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September 29, 2014
Grain Market Outlook
up 12.7%
and 7.9% over the three most recent marketing years.
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 82.6 mmt of U.S. soybean production in MY 2012/13 (30.8% of World total), 89.5 mmt
in “old crop” MY 2013/14 (31.6% of World total), and a projected amount of 106.5 mmt in “new crop” MY
2014/15 (34.2% of the World total).
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United States’ soybean exports have grown from 35.9 mmt in MY 2012/13 (35.7% of World total), to 44.8
mmt in “old crop” MY 2013/14 (39.6% of World total), and a projected amount of 46.3 mmt in “new crop” MY
2014/15 (40.1% of the World total).
United States’ soybean production and exports are projected to be up 29.0% and 29.1%, respectively, over
the three most recent marketing years.
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 sustainability
of Chinese soybean imports at current and projected levels by the USDA is necessary for continuance of the
historicly high World soybean prices that have occurred since the 2012/13 marketing year. Rumors have
surfaced at times in the last year of the possibility of slowing Chinese soybean import demand due to swine
industry production problems or other broad, systematic economic and/or financial factors. However, given
the information available to the USDA at this time, the agency has projected a continuance of the strong
growth trend in Chinese imports in “new crop” MY 2014/15 in recent WASDE reports – even raising the
Chinese import forecast by 1 mmt in the September 11th WASDE report. If this recent upward trend in Chinese
soybean imports were to falter for whatever reason, it could have a substantial negative impact on U.S. and
World soybean market prices.
Now with an anticipated record large fall harvest of soybeans approaching in the United States, cash
soybean prices have fallen below $9.00 per bushel – with Central Kansas Terminal cash bids in the range of
$8.47 ¾ ‐ $8.78 ¾ on Thursday, September 25th. “New crop” November 2014 soybean futures closed at $9.14
per bushel on Friday, September 26th, with “next year’s crop” November 2015 soybean futures closing at $9.36
½ on the same day.
Given that the USDA projections for “new crop” MY 2014/15 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 be
record high, there is no indication yet that any change is expected in these projected trends in the broader
World soybean market. The possibility of weather‐related production problems in South America during the
spring of 2015, or in the United States during the summer‐fall of 2015 could impact these trends, but until such
issues surface the soybean market will likely assume that these “predominant trends” will continue into the
foreseeable future.
I‐B. September 2014 USDA Reports
On September 11, 2014 the USDA National Agricultural Statistical Service (NASS) released its September
2014 Crop Production report containing state and national level U.S. soybean production estimates for 2014.
The September Crop Production report was based on farmer surveys and objective field plot measurement
information gathered during the August 25th through September 5th period. Approximately 12,000 producers
were interview during the survey period with inquiries made about probable soybean yield. The objective
yield surveys were conducted in major producing states accounting for 75 percent of U.S. soybean production
in recent years. From its objective yield field surveys, the USDA reported soybean pods with beans per 18
square feed in the report, and also calculated implied pod weight (i.e., grams per pod) in its effort to figure
soybean production at the state and national level.
On the same day the World Agricultural Outlook Board (WAOB) released its September 2014 World
Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World soybean supply‐
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demand and price projections for both the “old crop” 2013/14 marketing year as well as for “new crop” MY
2014/15. The “old crop” 2013/14 marketing year ended on August 31, 2014, while the “new crop” 2014/15
U.S. wheat marketing year will last from September 1, 2014 through August 31, 2015. Information in the
upcoming September 30th USDA NASS Quarterly Stocks report will be used in calculating adjustments to “old
crop” MY 2013/14 U.S. soybean usage and ending stocks in the October 10th USDA WASDE report.
I‐C. Soybean Futures Trends Since the July 11th USDA Reports
“New crop” NOVEMBER 2014 soybean futures contract prices responded in a negative manner to the
information in the September 11th USDA reports (Figure 1). On the day of the report – Thursday, September
11th – Chicago Board of Trade (CBOT) NOVEMBER 2014 soybean futures prices opened at $9.92 /bu, and
traded as high as $9.95 and as low as $9.69 ½ during the session, before settling at $9.81 ½ – down $0.12 ¼ for
the day (Figure 1). Since then NOVEMBER 2014 soybean futures prices have traded within the range from a
high of $9.99 ¾ on September 16th, to a low of $9.09 ¾ on September 26th before closing at $9.10 ¾ that same
day. Prior to early‐mid May 2014, NOVEMBER 2014 soybean futures had trend sharply higher from a low of
$10.88 ¼ on January 31st to a high of $12.49 ¼ on April 28th, and then to a “higher high” of $12.79 on May 22nd.
Since then, prices have fallen $3.68 ¾ lower – closing at $9.10 ¼ on September 26th .
Figure 1. NOVEMBER 2014 CME Soybean Futures Price Charts (electronic trade) …
November 18, 2014
Grain Market Outlook
… CME eCorn Futures
Mar. 19 – Nov. 14, 2014
Close = $4.06 ½ on 11/17/2014
DEC 2014 CME eCorn Futures
Mar. 20 – Nov. 17, 2014
Close = $3.77 ½ on 11/17/2014
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The “new crop” JULY 2015 corn futures market contract also responded in a moderately positive manner
to the information in the November 10th USDA reports. On the day of the report – Monday, November 10th –
CME JULY 2015 corn futures prices opened at $3.94 per bushel, trading within the range of $3.93 ¾ ‐ $4.07
during the session, before settling at $3.98 ½ – up $0.02 per bushel for the day (Figure 1). Since then, JULY
2015 corn futures prices have traded in a range from a low of $3.94 ½ on Tuesday, November 11th to a high of
$4.17 on Thursday, November 13th, before closing at $4.06 ½ on Monday, November 17th.
Question: Do the prices in early October represent a fall harvest low?
In hindsight now it seems that the upward trend in DEC 2014 and JULY 2015 corn futures prices since the
$3.46 ¾ low trading price on October 1, 2014 may signal that the fall harvest market low in corn futures prices
has occurred. Of course the results of the December 2014 and the January 2015 USDA crop production and
WASDE reports and the grain market’s reaction to them as well as other possible market influencin …
July 18, 2014
Grain Market Outlook
n for these two
countries will be even higher in “new crop” MY 2014/15 – up to 145.0 mmt, which would be up 10.4% over the
three year period. This compares to U.S. soybean production of 82.6 mmt in MY 2012/13, 89.5 mmt in
“current” MY 2013/14, and a projected amount of 103.4 mmt in “new crop” MY 2014/14 – up 25.3% over the
same three year period. Also, the key market demand “driver” of Chinese soybean imports were estimated to
be 59.9 mb in MY 2012/13, and 69.0 mb in “current” MY 2013/14, and are projected to be 73.0 mb in “new
crop” MY 2014/15 – up 21.9% over the same three marketing years.
It is widely acknowledged by soybean market analysts that continued growth and/or at least sustainability
of Chinese soybean imports at current and projected levels by the USDA is necessary for continuance of the
historically high World soybean prices that have occurred since the 2012/13 marketing year. Rumors persist of
slowing Chinese soybean import demand due to swine industry production problems or other broad,
systematic economi …
October 1, 2015
USDA METSS Project
1)
where S is the nominal exchange rate, P is the U.S. price level and P* is the price level in the country of
interest, say Ghana. When the real exchange rate is appreciating, it means the U.S. price of the bundle
3
of goods in the basket is increasing relative to the Ghanaian price. Now, when the real exchange rates
appreciates, then the real value of the dollar has depreciated, suggesting a decline in its purchasing
power, relatively speaking.
To get to know how Q affects the poverty level, it is necessary to try to understand the factors that
influence changes in Q. The real exchange rate between the currencies of the two countries may
change when there is a change in the relative demand for U.S. goods as a result of preference shift,
leading to total expenditure on U.S. goods increasing. The shift may arise from two principal sources.
An increase in global private and public demand for U.S. goods is one source of such shifts. This shift is
exacerbated when the relative increase in demand for U.S. goods is much higher than the increase in
demand for Ghana goods. In an increasingly interconnected world, imports tend to account increasing
share of development countries’ consumption. Another source of the shift is an increase in U.S.
Government expenditure on U.S. goods, an event that increases during recessionary periods in attempts
to boost demand as an economic stimulant. When these events shift the demand for U.S. goods,
equilibrium can only be restored if the relative price of U.S. goods vis‐à‐vis Ghana goods rose. From
Equation (1), this implies a decline in Q, i.e., the purchasing power of the U.S. dollar has increased
relative to the Ghana cedi. The corollary is true: that the purchasing power of the Ghana cedi has
declined and its purchasing power has fallen.
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Figure 1: Purchasing Power Parities for UK and Euro Zone per US Dollar (2009‐2014)
Another source of change in the real exchange rate is a change in relative output supply in the U.S.
significantly exceeding that of Ghana. Output supply changes are a function of resource productivity‐
enhancing technologies, such as those for labor and capital. Tractors and other farm production
equipment are some of the visible productivity‐enhancing technologies that allow U.S. agriculture, for
example, to dwarf that of Ghana. One outcome of increasing productivity is increasing incomes and the
country with the highest relative productivity increase will also have the highest relative income
increase. Because the higher incomes often lead to increased consumption of imports, relative prices in
the U.S. need to fall to restore equilibrium. This fall in relative prices lead to an increase in Q and a fall
in the U.S. dollar in real terms. Conversely, Ghana’s relative productivity disadvantage suggests the
need for appreciation of the Ghana cedi in order to restore equilibrium, leading to an increase in
Ghana’s prices relative to those in the U.S., i.e., the Ghana cedi rises in real terms. The foregoing works
well if the goods and services in the basket of goods being compared between the two countries are all
traded. However, a fair proportion of goods in the basket of developing countries tend to be non‐
traded.
Purchasing Power Parity
0.765
0.770
0.775
0.780
0.785
0.790
0.795
0.800
0.63
0.64
0.65
0.66
0.67
0.68
0.69
0.7
0.71
2009 …
December 18, 2020
Grain Market Outlook
rate of 27.2 mb
shipped to meet the USDA projection of 2.200 … the U.S. dollar relative to other world currencies.
There …
November 20, 2014
Commodity Program Papers
crop-share or flex-rent or other arrangement where risk is … The condition that farmers meet conservation compliance requirements …
February 1, 2016
Leasing Papers
and Presentations
t of Agricultural Economics
Winter Meetings 2016
RENTS AND NET FARM INCOME
Returns to Farming
Source: KS Farm Management Association
Updated … Ignores
–Working capital (carry over from previous years)
– Debt obligations and other cash outlays
– Alternative rental arrangements (subsidization)
Non‐Irrigated Rental Rates
Region
2014 …
August 18, 2017
2,019 2,144 2,204 2,646
Other Latin America 861 856 590 … Industry Summer Business Meeting
Denver, CO
Assessing Beef …
November 15, 2015
Water Policy
producers and stakeholders in other areas. The knowledge of how … specific conservation plan to meet local goals. LEMAs are
proactive … minimizing the effects of other factors such as
3 …
February 27, 2018
2018 Farm Bill Meetings Presentations
they funded Vince Smith and others to promote a more “informed” … insurance and hedges (KC Meeting)
7. Ad hoc disaster aid provide … indemnity payments. All other farmers paid premiums, but …