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April 25, 2016
Grain Market Outlook
d production prospects.
Market factors such as a) economic and financial system disruptions impacting grain, energy, and other
commodity markets, b) U.S. farmer resistance to selling at low late‐April and May 2016 cash corn prices, and c)
concerns about possible “El Nino” or “El Nino‐La Nina transition”‐ related weather patterns in spring‐summer
2016 with an eye toward their possible negative impacts on 2016 crop production, could each still impact corn
market prices through summer‐fall 2016. Also, low feedgrain prices have resulted in lower input costs for U.S.
and Foreign livestock feeding and bioenergy users – leading to strong domestic and foreign feedgrain usage
and providing underlying support for U.S. corn exports. In the “current” 2015/16 marketing year the high
value of the U.S. dollar and prospects for a large 2016 South American corn crop have been significant limiting
factors for U.S. corn exports – although the U.S. dollar has been trending lower in recent weeks.
USDA Estimate for “Current” MY 2015/16: The USDA made several changes to the U.S. corn supply‐demand
balance sheet for “current crop” MY 2015/16 – with 2015 U.S. corn production of 13.601 bb, and total supplies
of 15.382 bb for MY 2015/16. Total use is projected to be 13.521 bb (down 24 million bushels or ‘mb’) Ethanol
use was projected to be 5.250 bb (up 25 mb), with non‐ethanol Food, Seed, and Industrial (FSI) use of 1.371 bb
(up 1 mb), exports of 1.650 bb, and feed and residual use of 5.250 bb (down 25 mb). Ending stocks are
forecast to be up 25 mb to 1.862 bb (13.77% S/U) in “current” MY 2015/16 – up from 1.731 bb (12.6% S/U) in
“old crop” MY 2014/15, and 1.232 bb (9.2% S/U) in MY 2013/14. U.S. corn average cash prices are forecast to
be in the range of $3.40‐$3.70 /bu. ($3.55 midpoint) versus $3.70 in “old crop” MY 2014/15, $4.46 in MY
2013/14, and $6.89 (record high) in MY 2012/13.
Adjusted USDA Forecast for “Next Crop” MY 2016/17: An adjusted version of the USDA’s “next crop” MY
2016/17 forecast for U.S. corn is presented here, building on the information presented by the USDA at its
Agricultural Outlook Forum in Arlington, VA on February 25‐26, with 2015 U.S. corn planted acres matching
the higher March 31st Prospective Planting report planted acreage forecast. Projected 2016 U.S. corn
plantings equal 93.601 ma – up 5.602 ma from 2015. Forecast 2016 harvested acres of 85.413 ma would be up
4.664 ma vs 2015. With projected yields of 168.0 bu/ac, 2016 U.S. corn production is projected to be a record
14.349 billion bushels (bb) – up from 13.829 bb in 2013, 14.216 bb in 2014, and 13.601 bb in 2015. With
forecast MY 2016/17 total use of 13.725 bb (2nd highest behind 13.748 bb in “old crop” MY 2014/15), and
projected ending stocks of 2.486 bb (18.11% S/U) – up from 1.862 bb (13.77% S/U) in “current crop” MY
2015/16, U.S. corn prices are projected by the USDA to be $3.45 /bu – down from the $3.55 /bu midpoint
estimate for “current” MY 2015/16 and subject to lowering in future USDA WASDE reports. This scenario is
given a 35% likelihood of occurring by KSU.
Page | 2
KSU Forecast for “Next Crop” MY 2016/17: Three alternative KSU‐Scenarios for U.S. corn supply‐demand and
prices are presented for “next crop” MY 2016/17, with each assuming a 1.5 ma downward adjustment in 2016
U.S. corn planted acres from the USDA’s March 31st Prospective Plantings report. A) KSU‐Scenario A (Lower
Acres & Trend Yield) (30% probability) assumes for “next crop” MY 2016/17: 92.101 ma planted, 84.404 ma
harvested, 164.5 bu/ac yield, 13.825 bb production, 15.727 bb total supplies, 13.640 bb total use, 2.087 bb
ending stocks, 15.30% S/U, & $3.20 /bu U.S. corn average price; B) KSU‐Scenario B (Lower Acres & Moderate
Drought) (25% prob.) assumes 92.101 ma planted, 84.404 ma harvested, 158.0 bu/ac yield, 13.279 bb
production, 15.186 bb total supplies, 13.575 bb total use, 1.611 bb ending stocks, 11.87% S/U, & $3.70 /bu U.S.
corn price; and C) KSU‐Scenario C (Lower Acres & Extreme Drought) (10% prob.) assumes 92.101 ma planted,
84.404 ma harvested, 150.0 bu/ac yield, 12.607 bb production, 14.519 bb total supplies, 13.382 bb total use,
1.137 bb ending stocks, 8.5% S/U, & $4.75 /bu U.S. corn price.
World Corn Supply‐Demand: World total supplies of 1,179.7 million metric tons (mmt) are projected for
“current” MY 2015/16, down from 1,187.9 mmt in “old crop” MY 2014/15, but up from 1,123.9 mmt in MY
2013/14. Projected World corn ending stocks of 208.9 mmt (21.5% S/U) in “current” MY 2015/16 are up from
207.6 mmt (21.2% S/U) in “old crop” MY 2014/15, and from 175.0 mmt (18.4% S/U) in MY 2013/14.
…
June 1, 2016
Grain Market Outlook
Market factors such as a) potential future economic and financial system disruptions impacting grain, energy,
and other commodity markets, b) U.S. farmer resistance to selling at low late‐May and June 2016 cash corn
prices, and c) concerns about possible “El Nino” or “El Nino‐La Nina transition”‐ related weather patterns in
spring‐summer 2016 with an eye toward their possible negative impacts on 2016 crop production, could each
still impact corn market prices through summer‐fall 2016. However, farmer resistance to “old crop” cash sales
will be forced to give way in coming months as the 2016 U.S. corn crop develops and approaches harvest in
coming months. Also, low feedgrain prices have resulted in lower input costs for U.S. and Foreign livestock
feeding and bioenergy users – leading to strong domestic and foreign feedgrain usage and providing
underlying support for U.S. corn exports. In the “current” 2015/16 marketing year the high value of the U.S.
dollar and prospects for a large 2016 South American corn crop have been significant limiting factors for U.S.
corn exports – although the U.S. dollar has been trending lower since early February 2016 – coinciding with
moderately improved U.S. corn exports.
USDA Estimate for “Current” MY 2015/16: The USDA made several changes to the U.S. corn supply‐demand
balance sheet for “current crop” MY 2015/16 – with 2015 U.S. corn production of 13.601 bb, and total supplies
of 15.387 bb for MY 2015/16 (up 5 million bushels or ‘mb’ due to increased imports). Total use is projected to
be 13.585 bb (up 64 mb). Ethanol use was projected to be 5.250 bb, with non‐ethanol Food, Seed, and
Industrial (FSI) use of 1.360 bb (down 11 mb), exports of 1.725 bb (up 75 mb), and feed and residual use of
5.250 bb. Ending stocks are forecast to be down 59 mb to 1.803 bb (13.27% S/U) in “current” MY 2015/16 –
up from 1.731 bb (12.6% S/U) in “old crop” MY 2014/15, and 1.232 bb (9.2% S/U) in MY 2013/14. U.S. corn
average cash prices are forecast to be in the range of $3.50‐$3.70 /bu. ($3.60 midpoint) versus $3.70 in “old
crop” MY 2014/15, $4.46 in MY 2013/14, and $6.89 (record high) in MY 2012/13.
USDA Forecast for “New Crop” MY 2016/17: The USDA provided it’s first WASDE report forecast “new crop”
MY 2016/17 forecast for U.S. corn – relying on the USDA March 31st Prospective Planting report planted
acreage forecast and a number of other harvested acreage and yield assumptions. Projected 2016 U.S. corn
plantings equal 93.601 ma – up 5.602 ma from 2015. Forecast 2016 harvested acres of approximately 85.893
ma would be up 5.144 ma vs 2015. With projected yields of 168.0 bu/ac, 2016 U.S. corn production is
projected to be a record 14.430 bb – up from 13.601 bb in 2015, 14.216 bb in 2014, and 13.829 bb in 2013.
With forecast “new crop” MY 2016/17 total use of 14.120 bb (record high), and projected ending stocks of
Page | 2
2.153 bb (15.24% S/U) – up from 1.803 bb (13.27% S/U) in “current crop” MY 2015/16 – U.S. corn prices are
projected by the USDA to be in the range of $3.05‐$3.65 (midpoint = $3.35 /bu) – with the midpoint of $3.35
being down from the $3.60 /bu midpoint estimate for “current” MY 2015/16. This scenario is given a 40%
likelihood of occurring by Kansas State University.
KSU Forecasts for “New Crop” MY 2016/17: Three alternative KSU‐Scenarios for U.S. corn supply‐demand and
prices are presented for “new crop” MY 2016/17, with each assuming a 1.0 ma downward adjustment in 2016
U.S. corn planted acres from the USDA’s March 31st Prospective Plantings report. A) KSU “trend yield”
scenario (30% probability) assumes the following for “new crop” MY 2016/17: 92.601 ma planted, 84.545 ma
harvested, 164.5 bu/ac trend yield, 13.908 bb production, 15.751 bb total supplies, 13.637 bb total use, 2.114
bb ending stocks, 15.50% S/U, & $3.30 /bu U.S. corn average price; B) KSU “moderate drought” scenario (20%
prob.) assumes 92.601 ma planted, 84.545 ma harvested, 158.0 bu/ac yield, 13.358 bb production, 15.206 bb
total supplies, 13.497 bb total use, 1.709 bb ending stocks, 12.66% S/U, & $3.75 /bu U.S. corn price; and C)
KSU “serious drought” scenario (10% prob.) assumes 92.601 ma planted, 84.545 ma harvested, 150.0 bu/ac
yield, 12.682 bb production, 14.535 bb total supplies, 13.257 bb total use, 1.278 bb ending stocks, 9.6% S/U, &
$4.40 /bu U.S. corn price.
World Corn Supply‐Demand: World total supplies of 1,011.1 million metric tons (mmt) are projected for “new
crop” MY 2016/17, up from 1,176.7 mmt in “current crop” MY 2015/16, and up from 1,188.7 mmt in MY
2014/15. Projected World corn ending stocks of 207.0 mmt (20.5% S/U) in “new crop” MY 2016/17 are up
from 207.87 mmt (21.5% S/U) in “current crop” MY 2015/16, and from 207.88 mmt (21.2% S/U) in MY
2014/15.
…
May 28, 2015
Grain Market Outlook
ose available from South
America (with their “weaker” currencies). Soybean price prospects seem limited until June‐July 2015 ‐ the
when questions about late planting problems in … y 2015 World
Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World soybean supply‐
demand and price projections for the 2013/14, “current” 2014/15, as well as the “new crop” 2015/16
marketing years. The “new crop” 2015/16 U.S. corn marketing year will begin on September 1, 2015 and will
last through August 31, 2016.
In the May 12th WASDE report the USDA released projections for the “new crop” 2015/16 marketing year
for corn, grain sorghum, wheat, soybeans and other major crops. Projections of 2015 crop size for soybeans
are based on WAOB estimates of crop acreage and yields. However, the first projection of 2015 U.S. soybean
production by the USDA National Agricultural Statistics Service (NASS) that will be based on actual farmer
surveys and field trials will be in the August 12, 2015 NASS Crop Production and WAOB WASDE reports.
I‐B. Updated Comments on Predominant Soybean Market Trends
The activities of the World soybean market in over the last 3 to 5 years can be better understood if a
person recognizes several “predominant trends” that have been occurring in production and export/import
trade among major countries and regions of the World involved in the soybean trade. The primary countries
involved in these predominant trends have been China on the demand side and South American countries
(Brazil, Argentina, Paraguay, and others) and the United States on the supply side.
Uptrends in Chinese Soybean Usage & Imports
Growing Chinese domestic use and imports of soybeans have been the key market demand “driver” in
World soybean markets in recent years. Chinese soybean domestic usage is has increased from 76.18 million
metric tons (mmt) in MY 2012/13 (29.1% of World use), up to 80.3 mmt in MY 2013/14 (29.2% of World use),
to 85.78 mmt in “current crop” MY 2014/15 (29.4% of World use), and further up to a projected level of 89.25
mmt (29.3% of World use) in “new crop” MY 2015/16. Chinese soybean domestic usage of 89.25 mmt in “new
crop” MY 2015/16 is projected to be up 4.1% over 85.78 mmt in “current” MY 2014/15, and up 11.1% over
80.3 mmt two years ago.
Chinese domestic production of soybeans was 13.05 mmt in MY 2012/13 (17.1% of total use), 12.2 mmt in
MY 2013/14 (15.2% of usage), 12.35 mmt in “current” MY 2014/15 (14.4% of use), and is projected to be 11.5
mmt in “new crop” MY 2015/16 (12.9% of use). With domestic production declining as a proportion of total
use over the last three marketing years with more declines expected in “new crop” MY 2015/16, China is
forced to rely even more heavily on sizable amounts of soybean imports to fill domestic use needs.
Chinese soybean imports were estimated to be 59.9 mb in MY 2012/13 (62.4% of World soybean imports),
70.4 mb in MY 2013/14 (63.2% of the World total), and 73.5 mb in “current crop” MY 2014/15 (64.4% of the
World total), while being projected at 77.5 mmt in “new crop” MY 2015/16 (64.8% of the World total).
Chinese soybean imports of 77.5 mmt in “new crop” MY 2015/16 are projected to be up 5.4% over “current”
MY 2014/15, and up 10.1% over two years ago.
Page | 3
Recent Trends in Major South American Country’s Soybean Production & Exports
There have been three successively larger record years of combined Brazil, Argentina and Paraguay
soybean production of 139.5 mmt in MY 2012/13, 148.4 mmt in MY 2013/14, and 161.5 mmt in “current crop”
MY 2014/15, with a fourth successive increase projected up to 162.8 mmt in “new crop” MY 2015/16.
Soybean production from these three key South American countries amounted to 51.9% of World production
in MY 2012/13, 52.4% in MY 2013/14, and 50.9% in “current” MY 2014/15, and is projected to be 51.3% of the
World total in MY 2015/16. Projected combined Argentina, Brazil and Paraguay soybean production of 162.8
mmt in “new crop” MY 2015/16 is estimated to be up 0.8% over “current” MY 2014/15, up 9.7% over MY
2013/14, and up 16.7% over MY 2012/13.
South American soybean exports have grown in a manner similar to production over this same period.
Overall, combined Brazil, Argentina and Paraguay soybean exports have trended higher in recent years –
starting with 55.16 mmt in MY 2012/13, then up to 59.47 mmt in MY 2013/14, and 58.45 mmt in “current” MY
2014/15, with an increase projected up to 62.85 mmt in “new crop” MY 2015/16. Total soybean exports from
these three key South American countries as a proportion of World exports has actually trended lower in
recent years, amounting to 54.9% in MY 2012/13, to 52.7% in MY 2013/14, and 49.7% of the World total in
“current” MY 2014/15, with a projection of 51.5% of World soybean exports in “new crop” MY 2015/16.
Projected combined Argentina, Brazil and Paraguay soybean exports of 62.85 mmt in “new crop” MY 2015/16
are projected to be up 7.5% from 58.45 mmt in “current” MY 2013/14, up 5.7% from 59.471 mmt in MY
2013/14, and up 13.9% from 55.16 mmt in MY 2012/13. The short term marginal decline in combined Brazil,
Argentina and Paraguay exports as a proportion of World soybean trade in “current” MY 2014/15 has been
caused by increases in United States’ exports.
Uptrends in United States’ Soybean Production & Exports
The growth in United States’ soybean production and exports compares to that in South America over this
same three period, with 82.8 mmt of U.S. soybean production in MY 2012/13 (30.8% of World total), 91.4 mmt
in MY 2013/14 (32.3% of World total), 108.0 mmt in “current” MY 2014/15 (34.0% of the World total), and a
projected level of 104.8 mmt in MY 2015/16 (33.0% of World total). Projected U.S. soybean production of
104.8 mmt (3.850 billion bushels or ‘bb’) in “new crop” MY 2015/16 is projected to be down 3.0% from 108.0
mmt (3.969 bb) in “current” MY 2014/15, but up 10.8% from 91.4 mmt (3.358 bb) in MY 203/14.
United States’ soybean exports have grown from 35.85 mmt in MY 2012/13 (35.7% of World total), to 44.8
mmt (1.647 bb) in MY 2013/14 (39.7% of World total), to 49.0 mmt (1.800 bb) in “current” MY 2014/15 (41.7%
of the World total), with a projection of 48.3 mmt (1.775 bb) in “new crop” MY 2015/16. Projected U.S.
soybean exports of 48.3 mmt in “new crop” MY 2015/16 are projected to be down 1.4% from “current” MY
2014/15, but up 7.8% from MY 2013/14.
The Necessity to the Soybean Market of Continued Strength in Chinese Import Demand
It is widely acknowledged by soybean market analysts that continued growth and/or at least “level
sustainability” of Chinese soybean imports at current and projected levels is necessary for continuance of the
historically high World soybean market prices that have occurred since the 2012/13 marketing year. The USDA
has continued to project that strong growth would occur in Chinese soybean imports in “new crop” MY
2015/16 and beyond. If this recent upward trend in Chinese soybean imports and import demand were to
falter, it would unquestionably have a substantial negative impact on U.S. and World soybean market prices.
Page | 4
As a result of a record large fall harvest of soybeans in the United States in 2014 and another anticipated
large crop in 2015, spot cash soybean prices at Farmers Grain Coop in Hutchinson, Kansas (Hutchinson being a
major grain market hub in the south central part of the state) had fallen to as low as $8.44 per bushel on
September 26, 2015, before moving above $9.00 on October 24, 2015. Cash soybean prices at this location
have traded in the range of $8.86 (on May 26, 2015) to $9.93 (on November 11, 2014 and January 6, 2015)
since then, with a cash spot price of $8.86 ($0.36 under basis) offered on Wednesday, May 26th.
Soybean forward contract prices for fall harvest in October 2015 in the Hutchinson, Kansas area on
Wednesday, May 27th were in the range of $8.29 / bu. ($0.78 under basis November 2015 CME Soybean
Futures) to $8.56 ($0.51 under basis). “New crop” NOV 2015 soybean futures were trading at $9.15 per bushel
that day at the time of these new crop forward contract bids on May 27th.
Given that the USDA projections for “current crop” MY 2014/15 and “new crop” MY 2015/16 indicate that
a) Chinese soybean imports will continue to be strong, and b) South American soybean production to be
harvested in early‐mid 2015 will again be record high, there is no indication yet that any change is expected in
these projected trends in production, exports or imports in the broader World soybean market. The
possibility of weather‐related soybean production problems in the United States during the summer‐fall of
2015 could impact these trends. However, until and unless such potential production problems actually do
occur, the World soybean market will likely assume that these “predominant adequate supply trends” will
continue into the foreseeable future.
I‐C. Soybean Futures and U.S. Dollar Index Trends
“Current crop” JULY 2015 soybean futures contract prices responded in a negative manner to the
information in the May 12th USDA reports (Figure 1). On the day of the reports CME JULY 2015 futures prices
opened at $9.73 ½ /bu, and traded as high as $9.81 ½ and as low as $9.55 during the session, before settling at
$9.55 ½ – down $0.18 ½ for the day. Since then JULYY 2015 soybean futures prices have traded within the
range from a high of $9.64 ½ on May 18th, to a low of $9.22 ½ on May 26th, before closing at $9.27 on
Wednesday, May 27th.
Figure 1. JULY 2015 and NOV 2015 CME Soybean Futures Price Charts (electronic trade) …
March 15, 2016
Grain Market Outlook
uction prospects.
Market factors such as a) economic and financial system disruptions impacting grain and energy commodity
markets, b) U.S. farmer resistance to selling at low March‐April 2016 cash corn prices, and c) concerns about
possible “El Nino” or “El Nino‐La Nina transition”‐ related weather patterns in spring‐summer 2016 with
negative impacts on 2016 crop production, could each still impact corn market prices through summer‐fall
2016. Also, low feedgrain prices have resulted in lower input costs for U.S. and Foreign livestock feeding and
bioenergy users – leading to strong domestic feedgrain usage and providing underlying support for U.S. corn
exports. To date in the “current” 2015/16 marketing year the high value of the U.S. dollar and current
prospects for a large 2016 South American corn crop have been significant limiting factors for U.S. corn
exports.
USDA Estimate for “Current” MY 2015/16: The USDA made no changes in its estimate of the U.S. corn supply‐
demand balance sheet for “current crop” MY 2015/16 – with 2015 U.S. corn production of 13.601 bb, and total
supplies of 15.382 bb for MY 2015/16. Total use is projected to be 13.545 bb – including ethanol use of 5.225
bb, non‐ethanol Food, Seed, and Industrial (FSI) use of 1.370 bb, exports of 1.650 bb, and feed and residual use
of 5.300 bb. Ending stocks are forecast at 1.837 bb (13.56% S/U) in “current” MY 2015/16 – up from 1.731 bb
(12.6% S/U) in “old crop” MY 2014/15, and 1.232 bb (9.2% S/U) in MY 2013/14. U.S. corn average cash prices
are forecast to be in the range of $3.40‐$3.80 /bu. ($3.60 midpoint) versus $3.70 in “old crop” MY 2014/15,
$4.46 in MY 2013/14, and $6.89 (record high) in MY 2012/13.
USDA Forecast for “Next Crop” MY 2016/17: At the USDA Agricultural Outlook Conference in Arlington, VA
on February 25‐26, the USDA forecast of U.S. corn supply‐demand and prices for the “next crop” 2016/17
marketing year beginning September 1, 2016. The USDA projected 2016 U.S. corn plantings of 90.000 million
acres (ma) – up 2.001 ma from 2015. Forecast 2016 harvested acres of 82.300 ma would be up 1.551 ma vs
2015. With projected yields of 168.0 bu/ac, 2016 U.S. corn production is projected to be 13.825 billion bushels
(bb) – 3rd highest on record behind 13.829 bb in 2013 and 14.216 bb in 2014, but greater than 13.601 bb in
2015. With forecast MY 2016/17 total use of 13.725 bb (2nd highest behind 13.748 bb in MY 2014/15), and
projected ending stocks of 1.977 bb (14.40% S/U), U.S. corn prices are projected by the USDA to be $3.45 /bu –
down from the $3.60 /bu midpoint estimate for “current” MY 2015/16.
KSU Forecast for “Next Crop” MY 2016/17: Using recent USDA planted and harvested acres projections (see
above), KSU projections are for long term trend yields for 2016 of 164.5 bu/ac, and 2016 U.S. corn production
of 13.538 bb. Total use of 13.665 bb includes 5.265 bb corn use for ethanol (up 40 mb vs USDA), non‐ethanol
food, seed and industrial use of 1.375 bb (same as USDA), exports of 1.650 bb (down 50 mb vs USDA), and
livestock feed and residual use of 5.375 bb (down 50 mb vs USDA). Following these KSU supply and use
Page | 2
projections, ending stocks are projected to be 1.710 bb (12.51% S/U), with U.S. corn prices projected by KSU to
be $3.75 /bu – up $0.30 /bu from the USDA’s early projection of $3.45 /bu for “next crop” MY 2016/17.
Potential KSU 2016 U.S. Corn “Short Crop Scenario – 13.000 Billion Bushels: If moderately significant corn
production problems were to occur in the U.S. in the summer of 2016 resulting in a 13.000 bb corn (157.95
bu/ac yield on 82.300 ma harvested), then all else being equal, ending stocks for “next crop” MY 2016/17
could decline to 1.172 bb (8.5% S/U), with U.S. corn prices likely to increase to $4.50‐$5.50 per bushel.
World Corn Supply‐Demand: World total supplies of 1,174.75 million metric tons (mmt) are projected for
“current” MY 2015/16, down marginally from 1,184.5 mmt in “old crop” MY 2014/15, but up from 1,124.1
mmt in MY 2013/14. Projected World corn ending stocks of 207.0 mmt (21.4% S/U) in “current” MY 2015/16
are up from 205.1 mmt (20.9% S/U) in “old crop” MY 2014/15, and from 174.8 mmt (18.4% S/U) in MY
2013/14.
I. U.S. Corn Market Situation and Outlook
I‐A. March 9th USDA WASDE Report & February 25‐26 Agricultural Outlook
Conference, Arlington, Virginia
On March 9th the USDA World Agricultural Outlook Board (WAOB) released its March 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 “current” 2015/16 marketing years. The
“current” 2015/16 marketing year for U.S. corn began on 9/1/2015 and will last through 8/31/2016.
The March 9th USDA WASDE report followed earlier U.S. corn supply‐demand and price projections for the
“next crop” 2016 provided by the USDA at the 2016 Agricultural Outlook Conference in Arlington, Virginia on
February 25‐26, 2016.
I‐B. CME MAY & DECEMBER 2016 Corn Futures Trends
Since lows of $3.54 ½ on January 7th and $3.54 ½ on March 3rd, MAY 2016 Chicago Mercantile
Exchange (CME) corn futures prices have traded higher. On March 9th when the USDA WASDE report
was released, CME MAY 2016 corn futures opened at $3.60, traded in a range of $3.57 ¼ to $3.61 ½,
and closed $0.01 lower at $3.59 ½. Since that day, CME MAY Corn traded in a range from $3.58 on
March 10th to $3.69 ¼ on March 14th before closing at $3.68 ¾ that same day (Figure 1).
…
September 1, 2015
Grain Market Outlook
… n MY 2013/14. For perspective, these recent supply‐demand figures can be compared to the
historic World wheat ending stocks and stocks‐to‐use minimums of 128.8 mmt and 21.0% S/U in MY 2007/08.
Page | 2
I. U.S. Wheat Market Situation & Outlook
I‐A. August 12th USDA Reports & “New Crop” MY 2015/16 Projections
On August 12th the USDA National Agricultural Statistics Service (NASS) in its Crop Production report with
its’ projections of 2015 U.S. wheat production as of August 1, 2015. Wheat production forecasts in the August
12th Crop Production report were based on actual farm operator surveys and objective yield field trials
conducted between July 25th and August 6th by USDA NASS – representing crop conditions and expected yield
and production prospects as of August 1, 2015.
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 wheat 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 June 1, 2015 and will last
through May 31, 2016.
I‐B. CME KC Hard Red Winter Wheat Futures & U.S. Dollar Index Trends
Since market highs of $6.28 ¾ per bushel for the CME DECEMBER 2015 Kansas hard red winter wheat
futures contract occurred on June 30, 2015, December futures have trended sharply lower – down to a low of
$4.78 ¼ on August 31, 2015 (Figure 1). The slow pace of U.S. wheat exports caused by record large World
wheat production prospects in “new crop” MY 2015/16 and the historically high value of the U.S. dollar have
been key factors causing the recent sharp decline in CME DECEMBER 2015 Kansas HRW wheat prices.
Figure 1. DECEMBER 2015 & JULY 2016 CME Kansas Wheat Futures Price Charts …
June 22, 2015
Grain Market Outlook
… rt – containing U.S. and World soybean supply‐
demand and price projections for the 2013/14, “current” 2014/15, as well as the “new crop” 2015/16
marketing years. The 2014/15 marketing year will end on August 31, 2015, while the “new crop” 2015/16 U.S.
soybean marketing year will begin on September 1, 2015 and will last through August 31, 2016.
In the June 10th WASDE report the USDA released projections for the “new crop” 2015/16 marketing year
for corn, grain sorghum, wheat, soybeans and other major crops. Projections of 2015 crop size for soybean are
based on WAOB estimates of crop acreage and yields. However, the first projection of 2015 U.S. soybean
production by the USDA National Agricultural Statistics Service (NASS) that will be based on actual farmer
surveys and field trials will be in the August 12, 2015 Crop Production and WASDE reports.
I‐B. Updated Comments on Predominant Soybean Market Trends
The activities of the World soybean market in over the last 3 to 5 years can be better understood if a
person recognizes several “predominant trends” that have been occurring in production and export/import
trade among major countries and regions of the World involved in the soybean trade. The primary countries
involved in these predominant trends have been China on the demand side and South American countries
(Brazil, Argentina, Paraguay, and others) and the United States on the supply side.
Uptrends in Chinese Soybean Usage & Imports
Growing Chinese domestic use and imports of soybeans have been the key market demand “driver” in
World soybean markets in recent years. Chinese soybean domestic usage has increased from 80.30 million
metric tons (mmt) in MY 2013/14 (29.1% of World use), up to 80.3 mmt in MY 2013/14 (29.2% of World use),
to 85.70 mmt in MY 2014/15 (29.15% of World use), and further up to a projected level of 89.25 mmt (29.2%
of World use) in “new crop” MY 2015/16. Chinese soybean domestic usage of 89.25 mmt in “new crop” MY
2015/16 is projected to be up 4.1% over 85.70 mmt in MY 2014/15, and up 11.1% over 80.3 mmt two years
ago.
Chinese domestic production of soybeans was 13.05 mmt in MY 2012/13 (17.1% of total domestic use),
12.2 mmt in MY 2013/14 (15.2% of domestic usage), 12.35 mmt in MY 2014/15 (14.4% of domestic use), and is
projected to be 11.5 mmt in “new crop” MY 2015/16 (12.9% of domestic use). With domestic production
declining as a proportion of total domestic use of soybeans in China over the last three marketing years with
more declines expected in “new crop” MY 2015/16, China is finding itself forced to rely even more heavily on
sizable amounts of soybean imports to fill domestic use needs.
Chinese soybean imports were estimated to be 59.9 mb in MY 2012/13 (62.4% of World soybean imports),
70.4 mb in MY 2013/14 (63.2% of the World total), and 73.5 mb in MY 2014/15 (64.1% of the World total),
while being projected at 77.5 mmt in “new crop” MY 2015/16 (64.7% of the World total). Chinese soybean
imports of 77.5 mmt in “new crop” MY 2015/16 are projected to be up 5.4% over MY 2014/15, and up 10.1%
over two years ago.
Page | 3
Recent Trends in Major South American Country’s Soybean Production & Exports
There have been three successively larger record years of combined Brazil, Argentina and Paraguay
soybean production of 139.5 mmt in MY 2012/13, 148.4 mmt in MY 2013/14, and 162.5 mmt in MY 2014/15,
with a fourth successive increase projected up to 162.8 mmt in “new crop” MY 2015/16. Soybean production
from these three key South American countries amounted to 51.9% of World production in MY 2012/13,
52.4% in MY 2013/14, and 51.1% in MY 2014/15, and is projected to be 51.3% of the World total in MY
2015/16. Projected combined Argentina, Brazil and Paraguay soybean production of 162.8 mmt in “new crop”
MY 2015/16 is estimated to be up 0.2% over MY 2014/15, up 9.7% over MY 2013/14, and up 16.7% over MY
2012/13.
South American soybean exports have grown in a manner similar to production over this same period.
Overall, combined Brazil, Argentina and Paraguay soybean exports have trended higher in recent years –
starting with 55.16 mmt in MY 2012/13, then up to 59.47 mmt in MY 2013/14, and 58.45 mmt in MY 2014/15,
with an increase projected up to 62.85 mmt in “new crop” MY 2015/16. Total soybean exports from these
three key South American countries as a proportion of World exports has actually trended lower in recent
years, amounting to 54.9% in MY 2012/13, to 52.7% in MY 2013/14, and 49.6% of the World total in MY
2014/15, with a projection of 51.5% of World soybean exports in “new crop” MY 2015/16.
Projected combined Argentina, Brazil and Paraguay soybean exports of 62.85 mmt in “new crop” MY
2015/16 are projected to be up 7.5% from 58.45 mmt in “current” MY 2013/14, up 5.7% from 59.47 mmt in
MY 2013/14, and up 13.9% from 55.16 mmt in MY 2012/13. This recent marginal decline in combined Brazil,
Argentina and Paraguay exports as a proportion of World soybean trade in MY 2014/15 and “new crop” MY
2015/16 has been caused by increases in United States’ soybean total supplies and subsequent exports.
Uptrends in United States’ Soybean Production & Exports
The growth in United States’ soybean production and exports compares to that in South America over this
same three period, with 82.8 mmt of U.S. soybean production in MY 2012/13 (30.8% of World total), 91.4 mmt
in MY 2013/14 (32.3% of World total), 108.0 mmt in MY 2014/15 (33.9% of the World total), and a projected
level of 104.8 mmt in MY 2015/16 (33.0% of World total). Projected U.S. soybean production of 104.8 mmt
(3.850 billion bushels or ‘bb’) in “new crop” MY 2015/16 is projected to be down 3.0% from 108.0 mmt (3.969
bb) in MY 2014/15, but up 14.7% from 91.4 mmt (3.358 bb) in MY 2013/14, and up 26.6% from 82.8 mmt
(3.042 bb) in MY 2012/13.
United States’ soybean exports have grown from 35.85 mmt (1.317 bb) in MY 2012/13 (35.7% of World
total), to 44.8 mmt (1.647 bb) in MY 2013/14 (39.7% of World total), to 49.2 mmt (1.800 bb) in MY 2014/15
(41.7% of the World total), with a projection of 48.3 mmt (1.775 bb) in “new crop” MY 2015/16. Projected U.S.
soybean exports of 48.3 mmt in “new crop” MY 2015/16 are projected to be down 1.9% from MY 2014/15, but
up 7.8% from MY 2013/14, and up 34.8% from MY 2012/13.
The Necessity to the Soybean Market of Continued Strength in Chinese Import Demand
It is widely acknowledged by soybean market analysts that continued growth and/or at least “level
sustainability” of Chinese soybean imports at current and projected levels is necessary for continuance of the
historically high World soybean market prices that have occurred since the 2012/13 marketing year. The USDA
has continued to project that strong growth would occur in Chinese soybean imports in “new crop” MY
2015/16 and beyond. If this recent upward trend in Chinese soybean imports and import demand were to
Page | 4
falter or become “level”, it would unquestionably have a substantial negative impact on U.S. and World
soybean market prices.
As a result of a record large fall harvest of soybeans in the United States in 2014 and another anticipated
large crop in 2015, spot cash soybean prices at Farmers Grain Coop in Hutchinson, Kansas (Hutchinson being a
major grain market hub in the south central part of the state) had fallen to as low as $8.44 per bushel on
September 26, 2015, before moving above $9.00 on October 24, 2015. Cash soybean prices at this location
have traded in the range of $8.86 (on May 26, 2015) to $9.93 (on November 11, 2014 and January 6, 2015)
since then, with a cash spot price of $9.36 ($0.36 under basis) offered on Friday, June 19th.
Soybean forward contract prices for fall harvest in October 2015 in the Hutchinson, Kansas area on Friday,
June 19th were in the range of $8.62 / bu. ($0.78 under basis November 2015 CME Soybean Futures) to $8.89
($0.51 under basis). “New crop” NOV 2015 soybean futures were trading at $9.40 per bushel at the time of
these new crop forward contract bids were posted on June 19th.
Given that the USDA projections for MY 2014/15 and “new crop” MY 2015/16 indicate that a) Chinese
soybean imports will continue to be strong, and b) South American soybean production harvested in early‐mid
2015 has again been record high, there is no indication yet that any change is expected in these projected
trends in production, exports or imports in the broader World soybean market. The possibility of weather‐
related soybean production problems in the United States during the summer‐fall of 2015 could impact these
trends. However, until and unless such potential production problems actually do occur, the World soybean
market will likely assume that these “predominant adequate supply trends” will continue into the foreseeable
future.
I‐C. Soybean Futures and U.S. Dollar Index Trends
“Current crop” JULY 2015 soybean futures contract prices responded in a negative manner to the
information in the June 10th USDA reports (Figure 1). On the day of the reports CME JULY 2015 futures prices
opened at $9.51 ½ /bu, and traded as high as $9.57 ¾ and as low as $9.44 ½ during the session, before settling
at $9.49 ½ – down $0.02 for the day. Since then JULY 2015 soybean futures prices have traded within the
range from a low of $9.30 ½ on June 15th, a high of $9.67 on June 18th, before closing at $9.71 ½ on Friday,
June 19th.
Figure 1. JULY 2015 and NOV 2015 CME Soybean Futures Price Charts (electronic trade) …
May 2, 2017
Grain Market Outlook
tures or cash market price rallies to date in Spring 2017. IF excessive moisture conditions that have
developed in the U.S. Corn Belt in late April – very early May were to continue until mid‐May and significantly
delay planting progress – THEN increased concerns about 2017 U.S. corn production prospects could lead to
higher U.S. corn prices in late‐Spring ‐ Summer 2017.
Cash corn prices at major grain elevators in central and western Kansas ranged from $3.04 to $3.31 on
Monday, May 1st. This represents a marked increase since October‐December 2016 when prices had fallen
below $3.00 per bushel – down to $2.66‐$2.96 on December 23rd – although not as low as marketing loan rates
near $2.05 (central KS) to $2.19 (western KS) per bushel. Cash corn prices in east central and northeast Kansas
– near river terminal locations – were near $3.55 on May 1st, up from the range of $3.26‐$3.28 per bushel on
12/23/2016. Cash corn prices at Kansas ethanol plants on May 1st ranged from $3.38 to $3.73 – indicating
continuing strength in ethanol demand in Kansas and nationwide. While the “large supply and tight storage
availability” situation still predominates in local Kansas grain markets, it is a positive market signal that corn
usage has not declined, and that Kansas cash corn prices have enough support to have avoided falling down to
USDA loan rate levels.
Other factors that could affect the U.S. corn market in 2017 include the following: First, the pace and timing of
U.S. farmer marketing of the 2016 corn crop – much of which had been placed in storage after fall harvest and
likely has been held for sale through the winter into at least early spring 2017. Second, anticipation of
continued strong use of 2016 crop U.S. corn for domestic U.S. ethanol production and livestock feeding
through spring‐summer 2017. Third, at least moderate continued strength in U.S. corn exports – at least until
what is forecast to be a sizable 2nd crop of corn from South America becomes available on global markets
during Summer 2017. And fourth, the always present possibility of broader U.S. and Foreign economic and/or
financial system disruptions that could impact grain, energy, and other commodity markets in 2017. World
geo‐political events have the potential to provide “shocks” to U.S. and World energy and grain markets – with
the impact on the direction of U.S. and World corn markets being difficult to anticipate depending on which
countries may be involved and their role in global corn export trade.
Page | 2
USDA Supply‐Demand Forecast for “Next Crop” MY 2017/18. With early USDA projections of 2017 U.S. corn
plantings of 89.996 million acres or ‘ma’ (down 4.0 ma). Harvested acres of approximately 82.4 ma (down
4.35 ma) are forecast, with projected yields of 170.7 bu/ac (vs the record high of 174.6 in 2016), leading to a
2017 U.S. corn production is forecast to be 14.065 bb – down from the record high of 15.148 bb in 2016.
The USDA forecast “next crop” MY 2017/18 total supplies to be 16.435 bb – down 505 mb from last year’s
record high. Total use is forecast at 14.220 bb – down 400 mb from last year’s record high. Ending stocks are
projected to be 2.215 bb (15.58% S/U) – down from 2.320 bb (15.87% S/U) in “current” MY 2016/17. United
States’ corn prices are projected by the USDA to average $3.50 /bu – up from a midpoint estimate of $3.40 /bu
from “current” MY 2016/17 – but within the range of $3.25‐$3.55 /bu for this marketing year. This scenario is
given a 55% likelihood of occurring by KSU Extension Ag Economist D. O’Brien.
Alternative KSU Forecasts for “Next Crop” MY 2017/18: Three alternative KSU‐Scenarios for U.S. corn supply‐
demand and prices are presented for “next crop” MY 2017/18. Each forecast scenario presents the likelihood
of lower U.S. corn acreage, yields and production than projected by the USDA in the February 23‐24, 2017
Agricultural Outlook Forum for “next crop” MY 2017/18.
KSU “Next Crop” MY 2017/18 Scenario #1) “167.3 bu/ac – 13.556 bb” Scenario (25% probability) assumes:
88.500 ma planted, 81.031 ma harvested, 167.3 bu/ac trend yield, 13.556 bb production, 15.926 bb total
supplies, 14.185 bb total use, 1.741 bb ending stocks, 12.27% S/U, & $3.85 /bu U.S. corn average price for
“next crop” MY 2017/18;
KSU “Next Crop” MY 2017/18 Scenario #2) “165.0 bu/ac – 13.370 bb” Scenario (15% probability) assumes:
88.500 ma planted, 81.031 ma harvested, 165.0 bu/ac yield, 13.370 bb production, 15.740 bb total supplies,
14.080 bb total use, 1.660 bb ending stocks, 11.21% S/U, & $4.05 /bu U.S. corn average price for “next crop”
MY 2017/18;
KSU “Next Crop” MY 2017/18 Scenario #3) “150.0 bu/ac – 12.155 bb” Scenario (5% probability) assumes:
88.500 ma planted, 81.031 ma harvested, 150.0 bu/ac yield, 12.155 bb production, 14.525 bb total supplies,
13.460 bb total use, 1.065 bb ending stocks, 7.91% S/U, & $4.75 /bu U.S. corn average price for “next crop” MY
2017/18;
World Corn Supply‐Demand: Record high World corn production of 1,053.8 million metric tons (mmt) is
projected for “current” MY 2016/17, up 9.4% from 963.3 mmt in MY 2015/16, and up 3.7% from 1,016.0 mmt
in MY 2014/15. Record high World corn total supplies of 1,265.6 mmt are projected for “current” MY 2016/17,
up from 1,173.1 mmt in MY 2015/16, and from 1,190.8 mmt in MY 2014/15.
World corn exports of 154.4 mmt are projected for “current” MY 2016/17, up 28.7% from 120.0 mmt in MY
2015/16, and up 8.6% from 142.2 mmt in MY 2014/15. Projected record high World corn ending stocks of
223.0 mmt (21.4% S/U) in “new crop” MY 2016/17 are up from 211.8 mmt (22.0% S/U) in MY 2015/16, and
from 209.8 mmt (21.4% S/U) in MY 2014/15.
Although World corn ending stocks are projected to be a record high in “current” MY 2016/17 at 223.0 mmt,
World corn percent ending stocks‐to‐use are forecast to actually decline marginally to 21.4%. Strong World
demand for corn at low prices is expected to continue – especially in the United States, Argentina, Mexico,
Southeast Asia, China, Ukraine, and other Former Soviet Union countries (less Ukraine). An ongoing, strong
demand base for corn could help cause sharply increased corn market volatility in the summer of 2017 IF any
serious threats emerge to the 2017 U.S. corn crop.
Page | 3
I. U.S. Corn Market Situation and Outlook
April 11th USDA Crop Production & WASDE Reports
On April 11th the USDA World Agricultural Outlook Board (WAOB) released its April 2017 World
Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World corn supply‐demand
and price projections for the 2014/15, 2015/16, and “current crop” 2016/17 marketing years (MY) for corn.
The “current” MY 2016/17 for U.S. corn began on September 1, 2016 and will last through August 31, 2017.
On March 31st, the USDA’s National Agricultural Statistics Service (NASS) (https://www.nass.usda.gov/) released
it’s Prospective Plantings (http://usda.mannlib.cornell.edu/usda/current/ProsPlan/ProsPlan‐03‐31‐2017.pdf) and Grain Stocks
(http://usda.mannlib.cornell.edu/usda/current/GraiStoc/GraiStoc‐03‐31‐2017.pdf) reports. These USDA reports were preceded by
the USDA 2017 Agricultural Outlook Forum in Arlington, Virginia on February 23‐24, 2017
(https://www.usda.gov/oce/forum/). At this forum the USDA provided an initial set of supply‐demand and price
forecasts for U.S. corn and other crops for the upcoming 2017/18 marketing year. “Next crop” MY 2016/17 for
U.S. corn will begin on September 1, 2017 and will last through August 31, 2018.
Following its normal procedures, the next supply‐demand and price forecasts for “next crop” 2017/18
from the USDA will be released in the May 10, 2017 USDA WASDE report.
CME MAY 2017 & DECEMBER 2017 Corn Futures Trends
MAY 2017 CME Corn Futures
Following a low of $3.32 1/2 on August 31, 2016, MAY 2017 Chicago Mercantile Exchange (CME) corn
futures prices trended up to a high of $3.75 ¾ on October 20, 2016 (Figure 1). Following that high, MAY 2017
corn futures prices declined to a low of $3.49 ¼ on December 1, 2016, before moving to an eventual high of
$3.87 ¼ on February 16, 2017. Since then, MARCH 2017 corn futures first trended lower to $3.67 ¼ on
February 27th, and then to a high of $3.86 ¼ on February 28th before closing at $3.82 on March 1, 2017
DECEMBER 2017 CME Corn Futures
In a similar trading pattern to MARCH 2017 Corn futures, following a low of $3.58 1/2 on August 31, 2016,
DECEMBER 2017 Chicago Mercantile Exchange (CME) corn futures prices trended up to a high of $3.95 ½ on
October 20, 2016 (Figure 1). Following that high, DECEMBER 2017 corn futures prices declined to lows of
$3.74 ¼ on November 15th and $3.74 ½ on December 1, 2016, before moving to an eventual high of $4.03 ¾ on
February 16, 2017. Since then, DECEMBER 2017 corn futures first trended lower to $3.88 on February 27th,
and then to a high of $4.04 on February 28th before closing at $4.01 ¼ on March 1, 2017.
CME Corn Futures 2017 Contract Spreads
The total futures carrying charge or “term spread” between MARCH 2017 and JULY 2017 corn futures on
Wednesday, March 1st was $0.16 ¾ per bushel (i.e., $3.89 ¼ for JULY 2017 Corn less $3.75 ¾ for MARCH 2017
Corn), or $0.0419 per bushel per month. This compares to commercial grain storage charges in Kansas grain
elevators in the range of $0.04 to $0.05 per bushel per month – before accounting for interest or additional
handling costs or other discounts. The MARCH 2017 Corn futures contract was entering the early stages of its
Page | 4
contract delivery period at that time, with grain elevators “rolling” to the MAY 2017 Corn futures contract for
local basis determination purposes. The spread from the MAY 2017 to JULY 2017 Corn futures contracts was
$0.07 ¼ ($3.89 ¼ ‐ $3.82) or $0.03625 per month.
Figure 1. MAY 2017 & DECEMBER 2017 CME Daily Corn Futures Price Charts (as of May 2, 2017)
ne …
May 19, 2017
Grain Market Outlook
7/18 has limited any significant corn futures or cash market price rallies to date in Spring
2017. IF excessive moisture conditions that have developed in the U.S. Corn Belt in late April – mid‐May were
to continue until late‐May and significantly delay planting progress – THEN increased concerns about 2017 U.S.
corn production prospects could lead to higher U.S. corn prices in late‐Spring ‐ Summer 2017.
Cash corn bids at major grain elevators ranged from $3.07 ($0.65 under JULY futures) to $3.62 ($0.10 under)
in Western Kansas and $2.98 ($0.73 under) to $3.31 ½ ($0.40 under) in Central Kansas on Wednesday, May
17th. This represents a marked increase since October‐December 2016 when corn price bids statewide had
fallen below $3.00 per bushel – down to $2.66‐$2.96 on December 23rd – although not as low as marketing
loan rates near $2.05 (central KS) to $2.19 (western KS) per bushel. Cash corn price bids in east central and
northeast Kansas – near river terminal locations – were near $3.48 ½ ‐ $3.51 ½ on May 17th, up from the range
of $3.26‐$3.28 per bushel on 12/23/2016. Cash corn bids at Kansas ethanol plants on May 17th ranged from
$3.47 ¾ ($0.20 under) to $4.02 ¾ ($0.35 over) – 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 market signal that corn usage has not declined, and that Kansas cash
corn prices have enough support to have avoided falling down to USDA loan rate levels.
Other factors that could affect the U.S. corn market in 2017 include the following: First, the pace and timing of
U.S. farmer marketing of the 2016 corn crop – much of which had been placed in storage after fall harvest and
likely has been held for sale through the winter into at least early‐spring and some into summer 2017. Second,
anticipation of continued strong use of 2016 crop U.S. corn for domestic U.S. ethanol production and livestock
feeding through spring‐summer 2017. Third, at least moderate continued strength in U.S. corn exports – at
least until what is forecast to be a sizable 2nd crop of corn from South America becomes available on global
markets during Summer 2017. And fourth, the always present possibility of broader U.S. and Foreign
economic and/or financial system disruptions that could impact grain, energy, and other commodity markets
in 2017. World geo‐political events have the potential to provide “shocks” to U.S. and World energy and grain
markets – with the impact on the direction of U.S. and World corn markets being difficult to anticipate
depending on which countries may be involved and their role in global corn export trade.
Page | 2
USDA Supply‐Demand & Price Forecast for “Next Crop” MY 2017/18
Early USDA projections are for 2017 U.S. corn plantings of 89.996 million acres or ‘ma’ (down 4.0 ma).
Harvested acres of approximately 82.4 ma (down 4.35 ma) are forecast, with projected yields of 170.7 bu/ac
(vs the record high of 174.6 in 2016), leading to a 2017 U.S. corn production is forecast of 14.065 bb – down
from the record high of 15.148 bb in 2016.
The USDA forecast “next crop” MY 2017/18 total supplies to be 16.410 bb – down 530 mb from last year’s
record high. Total use is forecast at 14.300 bb – down 345 mb from last year’s record high. Ending stocks are
projected to be 2.110 bb (14.76% S/U) – down from 2.295 bb (15.67% S/U) in “current” MY 2016/17. United
States’ corn prices are projected to average $3.40 /bu (range of $3.00‐$3.80). This equals the midpoint
estimate of $3.40 /bu from “current” MY 2016/17. This scenario is given a 45% likelihood of occurring by KSU
Extension Ag Economist D. O’Brien.
Alternative KSU Supply‐Demand & Price Forecast for “Next Crop” MY 2017/18
Three alternative KSU‐Scenarios for U.S. corn supply‐demand and prices are presented for “next crop” MY
2017/18. Each forecast scenario presents the likelihood of lower U.S. corn acreage, yields and production than
projected by the USDA in the May 10, 2017 WASDE report for “next crop” MY 2017/18.
KSU “Next Crop” MY 2017/18 Scenario #1) “167.3 bu/ac – 13.556 bb” Scenario (25% probability) assumes:
88.500 ma planted, 81.031 ma harvested, 167.3 bu/ac trend yield, 13.556 bb production, 15.901 bb total
supplies, 14.255 bb total use, 1.646 bb ending stocks, 11.55% S/U, & $3.95 /bu U.S. corn average price for
“next crop” MY 2017/18;
KSU “Next Crop” MY 2017/18 Scenario #2) “165.0 bu/ac – 13.370 bb” Scenario (15% probability) assumes:
88.500 ma planted, 81.031 ma harvested, 165.0 bu/ac yield, 13.370 bb production, 15.715 bb total supplies,
14.155 bb total use, 1.560 bb ending stocks, 11.02% S/U, & $4.10 /bu U.S. corn average price for “next crop”
MY 2017/18;
KSU “Next Crop” MY 2017/18 Scenario #3) “150.0 bu/ac – 12.155 bb” Scenario (5% probability) assumes:
88.500 ma planted, 80.535 ma harvested, 150.0 bu/ac yield, 12.080 bb production, 14.375 bb total supplies,
13.460 bb total use, 915 million bushels (mb) ending stocks, 6.80% S/U, & $6.00 /bu U.S. corn average price for
“next crop” MY 2017/18;
World Corn Supply‐Demand: World corn production of 1,033.7 million metric tons (mmt) is projected for
“next crop” MY 2017/18, down 3.0% from the record high of 1,065.1 mmt in “current” MY 2016/17, but still up
6.8% from 968.1 mmt in MY 2015/16. Near record World corn total supplies of 1,257.6 mmt are projected for
“next crop” MY 2017/18, down marginally from the record high of 1,278.1 mmt in “current” MY 2016/17, but
up from 1,177.5 mmt in MY 2015/16.
World corn exports of a near record 151.9 mmt are projected for “next crop” MY 2017/18, down 4.2% from
the record high of 158.6 mmt in MY 2015/16, and up 26.6% from 119.95 mmt in MY 2015/16. Projected World
corn ending stocks of 195.3 mmt (18.4% S/U) in “next crop” MY 2017/18 are down from the record high 223.9
mmt (21.3% S/U) in “current” MY 2016/17, and from 212.4 mmt (22.0% S/U) in MY 2015/16.
Strong World demand for corn at low prices is expected to continue – especially in the United States,
Argentina, Mexico, Southeast Asia, China, Ukraine, and other Former Soviet Union countries (less Ukraine).
An ongoing, strong demand base for corn could help cause sharply increased corn market volatility in the
summer of 2017 IF any serious threats emerge to the 2017 U.S. corn crop.
Page | 3
I. U.S. Corn Market Situation and Outlook
May 10th USDA Crop Production & WASDE Reports
On May 10th the USDA World Agricultural Outlook Board (WAOB) released its May 2017 World
Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World corn supply‐demand
and price projections for the 2015/16, “current” 2015/16, and “next crop” 2017/18 marketing years (MY) for
corn. The “next crop” MY 2017/18 for U.S. corn will begin on September 1, 2017 and will last through August
31, 2018. Earlier, on March 31st, the USDA National Agricultural Statistics Service (NASS)
(https://www.nass.usda.gov/) had released it’s Prospective Plantings (http://usda.mannlib.cornell.edu/usda/current/ProsPlan/ProsPlan‐
03‐31‐2017.pdf) and Grain Stocks (http://usda.mannlib.cornell.edu/usda/current/GraiStoc/GraiStoc‐03‐31‐2017.pdf) reports. Planted
acreage estimates from the Prospective Plantings report were used by the USDA WAOB to develop the May
10th projection of 2017 U.S. corn production in the WASDE report. The grain stocks estimates released on
March 31st were used to calculate U.S. corn livestock feed and residual usage in “current” MY 2016/17.
Following its normal procedures, the next supply‐demand and price forecasts for “next crop” 2017/18
from the USDA will be released in the June 9, 2017 USDA WASDE report.
CME JULY 2017 & DECEMBER 2017 Corn Futures Trends
JULY 2017 CME Corn Futures
Following a low of $3.40 ¼ on August 31, 2016, JULY 2017 Chicago Mercantile Exchange (CME) corn
futures prices trended up to a high of $3.81 ¾ on October 20, 2016 (Figure 1). Following that high, JULY 2017
corn futures prices declined to a low of $3.57 ¼ on December 1, 2016, before moving to an eventual high of
$3.93 ¾ on February 16, 2017. Since then, JULY 2017 corn futures traded in the range from lows $3.61 ¾ on
March 27th and $3.60 ¾ on April 21st to highs of $3.79 ¼ on April 3rd, $3.79 ¼ on April 13th, and $3.79 on May
1st, before closing at $3.71 ½ on May 17, 2017.
DECEMBER 2017 CME Corn Futures
In a similar trading pattern to JULY 2017 corn futures, following a low of $3.58 1/2 on August 31, 2016,
DECEMBER 2017 Chicago Mercantile Exchange (CME) corn futures prices trended up to a high of $3.95 ¼ on
October 20, 2016 (Figure 1). Following that high, DECEMBER 2017 corn futures prices declined to lows of
$3.74 ¼ on November 15th and $3.74 ½ on December 1, 2016, before moving to an eventual high of $4.03 ¾ on
February 16, 2017 and $4.04 on February 28th. Since then, DECEMBER 2017 corn futures traded in the range
from lows $3.78 ¼ on March 27th and $3.79 ¼ on April 21st to highs of $3.95 on April 3rd, $3.95 ¾ on April 13th,
and $3.95 ¾ on May 1st, before closing at $3.89 on May 17, 2017.
CME Corn Futures 2017 Contract Spreads
The total futures carrying charge or “term spread” between JULY 2017 and SEPTEMBER 2017 corn futures
on Wednesday, May 17th was $0.07 ¾ per bushel (i.e., $3.79 ¼ for SEPTEMBER 2017 Corn less $3.71 ½ for JULY
2017 Corn), or $0.03875 per bushel per month. This compares to commercial grain storage charges in Kansas
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grain elevators in the range of $0.04 to $0.05 per bushel per month – before accounting for interest or
additional handling costs or other discounts.
Figure 1. JULY 2017 & DECEMBER 2017 CME Daily Corn Futures Price Charts (as of May 17, 2017)
ne …