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February 18, 2015
Grain Market Outlook
I‐C. U.S. Corn Supply‐Demand – USDA “Current Crop” 2014/15 Projections
U.S. Corn Acreage, Yield & Production
The USDA made no change from the January WASDE report in its projection that 2014 U.S. corn total
planted acreage was 90.597 million acres (ma), which had been adjusted down from 90.885 ma in the
December WASDE report (Table 1 and Figure 2). Planted acreage of 90.597 million acres in 2014 is down from
95.365 ma in 2013, 97.291 ma in 2012, and 91.921 ma in 2011.
In addition, the USDA made no change in its January projection of 2014 U.S. corn harvested acreage of
83.136 ma, which had been adjusted upwards from 83.097 ma in December. Harvested acreage of 83.136 ma
in 2014 is down from 87.451 ma in 2013, 87.365 ma in 2012, and 83.981 ma in 2011.
The 2014 proportion of harvested‐to‐planted acreage for all U.S. corn is projected to be 91.8% ‐ which had
been adjusted up from 91.4% in December. This proportion of harvested acreage in 2014 of 91.8% is up
marginally from 91.7% in to 2013, and up from 89.9% in 2012, and 91.4% in 2011.
The projected 2014 U.S. average corn yield of 171.0 bushels per acre (bu/ac) is a record high and
unchanged from the January USDA reports, but is down from earlier USDA projections of 173.4 bu/ac in
December and 174.2 bu/ac in October 2014 (Table 1 and Figure 3). This projection of 171.0 bu/ac in January‐
February is up from 158.8 bu/ac in 2013, the drought affected 2012 low yield of 123.1 bu/ac., and up from the
previous record high of 164.7 bu/ac in 2009.
DEC 2015 CME eCorn Futures
June 20, 2014 – Feb. 17, 2015
Close = $4.20 ½ on 2/17/2015
MAR 2015 CME eCorn Futures
June 20, 2014 – Feb. 17, 2015
Close = $3.89 ½ on 2/17/2015
Page | 4
Based on these 2014 acreage and yield projections, the USDA maintained is January projection that 2014
U.S. corn production to be a record high 14.216 billion bushels (bb) – down from 14.407 bb in the December
USDA reports. The projection of a record high 14.216 bb is up from the previous record high of 13.925 bb in
2013, 10.755 bb in 2012, 12.360 bb in 2011, 12.447 bb in 2010, and 13.092 bb in 2009 (Table 1).
U.S. Corn Total Supplies
The USDA projects that total supplies of U.S. corn for “current crop” MY 2014/15 are a record high 15.472
bb – resulting from beginning stocks of 1.232 bb, projected 2014 production of 14.216 bb, and projected
imports of 25 million bushel (mb) (Table 1 and Figure 4). Total supplies of 15.472 bb in “current crop” MY
2014/15 are comparable to recent year’s amounts of 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, 11.904
bb in “short crop” MY 2012/13, and 14.686 bb in MY 2013/14 (2nd highest).
Beginning stocks of 1.232 bb in “current crop” MY 2014/15 are down marginally (‐ 4 mb) from October‐
December USDA WASDE reports. The total of 1.232 bb in beginning stocks in “current crop” MY 2014/15 is up
from 821 mb in MY 2013/14, 989 mb in MY 2012/13, and 1.128 bb in MY 2011/12, but less than 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
“current crop” MY 2014/15 of 1.232 bb is up considerably from the low of 426 mb that occurred in MY
1996/97 (Table 1 and Figure 4).
Imports of 25 mb in “current crop” MY 2014/15 are projected to be down from 36 mb in MY 2013/14 (the
2nd highest), 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 5.250 bb in
“current crop” MY 2014/15 is up from 5.175 bb in January and from 5.150 bb in the December WASDE report –
due to a) low corn input prices, b) at least moderate strength in distillers grains co‐product prices, and c)
increased projections of 2015 U.S. gasoline consumption released in recent weeks (Table 1 and Figures 5‐6).
This projection of 5.250 bb in “current crop” MY 2014/15 is up from 5.134 bb in MY 2013/14, 4.641 bb in MY
2012/13, and 5.000 bb in MY 2011/12.
Figure 6 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 crop” MY 2014/15 has
ranged from 4.911‐5.530 bb on a weekly basis since early September 2014 ‐ the beginning of the “current
crop” 2014/15 marketing year. Over the period of from September 1, 2014 through February 6, 2015, corn
usage for ethanol production was been on pace to reach 5.277 bb in “current crop” MY 2014/15. This
estimate of 5.277 bb is 27 mb more than the USDA’s February 2015 WASDE report estimate of 5.250 bb of
corn to be used for ethanol production during “current crop” MY 2014/15, with 23 of 52 weeks (44.2%) 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 7 – which shows estimated a) DDGS
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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 1.049‐1.130 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
projected for MY 2013/14, and a projection of 1.016 bb in “current crop” MY 2014/15. Over the same five
most recent marketing years, DDGS exports in corn equivalent weights are estimated to range from 299 to 484
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 estimated for MY 2013/14, and a projection of a record high 484 mb in “current crop” MY
2014/15.
U.S. Corn Exports: Projected U.S. corn exports of 1.750 in “current crop” MY 2014/15 are down from the
estimate of 1.917 bb in MY 2013/14, but are up sharply from 730 mb in MY 2012/13 – the 40 year low since
MY 1975/76 (Table 1, Figures 5 and 7). According to the USDA Foreign Agricultural Service (FAS) weekly
export data (http://apps.fas.usda.gov/export‐sales/esrd1.html), as of February 5th, through the 23rd week of “current crop”
MY 2014/15 (23 of 52 weeks), 627.6 mb of U.S. corn had been physically shipped for export – equal to 35.9%
of the USDA’s updated projection for “current crop” MY 2014/15 of 1.750 bb. An additional 677.5 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 627.6 mb in past shipments plus 677.5 mb in forward sales amounts to 1,305.1 mb, or
74.6% of the USDA’s 1.750 bb U.S. corn export target for “current crop” MY 2014/15 in the February 10th
USDA WASDE report with 44.2% (23/52 weeks) of the marketing year completed. United States’ corn exports
will need to average 38.7 mb per week for the remainder of the “current crop” 2014/15 marketing year to
achieve the USDA’s 1.750 bb projection. This compares to 28.1 mb and 24.4 mb of export shipments for the
weeks ending January 29th and February 5th, respectively – behind the pace needed to meet the USDA’s export
projection.
Non‐Ethanol FSI: Forecast non‐ethanol food, seed and industrial (FSI) use of 1.395 bb in “current crop”
MY 2014/15 is greater than 1.367 bb in MY 2013/14, and compares to 1.397 bb in MY 2012/13, and 1.428 bb
in MY 2011/12 (Table 1, Figures 5 and 7).
Feed and Residual Use: Forecast U.S. feed and residual use of 5.250 bb in “current crop” MY 2014/15 is
down 25 mb from January, and down 125 mb from the December WASDE (Table 1, Figures 5 and 7). This
projection of 5.250 bb in “current crop” MY 2014/15 is up from 5.036 bb for MY 2013/14, 4.315 bb in MY
2012/13, and 5.000 bb in MY 2011/12. 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 as shown in what follows.
In the USDA February 13th Feed Outlook Report (http://usda.mannlib.cornell.edu/usda/current/FDS/FDS‐02‐13‐2015.pdf) the
USDA Economic Research Service (ERS) indicates that over the MY 2012/13 through “current 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 125.9 million metric tons (mmt) in MY 2012/13 (87.1% corn), and 134.5 mmt in
MY 2013/14 (95.1% corn), and is projected to be 142.8 mmt in “current crop” MY 2014/15 (93.4% corn). Over
this same three year period, total U.S. Grain Consuming Animal Units were estimated to be 92.3 million in MY
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2012/13, and 90.9 million in “current” MY 2013/14, and are projected to be 92.8 million in “current crop” MY
2014/15.
As a result, U.S. Energy Feeds per Grain Consuming Animal Unit is estimated to be 1.364 metric tons per
animal unit (mt/au) in MY 2012/13, and 1.477 mt/au in MY 2013/14, and is projected to be 1.539 mt/au in
“current 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 the “record large crop” MY
2013/14, and now into the new record large “current crop” MY 2014/15 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 –
helping to bring downward pressure on corn and other feedgrain prices.
Total Use of U.S. Corn for “current crop” MY 2014/15 is projected to be a record high 13.645 bb – up 50
mb from January, but down 25 mb from the December USDA WASDE report. This amount is up from the
previous record high of 13.454 bb in MY 2013/14, and up sharply from 11.083 bb in drought‐affected MY
2012/13 (Table 1 and Figures 5 & 7). United States’ total corn use has varied widely in recent marketing years
due mainly to changes in available U.S. corn supplies, trending from 12.737 bb in MY 2007/08, 12.056 bb in MY
2008/09, 13.066 bb in MY 2009/10, 13.055 bb in MY 2010/11, 12.528 bb in MY 2011/12, 11.083 bb in MY
2012/13, the previous record high of 13.454 bb in MY 2013/14, and the projected new record high amount of
13.645 bb in “current crop” MY 2014/15.
U.S. Corn Ending Stocks, % Ending Stocks‐to‐Use, & Prices
U.S. corn ending stocks for “current crop” MY 2014/15 are projected to be 1.827 bb – down 50 mb from
January and down 171 mb from the December WASDE report (Table 1 & Figure 4). 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, and are now projected to be 1.827 bb in “current crop” MY 2014/15.
Projected percent (%) ending stocks‐to‐use of 13.39% in “current crop” MY 2014/15 has been trending
lower since fall, being down from 13.81% in January, 14.62% in December, 14.70% in November, and from
15.3% in the October WASDE report (Table 1 and Figures 8‐9). On a year‐by‐year basis, U.S. corn % ending
stocks‐to‐use trended downward from 12.8% in MY 2007/08 and 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 then down to 7.4% in “drought stricken” MY 2012/13,
before increasing for the first time in six (6) years to 9.2% in MY 2013/14, and now to a projected level of
13.4% in “current crop” MY 2014/15.
U.S. average corn prices for “current crop” MY 2014/15 are projected to be in the range of $3.40‐$3.90
bu/ac (midpoint = $3.65) (Table 1 & Figures 8‐9). This price range is narrower by $0.05 /bu on each end of the
range from January, but up from a forecast range of $3.20‐$3.80 (midpoint = $3.50) in the December 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. However, if the February 10th 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 $4.46 in MY 2013/14, and again down to $3.40‐$3.90 (midpoint = $3.65) in “current crop” MY 2014/15.
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I‐D. KSU Corn Market Scenarios: MY 2014/15 & “Next Crop” MY 2015/16
Kansas State University Extension forecasts of U.S. corn supply‐demand balances and prices for the
“current crop” 2014/15 and “next crop” 2015/16 marketing years are provided below. Given the market
information available in mid‐February, the conservative price projections that follow seem reasonable –
especially for the current marketing year, i.e., “current crop” MY 2014/15. There is the possibility that the
USDA is overly pessimistic in its projections of U.S. corn usage in the “current crop” 2014/15 marketing year –
which would ultimately lead to lower U.S. corn supply‐demand balances, and at least marginally higher prices
than are currently being projected for the current marketing year.
A. KSU “Current Crop” MY 2014/15 U.S. Corn Supply‐Demand & Price Projection
These KSU supply‐demand and price projections for “current crop” MY 2014/15 reflect the possibility of
U.S. corn usage being underestimated by the USDA in the current marketing year. KSU projections of 2015
U.S. corn planted and harvested acreage are found in Table 1 and Figure 2. Projections of 2015 probability‐
weighted U.S. corn yields are found in Table 1 and Figure 3. Probability‐weighted KSU forecasts of U.S. corn
average prices for “current crop” MY 2014/15 are based on projections of U.S. corn % ending stocks‐to‐use
shown in Table 1 and Figures 8‐9.
“Current crop” 2014/15 KSU Scenario for U.S. Corn Supply‐Demand – 20% Probability
‐ Total Supplies …
March 19, 2014
Grain Market Outlook
I‐C. U.S. Corn Supply‐Demand for the “Current” 2013/14 Marketing Year
U.S. Corn 2013 Acres, Yield & Production
The USDA again left unchanged its projection of 2013 U.S. corn production of 13.925 billion bushels (bb),
up from a drought‐affected short crop of 10.780 bb in 2012. This USDA projection is based on record high
planted acreage of 95.365 million acres (ma), and harvested acreage of 87.668 ma (Table 1 and Figure 2). The
USDA also maintained its projection of an average U.S. corn yield of 158.8 bushels per acre (bu/ac). The
January‐March USDA 2014 projection of 158.8 bu/ac in average 2013 U.S. corn yields is down from the USDA’s
projection at the February 22, 2013 USDA Outlook Forum of 163.6 bu/ac (Table 1 and Figure 3).
Projected 2013 U.S. corn production of 13.925 bb remains a record high, being up 3.145 bb ( 29%) from
10.780 bb in 2012, and up 13% from 12.360 bb in 2011 (Table 1). If further changes are eventually made by
the USDA in its projection of 2013 U.S. corn production, they are unlikely to occur until the 2014 Crop
Production Summary is released in January 2015 if the USDA follows its usual procedures.
U.S. Corn Total Supplies in “Current” MY 2013/14
The USDA estimates that total supplies of U.S. corn for “current” MY 2013/14 are 14.781 bb – resulting
from beginning stocks of 821 mb, projected 2013 production of 13.925 bb, and projected imports of 35 mb
(Table 1). Total supplies of 14.781 bb in MY 2013/14 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 (2nd largest), 14.182 bb in MY 2010/11 (3rd
largest), 13.517 bb in MY 2011/12, and 11.932 bb in “last year’s” MY 2012/13. Beginning stocks of 821 mb are
the lowest since 426 mb in MY 1996/97, and substantiate the tightness of U.S. corn supplies during June‐
August 2013.
U.S. Corn Total Use & Use by Category in “Current” MY 2013/14
Total Use of U.S. Corn for “current” MY 2013/14 is projected to be 13.325 bb – up 25 mb from February,
up 175 from January, up 275 mb from the December WASDE, and up 375 mb from November, while being up
19.9% from 11.111 bb in “last year’s” MY 2012/13 (Table 1 and Figures 4 & 6). United States’ total corn use of
13.325 bb in “current” 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 “last year’s” MY 2012/13.
U.S. Ethanol Production and Corn Usage: Projected U.S. corn use for ethanol production of 5.000 bb in
“current” MY 2013/14 is up from 4.648 bb in “last year’s” MY 2012/13, while being equal to 5.000 bb in MY
MAY 2014 CME eCorn Futures
July 18, 2013 – March 18, 2014
Close of $4.86 ¼ on Fri., March 18th
December 2014 CME eCorn Futures
July 18, 2013 – March 18, 2014
Close of $4.87 ¾ on Fri., March 18th
Page | 4
2011/12. 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 4.637‐5.262 bb on a weekly basis since early September 2013 ‐ the beginning of the “current”
2013/14 marketing year – averaging a projection of 4.993 bb for “current” MY 2013/14 over the September
2013 – March 7, 2014 time period. This projection of 4.993 bb is consistent to USDA’s March 2014 WASDE
report estimate of 5.000 bb of corn to be used for ethanol production during “current” MY 2013/14.
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 sin …
March 15, 2016
Grain Market Outlook
Ending Stocks
Page | 9
Figure 8 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, these calculations indicate that the
equivalent projected annual rate of U.S. corn used for ethanol production for “current” MY 2015/16 has
ranged from 5.142‐5.526 bb on a weekly basis since early September 2015 ‐ the beginning of the “current”
2015/16 marketing year. The largest amounts of U.S. ethanol production and subsequent corn use to date in
the “current” MY 2015/16 marketing year have occurred during the weeks ending November 20th and
December 11th, 2015, and January 8th, 2016.
To date in the “current” 2015/16 marketing year, corn usage for ethanol production has been on pace to
reach approximately 5.266 to 5.325 bb – 41 to 100 mb greater than the USDA’s March 9, 2016 WASDE report
estimate of 5.225 bb of corn to be used for ethanol production during this period. As a result of these
calculations, projected Kansas State University use of U.S. corn for ethanol production in “next crop” 2016/17
is 5.265 bb – up 40 mb from the USDA 2016 Agricultural Outlook Conference forecast of 5.225 bb (Table 1).
Figure 8. Weekly U.S. Oxygenate Plant Production of Fuel Ethanol & Estimated Corn Use
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 9 – which shows the estimated
amount of a) DDGS corn equivalent U.S. domestic livestock feeding, and b) DDGS corn equivalent exports as
well as other categories of U.S. corn usage since MY 1989/90.
DDGS Feed Use: 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 an average of approximately 1.048 bbeqwt (billion bushels of
equivalent bushel‐weights of U.S. corn) with a range of 0.992‐1.130 bbeqwt of DDGS are projected either to
have already been or are to be fed to U.S. livestock during each marketing year.
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December 18, 2015
Grain Market Outlook
I‐E. U.S. Corn Supply‐Demand
U.S. Corn Acreage, Yield & Production
The USDA maintained it’s projection of 2015 U.S. corn planted acres to be 88.381 million acres (ma) in the
December 9th USDA Crop Production and WASDE reports, unchanged from the November 10th and October
9th USDA reports, but down 516,000 acres from 88.897 ma in September. This projection of 88.381 million
acres (ma) of 2015 U.S. corn planted is down from 90.597 ma in 2014, the second highest amount of 95.365
ma in 2013, the record high of 97.291 ma in 2012, and from 91.936 ma in 2011 (Table 1 and Figure 4).
The USDA also maintained its projection that 2015 U.S. corn harvested acreage would be 80,664,000 acres
– unchanged from November‐October but down 437,000 acres from the September USDA reports. This
projection of 80.664 ma is down from 83.136 ma in 2014, the record high of 87.451 ma in 2013, the second
highest amount of 87.365 ma in 2012, and from 83.879 ma in 2011 (Table 1 and Figure 4). The USDA implicitly
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Page | 5
projected that the proportion of harvested‐to‐planted acreage in 2015 is 91.3%, down from 91.8% in 2014, and
91.7% in 2013, but up from 89.8% in drought‐stricken 2012.
The USDA left unchanged it’s forecast 2015 U.S. average corn yields to be 169.3 bushels per acre (bu/ac)
from November – but up 1.3 bu/ac from the USDA’s October projection, and 1.8 bu/ac from September (Table
1 and Figure 5). This December 2015 USDA projection of 2015 U.S. corn yields of 169.3 bu/ac is down from the
record 171.0 bu/ac in 2014, but up from 158.1 bu/ac in 2013, the drought affected 2012 low yield of 123.1
bu/ac., 146.8 bu/ac in 2011, 152.6 bu/ac in 2010, and up from 164.4 bu/ac in 2009 – the third highest U.S. corn
yield on record.
Based on this combination of USDA December 9th projections for 2015 planted acreage (88.381 ma),
harvested acreage (80.664 ma), and yield (169.3 bu/ac), projected 2015 U.S. corn production is 13.654 billion
bushels (bb) – unchanged from November, but up 99 million bushels (mb) from the USDA’s October
projections, and up 65 mb from September. This projection of 13.654 bb U.S. corn production in 2015 is the
3rd highest on record, being down from the record high of 14.216 bb in 2014, and the 2nd highest amount of
13.829 bb in 2013. However, this projection of 13.654 bb in 2015 would still be 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 15.415 bb – unchanged
from November, but up 99 mb from October, and up 68 mb from the September WASDE report. This
projection of 15.415 bb for “new crop” MY 2015/16 results from beginning stocks of 1.731 bb, projected 2015
production of 13.654 bb, and projected imports of 30 mb (Table 1 and Figure 6). Since the beginning of the
expansion in U.S. ethanol production in 2006‐2007, total supplies of U.S. corn have been 14.362 bb in MY
2007/08, 13.681 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, the estimated highest amount on
record of 15.479 bb in “old crop” MY 2014/15, and the forecast 2nd highest amount on record of 15.415 bb in
“new crop” MY 2015/16.
The USDA December 9th forecast of beginning stocks of 1.731 bb in “new crop” MY 2015/16 is unchanged
from November‐October, but down 1 mb from September and down 41 mb from the August 12th WASDE
report. The USDA’s projection of 1.731 bb in “new crop” MY 2015/16 in beginning stocks is up substantially
from 1.232 bb in “old 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 marginally 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 1.731 bb is up considerably
from the low of 426 mb that occurred in MY 1996/97, and is the highest amount since 1.967 bb in MY 2006/07
and 2.114 bb in MY 2005/06 (Table 1 and Figure 6).
Projected imports of 30 mb in “new crop” MY 2015/16 are down 2 mb from 32 mb in “old crop” MY
2014/15, down from 36 mb in MY 2013/14 (the 2nd highest on record), and are 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, but up from 8 mb in MY 2009/10.
U.S. Corn Use by Category & Total Use
U.S. Ethanol Production and Corn Usage: Projected U.S. corn use for ethanol production of 5.200 bb in
“new crop” MY 2015/16 is up 25 mb from November, but still down 50 mb from October‐September‐August,
Page | 6
and down marginally from 5.209 bb in “old crop” MY 2014/15, while up from 5.124 bb in MY 2013/14, 4.641
bb in MY 2012/13, 5.000 bb in MY 2011/12, and 5.019 bb in MY 2010/11 (Table 1 and Figures 7 and 8).
Figure 8 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 “new crop” MY 2015/16 has ranged from 5.142‐5.226 bb on a
weekly basis since early September 2015 ‐ the beginning of the “new crop” 2015/16 marketing year. The
largest amounts of U.S. ethanol production and subsequent corn use to date in the “new crop” MY 2015/16
marketing year have occurred during the weeks ending November 20th, and December 4th and 11th.
To date in the “new crop” 2015/16 marketing year, corn usage for ethanol production has been on pace to
reach approximately 5.286 bb in “new crop” MY 2015/16 – 86 mb greater than the USDA’s December 9, 2015
WASDE report estimate of 5.200 bb of corn to be used for ethanol production during this period.
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 9 – which shows the estimated
amount of 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 …
July 23, 2015
Grain Market Outlook
oric World wheat ending stocks and stocks‐to‐use minimums of 128.75 mmt and 20.9% S/U in MY 2007/08,
which led to record high U.S. season average wheat prices of $6.89 /bu in that marketing year.
Page | 2
I. U.S. Wheat Market Situation & Outlook
I‐A. July 10th USDA Reports & “New Crop” MY 2015/16 Projections
On July 10th the USDA released two reports, the July 2015 Crop Production report from the National
Agricultural Statistics Service (NASS), and the July 2015 World Agricultural Supply and Demand Estimates
(WASDE) report from the World Agricultural Outlook Board (WAOB).
In the July 10th Crop Production report the USDA released projections of the 2015 U.S. wheat crop.
Projections of 2015 crop size for wheat are based on actual farmer surveys and field trials conducted from June
24th to July 7th by USDA NASS – representing crop conditions and production prospects as of July 1, 2015. The
July 10th WASDE report contained 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 “old crop” 2014/15 marketing
year for U.S. wheat ended on May 31, 2015, while the “new crop” 2015/16 U.S. wheat marketing year 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 $7.10 ½ per bushel for the CME SEPTEMBER 2015 Kansas hard red winter wheat
futures contract occurred on December 18, 2014, September futures have trended generally lower – down to
a low of $4.95 ½ on May 5, 2015. Then after trading in a range of $5.00 ½ to $5.74 ½ during the May 6th to
June 26th period, September 2015 Kansas HRW wheat futures rose to $6.11 ½ on June 30th – the day of the
2015 USDA Acreage and June Quarterly Stocks reports.
Chicago Mercantile Exchange (CME) SEPT 2015 Kansas HRW Wheat futures prices responded to the
release of the July 10th USDA reports by trading lower for the day. The USDA reports were released at midday
(i.e., 11 a.m., central time). SEPT 2015 HRW wheat futures prices opened at $5.78 on Friday, July 10th ‐ trading
as high as $5.86 ½ and as low as $5.66 ¾ per bushel during the session, before closing $0.07 lower for the day
at $5.72 ¼ /bu (Figure 1). Since then, September 2015 wheat futures have fallen to a low of $5.11 on
Wednesday, July 22, before closing at $5.12 ¾ per bushel that same day.
Figure 1. SEPT 2015 & JULY 2016 CME Kansas Wheat Futures Price Charts (electronic trade) …
March 17, 2015
Grain Market Outlook
I‐C. U.S. Corn Supply‐Demand – USDA “Current Crop” 2014/15 Projections
U.S. Corn Acreage, Yield & Production
In its March 2015 USDA WASDE report the USDA made no change from the January‐February WASDE
reports in its projection that 2014 U.S. corn total planted acreage was 90.597 million acres (ma), which had
been adjusted down from 90.885 ma in the December WASDE report (Table 1 and Figure 2). Planted acreage
of 90.597 million acres in 2014 is down from 95.365 ma in 2013, 97.291 ma in 2012, and 91.921 ma in 2011.
In addition, the USDA made no change in its January‐February projections of 2014 U.S. corn harvested
acreage of 83.136 ma, which had been adjusted upwards from 83.097 ma in December. Harvested acreage of
83.136 ma in 2014 is down from 87.451 ma in 2013, 87.365 ma in 2012, and 83.981 ma in 2011.
The 2014 proportion of harvested‐to‐planted acreage for all U.S. corn is projected to be 91.8% ‐ which had
been adjusted up from 91.4% in December. This proportion of harvested acreage in 2014 of 91.8% is up
marginally from 91.7% in to 2013, and up from 89.9% in 2012, and 91.4% in 2011.
The projected 2014 U.S. average corn yield of 171.0 bushels per acre (bu/ac) is a record high and
unchanged from the January‐February USDA reports, but is down from earlier USDA projections of 173.4 bu/ac
in December and 174.2 bu/ac in October 2014 (Table 1 and Figure 3). This projection of 171.0 bu/ac is up from
158.1 bu/ac in 2013, the drought affected 2012 low yield of 123.1 bu/ac., and up from the previous record high
of 164.7 bu/ac in 2009.
Based on these 2014 acreage and yield projections, the USDA maintained is earlier January‐February
projection that 2014 U.S. corn production to be a record high 14.216 billion bushels (bb) – down from 14.407
bb in the December USDA reports. The projection of a record high 14.216 bb is up from the previous record
high of 13.829 bb in 2013, 10.755 bb in 2012, 12.360 bb in 2011, 12.447 bb in 2010, and 13.092 bb in 2009
(Table 1 and Figure 4).
U.S. Corn Total Supplies
The USDA projects that total supplies of U.S. corn for “current crop” MY 2014/15 are a record high 15.472
bb – resulting from beginning stocks of 1.232 bb, projected 2014 production of 14.216 bb, and projected
DEC 2015 CME eCorn Futures
Sept. 11, 2014 – March 13, 2015
Close = $4.04 ¾ on 3/13/2015
MAY 2015 CME eCorn Futures
Sept. 11, 2014 – March 13, 2015
Close = $3.80 ½ on 3/13/2015
Page | 4
imports of 25 million bushel (mb) (Table 1 and Figure 4). Total supplies of 15.472 bb in “current crop” MY
2014/15 are comparable to recent year’s amounts of 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, 11.904
bb in “short crop” MY 2012/13, and 14.686 bb in MY 2013/14 (2nd highest).
Beginning stocks of 1.232 bb in “current crop” MY 2014/15 are down marginally (down 4 mb) from the
October‐December USDA WASDE reports. The total of 1.232 bb in beginning stocks in “current crop” MY
2014/15 is up from 821 mb in MY 2013/14, 989 mb in MY 2012/13, and 1.128 bb in MY 2011/12, but less than
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 “current crop” MY 2014/15 of 1.232 bb is up considerably from the low of 426 mb that occurred in
MY 1996/97 (Table 1 and Figure 4).
Imports of 25 mb in “current crop” MY 2014/15 are projected to be 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 5.200 bb in
“current crop” MY 2014/15 is down 50 mb from February, but still up from 5.175 bb in January and from 5.150
bb in the December WASDE report. These adjustments in the USDA projections are due to a) low corn input
prices, b) at least moderate strength in distillers grains co‐product prices, and c) increased projections of 2015
U.S. gasoline consumption released in the past month (Table 1 and Figures 5‐6). This projection of 5.200 bb in
“current crop” MY 2014/15 is up from 5.134 bb in MY 2013/14, 4.641 bb in MY 2012/13, and 5.000 bb in MY
2011/12.
Figure 6 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 4.772‐5.374 bb on a
weekly basis since early September 2014 ‐ the beginning of the “current crop” 2014/15 marketing year. Over
the period of from September 1, 2014 through March 6, 2015, corn usage for ethanol production was been on
pace to reach 5.127 bb in “current crop” MY 2014/15. This estimate of 5.127 bb is 73 mb less than the USDA’s
March 2015 WASDE report estimate of 5.200 bb of corn to be used for ethanol production during “current
crop” MY 2014/15, with 27 of 52 weeks (51.9%) 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 7 – 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 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
Page | 5
projected for MY 2013/14, and a projection of 1.006 bb in “current crop” MY 2014/15. Over the same five
most recent marketing years, DDGS exports in corn equivalent weights are estimated to range from 299 to 479
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 estimated for MY 2013/14, and a projection of a record high 479 mb in “current crop” MY
2014/15.
U.S. Corn Exports: Projected U.S. corn exports of 1.800 in “current crop” MY 2014/15 were raised 50 mb in
the March WASDE report from the previous month. This projection of 1.800 bb for MY 2014/15 is down from
the estimate of 1.917 bb in MY 2013/14, but are up sharply from 730 mb in MY 2012/13 – the 40 year low
since MY 1975/76 (Table 1, Figures 5 and 7). According to the USDA Foreign Agricultural Service (FAS) weekly
export data (http://apps.fas.usda.gov/export‐sales/esrd1.html), as of March 5th, through the 27rd week of “current crop” MY
2014/15 (27 of 52 weeks), 789.2 mb of U.S. corn had been physically shipped for export – equal to 43.8% of
the USDA’s updated projection for “current crop” MY 2014/15 of 1.800 bb. An additional 629.8 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 789.2 mb in past shipments plus 629.8 mb in forward sales amounts to 1,419.0 mb, or
78.8% of the USDA’s 1.800 bb U.S. corn export target for “current crop” MY 2014/15 in the March 10th USDA
WASDE report with 51.9% (27/52 weeks) of the marketing year completed. United States’ corn exports will
need to average 40.4 mb per week for the remainder of the “current crop” 2014/15 marketing year to achieve
the USDA’s 1.800 bb projection. This compares to 54.3 mb and 45.9 mb of export shipments for the weeks
ending February 26th and March 5th, respectively – i.e., ahead of the pace needed to meet the USDA’s export
projection.
Non‐Ethanol FSI: Forecast non‐ethanol food, seed and industrial (FSI) use of 1.395 bb in “current crop”
MY 2014/15 is greater than 1.367 bb in MY 2013/14, and compares to 1.397 bb in MY 2012/13, and 1.428 bb
in MY 2011/12 (Table 1, Figures 5 and 7).
Feed and Residual Use: Forecast U.S. feed and residual use of 5.250 bb in “current crop” MY 2014/15 is
down 25 mb from January‐February, and down 125 mb from the December WASDE (Table 1, Figures 5 and 7).
This projection of 5.250 bb in “current crop” MY 2014/15 is up from 5.036 bb for MY 2013/14, 4.315 bb in MY
2012/13, and 5.000 bb in MY 2011/12. 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 as shown in what follows.
In the USDA March 10th Feed Outlook Report (http://usda.mannlib.cornell.edu/usda/current/FDS/FDS‐03‐12‐2015.pdf) the
USDA Economic Research Service (ERS) indicates that over the MY 2012/13 through “current 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 125.9 million metric tons (mmt) in MY 2012/13 (87.05% corn), and 134.5 mmt in
MY 2013/14 (95.1% corn), and is projected to be 144.1 mmt in “current crop” MY 2014/15 (93.4% corn). Over
this same 3 year period, total U.S. Grain Consuming Animal Units (GCAUs) were estimated to be 92.3 million
in MY 2012/13, 90.9 million in “current” MY 2013/14, and 92.9 million in “current crop” MY 2014/15.
As a result, U.S. Energy Feeds per Grain Consuming Animal Unit is estimated to be 1.364 metric tons per
animal unit (mt/au) in MY 2012/13, and 1.477 mt/au in MY 2013/14, and is projected to be 1.551 mt/au in
“current 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 the record “large crop” MY
2013/14, and now into the new even bigger record large “current crop” MY 2014/15 for corn and other
Page | 6
aggregated feedgrains, the amount of energy feeds fed per animal unit and total feed use of U.S. corn has
increased – helping to bring downward pressure on the prices of U.S. corn and other feedgrains.
Total Use of U.S. Corn for “current crop” MY 2014/15 is projected to be a record high 13.695 bb – up 50
mb from February and up 100 mb from January, and up 25 mb from the December USDA WASDE report. This
compares to the previous record high of 13.454 bb in MY 2013/14, and is up sharply from 11.083 bb in
drought‐affected MY 2012/13 (Table 1 and Figures 5 & 7). United States’ total corn use has varied widely in
recent marketing years – due mainly to changes in available U.S. corn supplies. Corn supplies in the U.S. over
time have changed from 12.737 bb in MY 2007/08, to 12.056 bb in MY 2008/09, 13.066 bb in MY 2009/10,
13.055 bb in MY 2010/11, 12.528 bb in MY 2011/12, 11.083 bb in MY 2012/13, the previous record high of
13.454 bb in MY 2013/14, and now to the new projected record high amount of 13.695 bb in “current crop”
MY 2014/15.
U.S. Corn Ending Stocks, % Ending Stocks‐to‐Use, & Prices
U.S. corn ending stocks for “current crop” MY 2014/15 are projected to be 1.777 bb – down 50 mb from
February, down 100 mb from January, and down 221 mb from the December WASDE report (Table 1 & Figure
4). 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, and are now projected to be 1.777 bb in “current crop” MY
2014/15.
Projected percent (%) ending stocks‐to‐use of 12.98% in “current crop” MY 2014/15 has been trending
lower since fall, being down from 13.39% in February, 13.81% in January, 14.62% in December, 14.70% in
November, and from 15.3% in the October WASDE report (Table 1 and Figures 8‐9). On a year‐by‐year basis,
U.S. corn % ending stocks‐to‐use trended downward from 12.8% in MY 2007/08 and 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 then down to 7.4% in “drought stricken”
MY 2012/13, before increasing for the first time in six (6) years to 9.2% in MY 2013/14, and now again up to a
projected level of 12.98% in “current crop” MY 2014/15.
U.S. average corn prices for “current crop” MY 2014/15 are projected to be in the range of $3.50‐$3.90
bu/ac (midpoint = $3.70) (Table 1 & Figures 8‐9). This price range is higher by $0.10 /bu on the lower end of
the price range from February, with the midpoint of $3.70 being up $0.05 per bushel from the February
WASDE report.
Since the beginning of the rapid expansion in U.S. ethanol production in 2006, U.S. corn prices have moved
first higher, then lower, and then 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. However, if the March 10th WASDE projection
holds true, prices will have declined for two consecutive years since the $6.89 record high in MY 2012/13,
down to $4.46 in MY 2013/14, and again down to $3.50‐$3.90 (midpoint = $3.70) in “current crop” MY
2014/15.
…
December 18, 2014
Grain Market Outlook
ng stocks in “current
crop” MY 2014/15 of 194.9 mmt (27.4% S/U) are up from 185.3 mmt (26.3% S/U) in MY 2013/14, and from
174.5 mmt (25.7% S/U) in MY 2012/13. For perspective, these figures can be compared to the historic World
wheat ending stocks and ending stocks‐to‐use minimums of 129.0 mmt and 21.0% S/U in MY 2007/08.
Page | 2
I. U.S. Wheat Market Situation & Outlook
I‐A. December 2014 and Upcoming January 2015 USDA Reports
On December 10, 2014 the USDA National Agricultural Statistical Service (NASS) released its December
2014 Crop Production report containing state and national level U.S. wheat production estimates for 2014.
The December Crop Production report focused on U.S. cotton and orange production, with no substantive
changes made from the November 10th Crop Production report. The next major survey based USDA report
addressing U.S. crop production for wheat, corn, other feedgrains, soybeans, and other major crops will be the
USDA Annual Crop Production Summary report to be released on Monday, January 12, 2015. On that same
day USDA NASS will also release the January 2015 Crop Production, December Grain Stocks, and U.S. Winter
Wheat Seedings reports.
Also on December 10th the USDA World Agricultural Outlook Board (WAOB) released its December 2014
World Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World wheat supply‐
demand and price projections for the “current crop” 2014/15 marketing year. The “current crop” 2014/15 U.S.
wheat marketing year began June 1, 2014 and will last through May 31, 2015.
I‐B. CME Hard Red Winter Wheat Futures & U.S. Dollar Index Trends
Since market highs of $8.62 per bushel on May 6, 2014 for the MARCH 2015 contract, Kansas hard red
winter wheat futures trended sharply lower through the later part of September‐early October – with the
MARCH 2015 contract trading as low as $5.54 ¾ per bushel on October 1, 2014. This four month decline in
wheat market prices was attributed largely to a) unthreatened prospects for record large world wheat
production in the 2014/15 marketing year during this same time period, b) a second consecutive year of near
record large world coarse grain production which lessened the demand for wheat feed use, and c) an uptrend
in the value of the U.S. dollar against other major World currencies – making the effective price of U.S. wheat
higher for World import buyers.
However, since those wheat futures market lows in the last half of September‐early October ($5.54 on
10/1/2014), and again in early November ($5.70 ¼ on 11/10/2014), wheat futures markets have trended
higher. Reasons for this price uptrend include a) the onset and intensification of the most recent El Nino
weather pattern – which has caused dry growing conditions and reduced wheat production prospects in
Australia – a major World wheat exporter, and 2) emerging geopolitical, logistical and financial problems in the
Black Sea Region countries – posing a threat to their ability to supply wheat exports to World wheat markets.
On Wednesday, December 17th CME Hard Red Winter Wheat futures traded as high as $6.85 per bushel – up to
the highest level since July 8th of this year.
MARCH 2015 Hard Red Winter Wheat futures prices responded to the release of the December 10th USDA
reports by trading lower for the day. MARCH 2015 HRW wheat efutures prices opened at $6.22 ¾ on
Wednesday, December 10th the high for the day. The USDA reports were released at midday (i.e., 11 a.m.,
central time). Prices declined as low as $6.13 per bushel during the session before closing $0.04 ½ lower for
the day at $6.17 ½ /bu (Figure 1). Since then, MARCH 2015 HRW wheat efutures prices have trended higher,
rising from a low of $6.10 ½ on December 11th up to a high of $6.82 ¾ on December 17th before closing at
$6.81 ½ on that same day.
Page | 3
Figure 1. MARCH 2015 & JULY 2015 CME Kansas Wheat Futures Price Charts (electronic trade) …
September 1, 2015
Grain Market Outlook
(31.0% S/U)
are also record high, and up from 209.7 mmt (29.6% S/U) in “old crop” MY 2014/15, and from 193.4 mmt
(27.7% S/U) in 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
ions
On June 10th the USDA World Agricultural Outlook Board (WAOB) released its June 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 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
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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) …