daniel o’brien extension agricultural economist · depends on continued growth in import demand...
TRANSCRIPT
Grain Market Outlook for 2018
2017 Farming for the Future Workshop
Pratt, Kansas
DANIEL O’BRIEN
EXTENSION AGRICULTURAL ECONOMIST
Topics to be discussed…..
1) Grain Market Analysis & Outlook
• Corn & Grain Sorghum
• Wheat
• Soybeans & Cotton
2) Economic “forces at work” in the grain markets& where they are taking us…
U.S. Dollar Index & Cash Prices
Monthly Chart: January 1973 through December 12, 201788.8
Avg. Index #Early DEC 2017
Corn & Sorghum Markets
U.S. Corn & Sorghum Supply-Use
• Prospects “LARGE” 14.6 billion bu 2017 U.S. Corn Crop
• Large Supplies & Stocks are limiting Feedgrain Price$’s
• Low Price$’s are supporting Corn Use
o Livestock Feed 2017/18 = 5.575 bln bu (10 year high – vs 5.858 bb in 2007/08)
o Ethanol 2017/18 = 5.525 bln bu (Record high – vs 5.439 bb last year)
o Other FSI 2017/18 = 1.460 bln bu (Record high – vs 1.452 bb in 2016/17)
o Exports 2017/18 = 1.925 bln bu (vs 2.293 bb in ‘16/17 & 1.901 in ‘15/16)
U.S. Corn & Grain Sorghum Stocks…..
• Corn: “Large” Stocks & % Stx/Use
o End Stocks 2017/18 2.437 bln bu (2nd highest since 1987/88)
o % Stocks/Use 2017/18 16.8% S/U (Highest since 2005/06)
• Grain Sorghum: “Tighter” Stocks & % Stx/Use than Corn
o End Stocks 2017/18 21 Mln bu (15 - 55 mb since 2008/09)
o % Stocks/Use 2017/18 5.7% S/U (Tightest since 2014/15)
CME Corn FuturesWeekly Chart: October 2008 – November 2017 + 12/13/2017
$2.90 $3.18 ¼ $3.01$3.49
MAR 2018$3.49
12/13/2017
Corn Cash & Futures Prices ($/bu)Pratt, KS Local Elevators – December 13, 2017
$3.37 $3.49 $3.57 $3.66 $3.73 $3.81
$3.24 $3.41
$3.51
$3.29
$3.51
$2.10 $2.10
$0
$1
$2
$3
$4
$5
$6
Pric
e $
/bu
Futures Low $ High $ Mktg Loan-Pratt
$0.0410 /mo
$0.0411 /mo
Kansas Corn Seasonal Cash $ IndexMonthly: Long Term Average & MY 2017/18 Projection
Long Term
2017/18
Grain Sorghum Cash & Corn Futures $’sPratt, KS Local Elevators – December 13, 2017
$3.37 $3.49 $3.57 $3.66 $3.73 $3.81
$3.04
$3.19 $3.19 $3.30
$1.86 $1.86
$0
$1
$2
$3
$4
$5
$6
Pric
e $
/bu
Futures Low $ High $ Mktg Loan-Pratt
$0.0410 /mo
$0.0411 /mo
Crop
BUT still
Large Supply
Domestic Use&
Exports
% Stocks/Use&
Prices
U.S. Corn AcreageFor 2018???
UP ≈ 0.5 to 1 million acres
U.S. Corn YieldsUSDA 2017 USDA Forecast = 175.4 bu/ac
Final 2017???Q? Is >175 bu/ac possible?
U.S. Corn Yields: 2000-2017Accuracy of November 1st USDA Forecasts
(0.8)
0.2 1.7
(1.0)
0.1
(0.5) (2.1) (2.3) (0.5)
1.5
(1.7)
0.1 0.8
(2.3) (2.4) (0.9) (0.7)(20)
0
20
40
60
80
100
120
140
100
110
120
130
140
150
160
170
180
Fore
ca
st E
rro
r (Bu
/ac
)
U.S
. Co
rn Y
ield
–Bu
/Ac
re
Year
Difference (bu/ac) November 1 USDA Forecast Final Yield
U.S. Corn Production & Supplies
Final 2017???U.S. Corn Production of
14.3-14.8 bln bu
U.S. Corn Use – By Category
U.S. Corn Use – By Category
U.S. Corn Exports – Weekly thru November 30, 2017
U.S. Corn Ending Stocks & % Stx/Use
1,967
8211,232
1,731 1,737
2,295 2,437 2,557
17.0
7.4
9.2
12.6 12.7
15.716.8
17.7
0
1,000
2,000
3,000
4,000
5,000
6,000
0
5
10
15
20
Mill
ion
Bush
els
% E
nd
Sto
cks-
to-U
se
Marketing Year
U.S. Corn % Stocks/Use vs Price$
U.S. Corn % Stocks/Use vs Price$
MORE Flexible $ responses
LESS
Fle
xib
le $
resp
ons
es
Corn % Stx/Use has trended
larger for 5 years running –
into “low $ flexible”
Δ Price$ / Δ Supply areas
World Corn (Maize) Production Regions
World Corn Supply, Use & Stocks
World Crop
BUT still
Large Supply
China
EU
Brazil
FSU-12
So. Africa
Mexico
Argentina
Canada
U.S. Corn Price$ vs “World-China” % S/UMY 1973/74 through “New Crop” MY 2017/18
Note impact of China
Grain Stocks policies on
World grain markets!!
“Total” vs “Accessible” World Corn Stocks
U.S. Sorghum Acreage
U.S. Sorghum YieldsUSDA 2018 USDA Forecast = 67.3 bu/ac
U.S. Milo $ vs U.S. Feedgrain % Stocks/UseMY 1973/74 thru “New Crop” MY 2017/18
Strong Sorghum Exports
have increased Prices vs
other feedgrains
Wheat Markets
U.S. Wheat Market Overview• U.S. Wheat Production trending lower (to a 15 year low in 2017)
• Large U.S. & World Stocks continue to limit Wheat Price$’s **
• “Moderate” Exports limiting 2017/18 U.S. Wheat Use
o Exports 2017/18 = 975 mln bu (778 mb – 1.291 bb range since 2008/09)
o Food Use 2017/18 = 950 mln bu (Level Food Use since MY 2012/13)
o Feed Use+ 2017/18 = 120 mln bu (Down from 228-365 mb in 2012 - 2013)
o HRW Exports 2017/18 = 405 mln bu (Down from 455 mb in MY 2016/17)
U.S. Wheat Stocks…..
• All U.S. Wheat: “Large” Stocks
o End Stocks 2017/18 960 mln bu (1.181 bb last year)
o % Stocks/Use 2017/18 45.5% S/U (53.2% S/U last year)
• U.S. HRW Wheat: “Large” Carryovers
o End Stocks 2017/18 470 mln bu (589 mb last year)
o % Stocks/Use 2017/18 53.7% S/U (62.5% S/U last year)
U.S. Wheat Quality & Grade
• U.S. HRW Wheat 2017 11.4% protein, 60.5 lb test, 0.6% dockage
o Versus 5 yr avg: 11.2% protein, 60.3 lb test wt, 0.6% dockage
• U.S. SRW Wheat 2017 9.5% protein, 59.1 lb test, 0.4% dockage
o Versus 5 yr avg: 9.8% protein, 58.4 lb test wt, 0.6% dockage
• U.S. Soft White Wheat2017 9.6% protein, 60.9 lb test, 0.5% dockage
o Versus 5 yr avg: 10.2% protein, 60.6 lb test wt, 0.5% dockage
• U.S. HRS Spring Wheat 2017 14.6% protein, 61.6 lb test, 0.5% dockage
o Versus 14.2% protein, 61.3 lb test wt, 0.9% defects in 2016
World Wheat Market Prospects:Large Supplies A “Buyer’s Market”
• Record Supplies & Large Usage Forecast for 2017/18
o 5 consecutive record high World wheat crops !!!
• Varying 2017/18 Crop Prospects by Country
• Still a “buyer’s market” for World Wheat Trade….but….
o Uncertainty about U.S. & World Crops in 2018?
o BUT a TIGHT “World-Less-China” supply situation has emerged***
CME Kansas Hard Red Winter WheatMonthly Chart: October 2008 – November 2017 + 12/13/2017
$4.33 $4.59
$6.01
$3.67 $4.16
MARCH 2018$4.16 ¼ 12/13/2017
Wheat Cash & HRW Wheat FuturesPratt, KS Local Elevators – December 13, 2017
$3.99 $4.16 $4.29 $4.45 $4.60 $4.82
$3.41 $3.41 $3.70$4.32
$2.94 $2.94
$0$1$2$3$4$5$6$7$8$9
Pric
e $
/bu
Futures High Price$ Mktg Loan-Pratt
$0.0575 /mo $0.0650 /mo $0.08 /mo $0.0713 /mo
Anticipated VSR Affect!!!
$0.0742 /mo
Crop
BUT still
Large Supply
Less Domestic Use&
Exports
Stocks/Use&
Prices
U.S. Wheat Seeded Acreage
2018 U.S. Winter Wheat Acres 4%+- Low Profits
- Disease pressure
- Wet / Delayed Planting @ Fall Seeding
U.S. Wheat Acreage
U.S. Wheat YieldsRecord High
U.S. Wheat Production & Supplies
U.S. Wheat Use by Category
U.S. All Wheat Exports – Weekly thru November 30, 2017
U.S. Hard Red Winter Wheat Exports - Weekly
U.S. Wheat Ending Stocks & % Stx/Use
876
456306
657976
590 752976
1,181960 838
37
22
13
29
49
24
37
5053
4540
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0
10
20
30
40
50
60M
illio
n Bu
she
ls
% E
nd
Sto
cks-
to-U
se
Marketing Year
U.S. Wheat Ending Stocks & Prices
U.S. Wheat Price vs U.S. Stocks-to-Use
World Wheat Production Regions
World Wheat Supply, Use & Stocks
U.S. Crops
BUT
Foreign Wheat
Russia, Turkey,
EU, India, China
BUT
Canada
Australia
Kazakhstan
Feed Use
Export Trade
Beg. Stocks
Production
Supplies
Ending Stocks
World Wheat Ending Stocks & % Stx/Use
209 203
136 128
204178 195
218241 255 268
3635
2321
31
26
2831
34 3536
0
100
200
300
400
500
600
700
0
10
20
30
40
Mill
ion
Me
tric
To
ns
% E
nd
ing
Sto
cks-
to-U
se
Marketing Year
U.S. Wheat Price ($) vs World % Stx/UseMY 1973/74 – “New Crop” MY 2017/18
Total World Wheat
% Skocks/Use
are “dismally” large!
U.S. Wheat $ vs Non-China % Stx/UseMY 1973/74 – “New Crop” MY 2017/18
Soybean & Cotton Markets
U.S. Soybean Market Prospects
• Strong Use & Exports - BUT Large Stocks, & Weaker Prices
U.S. soybean exports in 2017/18 to be historically large in spite of
large 2017 South American Production
Depends on continued growth in import demand from China, EU,
Southeast Asia, Mexico, & elsewhere
Questions & concerns have emerged in fall-winter 2017-2018 re:
2018 South American soybean crop risk (i.e., La Nina effects, etc.)
U.S. Soybean Supply-Use• 2017 U.S. Soybean Production & Supplies @ record HIGHS
• Large Soybean Stocks in U.S. & So. America** limit Price$’s
• Low Price$’s support Use in “New Crop” MY 2017/18 ***
o Soy Crush 2017/18 = 1.940 bln bu (Record – vs 1.899 bb 1 year ago)
o Exports 2017/18 = 2.225 bln bu (Record – vs 2.174 bb 1 year ago)
o Total Use 2017/18 = 4.306 bln bu (Record – vs 4.214 bb 1 year ago)
o SBM Use 2017/18 = 46.5 mln tons (vs 44.95 in MY 2016/17 & 45.1 in MY 2015/16)
U.S. Soybean & Cotton Stocks…..
• Soybean: “Large” Stocks & % S/U
o End Stocks 2017/18 445 mln bu (High vs 574 mb in 2006/07)
o % Stocks/Use 2017/18 10.3% S/U (High vs 18.6% in 2006/07)
• Cotton: “Large” 2017 Crop & “Growing” Stocks
o Production 2017/18 21.4 mln bales (17.2 & 12.9 mb last 2 years)
o End Stocks 2017/18 5.8 mln bales (2.75 & 3.8 mb last 2 years)
o % Stocks/Use 2017/18 32.0% S/U** (15.1% & 30.2% last 2 years)
CME Soybean Futures Monthly Chart: October 2008 – November 2017 + 12/13/2017
$7.76 ¼ $8.53 $9.00 ¼
$9.79
JAN 2018$9.79 ¼ 12/13/2017
Soybean Cash & Futures Price$’sPratt, KS Local Elevators - December 13, 2017
$9.79 $9.91 $10.02 $10.11 $10.13 $10.05 $9.98
$8.98 $8.89 $9.08
$4.96 $4.96
$0
$3
$6
$9
$12
$15
$18
Pric
e $
/bu
Futures High Price$ Mktg Loan (Pratt)
$0.0556/mo
$0.0529 /mo
Kansas Soybean Seasonal Cash $ IndexMonthly Prices: Long Term Average + “New Crop” MY 2017/18
MY 2017/18
Record Crop
and
Large Supply
Record Use&
Exports
Stocks/Use&
Prices
U.S. Soybean Acreage
For 2018???U.S. Soybean Planted Acres
UP ≈ 0.5 to 1 million ac.
U.S. Soybean YieldsUSDA 2017 = 49.5 bu/ac; 2018 Forecast = 48.4
U.S. Soybean Yields: 2000-2017Accuracy of November 1st USDA Forecasts
0.1 0.2 0.5 0.1
(0.4)
0.4
(0.1)
0.4 0.4 0.7
(0.4)
0.7 0.7 1.0 0.0
(0.3) (0.4)
(10)
0
10
20
30
40
50
60
20
25
30
35
40
45
50
55
Fore
ca
st E
rro
r (Bu
)
U.S
. So
ybe
an
Yie
ld –
Bu/A
cre
Year
Difference (bu/ac) November 1 USDA Forecast Final Yield
U.S. Soybean Production & Supplies
U.S. Soybean Use & End Stocks
U.S. Soybean Exports - Weekly
U.S. Soybean Ending Stocks & % Stx/Use
138 169 141 92191 197
301445 395
4.5%5.4%
4.5%
2.6%
5.0% 5.0%
7.1%
10.3%
8.9%
0
500
1,000
1,500
2,000
2,500
3,000
0%
4%
8%
12%
Mill
ion
Bu.
% E
nd
Sto
cks-
to-U
se
Marketing Year
U.S. Soybean % Stocks/Use vs Price$
U.S. Soybean $ vs U.S. Stx-to-UseMY 1973/74 through “Next Crop” MY 2017/18
World Soybean Supply, Use & Stocks
World Crop
U.S. Crop
Foreign Crop
Canada
China
Brazil**
Argentina**
Paraguay
India
Beg. Stocks
Production
Total Supply
Crush
Total Use
Trade
End Stocks
U.S. Soybean$ vs World %Stx/Use MY 1973/74 through “New Crop” MY 2017/18
Soybean Importer Purchases
52
126 3
16
97
149
4
26
0
50
100
China EU-28 SE Asia Mexico Rest of World
Mil
lio
n M
etri
c T
on
s
2010/11 2011/12 2012/13 2013/142014/15 2015/16 2016/17 2017/18
+13% /yr
+1.2% /yr+7.9% /yr +3.0% /yr
+9.7% /yr
China 41.2 mmt in 7 years
9.2 mmtin 7 years
Questions?
Daniel O’Brien – Extension Ag Economist
Blog: www.ksugrains.wordpress.com
KSUGrains on Twitter & Facebook
www.AgManager.info