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August 12, 2016
Breakout session presentations
will get a margin call for about $20,000 per contract. There … hedge to under preform by about 50 cents on HRW wheat.
3 … The MYA price is based on a survey of elevators who report total …
January 1, 2009
Animal ID & Traceability
ACKNOWLEDGEMENTS
The research team is grateful for financial support provided for this project by the
Animal and Plant Health Inspection Service (APHIS), United States Department of
Agriculture. In addition, we sincerely appreciate considerable support and assistance
from Dr. John Wiemers as well as assistance from Dr. David Morris and Mr. Neil
Hammerschmidt. We acknowledge Dr. Clement Ward and Dr. John Lawrence for helpful
comments as peer reviewers of our report as well as helpful suggestions from several
internal reviewers coordinated by APHIS. Furthermore, the research team especially
thanks the large number of industry stakeholders and related professionals, too
numerous to list here, who generously provided considerable amounts of their time
sharing information and views about NAIS in our completion of this project. …
June 24, 2016
Grain Market Outlook
owever, in March‐early June 2016, significant
soybean production problems have occurred in key South American production areas such in Argentina and
parts of Brazil – along with a heightening of trade concerns about summer 2016 weather conditions in the U.S.
Corn Belt. These emerging World soybean production concerns have helped to strengthen U.S. soybean
export trade in the “current crop” 2015/16 marketing year (ending August 31, 2016) and improved the outlook
for U.S. soybean exports in “new crop” MY 2016 (starting September 1, 2016).
Longer term, from MY 2008/09 to projected “new crop” MY 2016/17, the USDA forecasts a strong upward
trend in World soybean production (up 6.6% annually) which will have “out‐paced” the increase in World
soybean use (up 5.9% per year) if it holds true. However, the shortfall in South American’s soybean production
in “current” MY 2015/16 has at least temporarily interrupted these trends, and has caused projected World
soybean ending stocks and percent ending stocks‐to‐use to fall since MY 2014/15. As this trend toward larger
supplies has “abated” in “current” MY 2015/16 and for projected “new crop” MY 2016/17, U.S. and World
soybean prices have received at least moderate support. These trends are illustrated in that since World
soybean ending stocks of 62.0 mmt (22.5% %S/U) in MY 2013/14, stocks grew sharply in MY 2014/15 to 78.3
mmt (25.9% S/U), but have since declined to an estimate of 72.3 mmt (22.7% S/U) in “current” MY 2015/16,
and are forecast to decline further to 66.3 mmt (20.2% S/U) in “new crop” MY 2016/17.
A key World soybean market issue will be to determine whether weather or disease problems end up driving
U.S. soybean production low enough to alter the existing “large supply – buyer’s market” situation that has
existed in U.S. and World soybean markets in recent years, or if a large 2016 U.S. soybean crop will “rectify”
this short run trend toward lower World soybean ending stocks and lead to a re‐establishment of the “large
supply – low price” situation in fall 2016 that had existed during the 2014‐2015 time period.
USDA U.S. Soybean Forecast of “Current” MY 2015/16: As usual at this time in the marketing year, the USDA
maintained its forecast 2015 U.S. soybean production of a record 3.929 billion bushels (bb) – up marginally
from 3.927 bb in 2014. For “current” 2015/16, USDA projected U.S. total supplies at a record 4.150 bb (vs
4.052 bb in MY 2014/15), domestic crush at 1.890 bb (up 10 mb from May and 20 mb from April), exports at
1.760 bb (up 20 mb from May and 70 mb from March – but still down from the existing record 1.843 bb in
“current” MY 2014/15), total use at 3.780 bb (up 30 mb from May – but less than the record of 3.862 bb in MY
2014/15), and ending stocks at a 9‐year high of 370 mb (down 30 mb from May, and 75 mb from April, but still
up from 191 million bushels or ‘mb’ in MY 2014/15, and from 92 mb in MY 2013/14). Ending stocks‐to‐use are
projected at 9.79% ‐ down from 10.67% in May and 12.01% in April, but still up dramatically from 4.95% in MY
2014/15, and the record low of 2.65% in MY 2013/14. The USDA forecast “current” MY 2015/16 U.S. soybean
average prices to be $9.05 /bu – up $0.15 from May, but still down from $10.10 in MY 2014/15, $13.00 in MY
2013/14, and the record high of $14.40 in MY 2012/13.
Page | 2
USDA Forecast for “New Crop” MY 2016/17: The USDA projected 2016 U.S. soybean plantings of 82.236
million acres (ma) – down 414,000 acres from 2015. Forecast 2016 harvested acres of 81.370 ma is calculated
from projections of production and average yields, and is down 479,000 acres vs 2015. With projected yields
of 46.7 bu/ac, 2016 U.S. soybean production is projected to be 3.800 bb – 3rd highest on record behind 3.927
bb in 2014 and 3.929 bb in 2015. With forecast “new crop” MY 2016/17 total use of 3.940 bb (a new record
high ahead of 3.862 bb in MY 2014/15), and projected ending stocks of 260 mb (6.60% S/U), U.S. soybean
prices are estimated by the USDA to be in the range of $8.75‐$10.25 (midpoint = $9.50 /bu) – down from the
$9.05 /bu in “current” MY 2015/16 and $10.10 in MY 2014/15. This USDA projection is thought to have a 35%
probability of occurring in the judgment of Kansas State University Extension.
KSU Forecasts for “New Crop” MY 2016/17: Three alternative KSU‐Scenarios for U.S. soybean supply‐demand
and prices are presented for “new crop” MY 2016/17, with each assuming a 1.000 ma upward adjustment in
2016 U.S. soybean planted acres from the USDA’s March 31st Prospective Plantings and the June 10th WASDE
reports. A) KSU “Higher Acres ‐ Trend Yield” Scenario (30% probability) assumes for “new crop” MY 2016/17:
83.236 ma planted, 82.242 ma harvested, 45.85 bu/ac trend yield, 3.771 bb production, 4.171 bb total
supplies, 3.915 bb total use, 256 mb ending stocks, 6.54% S/U, & $10.25 /bu U.S. soybean average price; B)
KSU “Higher Acres ‐ Moderate Drought” (20% prob.) assumes 83.236 ma planted, 82.242 ma harvested, 44.0
bu/ac yield, 3.619 bb production, 4.019 bb total supplies, 3.801 bb total use, 218 mb ending stocks, 5.74% S/U,
& $10.75 /bu U.S. soybean price; and C) KSU “Higher Acres & Serious Drought” (15% prob.) assumes 83.236
ma planted, 82.242 ma harvested, 39.0 bu/ac yield, 3.207 bb production, 3.607 bb total supplies, 3.436 bb
total use, 171 mb ending stocks, 4.98% S/U, & $11.50 /bu U.S. soybean price.
…
July 21, 2015
Grain Market Outlook
… … CME Corn Futures
Nov. 20, 2014 – July 20, 2015
Close = $4.16 on 7/20/2015
SEPT 2015 CME Corn Futures
Nov. 20, 2014 – July 20, 2015
Close = $4.05 on 7/20/2015
Page | 4
I‐C. U.S. Corn Supply‐Demand – Focus on “New Crop” 2015/16 Projections
U.S. Corn Acreage, Yield & Production
The USDA’s projections of 2015 U.S. corn planted and harvested acres from the June 30th Acreage report
were used without adjustment in the July 10th USDA Crop Production and WASDE reports. In the June 30,
2015 USDA Acreage report the USDA projected that 2015 U.S. corn total planted acreage would be 88.897
million acres (ma), down 302,000 acres from 89.199 ma projected earlier in the March 31st USDA Prospective
Plantings report. This projection of 88.897 ma of U.S. corn planted in 2015 is down 1.700 ma (‐1.9%) from
90.597 ma in 2014, down 6.468 ma (‐6.8%) from 95.365 ma in 2013, down 8.394 ma (‐8.6%) from the record
high of 97.291 ma in 2012, and down from 91.921 ma in 2011 (Table 1 and Figure 3).
The USDA projected that 2015 U.S. corn total harvested acreage would be 81.101 million acres (ma),
nearly equal to the USDA WAOB projection in the June 10th WASDE report. This projection of 81.101 ma of
U.S. corn harvested in 2015 is down 2.035 ma (‐2.4%) from 83.136 ma in 2014, down 6.350 ma (‐7.3%) from
the record high of 87.451 ma in 2013, down 6.534 ma (‐7.2%) from 87.365 ma in 2012, and down from 83.981
ma in 2011. (Table 1 and Figure 3). The USDA implicitly projected that the proportion of harvested‐to‐planted
acreage in 2015 is 91.2%, down from 91.8% in 2014, and 91.7% in 2013, but up from 89.9% in drought‐stricken
2012.
The 2014 U.S. average corn yield of 171.0 bushels per acre (bu/ac) is a record high and unchanged from
the January‐June 2015 USDA reports, and is higher than the 166.8 bu/ac estimate for 2015 in the July 10th
WASDE report (Table 1 and Figure 4). Although this early 2015 USDA projection of 166.8 bu/ac is down from
171.0 bu/ac in 2014, it would still be the second highest U.S. corn yield on record, being up from 158.1 bu/ac in
2013, the drought affected 2012 low yield of 123.1 bu/ac., 147.2 bu/ac in 2011, 152.8 bu/ac in 2010, and up
from the previous historic record high of 164.7 bu/ac in 2009.
Based on this combination of USDA projections for 2015 planted acreage (88.897 ma), harvested acreage
(81.101 ma), and yield (166.8 ma – USDA), projected 2015 U.S. corn production would be 13.530 billion
bushels (bb) – down from the record high of 14.216 bb in 2014, and the previous record high of 13.829 bb in
2013 – but up from 10.755 bb in 2012, 12.314 bb in 2011, 12.425 bb in 2010, and 13.067 bb in 2009 (Table 1).
U.S. Corn Total Supplies
The USDA projects that total supplies of U.S. corn for “new crop” MY 2015/16 are 15.334 bb – down 197
million bushels (mb) from the June 10th WASDE report. This projection of 15.334 bb for “new crop” MY
2015/16 results from beginning stocks of 1.779 bb, projected 2015 production of 13.530 bb, and projected
imports of 25 million bushel (mb) (Table 1 and Figure 5). Total supplies of near 15.334 bb in “new crop” MY
2015/16 would be the second highest on record, being comparable to 14.362 bb in MY 2007/08, 13.729 bb in
MY 2008/09, 14.749 bb in MY 2009/10, 14.161 bb in MY 2010/11, 13.471 bb in MY 2011/12, 11.904 bb in
“short crop” MY 2012/13, 14.686 bb in MY 2013/14, and the record high of 15.474 bb in “current” MY
2014/15.
The USDA forecast of beginning stocks of 1.779 bb in “new crop” MY 2015/16 is down 97 mb from the
June 10th WASDE report, but up substantially from 1.232 bb in beginning stocks in “current crop” MY 2014/15,
821 mb in MY 2013/14, 989 mb in MY 2012/13, and 1.128 bb in MY 2011/12 – while being up at least
moderately from 1.708 bb in MY 2010/11, 1.673 bb in MY 2009/10, and 1.624 bb in MY 2008/09. This amount
of beginning stocks in “new crop” MY 2015/16 of 1.779 bb is up considerably from the low of 426 mb that
Page | 5
occurred in MY 1996/97, and is the highest since 1.967 bb in MY 2006/07 and 2.114 bb in MY 2005/06 (Table 1
and Figure 5).
Projected imports of 25 mb in “current crop” MY 2015/16 are equal to “current” MY 2014/15, but down
from 36 mb in MY 2013/14 (the 2nd highest on record), and are also down sharply from the record high of 160
mb in the drought‐stressed 2012/13 marketing year. 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 5.225 bb in
“new crop” MY 2015/16 (up 25 mb from June) is up from 5.200 bb in “current” MY 2014/15 (up 25 mb from
May), and up from 5.134 bb in MY 2013/14, 4.641 bb in MY 2012/13, and 5.000 bb in MY 2011/12 (Table 1 and
Figures 6‐7).
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 developed by Kansas State
University. Assuming 2.83 gallons of ethanol produced per bushel of corn (equaling the calculated conversion
of U.S. corn into ethanol in January 2015), these calculations indicate that the equivalent projected annual rate
of U.S. corn used for ethanol production for “current crop” MY 2014/15 has ranged from 4.830‐5.449 bb on a
weekly basis since early September 2014 ‐ the beginning of the “current crop” 2014/15 marketing year. Over
the period of September 1, 2014 through July 10, 2015, corn usage for ethanol production was been on pace
to reach 5.200 bb in “current crop” MY 2014/15. This estimate of 5.200 bb is equal to the USDA’s July 10, 2015
WASDE report estimate of 5.200 bb of corn to be used for ethanol production during “current crop” MY
2014/15, with 45 of 52 weeks (86.5%) of the marketing year completed.
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 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. According to these KSU
estimates, since MY 2010/11 approximately 0.993‐1.130 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, 1.004 bb in MY 2012/13,
993 mb in MY 2013/14, 1.006 bb in both “current crop” MY 2014/15, and 1.011 bb in “new crop” MY 2015/16.
Over the five most recent marketing years, DDGS exports in corn equivalent weights are estimated to range
from 299 to 482 mb, – i.e., 326 mb in DDGS corn‐weight equivalents in MY 2010/11, 299 mb in MY 2011/12,
322 mb in MY 2012/13, 473 mb in MY 2013/14, a near record 479 mb in “current crop” MY 2014/15, and a
record high 482 mb in “new crop” MY 2015/16.
U.S. Corn Exports: Projected U.S. corn exports of 1.875 bb in “new crop” MY 2015/16 (down 25 mb from
June) is up from 1.850 bb (up 25 mb from June) in “current” MY 2014/15, less than 1.917 bb in MY 2013/14,
and up sharply from 730 mb in MY 2013/14 – the 41 year low (i.e., since MY 1975/76) (Table 1, Figures 6 and
8).
According to USDA Foreign Agricultural Service (FAS) weekly export data (http://apps.fas.usda.gov/export‐
sales/esrd1.html), as of July 9th, through the 45th week of “current crop” MY 2014/15 (45of 52 weeks), 1,508.3 mb
Page | 6
of U.S. corn had been physically shipped for export – equal to 81.5% of the USDA’s projection of 1.850 bb for
“current crop” MY 2014/15. An additional 313.7 mb of U.S. corn had been pre‐sold for future export
shipments during the “current crop” 2014/15 marketing year – prior to August 31, 2015 (the end of “current
crop” MY 2014/15).
Adding together 1,508.3 mb in past shipments plus 313.7 mb in forward sales amounts to 1,832.0 mb, or
99.0% of the USDA’s 1.850 bb U.S. corn export target for “current crop” MY 2014/15 in the July 10th USDA
WASDE report with 86.5% (45/52 weeks) of the marketing year completed. United States’ corn export
shipments will need to average 48.8 mb per week for the remaining 7 weeks of the “current crop” 2014/15
marketing year to achieve the USDA’s 1.850 bb projection. This compares to 38.0 mb and 44.6 mb of export
shipments for the weeks ending July 2nd and July 9th, respectively – i.e., each being behind of the pace needed
to meet the USDA’s most recent export projection.
Non‐Ethanol FSI: Forecast non‐ethanol food, seed and industrial (FSI) use of 1.360 bb in “new crop” MY
2015/16 is greater than 1.346 bb in “current” MY 2014/15 (down 1 mb from May‐June, but reduced 48 mb
from the April WASDE), and compares to 1.369 bb in MY 2013/14, and 1.397 bb in MY 2012/13 (Table 1,
Figures 6 and 8).
Feed and Residual Use: Forecast U.S. feed and residual use of 5.275 bb in “new crop” MY 2015/16 (down
25 mb from June) is down 25 from 5.300 bb for “current” MY 2014/15 (up 50 mb from June), 5.034 bb in MY
2013/14, 4.315 bb in MY 2012/13, and 4.520 bb in MY 2011/12 (Table 1, Figures 6 and 8). These levels of corn
use for livestock feeding are somewhat correlated with the amounts of energy feeds per grain consuming
animal units (GCAUs) reported by the USDA over the same time period as illustrated in the following
information.
In the USDA July 14th Feed Outlook Report (http://usda.mannlib.cornell.edu/usda/current/FDS/FDS‐07‐14‐2015.pdf) the USDA
Economic Research Service (ERS) indicates that over the MY 2013/14 through “new crop” MY 2015/16 time
period, the total amount of Energy Feeds in the U.S. – including corn, sorghum, barley, oats and wheat – is
estimated to be 134.3 million metric tons (mmt) in MY 2013/14 (95.2% corn), and 144.6 mmt in “current” MY
2014/15 (93.1% corn), and 143.5 mmt in “new crop” MY 2015/16 (93.4% corn). Over this same 3 year period,
total U.S. Grain Consuming Animal Units (GCAUs) are estimated to be 91.0 million in MY 2013/14, 93.2 million
in “current” MY 2014/15, and 95.1 million in “new crop” MY 2015/16.
As a result, U.S. Energy Feeds per Grain Consuming Animal Unit is estimated to be 1.476 metric tons per
animal unit (mt/au) in MY 2013/14, and 1.552 mt/au in “current” MY 2014/15, and is projected to be 1.509
mt/au in “new crop” MY 2015/16. 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 the record “large crop”
years of MY 2013/14 and “current” MY 2014/15, and now into the expected third consecutive large crop year
in “new crop” MY 2015/16 for corn and other aggregated feedgrains, the amount of energy feeds fed per
animal unit and total feed use of U.S. corn has increased – contributing to downward pressure on the prices of
U.S. corn and other feedgrains.
Total Use of U.S. Corn for “new crop” MY 2015/16 is projected to be a record high 13.735 bb (down 25 mb
from June) – up from the current record highs of 13.696 bb in “current” MY 2014/15 (up 99 mb from June)
(Table 1 and Figures 6 and 8). United States’ total corn use has varied widely in recent marketing years – due
largely to changes in available U.S. corn supplies. Corn use in the U.S. over time has changed from 12.737 bb in
MY 2007/08, to 12.008 bb in MY 2008/09, 13.041 bb in MY 2009/10, 13.033 bb in MY 2010/11, 12.482 bb in
MY 2011/12, 11.083 bb in MY 2012/13, the one time record high of 13.454 bb in MY 2013/14, the previous
Page | 7
record high amount of 13.696 bb in “current crop” MY 2014/15, and now the new projected record high of
13.735 bb in “new crop” MY 2015/16.
U.S. Corn Ending Stocks, % Ending Stocks‐to‐Use, & Prices
U.S. corn ending stocks for “new crop” MY 2015/16 are projected to be 1.599 bb (down 172 mb from
June), which is down 180 mb from 1.779 bb in “current” MY 2014/15 (also down 97 mb from June) (Table 1 &
Figure 9). Since MY 2006/07 (1.304 bb), U.S. corn ending stocks have been 1.624 bb in MY 2007/08, 1.673 bb
in MY 2008/09, 1.708 bb in MY 2009/10, 1.128 bb in MY 2010/11, 989 mb in MY 2011/12, 821 mb in “drought
stricken” MY 2012/13, 1.232 bb in MY 2013/14, 1.779 bb in “current crop” MY 2014/15, and now are forecast
to be 1.599 bb in “new crop” MY 2015/16.
Projected percent (%) ending stocks‐to‐use of 11.64% in “new crop” MY 2015/16 is down from 12.87% in
the June WASDE report, and down from 13.00% in “current” MY 2014/15 (Table 1 and Figures 9 and 10). On a
year‐by‐year basis, U.S. corn % ending stocks‐to‐use trended downward from 12.75% in MY 2007/08 and
13.94% in MY 2008/09, to 13.10% in MY 2009/10, 8.65% in MY 2010/11, 7.92% in MY 2011/12, and then down
to 7.41% in “drought stricken” MY 2012/13, before increasing for the first time in six (6) years to 9.16% in MY
2013/14, and then to 12.99% in “current” MY 2014/15 – with a projected decline to 11.64% in “new crop” MY
2015/16.
U.S. average corn prices for “new crop” MY 2015/16 are projected to be in the range of $3.45‐$4.05 bu/ac
(midpoint = $3.75) – up from a projection of $3.20‐$3.80 ($3.50 midpoint) (Table 1 and Figures 9 and 10).
Since the beginning of the rapid expansion in U.S. ethanol production in 2006, U.S. corn prices have moved
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.
However, if the July 10th WASDE projection holds true, prices will now have declined since the $6.89 record
high in MY 2012/13, down to $4.46 in MY 2013/14, $3.60‐$3.80 (midpoint = $3.70) in “current crop” MY
2014/15, and to $3.45‐$4.05 (midpoint = $3.75) in “new crop” MY 2015/16.
I‐D. KSU Corn Market Scenarios for “New Crop” MY 2015/16
Kansas State University Research and Extension has provided forecasts of U.S. corn supply‐demand
balances and prices for the “new crop” 2015/16 marketing year to complement and expand upon those of the
USDA, with details provided below. Three probability‐weighted Kansas State University (KSU) projections are
provided.
The first scenario is based on USDA reported U.S. corn acreage with a yield of 165.0 bu/ac – given a 30%
probability of occurring in 2015. The second scenario is based on the USDA’s most recent projections of
planted and harvested 2015 U.S. corn planted acreage, along with a normal crop “trend yield” of 162.25 bu/ac
– given a 55% probability of occurring in 2015. The third scenario is based on USDA planted acreage
projections and a short crop “low yield” of 155.0 bu/ac – given a 15% probability of occurring in 2015.
KSU Scenario #1 – A “Normal Crop” of 13.382 bb with 30% Likelihood of Occurring
For “new crop” MY 2015/16, this “normal crop” yield KSU projection reflects the likelihood of a reduction
in U.S. corn planted acreage in 2015 (equal to June 30th USDA Acreage report projections), and how U.S. corn
yields that are at least moderately lower than USDA’s most recent July 10th WASDE projection would impact
Page | 8
2015 U.S. corn production, supply‐demand balances and prices in the coming “new crop” 2015/16 marketing
year, i.e., September 1, 2015 through August 31, 2016. This scenario is thought to have approximately a 30%
probability of occurring (i.e., 3 out of 10) at this point in time.
Specifically, this KSU U.S. corn supply‐demand scenario assumes that 2015 U.S. corn planted acreage will
be down 1.700 million acres (ma) to 88.897 ma (equal to the USDA’s June 30th Acreage Report projection),
with 2015 U.S. corn harvested acreage down 2.035 ma to 81.101 ma (also equal to the USDA’s June 30th
Acreage Report projection) (Table 1 and Figure 3). Forecast 2015 U.S. corn yields of 165.0 bu/ac in this
scenario are down from the USDA’s July 10th forecast of 166.8 bu/ac, but still up from the long term (1973‐
2014) trend line U.S. corn yields of 162.3 bu/ac. Taking these forecasts of 2015 U.S. corn acreage and yields
together, 2015 U.S. corn production is forecast to be 13.382 bb.
Following these projections of corn production for “new crop” MY 2015/16, U.S. total corn usage is then
estimated to be a record high 13.710 – down marginally from the USDA’s July 10th projection of 13.735 bb for
“new crop” MY 2015/16 (Table 1 and Figure 6).
In this scenario, KSU estimates are for U.S. corn ending stocks to be 1.476 bb, and for % ending stocks‐to‐
use of 10.77% for “new crop” MY 2015/16. Marketing year average U.S. corn prices would be projected to
average near $4.25 /bu for “new crop” MY 2015/16 (Table 1 and Figures 9 and 10).
Following is the KSU “normal crop / trend yield” U.S. corn supply‐demand and price scenario for “new
crop” MY 2015/16 – given a 30% probability of occurring.
1st KSU Scenario for “New Crop” MY 2015/16 U.S. Corn Supply/Demand & Prices
Estimated Probability of Occurring = 30% …
September 1, 2015
Grain Market Outlook
g stocks of 902 mb, 6.72% S/U, & $6.90 /bu U.S. corn MYA prices.
World Corn Supply‐Demand: World total supplies of 1,183 million metric tons (mmt) are projected for “new
crop” MY 2015/16, up from 1,181 mmt in “old crop” MY 2014/15, and 1,128 mmt in MY 2013/14. Projected
World corn ending stocks of 195.1 mmt (19.8% S/U) in “new crop” MY 2015/16 are down marginally from
197.4 mmt (20.1% S/U) in “old crop” MY 2014/15, but up from 175.0 mmt (18.4% S/U) in MY 2013/14.
Page | 2
I. U.S. Corn Market Situation and Outlook
I‐A. August USDA Reports & “New Crop” MY 2015/16 Projections
On August 12th the USDA National Agricultural Statistics Service (NASS) in its Crop Production report
made its’ first projection of 2015 U.S. corn production as of August 1, 2015 that was based on actual farmer
surveys and field trials. On the same day the USDA World Agricultural Outlook Board (WAOB) released its
August 2015 World Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World
corn supply‐demand and price projections for the 2013/14, “old crop” 2014/15, as well as the “new crop”
2015/16 marketing years. The “new crop” 2015/16 marketing year for U.S. corn began on September 1, 2015
and will last through August 31, 2016.
I‐B. CME DEC 2015 & MAY 2016 Corn Futures Trends
The CME DECEMBER 2015 corn contract is now the “lead” corn futures contract – representing “new crop”
2015 corn market price prospects. Local basis adjustments are now being made off DEC 2015 corn futures for
spot cash corn and grain sorghum price bids in North America as well as other World grain markets. The “new
crop” DECEMBER 2015 corn futures market contract initially responded in a “very negative” manner to the
information in the August 12th USDA reports, but in the days afterward have trended “first higher then
sideways”. 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.
On the day of the report – Wednesday, August 12th – Chicago Mercantile Exchange (CME) DECEMBER 2015
corn futures prices opened at $3.87 ¾ per bushel, and traded in a range of $3.57 ½ ‐ $3.93 ½ during the
session, before settling at $3.68 – down $0.19 ½ for the day (Figure 1). Since then, DECEMBER 2015 Corn has
traded from a low of $3.65 ½ on Monday, August 24th to a high of $3.86 ¾ on Tuesday, August 25th to before
closing at $3.75 ¼ on Monday, August 31st.
Figure 1. DECEMBER 2015 & MAY 2016 CME Corn Futures Price Charts …
October 19, 2016
Grain Market Outlook
p” MY 2015/16, and from 208.9 mmt (21.3% S/U) in MY
2014/15. Although World corn ending stocks are projected to be a record high in “new crop” MY 2016/17 at
216.8 mmt, World corn percent ending stocks‐to‐use in “new crop” MY 2016/17 are forecast to actually
decline to 21.3% ‐ indicative of expected continued strong World demand for corn at low prices – especially in
Europe where grain production has been hampered by extreme weather conditions.
Brazil corn production in “old crop” MY 2015/16 (1st crop harvested in January‐May 2016, 2nd crop harvested
in May‐August) is estimated to be 67.0 mmt, down 18.0 mmt (down 21.2%) from 85.0 mmt in MY 2014/15.
This shortfall in Brazilian corn production in 2016 has provided support for U.S. corn exports and even ethanol
production (via exports). However, expectations of a record large 2016 U.S. corn crop have had a predominant
negative impact on U.S. corn market prices through late summer and early fall. Brazilian corn production is
forecast by the USDA to rebound back to 83.5 mmt in MY 2016/17 (2017 production). Uncertainty about
Brazilian corn production prospects in 2017 could be a major factor impacting U.S. and World corn prices in the
coming spring and summer months of 2017.
China corn production in “new crop” MY 2016/17 (harvested in September‐October 2016) is estimated to be
216.0 mmt, down 8.6 mmt (down 3.8%) from 224.6 mmt in MY 2015/16, but marginally higher than 215.65
mmt in MY 2014/15. A major focus in World corn markets is on the size of Chinese ending stocks and on
recent changes in China’s domestic corn stock management policies. Ending stocks of corn in China are
projected to be 103.7 mmt (45.9% SU) in “new crop” MY 2016/17, down from 110.7 mmt (50.9% S/U) in “old
crop” MY 2015/16, but up from 100.5 mmt (49.7% S/U) in MY 2014/15. Over the last three marketing years,
percent ending stocks‐to‐use of corn for China ranging from 49.7% to 50.9% are the highest since MY 2002/03
(51.6%). During the interim MY 2003/04 to MY 2013/14 period, Chinese corn percent ending stocks‐to‐use
averaged 30.5%, ranging from 25.2% to 39.1%.
…
September 5, 2017
Grain Market Outlook
d from $3.22 ¾ ($0.35 under
Page | 2
DEC) to $3.72 ¾ ($0.15 over DEC) – indicating continuing strength in ethanol demand for corn in Kansas and
nationwide. While the “large supply and tight storage availability” situation still predominates in local Kansas
grain markets, it is a positive that Kansas cash corn prices have avoided falling down to USDA loan rate levels.
3. Major Corn Market Considerations for Fall 2017 through Spring 2018
First, large beginning stocks of U.S. corn coming into “new crop” MY 2017/18 have been a “mitigating”
factor limiting the response of the corn market to 2017 summer production risk. The corn market has been
less anxious about the adequacy of corn supplies in the face of 2017 U.S. corn production risk since beginning
stocks for “new crop” MY 2017/18 have been up to 2.370 bb rather than down to 1.000 bb.
Second, it is anticipated that low prices for U.S. corn will help maintain strong usage for domestic U.S.
ethanol and wet milling production, as well as livestock feeding through at least fall‐winter 2017.
Third, at least moderate continued strength is expected in U.S. corn exports due to low U.S. corn prices
and a moderate weakening of the U.S. dollar against other World currencies. Exports of U.S. corn are expected
to continue at a “decent” pace of 1.850 bb for “new crop” MY 2017/18 even though South American corn
production will continue to be a competitive factor in World trade through at least the end of 2017. Also,
preliminary forecasts for 2018 are that Brazilian corn acreage will be lower due to low prices and poor
profitability in 2017 – which may have a positive effect on U.S. corn exports and price prospects.
Fourth, a possibility exists of broader U.S. and Foreign economic and/or financial system disruptions that
could impact grain, energy, and other commodity markets in 2017‐2018. World geo‐political events could
provide “shocks” to U.S. and World energy and grain markets which could in turn impact grain prices in either
direction depending on the circumstances and the countries involved and their role in global corn export trade.
4. USDA Supply‐Demand & Price Forecast for “New Crop” MY 2017/18
With the USDA’s projection of 2017 U.S. corn plantings at 90.886 million acres or ‘ma’ (down 3.118 ma
from 2016), harvested acres of 83.496 ma (down 3.252 ma), and projected yields of 169.5 bu/ac (vs the record
high of 174.6 in 2016), 2017 U.S. corn production is forecast to be 14.153 bb – down from the record high of
15.148 bb in 2016.
The USDA forecast “new crop” MY 2017/18 total supplies to be 16.573 bb – down 367 mb from last year’s
record high. Total use is forecast at 14.300 bb – down 270 mb from last year’s record high. Ending stocks are
projected to be 2.273 bb (15.90% S/U) – down from 2.370 bb (16.27% S/U) in “old crop” MY 2016/17. United
States’ corn prices are projected to average $3.30 /bu (range of $2.90‐$3.70). This is down $0.05 /bu from the
midpoint estimate of $3.35 /bu from “old crop” MY 2016/17. This scenario is given a 50% likelihood of
occurring by KSU Extension Agricultural Economist D. O’Brien.
5. Alternative KSU Supply‐Demand & Price Forecast for “New crop” MY 2017/18
Four alternative KSU‐Scenarios for U.S. corn supply‐demand and prices are presented for “new crop” MY
2017/18. Each forecast scenario presents the likelihood of lower U.S. corn acreage, yields and production than
projected by the USDA in the August 10, 2017 WASDE report for “new crop” MY 2017/18.
A ‐ KSU “New crop” MY 2017/18 Scenario #1) “167.3 bu/ac – 13.815 bb” Scenario (35% probability) assumes:
89.886 ma planted, 82.577 ma harvested, 167.3 bu/ac trend yield, 13.815 bb production, 16.235 bb total
supplies, 14.245 bb total use, 1.990 bb ending stocks, 13.97% S/U, & $3.60 /bu U.S. corn average price for
“new crop” MY 2017/18;
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B ‐ KSU “New crop” MY 2017/18 Scenario #2) “164.0 bu/ac – 13.543 bb” Scenario (10% probability) assumes:
89.886 ma planted, 82.577 ma harvested, 164.0 bu/ac yield, 13.543 bb production, 15.963 bb total
supplies, 14.120 bb total use, 1.843 bb ending stocks, 13.05% S/U, & $3.75 /bu U.S. corn average price for
“new crop” MY 2017/18;
C ‐ KSU “New crop” MY 2017/18 Scenario #3) “160.0 bu/ac – 13.212 bb” Scenario (4% probability) assumes:
89.886 ma planted, 82.577 ma harvested, 160.0 bu/ac yield, 13.212 bb production, 15.632 bb total
supplies, 13.920 bb total use, 1.712 bb ending stocks, 12.30% S/U, & $3.85 /bu U.S. corn average price for
“new crop” MY 2017/18;
D ‐ KSU “New crop” MY 2017/18 “Wildcard” Scenario #4) “167.3 bu/ac – 13.815 bb” Scenario (1%
probability) assumes: 89.886 ma planted, 82.577 ma harvested, 167.3 bu/ac trend yield, 13.815 bb
production, 16.235 bb total supplies, 14.085 bb total use, 2.150 bb ending stocks, 15.26% S/U, & $3.45 /bu
U.S. corn average price for “new crop” MY 2017/18;
Note: even with significant reductions in 2017 U.S. corn production as represented in the KSU Scenarios A, B, C
and D above, the presence of large beginning stocks of 2.370 bb in “new crop” MY 2017/18 limit the
“tightness” of corn supply‐demand balances, and hinders any upward price responses.
5. World Corn Supply‐Demand – With & Without China
World corn production of 1,033.5 million metric tons (mmt) is projected for “new crop” MY 2017/18, down
1.7% from the record high of 1,070.5 mmt in “old crop” MY 2016/17, but still up 7.1% from 969.5 mmt in MY
2015/16. Near record World corn total supplies of 1,262.1 mmt are projected for “new crop” MY 2017/18,
down marginally from the record high of 1,284.0 mmt in “old crop” MY 2016/17, but up from 1,178.7 mmt in
MY 2015/16.
World corn exports of a 152.0 mmt are projected for “new crop” MY 2017/18, down 6.4% from the record
high of 162.4 mmt in “old crop” MY 2016/17, and up 27.1% from 119.6 mmt in MY 2015/16. Projected World
corn ending stocks of 200.9 mmt (18.9% S/U) in “new crop” MY 2017/18 are down from the record high 228.6
mmt (21.7% S/U) in “old crop” MY 2016/17, and from 213.5 mmt (22.1% S/U) in MY 2015/16.
An alternative view of the World corn supply‐demand is presented if Chinese corn usage and ending stocks
are isolated from the World market. “World Less China” corn ending stocks are projected to be 119.6 mmt
(14.5% S/U) in “new crop” MY 2017/18, down from 127.3 mmt (15.5% S/U) in “old crop” MY 2016/17, but up
from 102.7 mmt (13.7% S/U). These figures show that World stocks‐to‐use of corn less China’s direct influence
are projected to be down approximately 23% (i.e., 14.5% S/U for the “World Less China” versus 18.9% S/U for
the “World” overall in “new crop” MY 2017/18).
These figures also show that Chinese ending stocks of corn as proportion of the World overall is declining –
down from 51.9% in MY 2015/16 to 44.3% in “old crop” MY 2016/17, and down to 40.5% in “new crop” MY
2017/18. The deliberate actions taken by the Chinese government in recent years to reduce feedgrain
stockpiles is impacting the relative amount of corn stocks they hold in the World corn market.
…
February 1, 1999
Land Rental
Rates
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Breakout Sessions
non-market valuation and involves surveys, market experiments, and … a) gathering information about supply and
demand ……
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Breakout Sessions
paradox has led to
questions about the mass appraisal method … Landlord
Share determined
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Weighted
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