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September 29, 2014
Grain Market Outlook
Question: Do these prices represent a fall harvest low?
The downtrend in “new crop” November 2014 soybean futures began arguably on June 30, 2014 when
prices fell from $12.36 with a sharp 1 day decline of $0.70 ¾ per bushel. Then after a time of volatile sideways
movement, NOV 2014 futures began to trend more consistently downward from a high of $11.16 ½ on July 29,
2014. This downtrend continued through August and most of September with prices closing at $9.10 ½ on
September 26, 2014. Following the release of the September 11th USDA reports there has been much
discussion about how “the soybean market is looking for a low” for fall harvest 2014.
The results of the October ‐ November 2014 and the January 2015 USDA Crop Production and WASDE
reports, and the grain market’s reaction to them and potentially other market factors, will be key determinants
as to whether these price levels represent the fall harvest “lows” this year. There are signs that low soybean
futures prices are helping to bring about increased purchases on user‐buyers parts. This is found in a) reports
NOV 2014 CME eSoybean Futures
April 29, 2014 – Sept. 26, 2014
Close = $9.10 ¼ on 9/26/2014
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from the USDA Foreign Agricultural Service (FAS) export data that sizable forward purchases of U.S. soybeans
for later export have occurred, and b) from Commodity Futures Trading Commission data indicating that
commercial longs (i.e., business entities that take “long” or “buy” positions in futures markets to provide price
protection for their eventual purchase the cash product, such as soybean processors and exporters).
Until either a) a large proportion of U.S. soybean producers harvest their crop and put it in storage –
resisting sales of soybeans at sub‐$9.00 cash prices, or b) a significant soybean production threat occurs in
South American production regions during the November 2014 through April 2015 period, there is little that
will stop “new crop” November 2014 soybean futures prices from continuing to trend lower. The market is in
essence waiting for the formation of a general consensus that soybean futures prices have moved low enough
relative to market supply‐demand fundamentals.
I‐D. U.S. Soybean Supply‐Demand
U.S. Soybean Acreage, Yield & Production
The USDA continued to project that 2014 U.S. soybean planted acreage would be a record high 84.839
million acres (ma), up from 76.533 ma in 2013, 77.198 ma in 2012, and 75.046 ma in 2011 (Table 1 and Figure
2). In addition, the USDA projected 2014 U.S. soybean harvested acreage to be a record high 84.058 ma, up
from 75.869 ma in 2013, 76.164 ma in 2012, and 73.776 ma in 2011. The 2014 proportion of harvested‐to‐
planted acreage for all U.S. soybeans is projected to be 99.07%, down marginally from 99.13% in to 2013, but
up from 98.66% in 2012 and 98.3% in 2011.
Soybean Prevented Planting Impacts? It is possible that 2014 U.S. soybean planted and harvested acres
could be adjusted lower due to prevented planting problems that occurred this past spring. Farm Service
Agency (FSA) estimates released in August and September indicated as much as 2.5‐4.0 million acres may have
been designated as “prevented planted”. While questions exist about how these FSA prevented planting data
are to be interpreted, it seems likely that at least a marginal decrease in USDA projections of 2014 U.S.
soybean planted and harvested acreage will occur in the upcoming October, November or January 2015 USDA
NASS Crop Production reports. Such an acreage reduction which could lead to at least a marginal reduction in
2014 U.S. soybean production estimates, and which would in turn lead to adjustments in “new crop” 2014/15
marketing year U.S. soybean supply‐demand balances.
The projected 2014 U.S. average soybean yield of 46.6 bushels per acre (bu/ac) would be a record high,
and is up from USDA projections of 45.4 bu/ac in August, and 45.2 in July. This projection of 46.6 bu/ac in
September is up from 43.3 bu/ac in 2013, the drought‐affected 2012 low yield of 39.8 bu/ac., 41.9 164.7 bu/ac
in 2009, 43.5 bu/ac in 2010, and the previous record of 44.0 bu/ac in 2009 (Table 1 and Figure 3).
Based on these 2014 acreage and yield forecasts, the USDA projected 2014 U.S. soybean production to be
a record high 3.913 billion bushels (bb), up from 3.289 bb in 2013, 3.034 bb in 2012, 3.094 bb in 2011, the
previous record high of 3.329 bb in 2010, and 2.967 bb in 2009 (Table 1).
U.S. Soybean Total Supplies
The USDA estimates that total supplies of U.S. soybeans for “new crop” MY 2014/15 are 4.058 bb – up 87
million bushels or ‘mb’ from August. Total “new crop” supplies of 4.058 bb result from beginning stocks of 130
mb, projected 2014 production of 3.913 bb, and projected imports of 15 mb (Table 1). Over the recent period
of expansion in both corn ethanol production and Chinese soybean import demand, total supplies of U.S.
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soybeans were 3.655 bb in MY 2006/07 (previous record high), 3.261 bb in MY 2007/08, 3.185 bb in MY
2008/09, 3.512 bb in MY 2009/10, 3.495 bb in MY 2010/11, 3.325 bb in MY 2011/12, 3.243 bb in MY 2012/13,
and 3.509 bb in “old crop” MY 2013/14, and now are projected to be a new record high of 4.058 bb in “new
crop” MY 2014/15.
Beginning stocks of 130 mb in “new crop” MY 2014/15 are down 10 mb from the August WASDE, and
down from 141 mb in “old crop” MY 2013/14, 169 mb in MY 2012/13, and 215 mb in MY 2011/12. This
forecast of lower beginning stocks of 130 mb in “new crop” MY 2014/15 is comparable to the low of 112 mb
which occurred in MY 2004/05, and to what is at least a 40 year low of 103 mb in beginning stocks in MY
1977/78.
Imports of 15 mb in “new crop” MY 2014/15 are projected to be down from the record high of 80 mb in
“old crop” MY 2013/14, and down from the 2nd highest amount of 41 mb in MY 2012/13. However, U.S.
soybean imports of 15 mb in “new crop” MY 2014/15 would represent a return to “normal” – being
comparable to the range of 10 – 16 mb in U.S. soybean imports for the MY 2007/08 through MY 2011/12
period, and of U.S. soybean imports of less than 10 mb per marketing year going back to at least MY 1980/81.
U.S. Soybean Use by Category & Total Use
Domestic Crush: Projected U.S. soybean domestic crushings of 1.770 bb in “new crop” MY 2014/15 (up 15
mb from August) are up from 1.730 bb for “old crop” MY 2013/14 (up 5 mb from August), 1.689 bb in MY
2012/13, and from 1.703 bb in MY 2011/12 (Table 1 and Figure 4). The record high amount of U.S. soybean
domestic crushings of 1.808 bb occurred in MY 2006/07, followed closely time and quantity‐wise with 1.803 bb
in MY 2007/08.
U.S. Soybean Exports: Projected U.S. soybean exports of 1.700 bb in “new crop” MY 2014/15 (up 25 mb
from August) would be a record high, up from the current estimated high of 1.645 in “old crop” MY 2013/14
(up 50 mb from August) (Table 1 and Figure 4). United States’ soybean exports were 1.116 bb in MY 2006/07,
followed by 1.159 bb in MY 2007/08, 1.279 bb in MY 2008/09, 1.499 bb in MY 2009/10, 1.505 bb in MY
2010/11, 1.365 bb in MY 2011/12, 1.317 bb in MY 2012/13, the current record high of 1.645 bb in “old crop”
MY 2013/14, and now the projected new record high of 1.700 bb in “new crop” MY 2014/15.
Regarding the current pace of U.S. soybean export shipments and sales, as of September 18th, with 3 of 52
weeks (5.8%) of “new crop” MY 2014/15 complete, 25.5 mb of U.S. soybeans had been shipped for export –
equal to 1.5% of the USDA’s updated projection of 1.700 bb for “new crop” MY 2014/15 (Source: USDA
Foreign Agricultural Service U.S. Weekly Export Sales report ‐ http://apps.fas.usda.gov/export‐
sales/esrd1.html). United States’ export shipments will need to average 34.2 mb per week through the
remainder of the “new crop” 2014/15 marketing year to attain the USDA’s September 11th WASDE projection
of 1.700 bb. This compares to U.S. soybean export shipments of 7.5 mb and 15.3 mb which occurred during
the weeks ending September 11th and September 18th, respectively. As a result, these early, pre‐harvest U.S.
soybean export shipments were “behind pace” to meet the USDA marketing year U.S. forecast of 1.700 bb in
the “old crop” 2013/14 marketing year. However, it is expected that as U.S. soybean harvest progresses in
earnest in coming weeks with increased supplies becoming available for export, that the average weekly pace
of U.S. soybean exports will increase significantly from current levels.
Also as of September 18th an additional 1.004 billion bushels (bb) of U.S. soybeans had been sold for future
export sales in “new crop” 2014/15 marketing year. Adding together 25.5 mb in past shipments plus 1.004 bb
in forward sales amounts to 1.030 bb, or 60.6% of the USDA’s 1.700 bb U.S. soybean export target for “new
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crop” MY 2014/15 in the September 11th USDA WASDE report, with only 5.8% (3/52 weeks) of the marketing
year completed.
This large amount of preharvest export sales are indicative of a type of “pent up” or “anticipated” U.S.
soybean export business that will be reflected in sizable export sales once U.S. soybean supplies become
physically available for shipment in coming weeks.
Seed Use: Forecast seed use of 92 mb in “new crop” MY 2014/15 is down from 99 mb in “old crop” MY
2013/14 (up 4 mb from June), but up from 89 mb in MY 2012/13, and from 90 mb in MY 2011/12 (Table 1 and
Figure 4).
Residual Use: Forecast residual use of 22 mb in “new crop” MY 2014/15 (up 3 mb from August) is up from
(94) mb (i.e., a negative 94 mb) estimated in “old crop” MY 2013/14, and from 8 mb in MY 2012/13. The
appearance of a negative residual number in the U.S. crop supply‐demand balance sheet is a common
occurrence for USDA Quarterly U.S. wheat balance sheets, and occurred previously in recent years in the MY
2011/12 U.S. soybean balance sheet (2) mb. However, the appearance of this large of a negative number for
the residual measurement in “old crop” MY 2013/14 raises questions about the source of measurement error
in the other major supply and demand categories.
USDA’s Anticipated Residual Adjustment: The USDA’s September 30th Quarterly Stocks report is expected
to provide some guidance on how the USDA will rectify this situation. It seems likely that the USDA will make
only minor adjustments in August 31, 2014 ending stocks for the “old crop” 2013/14 soybean marketing year –
leaving them near the 130 mb level projected in the September WASDE report. If this is the case, then the
USDA may choose to increase its projected 2013 production estimate by an amount similar to the indicated
negative residual for “old crop” MY 2013/14, increasing it from 3.289 bb up in the September WASDE to an
adjusted level of approximately 3.383 bb (i.e., 3.289 bb + 94 mb). If this occurs, the USDA’s projections of
ending stocks and percent (%) ending stocks‐to‐use would not change, but 2013 U.S. soybean production and
“old crop” MY 2013/14 total supplies would both increase by the specified amount of the negative residual
(i.e., 94 mb).
Total U.S. Soybean Use: Projected U.S. total use of 3.583 bb in “new crop” MY 2014/15 (up 42 mb from
September) would be a record high, and is up from 3.379 bb in “old crop” MY 2013/14 (up 10 mb from last
month) (Table 1 and Figure 4). Over the last eight (8) marketing years, total U.S. soybean use has been 3.081
bb in MY 2006/07, 3.056 bb in MY 2007/08, 3.047 bb in MY 2008/09, 3.361 bb in MY 2009/10, 3.280 bb in MY
2010/11, 3.155 bb in MY 2011/12, 3.103 bb in MY 2012/13, the current record high of 3.379 bb in “old crop”
MY 2013/14, and now the projected new record high of 3.583 bb in “new crop” MY 2014/15.
U.S. Soybean Ending Stocks, % Ending Stocks‐to‐Use, & Prices
U.S. soybean ending stocks for “new crop” MY 2014/15 are projected to be 475 mb, up 45 mb from the
September WASDE, and up 265% from 130 mb in ending stocks in “old crop” MY 2013/14 (down 10 mb).
Projected “new crop” MY 2014/15 ending stocks of 475 mb would be the largest amount since 449 mb in MY
2005/06, and 574 mb in MY 2007/08, and compares to 205 mb in MY 2007/08, 138 mb in MY 2008/09, 151 in
MY 2009/10, 215 mb in MY 2010/11, 169 mb in MY 2011/12, 141 mb in MY 2012/13, and the estimate of 130
mb in “old crop” MY 2013/14 (Table 1 and Figure 4).
Percent (%) ending stocks‐to‐use of 13.26% forecast for “new crop” MY 2014/15 (up from 12.14% in the
September WASDE) is up from the record low of 3.85% (down from 4.15% in September) now projected by the
USDA for “old crop” MY 2013/14 (Table 1 and Figures 5‐6). Over the last eight (8) years, U.S. soybean %
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ending stocks‐to‐use have been 18.62% in MY 2006/07, 6.71% in MY 2007/08, 4.53% in MY 2008/09, 4.49% in
MY 2009/10, 6.55% in MY 2010/11, 5.36% in MY 2011/12, 4.54% in MY 2012/13, the estimate of 3.85% in “old
crop” MY 2013/14, and now the projection of 13.26% for “new crop” MY 2014/15.
U.S. average soybean prices for “new crop” MY 2014/15 are projected to be $9.00‐$11.00 per bushel
(midpoint = $10.00) – down sharply from $13.00 /bu in “old crop” MY 2013/14 (Table 1 and Figures 5‐6). Over
the last eight (8) marketing years, U.S. soybean prices have been $6.43 per bushel in MY 2006/07, $10.10 in
MY 2007/08, $9.97 in MY 2008/09, $9.59 in MY 2009/10, $11.30 in MY 2010/11, $12.50 in MY 2011/12, a
record high of $14.40 in MY 2012/13, $13.00 for “old crop” MY 2013/14, and now a range midpoint projection
of $10.00 / bu in “new crop” MY 2014/15.
I‐E. KSU U.S. Soybean Supply‐Demand Scenarios for “Next Crop” 2014/15
The USDA is projecting that “new crop” 2014/15 marketing year U.S. soybean prices will be down markedly
from the previous few years, in the range of $9.00‐$11.00 per bushel (midpoint of $10.00). Similarly, the
Kansas State University (KSU) forecasts provided here are decidedly conservative in terms of projected U …
July 15, 2014
Grain Market Outlook
SEPT 2014 CME eCorn Futures
Nov. 13, 2013 – July 14, 2014
Close = $3.81 ½ on 7/14/2014
DEC 2014 CME eCorn Futures
Oct. 17, 2013 – June 17, 2014
Close = $3.88 ¼ on 7/14/2014
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“New crop” DEC 2014 corn futures contract prices also responded in a negative manner to the
information in the July 11th USDA reports. On the day of the report, CBOT DEC 2014 corn futures prices
opened at $3.92 ½ per bushel, and traded as high as $3.94 ¾ and as low as $3.82 ½ during the session, before
settling at $3.84 ¾ – also down $0.08 for the day (Figure 1). On Monday, July 14th DEC 2014 corn futures
prices first opened trade lower at $3.83 ½, trading in a range from a low of $3.80 ¼ to a high of $3.89 ¼, before
closing at $3.88 ¼ ‐ up $0.03 ½ for the day. The low price of $3.80 ¼ was also a record historic low for the
DECEMBER 2014 corn futures contract.
I‐C. U.S. Corn Supply‐Demand
U.S. Corn Acreage, Yield & Production
Following the results of June 30th USDA NASS Acreage report, the USDA projected that 2014 U.S. corn
total planted acreage would be 91.641 million acres (ma), down 50,000 acres from the March 31st USDA NASS
Prospective Plantings Report, and down from 95.365 ma in 2013, 97.155 ma in 2012, and 91.936 ma in 2011
(Table 1 and Figure 2). In addition, the USDA projected 2014 U.S. corn harvested acreage to be 83.839 ma,
down from its June 11 WASDE report projection of 84.3 ma, and down from 87.668 ma in 2013, and 87.365
ma in 2012, but up from 81.446 ma in 2011. The 2014 proportion of harvested‐to‐planted acreage for all U.S.
corn is projected to be 91.49%, down from 91.9% in to 2013, but up from 89.9% in 2012 and 91.4% in 2011.
The projected 2014 U.S. average corn yield of 165.3 bushels per acre (bu/ac) is unchanged from the May‐
June WASDE reports, and would be a record high, up from 158.8 bu/ac in 2013, the drought affected 2012 low
yield of 123.4 bu/ac., and the historic high of 164.7 bu/ac in 2009 (Table 1 and Figure 3). Based on these 2014
acreage and yield forecasts, the USDA projected 2014 U.S. corn production to be 13.860 billion bushels (bb) –
which would be the second highest amount on record, following the record high of 13.925 bb in 2013, 10.780
bb in 2012, 12.360 bb in 2011, 12.447 in 2010, and 13.092 bb in 2009 (Table 1).
U.S. Corn Total Supplies
The USDA estimates that total supplies of U.S. corn for “new crop” MY 2014/15 are 15.136 bb – resulting
from beginning stocks of 1.246 bb, projected 2014 production of 13.860 bb, and projected imports of 30
million bushel (mb) (Table 1). Total supplies of 15.136 bb in “new crop” MY 2014/15 would be a record high,
comparable to 14.362 bb in MY 2007/08, 13.729 bb in MY 2008/09, 14.774 bb in MY 2009/10 (3rd largest),
14.182 bb in MY 2010/11 (4th largest), 13.517 bb in MY 2011/12, 11.932 bb in MY 2012/13, and 14.781 bb in
“current year” MY 2013/14 (2nd highest).
Beginning stocks of 1.246 bb in “new crop” MY 2014/15 are up 100 mb from the June WASDE report, and
up sharply from both 821 mb in “current year” MY 2013/14, and from 989 mb in MY 2012/13. This amount of
beginning stocks is up considerably from the low of 426 mb occurring in MY 1996/97. Imports of 30 mb in
“new crop” MY 2014/15 are the third highest on record, and are projected to be down from 35 mb in “current
year” MY 2013/14 (the 2nd highest), and also down sharply from the record high of 162 mb in MY 2012/13.
These amounts of U.S. corn imports are comparable to 29 mb in MY 2011/12, and 28 mb in MY 2010/11.
U.S. Corn Use by Category & Total Use
U.S. Ethanol Production and Corn Usage: Projected U.S. corn use for ethanol production of 5.050 bb in
“new crop” MY 2014/15 is down from to 5.075 bb in “current year” MY 2013/14 (up 25 mb from the June
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WASDE report), while being up from 4.648 bb in MY 2012/13, and 5.000 bb in MY 2011/12 (Figure 4). Figure 5
shows weekly U.S. oxygenated plant production of fuel ethanol as reported by the U.S. Energy Information
Administration (www.eia.gov) with a calculated estimate of corn use developed by Kansas State University.
Assuming 2.75 gallons of ethanol produced per bushel of corn, these calculations indicate that the equivalent
projected annual rate of U.S. corn used for ethanol production for “current” MY 2013/14 has ranged from
4.638‐5.418 bb on a weekly basis since early September 2013 ‐ the beginning of the “current” 2013/14
marketing year.
Over the period of from September 1, 2013 through July 4, 2014, corn usage for ethanol production has
been on pace to reach 5.050 bb in “current” MY 2013/14, with the period of July 6th through August 31st
through the end of the current marketing year yet to occur. This estimate of 5.050 bb is less than the USDA’s
July 2014 WASDE report estimate of 5.075 bb of corn to be used for ethanol production during “current” MY
2013/14 (which had been raised 25 mb in the July WASDE report).
U.S. Corn Use as Distillers Grains: An estimate of the U.S. corn equivalent amounts of distillers grains
(DDGS) use for direct livestock feeding and exports is provided in Figure 6 – which shows estimated a) DDGS
corn equivalent U.S. domestic livestock feeding, and b) DDGS exports as well as other categories of U.S. corn
usage since MY 1989/90.
This analysis assumes 16.00 pounds of distillers dried grains and solubles (DDGS) per 56 pound bushel of
corn used in ethanol production – following from recent ethanol industry surveys. By these estimates since
MY 2010/11, approximately 1.051‐1.147 bb of U.S. corn equivalent bushel‐weights of DDGS are projected
either to have already been or are to be fed to U.S. livestock during each marketing year– i.e., 1.108 bb in
DDGS corn‐weight equivalents in MY 2010/11, 1.130 bb in MY 2011/12, 1.051 bb in MY 2012/13, 1.147 bb
projected for “current” MY 2013/14, and 1.142 bb in “new crop” MY 2014/15. Over the same five most recent
marketing years, DDGS exports in corn equivalent weights are estimated to range from 277 to 306 mb, with
approximately 301 bb of DDGS‐corn equivalents projected for the “new crop” MY 2014/15 U.S. corn marketing
year.
U.S. Corn Exports: Projected U.S. corn exports of 1.700 in “new crop” MY 2014/15 are down from the
estimate of 1.900 bb in “current year” MY 2013/14, but up sharply from 731 mb in MY 2012/13 – the 40 year
low since MY 1975/76 (Figure 4). According the USDA Foreign Agricultural Service (FAS) weekly export data,
ss of July 3rd, with 44 of 52 weeks (84.6%) of “current” MY 2013/14 complete, 1.542 bb of U.S. corn had been
shipped for export – equal to 81.2% of the USDA’s updated projection for “current” MY 2013/14 of 1.900 bb.
An additional 330 mb of U.S. corn had been sold for future export sales in the “current” 2013/14 marketing
year – prior to August 31, 2014 (the end of “current” MY 2013/14).
Adding together 1.542 bb in past shipments plus 330 mb in forward sales amounts to 1.872 bb, or 98.6% of
the USDA’s 1.900 bb U.S. corn export target for “current” MY 2013/14 in the July 11th USDA WASDE report
with 84.6% (44/52 weeks) of the marketing year completed. The strong pace of combined shipments and
sales motivated the USDA to increase its U.S. corn export projection by 150 mb from 1.750 bb to 1.900 bb back
in the May 9th WASDE report.
In addition, 168 mb of U.S. corn export sales have been reported for the “new crop” 2014/15 marketing
year – beginning September 1, 2014. This amount would equal 9.9% of the USDA’s projection of 1.700 bb for
“new crop” MY 2014/15 before the marketing year has began.
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Non‐Ethanol FSI: Forecast non‐ethanol food, seed and industrial (FSI) use of 1.385 bb in “new crop” MY
2014/15 is equal to 1.385 bb in “current year” MY 2013/14, and compares to 1.405 bb in “last year’s” MY
2012/13, and 1.428 bb in MY 2011/12 (Figure 4).
Feed and Residual Use: Forecast U.S. feed and residual use of 5.200 bb in “new crop” MY 2014/15 is down
50 mb from the June WASDE report, while being up from 5.175 bb for “current” MY 2013/14 and up from
4.326 bb in MY 2012/13. The estimate for “current” MY 2013/14 was lowered 125 mb from the June WASDE
number. These levels of corn use for livestock feeding are somewhat correlated with the amounts of energy
feeds per grain consuming animal units reported by the USDA over the same time period (Figure 4).
Last month’s June Feed Outlook Report (http://www.ers.usda.gov/publications/fds‐feed‐outlook/fds‐
14e.aspx) the USDA Economic Research Service (ERS) indicates that over the MY 2012/13 through “new crop”
MY 2014/15 time period, the total amount of Energy Feeds in the U.S. – including corn, sorghum, barley, oats
and wheat – was estimated to be 125.7 million metric tons (mmt) in MY 2012/13 (87.5% corn), 141.4 mmt in
“current” MY 2013/14 (95.2% corn), and 142.5 mmt in “new crop” MY 2014/15 (93.6% corn). Over this same
three year period, total U.S. Grain Consuming Animal Units were estimated to be 91.8 million in MY 2012/13,
89.7 million in “current” MY 2013/14, and 90.1 million in “new crop” MY 2014/15.
As a result, U.S. Energy Feeds per Grain Consuming Animal Unit was 1.369 metric tons per animal unit
(mt/au) in MY 2012/13, and is estimated to be 1.576 mt/au in “current” MY 2013/14, and 1.582 mt/au in “new
crop” MY 2014/15. As the availability of feed grain and other energy feeds has increased or is expected to
increase from the drought stricken “short crop” year of MY 2012/13 to “current” MY 2013/14, and into “new
crop” MY 2014/15, the amount of energy feeds fed per animal unit and total feed use of U.S. corn has and is
expected to also increase.
Total Use of U.S. Corn for “new crop” MY 2014/15 is projected to be 13.335 bb – down 50 mb from June.
This amount of 13.335 bb in total use for “new crop” MY 2014/15 is down from the record high of 13.535 bb in
“current” MY 2013/14 (also down 100 mb from the June WASDE), but up from 11.111 bb in drought affected
MY 2012/13 (Table 1 and Figures 4 & 6). United States’ total corn use has varied based on available U.S. corn
supplies in recent years, trending from 12.737 bb in MY 2007/08, 12.056 bb in MY 2008/09, 13.066 bb in MY
2009/10 (3rd highest), 13.055 bb in MY 2010/11 (4th highest), 12.528 bb in MY 2011/12, 11.111 bb in MY
2012/13, the record high of 13.535 bb in “current” MY 2013/14, and the projected amount of 13.335 bb in
“new crop” MY 2014/15 (2nd highest).
U.S. Corn Ending Stocks, % Ending Stocks‐to‐Use, & Prices
U.S. corn ending stocks for “new crop” MY 2014/15 are projected to be 1.801 bb – up 75 mb from the June
WASDE. This forecast amount of U.S. corn ending stocks of 1.801 bb in “new crop” MY 2014/15 up from 1.246
bb in “current year” MY 2013/14 – which was raised 100 mb from the June WASDE report (Table 1 & Figure
4). “Current” MY 2013/14 U.S. corn ending stocks of 1.246 bb are less than 1.673 bb of U.S. corn ending stocks
for MY 2008/09, and 1.708 bb in MY 2009/10 – but at least marginally larger than the recent down‐trending
ending stocks figures of 1.128 bb in MY 2010/11, 989 mb in MY 2011/12, and 821 mb in “drought stricken” MY
2012/13.
Projected percent (%) ending stocks‐to‐use of 13.5% in “new crop” MY 2014/15 are up from 12.9% in the
June WASDE report (Table 1 & Figures 7‐8). United States’ corn % ending stocks‐to‐use declined from 13.9%
in MY 2008/09, to 13.1% in MY 2009/10, 8.6% in MY 2010/11, 7.9% in MY 2011/12, and to 7.4% in “drought
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stricken” MY 2012/13, before increasing for the first time in six (6) years to 9.2% in “current” MY 2013/14 (up
from 8.4% in the June WASDE), and now to a projected level of 13.5% in “new crop” MY 2014/15.
U.S. average corn prices for “new crop” MY 2014/15 are projected to be in the range of $3.65‐$4.35 bu/ac
(midpoint = $4.00) (Table 1 & Figures 7‐8) – down from $3.85‐$4.55 (midpoint = $4.20) in the June WASDE
report. Since the beginning of the rapid expansion in U.S. ethanol production in 2006, U.S. corn prices have
moved higher, then lower, and higher again, changing from $3.04 /bu in MY 2006/07, to $4.20 in MY 2007/08,
$4.06 in MY 2008/09, $3.55 in MY 2009/10, $5.18 in MY 2010/11, $6.22 in MY 2011/12, and then up to the
record high of $6.89 in “drought stricken” MY 2012/13. But if the July 11th WASDE report projection holds
true, prices will now have declined for two consecutive years since the $6.89 record high in MY 2012/13, down
to $4.35‐$4.55 (midpoint = $4.45) in “current” MY 2013/14, and again down to $3.65‐$4.35 (midpoint = $4.00)
in “new crop” MY 2014/15. The USDA’s price projection for “current” MY 2013/14 is down from $4.45‐$4.65
(midpoint = $4.55) in the June 2014 WASDE report.
I‐D. KSU U.S. Corn Supply‐Demand Scenarios for “New Crop” MY 2014/15
There seems to be a tendency for early season forecasts by both the USDA and University grain market
economists to project full production scenarios. Looking back, a combination of drought, excessive moisture,
and resulting poor crop development conditions lead to lower than originally expected U.S. corn production in
2010, 2011, and 2012. And although the 2013 U.S. corn crop has ended up being record large, still it is
markedly lower than original early 2013 production forecast of 14.5+ bb.
Projections for 2014 U.S. corn production by the USDA and Kansas State University may very well follow
this same pattern of being overly optimistic – implicitly discounting the possibility of 2014 U.S. corn crop
production problems occurring later in the summer months. For example, KSU forecasts provided here are
decidedly conservative in terms of projected U …
February 5, 2014
Grain Market Outlook
1.631
0
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6
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18
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75
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Total Supply
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March 1
June 1
3.77
4.33
2.68
2.67
1.98
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10.0
12.0
14.0
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‐11
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11
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‐13
20
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‐14
Bil
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ush
els
Marketing Year
Q4: Jun‐Aug
Q3: Mar‐May
Q2: Dec‐Feb
Q1: Sept‐Nov
Page | 6
2013. In addition, the USDA’s projection of 2013 U.S. corn harvested acres was raised to 87.668 ma, up
436,000 acres from December 2013, but still down 1.467 ma from the earlier projection of 89.135 ma in the
2013 September Crop Production report (Table 2 and Figure 4).
The USDA’s January U.S. corn yield projection of 158.8 bu/ac is down from 160.4 bu/ac in November‐
December 2013, but up from 155.3 bu/ac in September, 154.4 bu/ac in August, 156.5 bu/ac in June‐July, and
158.0 bu/ac in May. The January 2014 projection of 158.8 bu/ac is still down from the initial USDA projection
of 163.6 bu/ac made by the USDA at its February 22, 2013 Outlook Forum (Table 2 and Figure 5).
Projected 2013 U.S. corn production of 13.925 bb is down 64 mb from November‐December 2013, but
would still be a record high, and up 3.145 bb or 29% from 10.780 bb in 2012, and up from 12.360 bb in 2011
(Table 2). The USDA’s estimate of forecast accuracy in the USDA NASS January Crop Production report
projection of 13.925 bb – as stated in the January 10th WASDE report ‐ indicates a 67% confidence interval of
final 2013 U.S. corn production being within a +/– 0.5% range of 13.855 to 13.995 bb. Similarly, a 90%
confidence interval for the January 2014 U.S. corn production forecast would be within a +/– 0.8% range of
13.814 to 14.036 bb. If changes are eventually to be made in the projection of 2013 U.S. corn production, they
may not be made until the 2014 Crop Production Summary in January 2015.
U.S. Corn Total Supplies in MY 2013/14
The USDA estimates that total supplies of U.S. corn for MY 2013/14 are 14.781 bb – down 61 mb from
December. The decrease in projected MY 2013/14 total supplies resulted from beginning stocks of 821 mb
(down 3 mb), projected 2013 production of 13.925 bb (down 64 mb), and projected imports of 35 mb (up 5
mb) (Table 1).
Total supplies of 14.781 bb in MY 2013/14 would record high, comparable to 14.362 bb in MY 2007/08,
13.729 bb in MY 2008/09, 14.774 bb in MY 2009/10 (2nd largest), 14.182 bb in MY 2010/11 (3rd largest), 13.517
bb in MY 2011/12, and 11.932 bb in “old crop” MY 2012/13. Beginning stocks of 821 mb are the lowest since
426 mb in MY 1996/97, and substantiate the market impact of tight corn supplies during the summer of 2013.
U.S. Corn Total Use & Use by Category in MY 2013/14
Total use of U.S. corn for MY 2013/14 is projected to be 13.150 bb – up 100 mb from the December
WASDE and up 200 mb from November, while being up 18% from 11.111 bb in “old crop” MY 2012/13 (Table 1
and Figure 6). Projected U.S. corn use for ethanol production of 5.000 bb in MY 2013/14 is up 50 mb from a
month ago, and up from 4.648 bb in MY 2012/13, while being equal to 5.000 bb in MY 2011/12. Forecast non‐
ethanol food, seed and industrial (FSI) use of 1.400 bb is down 50 mb from December, and compares to 1.396
bb in MY 2012/13, and 1.428 bb in MY 2011/12. Projected U.S. corn exports of 1.450 in MY 2013/14 are
unchanged from December, and up 98.4% from 731 mb a year ago in MY 2012/13 – the 39 year low since MY
1975/76.
Forecast U.S. feed and residual use of 5.300 bb is up 100 mb from November‐December and up 200 mb
from August‐September WASDE projections. Feed and residual use of 5.300 bb form MY 2013/14 is up 22.3%
from 4.335 bb in MY 2012/13, while being up 16.3% from 4.557 bb two years ago. U.S. total corn use of
13.150 bb in MY 2013/14 would be the highest on record, comparable to 12.737 bb in MY 2007/08 (4th
highest), 12.056 bb in MY 2008/09, 13.066 bb in MY 2009/10 (2nd highest), 13.055 bb in MY 2010/11 (3rd
highest), 12.528 bb in MY 2011/12, and 11.111 bb in MY 2012/13.
U.S. Ethanol Production and Corn Usage: Figure 7 shows weekly U.S. oxygenated plant production of fuel
ethanol as reported by the U.S. Energy Information Administration (www.eia.gov) with a calculated estimate of
corn use by Kansas State University. Assuming 2.75 gallons of ethanol produced per bushel of corn, these
calculations indicate that the equivalent projected annual rate of U.S. corn used for ethanol production for MY
2013/14 has ranged from 4.64‐5.26 bb on a weekly basis since early September 2013 ‐ the beginning of the
Page | 7
2013/14 marketing year – averaging a projection of 4.994 bb for MY 2013/14 over the September 2013 –
January 24, 2014 time period. This projection of 4.994 bb is consistent to USDA’s January 2014 WASDE report
estimate of 5.000 bb of corn to be used for ethanol production during the 2013/14 marketing year.
U.S. Corn Use as Distillers Grains: An estimate of the U.S. corn equivalent amounts of distillers grains
(DDGS) use for direct livestock feeding and exports is provided in Figure 8 – which shows estimated a) DDGS
corn equivalent U.S. domestic livestock feeding, and b) DDGS exports as well as other categories of U.S. corn
usage since MY 1989/90.
This analysis assumes 17.75 pounds of distillers dried grains and solubles (DDGS) per 56 pound bushel of
corn used in ethanol production. By these estimates, approximately 1.2‐1.3 bb of U.S. corn equivalent bushel‐
weights of DDGS are projected either to have been or are to be fed to U.S. livestock each marketing year since
MY 2010/11 – i.e., 1.265 bb in DDGS corn‐weight equivalents in MY 2010/11, 1.286 bb DDGS corn‐weight
equivalents in MY 2011/12, 1.196 bb in MY 2012/13, and 1.286 bb projected for MY 2013/14. Over the same
four most recent marketing years, DDGS exports in corn equivalent weights are estimated to range from 277
to 326 mb.
U.S. Corn Ending Stocks, % Ending Stocks‐to‐Use, and Prices in MY 2013/14
U.S. corn ending stocks for MY 2013/14 are projected to be 1.631 bb, down 161 mb from December and
down 256 mb from November. However, the January 2014 projection of 1.631 bb is still up 810 mb (+99%)
from 821 mb ending stocks in MY 2012/13 (Table 2 & Figure 8). “New crop” MY 2013/14 U.S. corn ending
stocks of 1.631 bb are comparable to 1.673 bb of U.S. corn ending stocks for MY 2008/09, and 1.708 bb in MY
2009/10 – and to the recent downtrend in ending stocks of 1.128 bb in MY 2010/11, 989 mb in MY 2011/12,
and 821 mb in MY 2012/13.
Projected percent (%) ending stocks‐to‐use of 12.4% in MY 2013/14 is down from the December 2013
projection of 13.7%, and also down from the September‐November 2013 forecasts of 14.6%‐14.7%, but up
significantly from 7.4% in MY 2012/13 (Table 1 & Figures 9‐10). Over the last six (6) years, U.S. corn % ending
stocks‐to‐use declined from 13.9% in MY 2008/09, to 13.1% in MY 2009/10, 8.6% in MY 2010/11, 7.9% in MY
2011/12, and 7.4% in “old crop” MY 2012/13, before being projected now for the first time in five (5) years to
increase to 12.4% in MY 2013/14.
U.S. average corn prices for MY 2013/14 are projected to be $4.10‐$4.70 bu/ac (midpoint = $4.40) – down
from the record high of $6.89 /bu in MY 2012/13 (Table 1 & Figures 9‐10). Since the beginning of the rapid
expansion in U.S. ethanol production in 2006, U.S. corn prices have generally risen, from $3.04 /bu in MY
2006/07, to $4.20 in MY 2007/08, $4.06 in MY 2008/09, $3.55 in MY 2009/10, $5.18 in MY 2010/11, $6.22 in
MY 2011/12, up to $6.89 in MY 2012/13 – with a decline now forecast to the price range midpoint projection
of $4.40 in MY 2013/14.
I‐E. KSU U.S. Corn Supply‐Demand Scenarios for “Next Year’s Crop” MY 2014/15
The Tendency Toward Projecting Full Production in Early Season U.S. Corn Crop Forecasts
The initial USDA projection of 2014 U.S. corn production along with supply‐demand and price prospects
will be given at the 2014 USDA Agricultural Outlook Forum, February 20‐21, 2014 in Arlington, Virginia
(www.usda.gov/oce/forum). Since at least the winter of 2006/07 there has been a tendency for early season
projections of U.S. corn production by the USDA, private industry analysts, and University Extension Grain
Marketing Specialists to be for “full production”, i.e., assuming trend line U.S. corn yields or better and
generally large corn crops.
This has been especially the case beginning in the winter of 2010 when preseason U.S. pre‐season corn
production forecasts have been markedly larger than what final U.S. corn crop production totals have ended
Page | 8
up being each year. A combination of drought and poor crop development conditions lead to lower than
originally expected U.S. corn production in 2010, 2011, and 2012. And although the 2013 U.S. corn crop has
ended up being record large, still it is markedly lower than original early 2013 production of 14.5+ bb.
Projections for 2014 U.S. corn production by the USDA and Kansas State University may very well follow
this same pattern of being overly optimistic – implicitly discounting the possibility of 2014 U.S. corn crop
production problems. Such early season forecasts for 2014 as these by KSU given below are decidedly
conservative in terms of projected U …
June 6, 2014
Grain Market Outlook
JULY 2014 CME eCorn Futures
Oct. 4, 2013 – June 3, 2014
Close = $4.58 ¼ on 6/3/2014
DEC 2014 CME eCorn Futures
Oct. 4, 2013 – June 3, 2014
Close = $4.54 ¼ on 6/3/2014
Page | 3
“New crop” DEC 2014 corn futures contract prices have also fallen sharply since the May 9th USDA reports.
On the day of the report – Friday, May 9th – Chicago Board of Trade (CBOT) DEC 2014 corn futures prices
opened at $5.10 ¼ per bushel, and traded as high as $5.14 ¾ and as low as $4.97 ¼ during the session, before
settling at $4.98 ¾ – down $0.12 ¾ for the day (Figure 1). Since then DEC 2014 corn futures prices have
traded lower – ranging from highs of $4.96 ¼ on Monday, May 12th and $4.96 ¼ on Wednesday, May 14th,
down to a low of $4.51 ½ on Monday, June 2nd before closing at $4.54 ¼ on Tuesday, June 3rd.
I‐C. U.S. Grain Sorghum Supply‐Demand
U.S. Grain Sorghum Acreage, Yield & Production
Following the results of March 31st USDA NASS Prospective Plantings Report, the USDA projected that
2014 U.S. grain sorghum total planted acreage would be 6.681 million acres (ma), down from 8.061 ma in
2013, 6.244 ma in 2012, and 5.481 ma in 2011 (Table 1 and Figure 1). In addition, the USDA projected 2014
U.S. corn harvested acreage to be 5.6 ma in the May 2014 WASDE report, down from 6.530 ma in 2013, but up
from 4.955 ma in 2012, and from 3.929 ma in 2011.
The forecast proportion of harvested‐to‐planted acreage for all U.S. grain sorghum is projected by the
USDA to be 83.8% in 2014, up from 81.0% in 2013, from 79.4% in 2012, and the recent low of 71.7% in 2011
(Figure 1). The average and median (i.e., the 50th percentile or “middle”) U.S. grain sorghum percent
harvested‐to‐planted acreage over the years of 2000‐2013 has been 82.6% and 83.5% , with a high of 89.1% in
2010 and lows of 71.7% in 2011, 74.3% in 2002, and 75.7% in 2006. Using the 2000‐2013 average percent
harvested‐to‐planted acreage proportion of 82.6 would lead to a projection of U.S. 2014 harvested acres of
5.519 million acres – approximately 81.5 acres less than the USDA’s projection of 5.60 million acres harvested
in 2014.
The projected 2014 U.S. average grain sorghum yield of 64.3 bushels per acre (bu/ac) would the highest in
four years, up from 59.6 bu/ac in 2013, the drought affected 2012 yield of 49.8 bu/ac., and 54.6 bu/ac in 2011,
but down from 71.8 bu/ac in 2010 and 69.4 bu/ac in 2009 (Table 1 and Figure 2).
Based on these 2014 acreage and yield forecasts, the USDA projected 2014 U.S. grain sorghum production
to be 360 million bushels (mb) – which is comparable to 389 mb in 2013, 247 mb in 2012, 214 mb in 2011, 346
mb in 2010, 383 mb in 2009, and 472 mb in 2008 (Table 1).
U.S. Grain Sorghum Total Supplies
The USDA estimates that total supplies of U.S. grain sorghum for “new crop” MY 2014/15 are 379 mb –
resulting from beginning stocks of 19 mb, projected 2014 production of 360 mb, and no projected imports
(Table 1). Total supplies of 379 mb in “new crop” MY 2014/15 compare to 525 mb in MY 2008/09, 438 mb in
MY 2009/10, 387 mb in MY 2010/11, 242 mb in MY 2011/12, 279 mb in MY 2012/13, and 404 mb in “current
year” MY 2013/14.
Beginning stocks of 19 mb in “new crop” MY 2014/15 are up from 15 mb in “current year” MY 2013/14,
and are less than the range of 23‐55 mb occurring during the MY 2008/09 – MY 2012/13 period.
Page | 4
U.S. Grain Sorghum Use by Category & Total Use
U.S. Food, Seed and Industrial Usage (FSI): Projected U.S. grain sorghum use for food, seed, and industrial
usage of 105 mb in “new crop” MY 2014/15 is a record high, up from 95 mb in “current” MY 2013/14 and MY
2012/13, 85 mb in MY 2011/12 and MY 2010/12, and 90‐95 mb in MY 2010/11 and MY 2009/10 (Table 1 and
Figure 3). This category includes grain sorghum used for ethanol production under the designation of
“Industrial”.
According Renewable Fuels Association data (http://www.ethanolrfa.org/bio‐refinery‐locations/), as of
May 30, 2014 there were 8 operational ethanol plants in the U.S. that used grain sorghum either alone or corn
in combination with corn as a feedstock. These ethanol plants had an operational capacity totaling 585 million
gallons of ethanol per year. At a conversion rate of 2.75 gallons of ethanol per bushel of grain sorghum, this
would amount to an annual maximum use of grain sorghum of 213 mb, markedly larger than the USDA’s
projection of 105 mb for FSI use. Not all ethanol plants that can use grain sorghum as a feedstock are doing so
at this time, and the total amount of FSI usage doesn’t represent only ethanol production, as food and seed
uses are also represented in this measure.
To pursue this further, during the MY 1998/99 through MY 2002/13 period U.S. grain sorghum FSI use
averaged 36 mb per year (ranging from 23 to 55 mb). Then from MY 2003/04 through MY 2007/08 period,
U.S. grain sorghum FSI use increased to average 45 mb per marketing year (ranging from 35 to 55 mb). With
the rapid expansion of U.S. starch‐based ethanol production that began in MY 2007/08 and started in earnest
in MY 2008/09, U.S. grain sorghum FSI use has averaged 91 mb over the MY 2008/09 through “current” MY
2013/14 period (ranging from 85 to 95 mb). Therefore, the difference in the averages of the 2003/03‐2007/08
and 2008/09‐2013/14 periods of 46 mb per marketing year (i.e., 91 mb less 45 mb) seems likely to represent
the approximate “lower bound” amount of U.S. grain sorghum used for ethanol production per marketing year
since MY 2007/08. This would be a “lower bound” since some grain sorghum may be been being used for
ethanol production during the earlier 1998/99‐2002/03 time period as well. Subtracting highs and lows from
the before and after ranges for these later two periods and following this reasoning, this amount could vary
from 30 mb (i.e., 85 mb less 55 mb) to 60 mb (i.e., 95 mb less 35 mb).
U.S. Grain Sorghum Use as Distillers Grains: If the amount of distillers grains per 56 pound bushel of grain
sorghum used in ethanol production is assumed to be 16.0 pounds – the same as for corn – then the amount
of distillers grains from grain sorghum use in ethanol production can be estimated.
By assuming 16.00 pounds of distillers dried grains and solubles (DDGS) per 56 pound bushel of grain
sorghum used in ethanol production, and that the amount of U.S. grain sorghum used for ethanol production
in “current” MY 2013/14 is approximately 46 mb, then DDGS production from grain sorghum is estimated to
be 30 million pounds. In 56 lb. per bushel of weight equivalents, this would amount to 13.1 million bushels of
grain sorghum bushel equivalents in the form of DDGS in “current” MY 2013/14.
For “new crop” MY 2014/15, the USDA has forecast a 10 mb increase in U.S. grain sorghum FSI use – up to
105 mb. It is assumed here that this increase would likely be in the form of increased industrial or ethanol use
since feed and export use are accounted for in other designated use categories, and food and seed use of
ethanol are relatively constant over time. This would amount to 56 mb in U.S. grain sorghum ethanol usage in
“new crop” MY 2014/15, which at 16.0 pounds of distillers grains per 56 pound bushel units would 35 million
Page | 5
pounds of DDGS, or 16 mb of grain sorghum bushel equivalents in the form of DDGS in “new crop” MY
2014/15. These amounts of U.S. grain sorghum indirect usage as either domestic DDGS livestock feed or DDGS
exportable product could be viewed as factors to be considered in addition to the formal USDA WASDE
marketing year balance sheet for U.S. grain sorghum.
U.S. Grain Sorghum Exports: Projected U.S. grain exports of 160 mb in “new crop” MY 2014/15 are down
from the estimate of 180 mb in “current year” MY 2013/14, but up sharply from 76 mb in MY 2012/13, and
from the 40 year low since MY 1975/76 of 63 mb in MY 2011/12 (Table 1 and Figure 3). As of May 22nd, with
38 of 52 weeks (73.1%) of “current” MY 2013/14 complete, 111.2 mb of U.S. grain sorghum had been shipped
for export – equal to 61.8% of the USDA’s updated projection for “current” MY 2013/14 of 180 mb
(http://apps.fas.usda.gov/export‐sales/esrd1.html ). An additional 49.3 mb of U.S. grain sorghum had been
sold for future export sales in “current” 2013/14 marketing year – prior to August 31, 2014 (the end of
“current” MY 2013/14).
Adding together 111.2 mb in past shipments plus 49.3 mb in forward sales amounts to 160.5 mb, or 89.2%
of the USDA’s 180 mb U.S. grain sorghum export target for “current” MY 2013/14 in the May 9th USDA WASDE
report with 73.1% (38/52 weeks) of the marketing year completed. United States’ grain sorghum export
shipments need to average 4.91 mb per week to meet the USDA’s projection of 180 mb in “current” MY
2013/14. Actual U.S. grain sorghum export shipments of 2.42 mb and 2.30 mb in the weeks ending May 15th
and May 22nd were behind pace to meet the USDA’s projection of 180 mb for “current” MY 2013/14.
Feed and Residual Use: The USDA forecast U.S. feed and residual use of 90 mb in “new crop” MY 2014/15
– which is down from 110 mb in “current” MY 2013/14, and compares to 93 mb in drought‐affected MY
2012/13, and 71 mb in MY 2011/12 (Table 1 and Figure 3).
The amount of grain sorghum used for livestock feeding has declined over time with the general decline
that has occurred in U.S. grain sorghum production, with some “crowding out” influence from ethanol
production usage likely also occurring. To illustrate, average U.S. grain sorghum production of 342 mb during
the 2008/09‐2013/14 period was 75.9% of the 450 mb average during the the 1998/99‐2007/08 period. In
comparison, average U.S. grain sorghum feed and residual use of 128 mb during the 2008/09‐2013/14 period
was 65.4% of the 196 mb average during the the 1998/99‐2007/08 period.
Total Use of U.S. Grain Sorghum: Total usage of U.S. grain sorghum for “new crop” MY 2014/15 is
projected to be 355 mb – which is down from 385 mb in “current” MY 2013/14, and compares to 264 mb in
drought‐affected MY 2012/13, and the even lower amount of 219 mb in MY 2011/12 (Table 1 and Figure 3).
United States’ total grain sorghum use has varied based on available U.S. grain sorghum supplies in recent
years, being 477 mb in MY 2007/08, 471 mb in MY 2008/09, 396 mb in MY 2009/10, 359 mb in MY 2010/11,
219 mb in MY 2011/12, 264 mb in MY 2012/13, 385 mb in “current” MY 2013/14, and the projected amount of
355 mb in “new crop” MY 2014/15. The record high U.S. grain sorghum usage of 869 mb occurred in MY
1985/86.
U.S. Grain Sorghum Ending Stocks, % Ending Stocks‐to‐Use, & Prices
U.S. grain sorghum ending stocks for “new crop” MY 2014/15 are projected to be 24 mb, up from 19 mb in
“current year” MY 2013/14 (Table 1 & Figure 4). “Current” MY 2013/14 U.S. grain ending stocks of 19 mb are
Page | 6
up from 15 mb of U.S. corn ending stocks for MY 2012/13, and essentially equal to 23 mb in MY 2011/12 and
27 mb in MY 2010/11. Generally, U.S. grain sorghum ending stocks have been at higher than most recent
levels during the previous 1998/99‐2009/10 period – averaging 51 mb (range = 32‐66 mb).
Projected percent (%) ending stocks‐to‐use of 6.76% in “new crop” MY 2014/15 is up from 4.93% in
“current” MY 2013/14 (Table 1 & Figures 4‐5). United States’ grain sorghum % ending stocks‐to‐use has
trended from 11.68% in MY 2008/09, to 10.35% in MY 2009/10, 7.52% in MY 2010/11, 10.50% in MY 2011/12,
5.68% in “drought stricken” MY 2012/13, to 4.93% in “current” MY 2013/14, and now to a projected level of
6.76% in “new crop” MY 2014/15. Ending stocks‐to‐use of 4.93% in “current” MY 2013/14 is the 2nd lowest on
record, with only 3.50% in the “short crop” year of MY 1995/96 being lower since MY 1975/76.
U.S. average grain sorghum prices for “new crop” MY 2014/15 are projected to be $3.60‐$4.30 bu/ac
(midpoint = $3.95) (Table 1 & Figures 4‐5). These U.S. grain sorghum price projections by the USDA are
essentially $0.25 per bushel lower than the USDA’s price projections for U.S. corn in “new crop” MY 2014/15.
Since the beginning of the rapid expansion in U.S. ethanol production in 2006, U.S. corn and grain sorghum
prices have moved higher, then lower and higher again, with grain sorghum prices being $3.29 /bu in MY
2006/07, to $4.08 in MY 2007/08, $3.20 in MY 2008/09, $3.22 in MY 2009/10, $5.02 in MY 2010/11, $5.99 in
MY 2011/12, up to the record high of $6.33 in “drought stricken” MY 2012/13, but then down to $4.40 in
“current” MY 2013/14 and the projection of $3.95 in “new crop” MY 2014/15.
I‐D. KSU U.S. Grain Sorghum Supply‐Demand Scenarios for “New Crop” MY 2014/15
There seems to be a tendency for early season forecasts by both the USDA and University grain market
economists to project “full production” scenarios, especially for U.S. corn crops in recent years. Projections for
2014 U.S. grain sorghum production by the USDA and Kansas State University may very well follow this same
pattern of being overly optimistic – implicitly discounting the possibility of 2014 U.S. grain sorghum crop
production problems with forecasts of trend‐line yields. For example, KSU forecasts provided here are
decidedly conservative in terms of projected U …
July 18, 2014
Grain Market Outlook
JULY 2014 CME eSoybeans
11/18/2013 – 7/18/2014
Close: $11.76 ¾ on July 18th
NOV 2014 CME eSoybeans
11/18/2013 – 7/18/2014
Close: $10.85 ¼ on July 18th
Page | 4
“New crop” NOVEMBER 2014 soybean futures contract prices also responded in a negative manner to the
information in the July 11th USDA reports. On the day of the report – Friday, July 11th – Chicago Board of Trade
(CBOT) NOVEMBER 2014 soybean futures prices opened at $10.93 ¼ /bu, and traded as high as $10.96 ¾ and
as low as $10.65 during the session, before settling at $10.75 – down $0.18 for the day (Figure 1). Since then
NOVEMBER 2014 soybean futures prices have traded within the range from a low of $10.68 ¾ on July 14th to a
high of $11.18 ¾ on July 17th, before closing at $10.85 ¼ on Friday, July 18th. Prior to the July 11th report,
NOVEMBER 2014 soybean futures had trend sharply higher from a low of $10.88 ¼ on January 31st to a high of
$12.49 ¼ on April 28th, and then to a “higher high” of $12.79 on May 22nd. Since then, prices have fallen $1.93
¾ lower through July 18th, before closing at $10.85 ¼ on July 18th.
I‐D. U.S. Soybean Supply‐Demand
U.S. Soybean Acreage, Yield & Production
Following the results of June 30th USDA NASS Acreage report, the USDA projected that 2014 U.S. soybean
total planted acreage would be 84.839 million acres (ma), up 346,000 acres from the March 31st USDA NASS
Prospective Plantings Report, and up from 76.533 ma in 2013, 77.198 ma in 2012, and 75.046 ma in 2011
(Table 1 and Figure 2). In addition, the USDA projected 2014 U.S. corn harvested acreage to be 84.058 ma,
down from its June 11 WASDE report projection of 80.5 ma, and down from 75.869 ma in 2013, and 76.164
ma in 2012, but up from 81.446 ma in 2011. The 2014 proportion of harvested‐to‐planted acreage for all U.S.
soybeans is projected to be 99.07%, compared to 99.13% in to 2013, 98.66% in 2012, and 98.30% in 2011.
The projected 2014 U.S. average soybean yield of 45.2 bushels per acre (bu/ac) is unchanged from the
May‐June WASDE reports, and would be a record high, up from 43.3 bu/ac in 2013, the drought affected 2012
low yield of 39.8 bu/ac., and the historic high of 44.0 bu/ac in 2009 (Table 1 and Figure 3). Based on these
2014 acreage and yield forecasts, the USDA projected 2014 U.S. soybean production to be a record high 3.800
billion bushels (bb) – which is up from 3.289 bb in 2013, 3.034 bb in 2012, 3.094 bb in 2011, 3.329 in 2010,
3.359 bb in 2009, and 2.957 bb in 2008 (Table 1).
U.S. Soybean Total Supplies
The USDA estimates that total supplies of U.S. soybeans for “new crop” MY 2014/15 are 3.995 bb – up
180 million bushels or ‘mb’ from June. Total “new crop” supplies of 3.995 bb result from beginning stocks of
140 mb, projected 2014 production of 3.800 bb, and projected imports of 15 mb (Table 1). Total supplies of
3.995 bb in “new crop” MY 2014/15 would be a record high, comparable to 3.655 bb in MY 2006/07 (2nd
highest), 3.261 bb in MY 2007/08, 3.185 bb in MY 2008/09, 3.512 bb in MY 2009/10 (4th highest), 3.495 bb in
MY 2010/11 (5th highest), 3.325 bb in MY 2011/12, 3.239 bb in MY 2012/13, and 3.514 bb in “current year” MY
2013/14 (3rd highest).
Beginning stocks of 140 mb in “new crop” MY 2014/15 are up 15 mb from June, down marginally from 141
mb in “current year” MY 2013/14, and down from 169 mb in MY 2012/13, and 215 mb in MY 2011/12. This
forecast of lower beginning stocks of 140 mb in “new crop” MY 2014/15 is comparable to the low of 112 mb
which occurred in MY 2004/05, and to what is at least a 40 year low of 103 mb in beginning stocks in MY
1977/78.
Imports of 15 mb in “new crop” MY 2014/15 are projected to be down from the record high of 85 mb in
“current year” MY 2013/14 (down 5 mb from June), and down from the 2nd highest amount of 36 mb in MY
Page | 5
2012/13. However, U.S. soybean imports of 15 mb in “new crop” would represent a return to “normal” –
being comparable to the range of 10 – 16 mb in U.S. soybean imports for the MY 2007/08 through MY 2011/12
period, and of U.S. soybean imports of less than 10 mb per marketing year going back to at least MY 1980/81.
U.S. Soybean Use by Category & Total Use
Domestic Crush: Projected U.S. soybean domestic crushings of 1.755 bb in “new crop” MY 2014/15 (up 40
mb from June) are up from 1.700 bb for “current” MY 2013/14 (which is up 25 mb from June), 1.689 bb in MY
2012/13, and from 1.703 bb in MY 2011/12 (Table 1 and Figure 4). The record high amount of 1.808 bb of U.S.
soybean domestic crushings occurred in MY 2006/07, followed closely time and quantity‐wise with 1.803 bb in
MY 2007/08.
U.S. Soybean Exports: Projected U.S. soybean exports of 1.675 bb in “new crop” MY 2014/15 (up 50 mb
from June) would be a record high, up from the current estimated high of 1.620 in “current” MY 2013/14 (up
20 mb from June) (Table 1 and Figure 4). Beginning in MY 2006/07, U.S. soybean exports were 1.116 bb,
followed by 1.159 bb in MY 2007/08, 1.279 bb in MY 2008/09, 1.499 bb in MY 2009/10 (3rd highest on record),
1.505 bb in MY 2010/11 (2nd highest on record), 1.365 bb in MY 2011/12, 1.320 bb in MY 2012/13, 1.620 bb in
“current” MY 2013/14 (the current historic record high if actually attained), and now the projected new record
high of 1.675 bb in “new crop” MY 2014/15.
Regarding the current pace of U.S. soybean export shipments and sales, as of July 10th, with 45 of 52 weeks
(86.5%) of “current” MY 2013/14 complete, 1.605 bb of U.S. soybeans had been shipped for export – equal to
99.1% of the USDA’s updated projection of 1.620 bb for “current” MY 2013/14. United States’ export
shipments will need to average only 2.17 mb per week through the remainder of the “current” 2013/14
marketing year to attain the USDA’s July 11th WASDE projection of 1.620 bb. This compares to U.S. soybean
export shipments of 3.29 mb and 3.48 mb which occurred during the weeks ending July 3rd and July 10th,
respectively. As a result, these recent U.S. soybean export shipments were “ahead of pace” to meet the USDA
marketing year U.S. forecast of 1.620 bb in the “current” 2013/14 marketing year. (Source: USDA Foreign
Agricultural Service U.S. Weekly Export Sales report ‐ http://apps.fas.usda.gov/export‐sales/esrd1.html).
Also as of July 10th an additional 70.0 mb of U.S. soybeans had been sold for future export sales in
“current” marketing year. Adding together 1.605 bb in past shipments plus 70 mb in forward sales amounts to
1.675 bb, or 103.4% of the USDA’s 1.620 bb U.S. soybean export target for “current” MY 2013/14 in the July
11th USDA WASDE report, with 86.5% (45/52 weeks) of the marketing year completed.
It is likely that that the as of yet unshipped soybean sales in “current” MY 2013/14 may be cancelled
before physical shipment occurs, motivating the USDA to not raise its forecast of 1.620 bb in exports even
closer to the total of 1.675 bb total of shipments plus forward sales as of July 10th. If this amount of additional
U.S. soybean shipments were to actually occur in the “current” 2013/14 marketing year, then there would be
an additional 55 mb in U.S. soybean usage (i.e., 1.675 – 1.620 bb = 55 mb).
Concerning pre‐sales of soybeans in “new crop” MY 2014/15, as of July 10th, outstanding sales of U.S.
soybeans in the marketing year beginning September 1, 2015 were 451 mb. This amount of forward sales
amounts to 26.9% of projected “new crop” MY 2014/15 sales of 1.675 bb. This total of 451 mb in forward
“new crop” MY 2014/15 U.S. soybean sales would be expected to increase as the end of the “current” MY
2013/14 marketing year on August 31st approaches, and any remaining unshipped soybean sales in “current”
MY 2013/14 are cancelled and then “rolled” into the “new crop” 2014/15 marketing year.
Page | 6
The USDA anticipates an even further reduction in the pace of U.S. soybean exports in the coming months
as South American soybean exports continue to complete with those from the U.S. for World export
shipments. Also, the spike in U.S. soybean imports to a record high 85 mb in “current” MY 2013/14 seems to
have in part been a reaction by World soybean market suppliers such as Brazil to the tightening “current”
marketing year ending stocks situation in the United States in recent months.
Seed Use: Forecast seed use of 92 mb in “new crop” MY 2014/15 is down from 99 mb in “current” MY
2013/14 (up 4 mb from June), but up from 89 mb in MY 2012/13, and from 90 mb in MY 2011/12 (Table 1 and
Figure 4).
Residual Use: Forecast residual use of 19 mb in “new crop” MY 2014/15 (up 1 mb from June) is up from ‐
69 mb estimated in “current” MY 2013/14, and from 1 mb in MY 2012/13. The appearance of a negative
residual number in the U.S. soybean supply‐demand balance sheet is a common occurrence for USDA
Quarterly U.S. wheat balance sheets, and occurred previously in recent years in the MY 2011/12 U.S. soybean
balance sheet (‐2 mb). However, the appearance of this large of a negative number for the residual
measurement in “current” MY 2013/14 raises questions about the source of measurement error in the other
major supply and demand categories.
It is possible that the USDA’s estimate of ending stocks of 140 mb is too large, and should be adjusted
lower by 69 mb, down to 71 mb (i.e., 140 – 69 = 71 mb). Or, the USDA could be under estimating total supplies
by this amount, meaning that some combination of beginning stocks, production, and imports is
underestimated by 69 mb in “current” MY 2013/14. Or, one of the usage categories could be underestimated
by 69 mb, such as domestic crush. For some reason or combination of reasons this abnormally high negative
U.S. soybean residual figure exists for “current” MY 2013/14. If the ending stocks figure of 140 mb ultimately
is too high, then this negative residual figure may be masking a tighter “old crop” ending stocks situation than
is currently identified by the USDA in the domestic soybean market.
Total U.S. Soybean Use: Projected U.S. total use of 3.541 bb in “new crop” MY 2014/15 (up 91 mb from
June) would be a record high, and is up from 3.374 bb in “current” MY 2013/14 (which is down 21 mb from
June) (Table 1 and Figure 4). Over the last eight (8) marketing years, total U.S. soybean use has been 3.081 bb
in MY 2006/07, 3.056 bb in MY 2007/08, 3.047 bb in MY 2008/09, 3.361 bb in MY 2009/10 (3rd largest on
record), 3.280 bb in MY 2010/11, 3.155 bb in MY 2011/12, 3.099 bb in MY 2012/13, the estimated amount of
3.374 bb in “current” MY 2013/14 (2nd largest on record), and now the projected record high of 3.541 bb in
“new crop” MY 2014/15.
U.S. Soybean Ending Stocks, % Ending Stocks‐to‐Use, & Prices
U.S. soybean ending stocks for “new crop” MY 2014/15 are projected to be 415 mb, up 90 mb from June,
and up 275 mb from 140 mb in ending stocks in “current” MY 2013/14 (which is also up 15 mb from June).
Projected “new crop” MY 2014/15 ending stocks of 415 mb would be the largest amount since 449 mb in MY
2005/06 and 574 mb in MY 2007/08, and compares to 205 mb in MY 2007/08, 138 mb in MY 2008/09, 151 in
MY 2009/10, 215 mb in MY 2010/11, 169 mb in MY 2011/12, 141 mb in MY 2012/13, and the estimate of 140
mb in “current” MY 2013/14 (Table 1 and Figure 4).
Percent (%) ending stocks‐to‐use of 11.71% forecast for “new crop” MY 2014/15 (up from 9.42% in June) is
up from the record low of 4.14% (up from 3.68% in June) now projected by the USDA for “current” MY
2013/14 (Table 1 and Figures 5‐6). Over the last eight (8) years, U.S. soybean % ending stocks‐to‐use have
been 18.62% in MY 2006/07, 6.71% in MY 2007/08, 4.53% in MY 2008/09, 4.49% in MY 2009/10, 6.55% in MY
Page | 7
2010/11, 5.36% in MY 2011/12, 4.54% in MY 2012/13, the estimate of 4.14% in “current” MY 2013/14, and
now the projection of 11.71% for “new crop” MY 2014/15.
U.S. average soybean prices for “new crop” MY 2014/15 are projected to be $9.75‐$11.75 per bushel
(midpoint = $10.75) – down sharply from $13.10 /bu in “current” MY 2013/14 (which is up $0.10 /bu from
April) (Table 1 and Figures 5‐6). Over the last eight (8) marketing years, U.S. soybean prices have been $6.43
per bushel in MY 2006/07, $10.10 in MY 2007/08, $9.97 in MY 2008/09, $9.59 in MY 2009/10, $11.30 in MY
2010/11, $12.50 in MY 2011/12, a record high of $14.40 in MY 2012/13, $13.10 for “current” MY 2013/14, and
now a range midpoint projection of $10.75 / bu in “new crop” MY 2014/15.
I‐E. KSU U.S. Soybean Supply‐Demand Scenarios for “Next Crop” 2014/15
The USDA is projecting that “new crop” 2014/15 marketing year U.S. soybean prices will be in the range of
$9.50‐$11.50 per bushel (midpoint of $10.50). Also, KSU forecasts provided here are decidedly conservative in
terms of projected U …
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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
to the U.S. government shutdown.
Similarly, the National Agricultural Statistical Service (NASS) released the latest Grain Stocks report for
December 1, 2018 U.S. grain stocks levels, the 2019 Winter Wheat & Canola Seedings report, the February
2019 Crop Production report, and the 2018 Annual Crop Production Summary report
(https://www.nass.usda.gov/Publications/Calendar/reports_by_date.php)
The USDA Foreign Agricultural Service (FAS) also released it’s February 2019 reports on World
Agricultural Production, and separate reports on World Markets and Trade for Grain and Oilseeds
(https://www.fas.usda.gov/data‐analysis/scheduled‐reports‐2019).
2 …
August 1, 2011
Land Buying and Valuing
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July 8, 2016
Commodity Program Papers
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February 24, 2012
Energy
Current tax credits are based on the 2005 Energy Policy Act, the 2008
Food, Conservation and Energy Act, and the 2008 Energy Improvement &
Extension …