acreage and
production prospects for 2019. High soybean prices in Brazil have been brought on by the directed focus of
China upon purchasing South American soybeans at the exclusion of the U.S. during the current trade dispute.
It is possible if not likely that farmers in Brazil and Argentina will sharply increase 2019 soybean planted acres,
which with decent yields would result in an even larger 2019 soybean crop than would otherwise be expected
– and more pressure on World soybean market prices.
Planting of the South American soybean crop begins in late fall 2018 here in the United States. This means
that U.S. corn and soybean producers will have some amount of information on 2019 South American crop and
market prospects when they make crop planting decisions in late winter – early spring 2019 here in the United
States. All else being equal, anticipated 2019 South American acreage trends may lead U.S. farmers to lower
their 2019 U.S. soybean plantings and to raise their 2019 U.S. corn plantings.
Page | 3
3. Kansas Cash Soybean Prices & Basis Bids
Cash soybean price bids on Wednesday, July 25th in Central at major terminal elevator locations were in
the range of $7.70 ¾ to $8.01 ¾ per bushel ($0.90 to $0.59 under AUGUST 2018). At Topeka and Atchison in
Northeast Kansas, cash prices ranged from $8.20 ¾ to $8.25 ¾ per bushel ($0.40 to $0.35 under AUGUST
2018). These Central and Northeast Kansas prices on July 25th are down substantially from $9.88 ‐ $9.93
($0.35 to $0.30 under JULY) on May 30th. Cash soybean bids at Kansas soybean processing plants in Emporia
and Wichita on July 25th ranged from $8.40 ¾ to $8.45 ¾ per bushel ($0.15 to $0.20 under AUGUST 2018) –
down substantially from May 30th when prices ranged from $9.86 ($0.37 under JULY) to $9.93 ($0.30 under).
In Western Kansas cash soybean bids at major grain elevators on July 25th ranged from $7.36 to $7.76 per
bushels ($1.30 to $$0.90 under AUGUST 2018), down substantially again from $8.88 ($1.35 under JULY 2018
futures) to $9.23 ($1.00 under) on May 30th.
4. South American Export Competition in “Old Crop” MY 2017/18
Soybean market signals from South American export competitors Argentina, Brazil and Paraguay have
improved in recent months as a result of the U.S.‐China trade dispute (Figure 14). Serious drought had caused
Argentina soybean production to decline by 32.7% from a USDA estimate of 55.0 million metric tons (mmt) in
2017 down to 37.0 mmt in 2018, and cut projected Argentine soybean exports by 55.9% to 3.1 mmt in the “old
crop” 2017/18 marketing year (MY) ending August 31st (Tables 2 & 3). Argentina soybean meal exports are
projected to be 11.7% lower (27.65 mmt) in MY 2017/18, down from 31.3 mmt in MY 2016/17.
However, Brazilian soybean production is projected to be higher – offsetting Argentina’s declines to a
degree. Brazil is projected by the USDA to produce a record high 119.5 mmt of soybeans in year 2018, up 4.3%
from the previous record of 114.5 mmt in year 2017. Brazilian soybean exports are forecast to be 74.65 mmt
in MY 2017/18 (ending August 31st), up 18.2% from 63.1 mmt in MY 2016/17 (Tables 2 & 3). Brazil soybean
meal exports are projected to be 14.1% higher (15.7 mmt) in MY 2017/18, up from 13.8 mmt in MY 2016/17.
Paraguay soybean production is projected to be down marginally – providing a neutral influence to the
market. Paraguay is projected by the USDA to produce 10.0 mmt of soybeans in year 2018 – down marginally
from 10.2 mmt in year 2017. Paraguay soybean exports are forecast to be 6.25 mmt in MY 2017/18 (ending
August 31st), up 2.0% from 6.13 mmt in MY 2016/17 (Tables 2 & 3).
These three South American countries are the main competition in global soybean export markets for the
United States. Argentina, Brazil and Paraguay are forecast to comprise 55.2% (84.0 mmt) of forecast World
soybean exports (152.2 mmt) in the “old crop” 2017/18 marketing year (MY). The U.S. is projected to make up
37.3% (56.7 mmt) of World soybean exports for MY 2017/18, with other countries making up the remaining
7.55% (11.5 mmt) (Table 3).
The trade dispute between the U.S. and China has “pushed” Chinese soybean export purchases toward
Brazil and away from the U.S. at least temporarily until the matter is either settled OR exportable South
American supplies are eventually no longer available in fall 2018. There has been both negative and positive
news coming from these negotiations to date, with final agreements or lack there‐of still to come.
Page | 4
5. U.S. Soybean Supply‐Demand Projections for “Old Crop” MY 2017/18
In the July 12th USDA WASDE report the USDA projected “old crop” MY 2017/18 soybean Total Supplies to
be up marginally from earlier WASDE reports at 4.715 billion bushels (bb) (Table 1 and Figure 6).
Continued strength in U.S. soybean crush resulting from demand for soybean meal for domestic and
foreign livestock feeding has supported domestic U.S. soybean demand (Table 1, Figures 7 & 9ab). Projected
U.S. soybean crush of 2.030 bb in “old crop” MY 2017/18 is a record high – up 15 mb from June and up 129 mb
from MY 2016/17. Strong crush of U.S. soybeans is related directly to strong demand for U.S. soybean meal.
Projected exports of U.S. soybean meal of a record high 13.500 million short tons (mst) in “old crop” MY
2017/18 ending on September 30th are up from 11.580 mst last year – up from the previous record of 13.107
mmt in MY 2014/15. Strong U.S. soybean meal exports in “old crop” MY 2017/18 are a direct result of
shortfalls in Argentina soybean production and soybean meal exports due to drought conditions in early 2018,
and possibly from the U.S.‐China trade dispute and the 25% Chinese tariffs on U.S. soybean imports.
The USDA’s World Agricultural Supply and Demand Estimates (WASDE) report monthly projections of U.S.
soybeans exports for “old crop” MY 2017/18 have declined by nearly 80 mb since January 2018 – down to a
projection of 2.085 bb (while up 20 mb from June) (Table 1, Figures 7 & 9ab). This forecast of 2.085 bb for the
current marketing year ending on August 31st is still the 2nd highest on record, but down from the record high
of 2.174 bb in U.S. soybean exports a year earlier.
Seed usage of U.S. soybeans is projected to be 104 mb in “old crop” MY 2017/18, with Residual use at 32
mb – both down marginally from MY 2016/17.
Total Use of U.S. soybeans was projected to be a record high of 4.251 bb in “old crop” MY 2017/18 – up
from the past record of 4.214 bb in MY 2016/17 (Table 1, Figures 7 & 9ab).
As a result of these supply and use projections for “old crop” MY 2017/18, ending stocks are projected to
be the 2nd highest on record at 465 mb (down 40 mb from June) with percent ending stocks‐to‐use of 10.94% –
both measures being up from 302 mb (7.17% S/U) in MY 2016/17 (Table 1, Figures 9ab & 10‐11). The record
high occurred in MY 2006/07, with 574 mb ending stocks and 18.62% ending stocks‐to‐use.
United States’ soybean prices for “old crop” MY 2017/18 are projected to average $9.35 /bu – down from
$9.47 in MY 2016/17, and comparable to $8.95 /bu in MY 2015/16 (Table 1, Figures 10‐11).
6. U.S. Soybean Supply‐Demand Projections for “New Crop” MY 2018/19
The USDA provided a forecast of U.S. soybean supply, demand, and prices for “new crop” MY 2018/19 In
the July 12th USDA WASDE report. Based on 2018 U.S. soybean production projections 88.557 million acres
(ma) planted, 88.862 ma harvested, and 2018 U.S. soybean average yields of 48.5 bu/ac., the USDA forecast
2018 U.S. soybean production to be 4.310 bb. This 2018 forecast of 4.310 bb would be down from the record
high of 4.392 bb in 2017, and the 2nd highest amount of 4.296 bb in 2016 (Tables 1a‐b, Figures 4‐5‐6).
Total Supplies of U.S. soybeans in “new crop” MY 2018/19 are forecast to be a record high 4.800 bb, based
on 465 mb in beginning stocks, 4.310 bb in production, and 25 mb in imports. This amount is up from the
previous record highs of 4.715 bb and 4.515 bb in U.S. soybean Total Supplies in “old crop” MY 2017/18 and
MY 2016/17, respectively (Tables 1a‐b, Figure 6).
Page | 5
Soybean crush in “new crop” MY 2018/19 is forecast to be a new record high of 2.045 bb (up 45 mb from
June) – to be driven by expected ongoing domestic usage for livestock feed and sharply higher U.S. soybean
meal exports (Table 1a‐b, Figures 7 & 9ab). This would be up 15 mb in U.S. soybean crush from the previous
record of 2.030 bb in “old crop” MY 2017/18.
Exports of U.S. soybeans in “new crop” MY 2018/19 are forecast to decline 45 mb to 2.040 bb – down 250
mb from the June WASDE as a result of the expected impact of U.S.‐China trade tensions (Figures 7‐9). A total
of 361.2 mb of U.S. soybeans have been purchased for shipment in the “new crop” 2018/19 marketing year,
beginning on September 1, 2018. This amount of pre‐sales equals 17.7% of the USDA’s projection of 2.040 bb
in U.S. soybean exports in “new crop” MY 2018/19.
Seed usage of U.S. soybeans is projected to be 103 million bushels (mb) in “new crop” MY 2018/19, with
Residual use forecast at 32 mb – both essentially equal to “old crop” MY 2017/18 (Table 1a‐b, Figures 9ab).
Total Use is projected to be a near‐record high of 4.220 bb – down 205 mb from June, and down from the
previous record high of 4.251 bb last year (Table 1a‐b, Figure 9b).
As a result of these supply and use projections for “new crop” MY 2018/19, ending stocks are projected to
be 580 mb (up 195 mb from June) with percent ending stocks‐to‐use of 13.74% – both up from 465 mb
(10.94% S/U) in “old crop” MY 2017/18 (Tables 1a‐b, Figures 9ab & 10‐11). United States’ soybean prices for
“new crop” MY 2018/19 are projected in the range of $8.00‐$10.50 (midpoint = $9.25 /bu) – all being down
$0.75 /bu from the June WASDE report, and comparable to the midpoint projection of $9.35 /bu in “old crop”
MY 2017/18. This scenario is given a 50% likelihood of occurring by KSU Extension Agricultural Economist D.
O’Brien.
7. Alternative KSU Soybean Forecast Scenarios for “New Crop” MY 2018/19
Three alternative KSU‐Scenarios to the USDA’s forecast for U.S. soybean supply‐demand and prices are
presented for “new crop” MY 2018/19 (Table 1b, Figure 10). These projections show how varying 2018 U.S.
soybean production and use scenarios could affect U.S. soybean supply‐demand and price outcomes in “new
crop” MY 2018/19. Probability‐weights are added to reflect judgements about how likely each scenario is to
occur in “new crop” MY 2018/19, i.e., during the September 1, 2018 through August 31, 2019 time period.
#1 ‐ KSU “Lower 2018 U.S. Soybean Exports” Scenario for “new crop” MY 2018/19: (20% probability):
Assumptions: 88.557 ma planted, 88.862 ma harvested, 48.5 bu/ac yield, 4.310 bb production, 4.800 bb
total supplies, 2.045 bb domestic crush, 1.890 bb exports (down 150 mb from USDA’s forecast), 4.070 bb
total use, 730 mb ending stocks, 17.94% S/U, & $7.75 /bu U.S. soybean average price;
#2 ‐ KSU “Large 2018 U.S. Soybean Production” Scenario for “new crop” MY 2018/19: (15% probability):
Assumptions: 88.557 ma planted, 88.862 ma harvested, 51.0 bu/ac yield (near the record high in year
2016 of 52.0 bu/ac), 4.532 bb production, 5.022 bb total supplies, 2.045 bb domestic crush, 2.150 bb
exports (up 110 mb from USDA), 4.330 bb total use, 692 mb ending stocks, 15.98% S/U, & $8.25 /bu U.S.
soybean average price;
#3 ‐ KSU “Small 2018 U.S. Soybean Production” Scenario for “new crop” MY 2018/19: (15% probability):
Assumptions are: 88.557 ma planted, 88.862 ma harvested, 46.0 bu/ac yield (closer to recent lows of 40‐
44 bu /ac in years 2011‐2013), 4.088 bb production, 4.578 bb total supplies, 1.950 bb domestic crush,
2.000 bb exports, 4.110 bb total use, 468 mb ending stocks, 11.38% S/U, & $9.50 /bu U.S. soybean price;
Page | 6
8. World Soybean Supply‐Demand Prospects
World soybean production of a record high 359.5 million metric tons (mmt) is projected for “new crop” MY
2018/19, up 6.8% from 336.7 mmt in “old crop” MY 2017/18, and up 3.3% from the current record high of
348.1 mmt in MY 2016/17 (Figure 13, Table 2). The “new crop” 2018/19 marketing year begins September 1,
2018 and continues through August 31, 2019. World soybean total supplies of 455.5 mmt in “new crop” MY
2018/19 are forecast to be up 5.1% from 433.4 mmt in “old crop” MY 2017/18, and up 6.3% from 428.6 mmt in
MY 2016/17.
World soybean exports of a 157.3 mmt are projected for “new crop” MY 2018/19, up 3.0% from 152.2
mmt in “old crop” MY 2017/18, and up 6.8% from 147.35 mmt in MY 2016/17 (Table 3). China would be the
key World soybean importer in the coming marketing year, and shows little sign of abating yet in their annual
soybean usage or import increases (Table 4, Figure 15).
Projected World soybean ending stocks of a record high 98.3 mmt (27.7% S/U) in “new crop” MY 2018/19
are up 2.3% from 96.0 mmt (28.3% S/U) in “old crop” MY 2017/18, up from the previous record high 96.7 mmt
(29.7% S/U) in MY 2016/17, and 78.0 mmt (25.8% S/U) in MY 2015/16 (Figures 13 & 16, Tables 8‐9).
Projected Foreign (Non‐U.S.) soybean ending stocks of 82.5 mmt (22.5% S/U) in “new crop” MY 2018/19,
are down 1.1% from 83.4 mmt (22.2% S/U) in “old crop” MY 2017/18, and is down from 88.5 mmt (24.5% S/U)
in MY 2016/17 (Tables 8‐9).
…
May 17, 2019
Grain Market Outlook
Dec. 1, 2018 ‐ S&P 500: +1.09% (Monday, Dec. 3) , U.S. & China agree on a 90‐day halt to new
tariffs. Trump agrees to put off the Jan. 1 scheduled increase on tariffs on $200 billion of
Chinese goods until early March while talks between the two countries take place. China
agrees to buy a "very substantial" amount of U.S. products.
…
March 4, 2025
Precision Ag and Technology Articles
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