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December 8, 2015
Grain Market Outlook
U.S. 2015/16
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Since MY 1999/2000 Kansas grain sorghum prices have typically been weakest during the harvest month of
October, with an average seasonal price index of 93.3% of the unweighted average Kansas sorghum price for
the September through August marketing year period. However, Kansas cash grain sorghum prices have then
trended higher from harvest lows beginning in November. On average this uptrend in Kansas grain sorghum
prices has continued from November through the spring months of March‐April‐May – up to highs in the range
of 104.0%‐104.4% of the marketing year average price during this time period. Prices have then tended to
decline moderately in June, and to trend lower during July‐August into late summer. The most variability
around these monthly indices have occurred at the beginning of harvest (September) and ending quarter
(June‐July‐August) of the September‐August U.S. grain sorghum marketing years.
For September through November 2016, U.S. grain sorghum prices have followed approximately the same
seasonable pattern as the previous 15 years, with higher prices in September followed by what seem to be
harvest‐period low prices in October 2015, followed by moderately higher prices in November.
I‐C. U.S. Grain Sorghum Supply‐Demand
U.S. Grain Sorghum Acreage, Yield & Production
The USDA made no changes in its projection that 2015 U.S. grain sorghum total planted acreage would be
8.651 million acres (ma), which is up from 7.138 ma in 2014, 8.076 ma in 2013, 6.259 ma in 2012, and 5.451
ma in 2011 (Table 1 and Figure 2). In addition, the USDA made no change in its projection of 2015 U.S. grain
sorghum harvested acreage for grain of 7.645 ma, up from 6.401 ma in 2014, 6.585 ma in 2013, 4.995 ma in
2012, and 3.945 ma in 2011. The 2015 proportion of harvested for grain‐to‐planted acreage for all U.S. grain
sorghum is projected to be 85.6%, up from 81.0% in to 2013, 79.8% in 2012, and 72.4% in 2011.
Based on the 2000‐2014 average of U.S. sorghum planted acres that were harvested for silage (i.e., 4.5%),
it is estimated that 2015 U.S. grain sorghum harvested acreage for silage would be approximately 387,000
acres, up from 315,000 acres in 2014, 380,000 acres in 2013, 353,000 acres in 2012, and 353,000 acres in 2011.
The projected 2015 U.S. average grain sorghum yield of 77.7 bushels per acre (bu/ac) is up 2.7 bu/ac from
the October Crop Production report, and up from 67.6 bu/ac in 2014, 59.6 bu/ac in 2013, the drought affected
2012 low yield of 49.6 bu/ac., 54.0 bu/ac in 2011, 71.9 bu/ac in 2010 and 69.4 bu/ac in 2009 (Table 1 and
Figure 3).
Based on these 2015 acreage and yield forecasts, the USDA projected 2015 U.S. grain sorghum production
to be a 16 year high of 594 million bushels (mb) – up 20 mb from the October Crop Production report, and up
from 433 mb in 2014, 392 mb in 2013, 248 mb in 2012, 213 mb in 2011, 345 mb in 2010, 382 mb in 2009, 476
mb in 2008, and 497 mb in 2007, but less than 595 mb in 1999 (Table 1 and Figure 4).
U.S. Grain Sorghum Total Supplies
The USDA estimates that total supplies of U.S. grain sorghum for “current crop” MY 2014/15 are a 16 year
high or 613 mb – resulting from beginning stocks of 18 mb, projected 2015 production of 594 mb, and
marginal projected imports of 0.72 mb (Table 1 and Figure 4). Over the last decade, U.S. grain sorghum total
supplies have been 343 mb in MY 2006/07, 530 mb in MY 2007/08, 529 mb in MY 2008/09, 436 mb in MY
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2009/10, 387 mb in MY 2010/11, 241 mb in MY 2011/12, 280 mb in MY 2012/13, 408 mb in MY 2013/14, and
estimate of 467 mb in “old crop” MY 2014/15, and now 613 mb in “new crop” MY 2015/16.
Beginning stocks of 18 mb in “new crop” MY 2015/16 are projected to be down from 34 mb in “old crop”
MY 2014/15, but up from 15 mb in MY 2013/14, and are less than the range of 23‐55 mb occurring during the
MY 2008/09 – MY 2012/13 period.
U.S. Grain Sorghum Use by Category & Total Use
U.S. Food, Seed and Industrial Usage (FSI): Projected record high U.S. grain sorghum use for food, seed,
and industrial usage of 100 mb in “new crop” MY 2015/16 is up 85 mb from the October WASDE report, and
comparable to 15 mb in “old crop” MY 2014/15, 70 mb in MY 2013/14, 95 mb in MY 2012/13, 85 mb in MY
2011/12 and MY 2010/12, and 90‐95 mb in MY 2010/11 and MY 2009/10 (Table 1 and Figure 5). This category
includes grain sorghum used for ethanol production under the designation of “Industrial”.
According Renewable Fuels Association data (http://www.ethanolrfa.org/bio‐refinery‐locations/), as of
November 13, 2015, there were 8 operational ethanol plants in the U.S. that are formally identified as using
grain sorghum either alone or grain sorghum in combination with corn as a feedstock. These ethanol plants
are listed as having an operational capacity totaling 606 million gallons of ethanol per year, and are located in
Kansas (3 – 115 mln gallons total annual capacity or “mgy”), Texas (2 – 218 mgy total), California (2 – 120 mgy
total), and North Dakota (1 – 153 mgy).
At a conversion rate of 2.75 gallons of ethanol per bushel of grain sorghum, this would amount to an
annual maximum use of grain sorghum of 220 mb, markedly larger than the USDA’s projection of 100 mb for
FSI use in “new crop” MY 2015/16. This is evidence that not all ethanol plants that have indicated that they
can or are using grain sorghum as a feedstock are doing so at this time at a 100% grain sorghum rate. Also, the
total amount of FSI usage doesn’t represent only ethanol production, as food and seed uses are also
represented in this measure.
U.S. Grain Sorghum Exports: Projected U.S. grain exports of 325 mb in “new crop” MY 2015/16 are down
105 mb from the October WASDE, and are down from the record high of 353 mb in “old crop: MY 2014/15, but
up from 211 mb in MY 2013/14, and up sharply from 76 mb in MY 2012/13, and from the 40 year low since MY
1975/76 of 63 mb in “drought stricken” MY 2011/12 (Table 1 and Figure 5). Strong grain sorghum imports by
China over the last 2‐3 marketing years have been the driving factor in sharply increased U.S. grain sorghum
exports over the same period.
As of November 26th, with 12.5 of 52 weeks (24.0%) of “new crop” MY 2015/16 complete, 102.3 mb of U.S.
grain sorghum had been shipped for export – equal to 31.5% of the USDA’s updated projection for “new crop”
MY 2015/16 of 325 mb (http://apps.fas.usda.gov/export‐sales/esrd1.html ). An additional 76.5 mb of U.S.
grain sorghum had been sold for future export sales in the remainder of “new crop” MY 2015/16 – to be
shipped prior to August 31, 2016 (the end of “new crop” MY 2015/16).
Adding together 102.3 mb in past shipments plus 76.5 mb in forward sales amounts to 178.8 mb, or 55.0%
of the USDA’s 325 mb U.S. grain sorghum export target for “new crop” MY 2015/16 in the November 26th
USDA WASDE report, with 24.0% (12.5/52 weeks) of the marketing year completed. United States’ grain
sorghum export shipments need to average 5.6 mb per week to meet the USDA’s projection of 325 mb in “new
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crop” MY 2015/16. Actual U.S. grain sorghum export shipments of 6.4 mb and 6.8 mb in the weeks ending
November 19th and 26th were ahead of pace to achieve the USDA’s projection of 325 mb for “new crop” MY
2015/16.
Feed and Residual Use: The USDA forecast U.S. feed and residual use of 130 mb in “new crop” MY 2015/16
– the largest amount in 6 years. Forecast domestic sorghum feed use of 130 mb is up from 80 mb in “old crop”
MY 2014/15, 93 mb in both MY 2013/14 and MY 2012/13, 69 mb in MY 2011/12, and 123 mb in MY 2010/11,
but less than 141 mb in MY 2009/10 and the 16 year high of 236 mb in MY 2008/09 (Table 1 and Figure 5).
Total Use of U.S. Grain Sorghum: Total usage of U.S. grain sorghum for “new crop” MY 2015/16 is
projected to be 555 mb – up 50 mb from the October WASDE report (Table 1 and Figure 5). United States’
total grain sorghum use has varied based on available U.S. grain sorghum supplies in recent years, being 477
mb in MY 2007/08, 474 mb in MY 2008/09, 395 mb in MY 2009/10, 359 mb in MY 2010/11, 218 mb in MY
2011/12, 265 mb in MY 2012/13, 374 mb in MY 2013/14, an estimated amount of 449 mb in “old crop” MY
2014/15, and a forecast quantity of 555 mb in “new crop” MY 2015/16. The record high U.S. grain sorghum
usage of 870 mb occurred in MY 1985/86, with the most recent high of 595 mb in MY 1999/2000.
U.S. Grain Sorghum Ending Stocks, % Ending Stocks‐to‐Use, & Prices
U.S. grain sorghum ending stocks for “new crop” MY 2015/16 are projected to be 58 mb – up 16 mb from
the October WASDE report, and up from 18 mb in “old crop” MY 2014/15, 34 mb in MY 2013/14, 15 mb in MY
2012/13, 23 mb in MY 2011/12, and 27 mb in MY 2010/11 (Table 1 & Figure 5). Generally, U.S. grain sorghum
ending stocks have been higher than most recent levels during the previous 1998/99‐2009/10 period –
averaging 51.1 mb (range = 32.1 – 65.7 mb).
Projected percent (%) ending stocks‐to‐use of 10.4% in “new crop” MY 2‐15/16 are up from a projection of
7.64% in the October WASDE report, and up strongly from 4.1% in “old crop” MY 2014/15 (Table 1 & Figures 5
and 6). United States’ grain sorghum % ending stocks‐to‐use has advanced from 11.1% in MY 2007/08, to
11.5% in MY 2008/09, 10.4% in MY 2009/10, 7.6% in MY 2010/11, 10.55% in MY 2011/12, 5.7% in “drought
stricken” MY 2012/13, 9.1% in MY 2013/14, an estimate of 4.1% in “old crop” MY 2014/15, and now a
projection of 10.4% in “new crop” MY 2015/16. Ending stocks‐to‐use of 5.72% in MY 2012/13 is the 2nd lowest
on record, with only 3.6% in the “short crop” year of MY 1995/96 being lower since MY 1975/76.
U.S. average grain sorghum prices for “new crop” MY 2015/16 are projected to be in the range of $3.30‐
$3.90 bu/ac (midpoint = $3.60) (Table 1 & Figures 6 and 7). These U.S. grain sorghum price projections by the
USDA are $0.05 /bu lower on a per bushel basis than the USDA’s price projections for U.S. corn in “current
crop” MY 2014/15 or $3.65 /bu.
Since the beginning of the rapid expansion in U.S. ethanol production in 2006, U.S. corn and grain sorghum
prices have moved higher, then lower and higher again, with grain sorghum prices moving from $3.29 /bu
(108% of corn) in MY 2006/07, to $4.08 (97% of corn) in MY 2007/08, $3.20 (79% of corn) in MY 2008/09,
$3.22 (91% of corn) in MY 2009/10, $5.02 (97% of corn) in MY 2010/11, $5.99 (96% of corn) in MY 2011/12, up
to the record high of $6.33 (92% of corn) in “drought stricken” MY 2012/13, but then down to $4.28 (96% of
corn) in MY 2013/14, an estimate of $4.03 (109% of corn) in “old crop” MY 2014/15, and a projection of $3.60
(99% of corn) in “new crop” MY 2015/16.
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I‐D. KSU U.S. Grain Sorghum Market Scenarios for “Next Crop” MY 2015/16
Kansas State University (KSU) Extension forecasts of U.S. grain sorghum supply‐demand balances for the
“new crop” 2015/16 marketing year are provided below. Some marginal amount of uncertainty about final
2015 U.S. grain sorghum production still remains that may be resolved in the January 12, 2016 USDA NASS
Crop Production Annual Summary report. Also, there is the possibility that the USDA is either overly
pessimistic or too optimistic in its projections of U.S. grain sorghum usage in the “new crop” 2015/16
marketing year – which would ultimately lead to lower and then higher U.S. grain sorghum supply‐demand
balances, respectively, and at least marginal adjustments in grain sorghum and other feedgrain prices versus
the USDA’s current projections.
KSU Scenario #1 – “Higher Sorghum Exports” with 60% Likelihood of Occurring
For “new crop” MY 2015/16, this “Higher Sorghum Exports”‐ oriented KSU projection reflects the
likelihood of higher U.S. grain sorghum exports than are currently projected by the USDA (Table 1 and Figure
6). The scenario assumes that 2015 U.S. grain sorghum production and total supplies are equal to USDA
November 10th forecasts for the “new crop” 2015/16 marketing year. However, U.S. grain sorghum exports
are assumed to be 375 mb – 50 mb above the USDA’s November 10th projection. A partially offsetting decline
of 30 mb in feed and residual use is also projected (i.e., 100 mb bu), with total use of U.S. grain sorghum
projected to be 575 mb – up 20 mb from the USDA’s forecast.
As a result of these projected supply‐demand balances in this “Higher Sorghum Exports” scenario, U.S.
average wheat prices for “new crop” MY 2015/16 would be forecast to be $3.90 /bu – down $0.13 /bu from
the “old crop” MY 2014/15 U.S. wheat average price of $4.03 /bu, while being $0.30 /bu higher than the
USDA’s November 10th WASDE report midpoint projection of $3.60 /bu for MY 2015/16.
1st KSU Wheat Scenario for MY 2015/16: “Higher Sorghum Exports”
Estimated Probability of Occurring = 60% …
September 18, 2014
Grain Market Outlook
CME eCorn Futures
Jan. 17, 2014 – Sept. 16, 2014
Close = $3.64 ¼ on 9/16/2014
DEC 2014 CME eCorn Futures
Jan. 17, 2014 – Sept. 16, 2014
Close = $3.43 ¾ on 9/16/2014
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Since then, DEC 2014 corn futures prices have traded in a range from a low of $3.35 ¾ on September 15th
to a high of $3.50 ½ on September 16th, before closing at $3.43 ¾ on that same day. The low closing price of
$3.38 ½ on September 12th was a record historic low for the DECEMBER 2014 corn futures contract.
The “new crop” MAY 2015 corn futures market contract also responded in a moderately negative manner
to the information in the September11th USDA reports. On the day of the report – Thursday, September 11th –
Chicago Board of Trade (CBOT) MAY 2015 corn futures prices opened at the high for the day at $3.66 per
bushel, and traded as low as $3.56 ¾ during the session, before settling at $3.62 – also down $0.04 ¾ for the
day (Figure 1). Since then, MAY 2015 corn futures prices have traded in a range from a low of $3.56 ¼ on
September 15th to a high of $3.70 on September 16th, before closing at $3.64 ¼ on that same day. The low
closing price of $3.59 ½ on September 12th was a record historic low for the MAY 2015 corn futures contract.
Question: Do these prices represent a fall harvest low?
It is possible that the sideways trend in DEC 2014 and MAY 2015 corn futures prices since the release of
the September 11th USDA reports may signal that “the market is looking for a low” in corn futures prices for fall
2015. Of course the results of the October and November 2014 and the January 2015 USDA crop production
and WASDE reports and the grain market’s reaction to them and potentially other market factors will be key
determinants as to whether these price levels represent the fall harvest “lows” this year. However, given what
the market now has in hand for information, that prices have not continued lower since the September 11th
USDA reports is an important market signal that the lows in the market may be occurring at this time.
I‐C. U.S. Corn Supply‐Demand
U.S. Corn Acreage, Yield & Production
The USDA projected that 2014 U.S. corn total planted acreage would be 91.641 million acres (ma)
unchanged from July‐August USDA projections, but down 50,000 acres from the March 31st USDA NASS
Prospective Plantings Report (Table 1 and Figure 2). Planted acreage of 91.641 million acres in 2014 is down
from 95.365 ma in 2013, 97.155 ma in 2012, and 91.936 ma in 2011. In addition, the USDA projected 2014
U.S. corn harvested acreage to be 83.839 ma – unchanged from July‐August but down from its June 11 WASDE
report projection of 84.3 ma, and down from 87.668 ma in 2013, and 87.365 ma in 2012, but up from 81.446
ma in 2011. The 2014 proportion of harvested‐to‐planted acreage for all U.S. corn is projected to be 91.49%,
down from 91.9% in to 2013, but up from 89.9% in 2012 and 91.4% in 2011.
Prevented Planting Impacts? It is possible that these figures for 2014 U.S. corn planted and harvested
acres could be adjusted low due to prevented planting that occurred this past spring. Farm Service Agency
(FSA) estimates released in August and September indicated as much as 2.5‐3.3 million acres may have been
designated as “prevented planted”. However, there are questions about how these FSA prevented planting
data are to be interpreted. Regardless, it seems likely that at least a marginal decrease in USDA projections of
2014 U.S. corn planted and harvested acreage will occur in either the upcoming October, November or January
2015 USDA NASS Crop Production reports, which could lead to at least a marginal reduction in 2014 U.S. corn
production estimates, and which would in turn lead to adjustments in “new crop” 2014/15 marketing year U.S.
corn supply‐demand balances.
The projected 2014 U.S. average corn yield of 171.7 bushels per acre (bu/ac) would be a record high, and is
up from USDA projections of 167.4 bu/ac in August, and 165.3 in July. This projection of 171.7 bu/ac in
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September is up from 158.8 bu/ac in 2013, the drought affected 2012 low yield of 123.4 bu/ac., and the
previous historic high of 164.7 bu/ac in 2009 (Table 1 and Figure 3). Based on these 2014 acreage and yield
forecasts, the USDA projected 2014 U.S. corn production to be 14.395 billion bushels (bb) – which would be
the highest amount on record, larger than the current record high of 13.925 bb in 2013, 10.780 bb in 2012,
12.360 bb in 2011, 12.447 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 “new crop” MY 2014/15 are a record high 15.607 bb
– resulting from beginning stocks of 1.181 bb, projected 2014 production of 14.395 bb, and projected imports
of 30 million bushel (mb) (Table 1). Total supplies of 15.607 bb in “new crop” MY 2014/15 are comparable to
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, 11.932 bb in MY 2012/13, and 14.781 bb in “old crop” MY
2013/14 (2nd highest).
Beginning stocks of 1.181 bb in “new crop” MY 2014/15 are unchanged from August, but down from a
projection of 1.246 bb in the July WASDE report. Projected beginning stocks of 1.181 bb in “new crop” MY
2014/15 are up sharply from both 821 mb in “old crop” MY 2013/14, and from 989 mb in MY 2012/13. This
amount of beginning stocks is up considerably from the low of 426 mb occurring in MY 1996/97. Imports of
30 mb in “new crop” MY 2014/15 are the third highest on record, and are projected to be down from 35 mb in
“current year” MY 2013/14 (the 2nd highest), and 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 5.125 bb in
“new crop” MY 2014/15 is up 50 mb from August and up 75 mb from July – following from expectations of low
corn input prices and continued profitability on U.S. ethanol production. This projection of 5.125 bb in “new
crop” MY 2013/14 is unchanged from 5.125 bb in “old crop” MY 2013/14 (up 5 mb), while being up from 4.641
bb (down 7 mb) in MY 2012/13, and 5.000 bb in MY 2011/12 (Figure 4). 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 “old crop” MY 2013/14 had ranged from 4.638‐5.418
bb on a weekly basis since early September 2013 ‐ the beginning of the “current” 2013/14 marketing year.
Only 1 week of ethanol production for “new crop” MY 2014/15 has been reported to date by the EIA (i.e., the
week ending September 5th), with estimated corn use at a rate that would equal 5.168 bb for the marketing
year.
Over the period of from September 1, 2013 through August 29, 2014, corn usage for ethanol production
was been on pace to reach 5.073 bb in “old crop” MY 2013/14. This estimate of 5.073 bb is less than the
USDA’s adjusted September 2014 WASDE report estimate of 5.125 bb of corn to be used for ethanol
production during “old crop” MY 2013/14 (which had been raised 5 mb in the August WASDE report).
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
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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 1.049‐1.158 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, 1.049 bb in MY 2012/13, 1.158 bb
projected for “old crop” MY 2013/14, and a projection of 1.158 bb in “new crop” MY 2014/15. Over the same
five most recent marketing years, DDGS exports in corn equivalent weights are estimated to range from 277 to
306 mb, with approximately 306 bb of DDGS‐corn equivalents projected for the “new crop” MY 2014/15 U.S.
corn marketing year.
U.S. Corn Exports: Projected U.S. corn exports of 1.750 in “new crop” MY 2014/15 are up 25 mb from the
August WASDE, but down from the estimate of 1.925 bb (up 25 mb) in “old crop” MY 2013/14, but is up 140%
sharply from 730 mb in MY 2012/13 – the 40 year low since MY 1975/76 (Figure 4). According the USDA
Foreign Agricultural Service (FAS) weekly export data, as of September 4th, the first week of “new crop” MY
2014/15, 27.4 mb of U.S. corn had been shipped for export – equal to only 1.6% of the USDA’s updated
projection for “new crop” MY 2014/15 of 1.750 bb. An additional 459.9 mb of U.S. corn had been sold for
future export sales in the “new crop” 2014/15 marketing year – prior to August 31, 2015 (the end of “new
crop” MY 2014/15).
Adding together 27.4 mb in past shipments plus 459.9 mb in forward sales amounts to 487.2 mb, or 27.8%
of the USDA’s 1.750 bb U.S. corn export target for “new crop” MY 2014/15 in the September 11th USDA
WASDE report with 1.9% (1/52 weeks) of the marketing year completed. United States’ corn exports will
need to average 33.8 mb per week for the remainder of the “new crop” 2014/15 marketing year to achieve the
USDA’s 1.750 bb projection. This compares to 27.4 mb of export shipments for the week ending Sept. 4th.
Non‐Ethanol FSI: Forecast non‐ethanol food, seed and industrial (FSI) use of 1.405 bb (up 30 mb from
August) in “new crop” MY 2014/15 is greater than 1.375 bb (down 10 mb) in “old crop” MY 2013/14, and
compares to 1.398 bb in MY 2012/13, and 1.428 bb in MY 2011/12 (Figure 4).
Feed and Residual Use: Forecast U.S. feed and residual use of 5.325 bb in “new crop” MY 2014/15 is up 75
mb from the August WASDE report, and up 125 mb from the July WASDE (Figure 4). This projection of 5.325
bb in “new crop” MY 2014/15 is up from 5.175 bb for “old crop” MY 2013/14, and up from 4.339 bb in MY
2012/13. 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.
In the USDA September 15th Feed Outlook Report (http://www. http://usda.mannlib.cornell.edu/usda/current/FDS/FDS‐09‐15‐
2014.pdf) the USDA Economic Research Service (ERS) indicates that over the MY 2012/13 through “new 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 (87.5% corn), and 137.1 mmt
in “old crop” MY 2013/14 (95.9% corn), and is projected to be 145.8 mmt in “new crop” MY 2014/15 (92.8%
corn). Over this same three year period, total U.S. Grain Consuming Animal Units were estimated to be 91.8
million in MY 2012/13, and 89.3 million in “current” MY 2013/14, and are projected to be 89.9 million in “new
crop” MY 2014/15.
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As a result, U.S. Energy Feeds per Grain Consuming Animal Unit is estimated to be 1.372 metric tons per
animal unit (mt/au) in MY 2012/13, and 1.535 mt/au in “old crop” MY 2013/14, and is projected to be 1.622
mt/au in “new 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 “old crop” MY 2013/14,
and now into “new crop” MY 2014/15, the amount of energy feeds fed per animal unit and total feed use of
U.S. corn has and is projected to also increase.
Total Use of U.S. Corn for “new crop” MY 2014/15 is projected to be 13.605 bb – up 170 mb from August
and up 270 mb from July. This amount of 13.605 bb in total use for “new crop” MY 2014/15 is marginally
larger than the record high of 13.600 bb in “old crop” MY 2013/14, and up sharply from 11.108 bb (down 3
mb) in drought affected MY 2012/13 (Table 1 and Figures 4 & 6). United States’ total corn use has varied
based on available U.S. corn supplies in recent years, 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, 11.108 bb in MY
2012/13, the current record high of 13.600 bb in “current” MY 2013/14, and the projected new record high
amount of 13.605 bb in “new crop” MY 2014/15.
U.S. Corn Ending Stocks, % Ending Stocks‐to‐Use, & Prices
U.S. corn ending stocks for “new crop” MY 2014/15 are projected to be 2.002 bb – up 194 mb from the
August WASDE report. This forecast amount of U.S. corn ending stocks of 2.002 bb in “new crop” MY 2014/15
up from 1.181 bb in “old crop” MY 2013/14 – which was unchanged from August WASDE, but lowered 65 mb
from 1.246 bb in the July WASDE report (Table 1 & Figure 4). Projected “new crop” MY 2014/15 U.S. corn
ending stocks of 2.002 bb would be greater than 1.673 bb of U.S. corn ending stocks for MY 2008/09, and
1.708 bb in MY 2009/10 – and markedly larger than the recent relatively low ending stocks figures of 1.128 bb
in MY 2010/11, 989 mb in MY 2011/12, 821 mb in “drought stricken” MY 2012/13, and 1.181 bb in “old crop”
MY 2013/14.
Projected percent (%) ending stocks‐to‐use of 14.7% in “new crop” MY 2014/15 are up from 13.5% in both
the August and July WASDE reports (Table 1 & Figures 7‐8). United States’ corn % ending stocks‐to‐use
declined from 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
to 7.4% in “drought stricken” MY 2012/13, before increasing for the first time in six (6) years to 8.7% in “old
crop” MY 2013/14 (down from 9.2% in the July WASDE report), and now to a projected level of 14.7% in “new
crop” MY 2014/15.
U.S. average corn prices for “new crop” MY 2014/15 are projected to be in the range of $3.20‐$3.80 bu/ac
(midpoint = $3.50) (Table 1 & Figures 7‐8) – down from $3.55‐$4.25 (midpoint = $3.90) in the August WASDE
report, and down from $3.65‐$4.35 (midpoint = $4.00) in the July 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, up to the record high of
$6.89 in “drought stricken” MY 2012/13. However, if the September 11th 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
$4.45 in “old crop” MY 2013/14, and again down to $3.20‐$3.80 (midpoint = $3.50) in “new crop” MY 2014/15.
…
June 18, 2014
Grain Market Outlook
“New crop” DEC 2014 corn futures contract prices also responded in a volatile and ultimately negative
manner to the information in the June 11th USDA reports. On the day of the report CBOT DEC 2014 corn
futures prices opened at $4.45 per bushel, and traded as high as $4.48 ½ and as low as $4.39 during the
session, before settling at $4.41 ¾ – down $0.03 ¼ for the day (Figure 1). Since then DEC 2014 corn futures
JULY 2014 CME eCorn Futures
Oct. 17, 2013 – June 17, 2014
Close = $4.38 ¾ on 6/17/2014
DEC 2014 CME eCorn Futures
Oct. 17, 2013 – June 17, 2014
Close = $4.39 ½ on 6/17/2014
Page | 3
prices have traded first higher and then lower – ranging from a high of $4.49 ¾ on Friday, June 13th to a low of
$4.36 ½ on Tuesday, June 17th before closing at $4.39 ½ on the same day.
I‐C. U.S. Corn Supply‐Demand
U.S. Corn Acreage, Yield & Production
The USDA left unchanged its projection of 2014 U.S. corn planted and harvested acreage, U.S. average
yield, and U.S. corn production. Updated estimates of U.S. corn planted and harvested acreage will be given in
the USDA NASS Acreage report to be released on Monday, June 30, 2014. Any changes in projected U.S. corn
acreage will likely be included in the upcoming July 11th World Agricultural Supply and Demand Estimates
Report.
Following the results of March 31st USDA NASS Prospective Plantings Report, the USDA projected that
2014 U.S. corn total planted acreage would be 91.691 million acres (ma), down from 95.365 ma in 2013,
97.155 ma in 2012, and 91.936 ma in 2011 (Table 1 and Figures 1‐2). No adjustments have been made in this
projection in the April‐May‐June USDA Crop Production or WASDE reports. In addition, the USDA projected
2014 U.S. corn harvested acreage to be 84.3 ma, down from 87.668 ma in 2013, and 87.365 ma in 2012, but up
from 81.446 ma in 2011.
The forecast 2014 proportion of harvested‐to‐planted acreage for all U.S. corn is projected to be 91.9%,
equal to 2013, but up from 89.9% in 2012 and 91.4% in 2011. The U.S. average and median (i.e., the 50th
percentile or “middle”) corn percent harvested‐to‐planted acreage over the years of 2000‐2013 has been
91.0% and 91.2% , with a high of 92.4% in 2010 and a low of 87.9% in 2002. Using the 2000‐2013 average
percent harvested‐to‐planted acreage proportion of 0.91 would lead to a projection of U.S. 2014 harvested
acres of 83.439 million acres – approximately 860,200 acres less than the USDA’s projection of 84.3 million
acres harvested.
The projected 2014 U.S. average corn yield of 165.3 bushels per acre (bu/ac) would be a record high, up
from 158.8 bu/ac in 2013, the drought affected 2012 yield of 123.4 bu/ac., and the historic high of 164.7 bu/ac
in 2009 (Table 1 and Figure 3). Based on these 2014 acreage and yield forecasts, the USDA projected 2014
U.S. corn production to be a record high 13.935 billion bushels (bb) – which is up marginally from 13.925 bb in
2013, 10.780 bb in 2012, 12.360 bb in 2011, 12.447 in 2010, and 13.092 bb in 2009and (Table 1).
U.S. Corn Total Supplies
The USDA estimates that total supplies of U.S. corn for “new crop” MY 2014/15 are 15.111 bb – resulting
from beginning stocks of 1.146 bb, projected 2014 production of 13.935 bb, and projected imports of 30 mb
(Table 1). Total supplies of 15.111 bb in “new crop” MY 2014/15 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 (3rd largest), 14.182 bb in MY
2010/11 (4th largest), 13.517 bb in MY 2011/12, 11.932 bb in MY 2012/13, and 14.781 bb in “current year” MY
2013/14. Beginning stocks of 1.146 bb in “new crop” MY 2014/15 are up sharply from 821 mb in “current
year” MY 2013/14, and are comparable to the low of 426 mb occurring in MY 1996/97.
U.S. Corn Use by Category & Total Use
U.S. Ethanol Production and Corn Usage: Projected U.S. corn use for ethanol production of 5.050 bb in
“new crop” MY 2014/15 is equal to 5.050 bb in “current year” MY 2013/14, while being up from 4.648 bb in
MY 2012/13, and 5.000 bb in MY 2011/12. Figure 5 shows weekly U.S. oxygenated plant production of fuel
Page | 4
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 4.638‐5.262 bb on a weekly basis since early September 201 …
July 23, 2015
Grain Market Outlook
65
70
75
80
85
90
95
U.S
. D
olla
r In
de
x (T
rad
e W
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d)
Date (Month / Day / Year)
Trade Weighted U.S. Dollar Index
Major Currencies, Index March 1973=100, Daily, Not Seasonally Adjusted
Source: St. Louis Federal Reserve Bank (FRED)
U.S. Dollar Index (Trade Weighted)
Page | 4
I‐C. U.S. Wheat Production
U.S. Wheat Planted Acreage
The USDA’s projections of 2015 U.S. wheat planted acres from the June 30th Acreage report were used
without adjustment in the July 10th USDA Crop Production and WASDE reports. In the June 30, 2015 USDA
Acreage report the USDA projected that 2015 U.S. wheat total planted acreage would be 56.079 million acres
(ma), down 743,000 acres (‐1.3%) from 56.822 ma in 2014, and down 157,000 acres (‐0.2%) from 56.236 ma in
2013 (Table 1 and Figures 3 and 4).
The USDA lowered its forecast of 2015 U.S. winter wheat plantings to 40.620 ma – down 131,000 acres
from the USDA March 31st Prospective Plantings report estimate. This 2015 projection of 40.620 ma is down
1.779 ma (‐4.2%) from 42.399 ma in 2014, and down 2.610 ma (‐6.0%) from 43.230 ma in 2013. Of this total,
29.57 ma were projected to be seeded to Hard Red Winter (HRW) wheat in 2015, down approximately 4%
from 30.47 ma in 2014, and down marginally from 29.67 ma in 2013. Soft Red Winter (SRW) wheat planted
acreage was projected to be 7.61 ma, down 10.5% from 8.50 ma in 2014, and down 22.8% from 10.04 ma in
2013. In 2015, USDA projects there to be 4.30 ma of all white wheat planted, with 3.433 ma of white winter
(WW) wheat, and approximately 867,000 acres of spring white (SW) wheat. All acreage planted of U.S. white
wheat in 2015 of 4.30 ma is up marginally from 4.21 ma in 2014.
The USDA projected that total U.S. other spring wheat plantings in 2015 would be 13.505 ma, up 480,000
acres (+3.7%) from 13.025 ma in 2014, but up 1.363 ma (+11.7%) from 11.606 ma in 2013. Of this total, 12.6
ma are Hard Red Spring (HRS) wheat, up from 12.25 ma in 2014, but up from 10.94 ma in 2013.
Durum wheat plantings in the U.S. in 2015 was projected by the USDA to be 1.954 ma in 2015, up 556,000
acres (+39.8%) from 1.398 ma in 2014, and up 554,000 acres (+39.6%) from 1.400 ma in 2013.
U.S. Wheat Harvested Acreage
The USDA’s projections of 2015 U.S. wheat harvested acres from the June 30th Acreage report were also
used without adjustment in the July 10th USDA Crop Production and WASDE reports. In the June 30, 2015
USDA Acreage report the USDA projected that 2015 U.S. wheat total harvested acreage would be 48.454
million acres (ma), up 2.073 ma (+4.5%) from 46.381 ma in 2014, and up 3.122 ma (+6.9%) from 45.332 ma in
2013 (Table 1 and Figures 3 and 4).
Aggregated total U.S. percent harvested‐to‐planted acreage in the U.S. was estimated to be 86.4% in 2015,
up from 81.6% in 2014, 80.6% in 2013, and comparable to the range of 76.0%‐89.1% (average = 84.1%, median
= 84.4%) over the 2000‐2014 period (Table 1 and Figure 4). The proportion of harvested‐to‐planted U.S.
wheat acreage in 2013 of 80.6% was the lowest since 81.6% in 2006 and 76.0% in 2002.
The USDA forecast 2015 U.S. winter wheat harvested acreage at 33.329 ma – up 1.025 ma (+3.2%) from
30.304 ma in 2014, and up 0.679 ma (+2.1%) from 32.650 ma in 2013. Of this total, 23.61 ma were projected
to be Hard Red Winter (HRW) wheat in 2015, up 7.7% from 21.92 ma in 2014, and up from 20.39 ma in 2013.
Soft Red Winter (SRW) wheat harvested acreage was projected to be 6.44 ma, down 10.1% from 7.16 ma in
2014, and down 27.8% from 8.92 ma in 2013. In 2015, USDA projects there to be 3.222 ma of all white wheat
harvested, with 3.277 ma of white winter (WW) wheat, and approximately 834,000 acres of spring white (SW)
wheat. All acreage harvested of U.S. white wheat in 2015 of 4.11 ma is up marginally from 3.97 ma in 2014.
Page | 5
The USDA projected that total U.S. other spring wheat harvested area in 2015 would be 13.217 ma, up
477,000 acres (+3.7%) from 12.740 ma in 2014, but up 1.873 ma (+16.5%) from 11.344 ma in 2013. Of this
total, 12.38 ma are Hard Red Spring (HRS) wheat, up from 11.99 ma in 2014, and from 10.70 ma in 2013.
Durum wheat harvested area in the U.S. in 2015 was projected by the USDA to be 1.908 ma in 2015, up
571,000 acres (+42.7%) from 1.337 ma in 2014, and up 570,000 acres (+42.6%) from 1.338 ma in 2013.
U.S. Wheat Yields & Production
The USDA projected that 2015 U.S. average wheat yields would be 44.3 bushels per acre (bu/ac) – up from
44.2 bu/ac in June and from 43.5 bu/ac in May. This increase in projected 2015 U.S. wheat yields reflected
improved Hard Red Winter wheat prospects in the U.S. Central and Southern Plains due to recent rains and
cool weather (in spite of accompanying lodging and disease problems). This projection of 2015 U.S. wheat
yields of 44.3 bu/ac is up from 43.7 bu/ac in 2014, and is comparable to the record high of 47.1 bu/ac in 2013,
the previous record of 46.2 bu/ac in 2012, 43.6 bu/ac in 2011, and 46.1 bu/ac in 2010 (Table 1 and Figure 5).
Based on this combination of projections for 2015 planted acreage (56.079 ma), harvested acreage (48.454
ma), and yield (44.3 bu/ac), 2015 U.S. wheat production would be 2.148 billion bushels (bb). This projection
of 2015 U.S. wheat production of 2.148 bb is up 27 mb from the June WASDE report, and up 61 mb from May.
Production of U.S. wheat of 2.148 bb in 2015 is up from 2.026 bb in 2014, and 2.135 bb in 2013, and within the
2004‐2014 range of 1.808‐2.512 bb (average = 2.128 bb, median = 2.135 bb) (Table 1 and Figure 6).
By class, 2015 U.S. Hard Red Winter (HRW) wheat production is forecast at 866 mb, up 17.3% from 738
mb in 2014. United States’ 2015 Hard Red Spring (HRS) wheat production is forecast at 573 mb, up 3.1% from
556 mb in 2014. Soft Red Winter (HRS) wheat production in 2015 is forecast at 393 mb, down 13.6% from
455 mb in 2014. Recently concerns about quality characteristics of the U.S. 2015 SRW wheat crop have
emerged, following from extremely wet late season conditions in the eastern U.S. Corn Belt. United States’
2015 White wheat (WW) production is forecast at 239 mb, up 6.7% from 224 mb in 2014. Even with this
USDA forecast for higher 2015 production, extremely dry conditions have impacted U.S. white wheat 2015
production prospects in the Pacific Northwest. Durum wheat production in 2015 in the U.S. is forecast at 76
mb, up 43.4% from 53 mb in 2014.
I‐D. U.S. Wheat Total Supplies
Total supplies of U.S. wheat of 3.031 bb are projected by the USDA for “new crop” MY 2015/16 (up 58 mb
from June, and up 94 mb from May), resulting from beginning stocks of 753 mb, projected 2015 production of
2.148 bb, and projected imports of 130 mb (Table 1 and Figure 6). Over the last ten (10) marketing years, U.S.
wheat total supplies have been 2.501 bb in MY 2006/07, 2.620 bb in MY 2007/08, 2.945 bb in MY 2008/09,
2.984 bb in MY 2009/10, 3.236 bb in MY 2010/11, 2.968 bb in MY 2011/12, 3.118 bb in MY 2012/13, 3.021 bb
in MY 2013/14, 2.764 bb in MY 2014/15, and now are projected to be 2.973 bb in “new crop” MY 2015/16.
Forecast U.S. wheat beginning stocks of 753 mb in “new crop” MY 2015/16 are up 41 mb from June, and
are up 26.7% from 590 mb in beginning stocks in MY 2014/15, and up 4.9% from 718 mb in MY 2013/14. This
projection of 753 mb in beginning stocks in “new crop” MY 2015/16 is more than double the long term historic
low of 306 mb in MY 2008/09 – which resulted from the historically tight U.S. wheat ending stocks situation
that occurred in MY 2007/08.
Page | 6
Projected U.S. wheat imports of 130 mb for “new crop” MY 2015/16 (down 10 mb from June) would be
the third highest amount on record, less than 144 mb in “old crop” MY 2014/15 (down 4 mb from June), and
the record high of 169 mb in MY 2013/14. Since MY 1973/74 and prior to MY 2013/14, the next highest
amounts of U.S. wheat imports have been: 1) 127 mb in MY 2008/09; 2) 123 mb in MY 2012/13; 3) 122 mb in
MY 2006/07; and 4) 119 mb in MY 2009/10.
Nearly all of U.S. wheat imports come from Canada because of favorable geographic location and
associated grain transportation logistics. Large Canadian wheat supplies over the last several years have been
a major factor in this increase in U.S. wheat imports. Canada produced a record large wheat crop of 37.5
million metric tons (mmt) (or 1.378 bb in 60 lb/bu units) in MY 2013/14, followed by a crop of 29.3 mmt (1.077
bb) in MY 2014/15, with a projection of 27.5 mmt (1.010 bb) in “new crop” MY 2015/16. The next largest
Canadian wheat crops since 1960 that were over 30.0 mmt were in 1990 (32.1 mmt), 1991 (32.0 mmt), and
1986 (31.4 mmt).
I‐E. U.S. Wheat Total Use & Use by Category
Food Use: Projected U.S. wheat food use of 967 mb in “new crop” MY 2015/16 has been trending
consistently higher over time due to a) steady growth in the U.S. population, and b) associated increases in
demand for processed wheat products. This projected amount of 967 mb in food use in “new crop” MY
2015/16 continues the steady upward trend following from 960 mb in MY 2014/15, 955 mb in MY 2013/14,
and from 951 mb in MY 2012/13 (Table 1 and Figure 7).
Seed Use: Forecast seed use of 72 mb in “new crop” MY 2015/16 is down from 81 mb in MY 2014/15 (up 4
mb from the June WASDE report), and compares to 77 mb in MY 2013/14, and 73 mb in MY 2012/13 (Table 1
and Figure 7). The USDA’s forecast U.S. wheat seed use extends the historic pattern of there being a relatively
small but inelastic demand for U.S. wheat seed, driven primarily by a) the amount of U.S. wheat seed needed
to plant adequate U.S. wheat acreage each year (from both commercial and on‐farm seed sources), b) the
need for adequate wheat seed stocks to cover possible U.S. seed wheat production shortfalls from year to
year, and c) whatever marginal increases or decreases in seed use are needed to accommodate changing U.S.
wheat seeded acreage on a year‐to‐year basis.
Exports: Projected …
February 5, 2014
Grain Market Outlook
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Q4: Jun‐Aug
Q3: Mar‐May
Q2: Dec‐Feb
Q1: Sept‐Nov
Page | 6
2013. In addition, the USDA’s projection of 2013 U.S. corn harvested acres was raised to 87.668 ma, up
436,000 acres from December 2013, but still down 1.467 ma from the earlier projection of 89.135 ma in the
2013 September Crop Production report (Table 2 and Figure 4).
The USDA’s January U.S. corn yield projection of 158.8 bu/ac is down from 160.4 bu/ac in November‐
December 2013, but up from 155.3 bu/ac in September, 154.4 bu/ac in August, 156.5 bu/ac in June‐July, and
158.0 bu/ac in May. The January 2014 projection of 158.8 bu/ac is still down from the initial USDA projection
of 163.6 bu/ac made by the USDA at its February 22, 2013 Outlook Forum (Table 2 and Figure 5).
Projected 2013 U.S. corn production of 13.925 bb is down 64 mb from November‐December 2013, but
would still be a record high, and up 3.145 bb or 29% from 10.780 bb in 2012, and up from 12.360 bb in 2011
(Table 2). The USDA’s estimate of forecast accuracy in the USDA NASS January Crop Production report
projection of 13.925 bb – as stated in the January 10th WASDE report ‐ indicates a 67% confidence interval of
final 2013 U.S. corn production being within a +/– 0.5% range of 13.855 to 13.995 bb. Similarly, a 90%
confidence interval for the January 2014 U.S. corn production forecast would be within a +/– 0.8% range of
13.814 to 14.036 bb. If changes are eventually to be made in the projection of 2013 U.S. corn production, they
may not be made until the 2014 Crop Production Summary in January 2015.
U.S. Corn Total Supplies in MY 2013/14
The USDA estimates that total supplies of U.S. corn for MY 2013/14 are 14.781 bb – down 61 mb from
December. The decrease in projected MY 2013/14 total supplies resulted from beginning stocks of 821 mb
(down 3 mb), projected 2013 production of 13.925 bb (down 64 mb), and projected imports of 35 mb (up 5
mb) (Table 1).
Total supplies of 14.781 bb in MY 2013/14 would 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 “old crop” MY 2012/13. Beginning stocks of 821 mb are the lowest since
426 mb in MY 1996/97, and substantiate the market impact of tight corn supplies during the summer of 2013.
U.S. Corn Total Use & Use by Category in MY 2013/14
Total use of U.S. corn for MY 2013/14 is projected to be 13.150 bb – up 100 mb from the December
WASDE and up 200 mb from November, while being up 18% from 11.111 bb in “old crop” MY 2012/13 (Table 1
and Figure 6). Projected U.S. corn use for ethanol production of 5.000 bb in MY 2013/14 is up 50 mb from a
month ago, and up from 4.648 bb in MY 2012/13, while being equal to 5.000 bb in MY 2011/12. Forecast non‐
ethanol food, seed and industrial (FSI) use of 1.400 bb is down 50 mb from December, and compares to 1.396
bb in MY 2012/13, and 1.428 bb in MY 2011/12. Projected U.S. corn exports of 1.450 in MY 2013/14 are
unchanged from December, and up 98.4% from 731 mb a year ago in MY 2012/13 – the 39 year low since MY
1975/76.
Forecast U.S. feed and residual use of 5.300 bb is up 100 mb from November‐December and up 200 mb
from August‐September WASDE projections. Feed and residual use of 5.300 bb form MY 2013/14 is up 22.3%
from 4.335 bb in MY 2012/13, while being up 16.3% from 4.557 bb two years ago. U.S. total corn use of
13.150 bb in 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 MY 2012/13.
U.S. Ethanol Production and Corn Usage: Figure 7 shows weekly U.S. oxygenated plant production of fuel
ethanol as reported by the U.S. Energy Information Administration (www.eia.gov) with a calculated estimate of
corn use 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 MY
2013/14 has ranged from 4.64‐5.26 bb on a weekly basis since early September 201 …
October 29, 2015
Grain Market Outlook
ricultural 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. wheat began on June 1, 2015 and will last
through May 31, 2016.
The October 9th USDA reports follow the release on September 30th of the USDA National Agricultural
Statistical Service (NASS) 2015 Small Grains Summary and Grain Stocks reports, both of which were relevant
to U.S. wheat supply‐demand estimates and market expectations for U.S. wheat prices. Of particular
importance in the Small Grains Summary report was the final estimate of 2015 U.S. wheat acreage, yield, and
production – both for U.S. wheat production overall and for analysis of supply‐demand conditions on a class‐
by‐class basis.
I‐B. CME Kansas Hard Red Winter Wheat DEC 2015 & JULY 2016 Futures
Since market highs of $6.28 ¾ per bushel for the CME DECEMBER 2015 Kansas hard red winter wheat
futures contract that occurred on June 30, 2015, December futures have trended sharply lower – down to a
low of $4.65 ¾ on September 4, 2015 (Figure 1). Following a recovery up to $5.21 on October 7th, DEC 2015
Kansas wheat futures declined again to $4.70 ½ on October 20th and $4.69 ½ on October 23rd before again
trending moderately higher. 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) has been the
key factor causing the recent sharp decline in CME DECEMBER 2015 Kansas HRW wheat futures prices.
Figure 1. DECEMBER 2015 & JULY 2016 CME Kansas Wheat Futures Price Charts …
March 18, 2015
Grain Market Outlook
40.45 ma (vs 42.4 ma2014, 43.2 ma2013, 40.9 ma2012, 40.6 ma2011)
Hard Red Winter Wheat seeded acreage of 29.50 ma in the U.S. in 2015 is the lowest amount since 28.5
ma in 2011. Soft Red Winter Wheat seeded acreage of 7.50 ma in the U.S. in 2015 is the lowest amount since
4.9 ma in 2011. White Winter Wheat seeded acreage of 3.48 ma in the U.S. in 2015 is within the range of U.S.
White Wheat over the 2011‐2014 period, i.e., 3.3‐3.6 ma.
The March 31st USDA NASS Prospective Plantings report will provide more information on U.S. wheat
acreage, for hard red winter, soft red winter, and durum wheat varieties planted in fall 2014 for harvest in
2015 – as well as for other types of spring wheat planted in the U.S. for harvest in the current calendar year.
I‐D. U.S. Wheat Total Supplies
Total supplies of 2.776 bb are projected by the USDA for “current crop” MY 2014/15, resulting from
beginning stocks of 590 mb, projected 2014 production of 2.026 bb, and projected imports of 160 mb (Table 1
and Figure 6).
Page | 5
Forecast U.S. wheat beginning stocks of 590 mb in “current crop” MY 2014/15 are down 17.8% from 718
mb in beginning stocks in MY 2013/14, and down from 743 mb in MY 2012/13. This is the lowest level of U.S.
wheat beginning stocks since 306 mb in MY 2008/09 (following the historically tight U.S. wheat ending stocks
situation that developed in MY 2007/08). This projected decline in U.S. wheat beginning stocks into the
“current crop” 2014/15 marketing year is a continuance of the pattern of steadily tighter U.S. wheat supplies
over the last four marketing years (since the recent high in beginning stocks of 976 mb in MY 2010/11).
Projected U.S. wheat imports of 160 mb for “current crop” MY 2014/15 are unchanged from February, but
down 20 mb from January, and would be the second highest amount on record, less than the record high of
169 mb in MY 2013/14. Since MY 1973/74 the next highest amounts of U.S. wheat imports have been: 1) 127
mb in MY 2008/09; 2) 123 mb in MY 2012/13; 3) 122 mb in MY 2006/07; and 4) 119 mb in MY 2009/10.
Nearly all of U.S. wheat imports come from Canada because of favorable geographic location / logistics.
Large Canadian wheat supplies over the last two years have been a major factor in this increase in U.S. wheat
imports. Canada produced a record large wheat crop of 37.5 million metric tons (mmt) (or 1.378 billion
bushels in 60 lb/bu units) in MY 2013/14. The next largest Canadian wheat crops since 1960 that were over
30.0 mmt were in 1990 (32.1 mmt), 1991 (32.0 mmt), and 1986 (31.4 mmt). Projected Canadian wheat
production in the “current crop” 2014/15 marketing year is lower – down to 29.3 mmt (1.077 bb). This
amount of Canadian wheat production is larger than the most recent 10 year average (years 2004‐2013) of
26.5 mmt (973 mb).
Total supplies of U.S. wheat of 2.776 bb in “current crop” MY 2014/15 are unchanged from February but
down 20 mb from the January WASDE report, and are down to the lowest amount of U.S. wheat supplies since
the 2006/07 and 2007/08 marketing years. Over the last eight (8) marketing years, U.S. wheat total supplies
have been 2.501 bb in MY 2006/07, 2.620 bb in MY 2007/08, 2.945 bb in MY 2008/09, 2.984 bb in MY
2009/10, 3.236 bb in MY 2010/11, 2.968 bb in MY 2011/12, 3.118 bb in MY 2012/13, 3.021 bb in MY 2013/14,
and 2.776 bb in “current crop” MY 2014/15.
I‐E. U.S. Wheat Total Use & Use by Category
Food Use: Projected U.S. wheat food use of 960 mb in “current crop” MY 2014/15 has been trending
consistently higher over time due to a) steady growth in the U.S. population, and b) associated increases in
demand for processed wheat products. This projected amount of 960 mb in food use in “current crop” MY
2014/15 continues the steady upward trend following from 952 mb in MY 2013/14, 945 mb in MY 2012/13,
and from 941 mb in MY 2011/12 (Table 1 and Figure 7).
Seed Use: Forecast seed use of 75 mb in “current crop” MY 2014/15 (down 1 mb) is down marginally from
77 mb in MY 2013/14, and compares to 73 mb in MY 2012/13, and 76 mb in MY 2011/12 (Table 1 and Figure
7). The USDA’s forecast U.S. wheat seed use extends the historic pattern of there being a relatively small but
inelastic demand for U.S. wheat seed, driven primarily by a) the amount of U.S. wheat seed needed to plant
adequate U.S. wheat acreage each year (from both commercial and on‐farm seed sources), and b) the need for
adequate wheat seed stocks to cover possible U.S. seed wheat production shortfalls from year to year.
Exports: Projected U.S. wheat exports of 900 mb in “current crop” MY 2014/15 are unchanged from
February, but down 25 mb from the January WASDE report. This projection of 900 mb of U.S. wheat exports in
“current crop” MY 2014/15 is down sharply from 1.176 bb in MY 2013/14, down to the lowest amount since
879 mb in MY 2009/10 (Table 1 and Figure 7).
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The sharp increase in the value of the U.S. dollar relative to other World currencies along with the
likelihood of fully adequate foreign wheat supplies for export trade purposes, are factors that have caused
lower U.S. wheat exports. That said, the uncertain impact on World wheat trade in the future from
geopolitical conflicts (between Russian and Ukraine), and the potential for dry or adverse weather conditions
in other major World wheat production areas are all factors that may eventually support increased U.S. wheat
exports and higher World wheat prices in the later stages of the “current crop” 2014/15 marketing year.
Cumulative U.S. wheat export shipments through March 5th – the 40th week of the “current crop” 2014/15
marketing year for U.S. wheat – totaled 633.2 mb, which is 70.4% of the USDA’s projected “current crop” MY
2014/15 exports of 900 mb with 76.9% (40 of 52 weeks) of the marketing year completed. “Current crop” MY
2014/15 ends on May 31, 2015. United States’ wheat export shipments will need to average 22.2 mb per week
through the remainder of the “current crop” 2014/15 marketing year to attain the USDA’s March 10th WASDE
projection of 900 mb. Wheat export shipments by the U.S. of 17.8 mb and 15.8 mb during the weeks ending
February 26th and March 5th, respectively, were “behind pace” to meet the USDA forecast of 900 mb in the
“current crop” 2014/15 marketing year. (Source: USDA Foreign Agricultural Service U.S. Weekly Export Sales
report ‐ http://apps.fas.usda.gov/export‐sales/esrd1.html).
In addition, when accounting for unshipped forward sales of exports of 184.5 mb in U.S. wheat for “current
crop” MY 2014/15 (that had not yet been shipped as of March 5th), total U.S. wheat shipped plus outstanding
shipments added up to 817.7 mb (i.e., 633.2 mb shipped plus 184.5 mb forward sales). This amounts to 90.9%
of the USDA’s projection of 900 mb for “current crop” MY 2014/15 with 76.9% of the marketing year having
already occurred (i.e., 40 of 52 weeks).
If a sharp, unexpected increase in U.S. wheat exports were to occur during the remainder of the “current
crop” 2014/15 marketing year, U.S. wheat price prospects could improve considerably as U.S. wheat supply‐
demand balances would tighten on a bushel‐for‐bushel basis. The potential exists during the remainder of
“current crop” MY 2014/15 (i.e., through May 2015) for wheat production problems in major wheat producing
and exporting countries such as Australia, Russia, Ukraine, parts of the European Union, Canada, Argentina,
and even the United States. The potential impact on U.S. wheat supply‐demand balances and prices for
“current crop” 2014/15 will be discussed in the “KSU Forecast” section below. As noted in an earlier section,
the higher value of the U.S. Dollar relative to other World currencies is being cited as a major factor that has
been limiting U.S. wheat exports and market price prospects (see Figure 2).
Feed & Residual Use: The USDA projected that U.S. feed and residual use would be 150 mb in “current
crop” MY 2014/15, down from 226 mb for MY 2013/14, the recent high of 370 mb in MY 2012/13, and from
162 mb in MY 2011/12 (Table 1 and Figure 7). Domestic U.S. wheat feeding has trended lower across MY
2013/14 and “current crop” MY 2014/15 due to sizable 2013 and 2014 U.S. corn and grain sorghum crops –
which has led to more abundant competitive U.S. feedgrain supplies for domestic livestock feeding at lower
market prices than during “drought stricken” MY 2012/13. Subsequently, over the last two U.S. wheat
marketing years, there has been and continues to be lower cross‐market demand for U.S. wheat in U.S.
livestock feed rations – causing U.S. wheat usage to be at least 75 to 150 mb less than they would have been
otherwise (i.e., if wheat feed use was in the range of 225 to 300 mb as it had been during the MY 2012/13 and
MY 2013/14).
Total U.S. Wheat Use: Total use of U.S. wheat for “current crop” MY 2014/15 is projected to be 2.085 bb
(up 1 mb from February), which would be the 3rd smallest amount of U.S. wheat total usage since MY 2004/05
(Figure 7). U.S. wheat total use has varied from 2.234 bb in MY 2004/05, 2.154 bb in MY 2005/06, 2.045 bb in
Page | 7
MY 2006/07, 2.314 bb in MY 2007/08, 2.288 bb in MY 2008/09, 2.008 bb in MY 2009/10, 2.373 bb in MY
2010/11 (the 2nd largest amount during the 11 year period), 2.226 bb in MY 2011/12, 2.400 bb in MY 2012/13
(the 3rd largest amount during the 11 year period), to the largest amount in this period of 2.431 bb in MY
2013/14, and finally to 2.084 bb in “current crop” MY 2014/15. Total usage of U.S. wheat in MY 2012/13 and
MY 2013/14 were boosted by higher than usual livestock feeding of wheat in reaction to extremely tight U.S.
corn and grain sorghum supplies – which in turn led to substitutionary demand for U.S. wheat in domestic
livestock feed rations and support for U.S. wheat prices.
I‐F. U.S. Wheat Ending Stocks, % Stocks‐to‐Use & Prices
United States’ wheat ending stocks for the “current crop” 2014/15 marketing year are projected to be 691
mb, down 1 mb from February, up 4 mb from January, and up 37 mb from the December 2014 WASDE
projection of 654 mb (Table 1 and Figure 6). This amount of U.S. wheat ending stocks is still markedly larger
than 306 mb in MY 2007/08 – the historic “tight stocks” marketing year in recent years. Over the last eight
marketing years, U.S. wheat ending stocks were a record low 306 mb in MY 2007/08, 657 mb in MY 2008/09,
976 mb in MY 2009/10, 863 in MY 2010/11, 743 mb in MY 2011/12, 718 mb in MY 2012/13, an estimated 590
mb in MY 2013/14, and now a projected amount of 691 mb in “current crop” MY 2014/15.
Percent (%) ending stocks‐to‐use for U.S. wheat of 33.1% in “current crop” MY 2014/15 is down only
marginally from 33.2% in February, but up from 32.57% in January, and from 30.55% in the December 2014
WASDE report (Table 1 and Figures 7‐8). Since the historic 67 year low of 13.2% in MY 2007/08, U.S. wheat
ending stocks‐to‐use has varied widely over time, being 28.7% in MY 2008/09, 48.6% in MY 2009/10, 36.4% in
MY 2010/11, 33.4% in MY 2011/12, 29.9% in MY 2012/13, 24.3% for MY 2013/14, to now a projected level of
33.1% in “current crop” MY 2014/15.
U.S. average wheat prices for “current crop” MY 2014/15 are projected to be in the range of $5.90‐$6.10
per bushel (“/bu”) (midpoint = $6.00 /bu) – narrower by $0.05 /bu on both ends of the range from a month
ago, but with the midpoint of $6.00 /bu being unchanged (Table 1 and Figures 7‐8). Starting with the record
tight U.S. and World wheat ending stocks marketing year of 2007/08, U.S. wheat prices have varied in the
following manner over time: $6.48 per bushel in MY 2007/08, $6.78 in MY 2008/09, $4.87 in MY 2009/10,
$5.70 in MY 2010/11, $7.24 in MY 2011/12, the record high of $7.77 in MY 2012/13, $6.87 in MY 2013/14, and
now a forecast range of $5.90‐$6.10 /bu (midpoint = $6.00 /bu) in “current crop” MY 2014/15.
How Marketing Year Average Prices are calculated by USDA: The following illustrative table (see below)
shows the type of calculations used by the USDA to make projections of the U.S. wheat marketing year average
price for the “current crop” 2014/15 marketing year.
These calculations show how monthly average U.S. wheat prices for the June 2014 through May 2015
period are weighted by the percent of average sales each month and summed together to calculate the
marketing year average price for “current crop” MY 2014/15. Scenarios represented are for a “+$0.50 /bu”
and an “$8.00 /bu” scenario during April‐May, 2015.
The March 2, 2015 estimate for “current crop” MY 2014/15 marketing year average price equaled $5.98
per bushel – calculated prior to the USDA March 10th WASDE forecast of $6.00. The “+$0.50 /bu” 2015
scenario for “current crop” MY 2014/15 is up to $6.03 due to the potential uptrend in MAY 2015, and JULY
2015 Kansas Wheat futures over the April‐May 2015 time period.
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Month
% Avg. Sales
by Month
3/2/2015
Scenario
+$0.50 /bu
Scenario
“$8.00 Spring 2015
$ Shock” Scenario
June 2014 …
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
Page | 3
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 influencing factors
will be key determinants as to whether these price levels ultimately represent the fall harvest “lows” for this
grain marketing year.
A time of seasonal market weakness typically has occurred during the months of January‐February in large
crop – low price years. Therefore it is still possible that prices may trend lower again sometime before spring,
2015. However, the $3.46 ¾ low on October 1st will be a key point of support for CME MARCH 2015 or CME
MAY 2015 corn futures prices should such a seasonal price decline occur in coming months.
I‐C. U.S. Corn Supply‐Demand – USDA Projections for “New Crop” 2014/15
U.S. Corn Acreage, Yield & Production
The USDA projected that 2014 U.S. corn total planted acreage would be 90.885 million acres (ma) –
unchanged from October (Table 1 and Figure 2). Planted acreage of 90.885 million acres in 2014 is down from
95.365 ma in 2013, 97.291 ma in 2012 (adjusted 116,000 acres higher by the USDA), and 91.936 ma in 2011.
In addition, the USDA projected 2014 U.S. corn harvested acreage to be 83.097 ma – unchanged from October
but down from 87.668 ma in 2013, and 87.365 ma in 2012, while still being up from 81.446 ma in 2011. The
2014 proportion of harvested‐to‐planted acreage for all U.S. corn is projected to be 91.4%, down from 91.9%
in to 2013, but up from 89.8% in 2012, and equal to 91.4% in 2011.
The projected 2014 U.S. average corn yield of 173.4 bushels per acre (bu/ac) would be a record high, but is
down from the earlier USDA projection of 174.2 bu/ac in October (Table 1 and Figure 3). This projection of
173.4 bu/ac in November 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 historic high of 164.7 bu/ac in 2009. Based on these 2014 acreage and yield
forecasts, the USDA projected 2014 U.S. corn production to be 14.407 billion bushels (bb) – which would be
the highest amount on record, larger than the current record high of 13.925 bb in 2013, 10.755 bb in 2012
(adjusted lower by 25 million bushels or “mb”), 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 “new crop” MY 2014/15 are a record high 15.668 bb
– resulting from beginning stocks of 1.236 bb, projected 2014 production of 14.407 bb, and projected imports
of 25 million bushel (mb) (Table 1 and Figure 4). Total supplies of 15.668 bb in “new crop” MY 2014/15 are
Page | 4
comparable to 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 MY 2012/13, and 14.782 bb in
“old crop” MY 2013/14 (2nd highest).
Beginning stocks of 1.236 bb in “new crop” MY 2014/15 are unchanged from October, but down from an
early season projection of 1.246 bb by the USDA in the July 2014 WASDE report (Table 1 and Figure 4).
Projected beginning stocks of 1.236 bb in “new crop” MY 2014/15 are up sharply from 821 mb in “old crop”
MY 2013/14, and from 989 mb in MY 2012/13. This amount of beginning stocks is up considerably from the
low of 426 mb occurring in MY 1996/97. Imports of 25 mb in “new crop” MY 2014/15 are projected to be
down from 36 mb in “old crop” MY 2013/14 (the 2nd highest), and 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 5.150 bb in
“new crop” MY 2014/15 is up 25 mb from September‐October – following from expectations of low corn input
prices and a continuation of at least marginal profitability for U.S. ethanol production (Table 1 and Figures 5‐
6). This projection of 5.150 bb in “new crop” MY 2013/14 is up from 5.134 bb in “old crop” MY 2013/14 (up 4
mb), while being up from 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 “new crop” MY 2014/15 has
ranged from 4.911‐5.278 bb on a weekly basis since early September 2014 ‐ the beginning of the “new crop”
2014/15 marketing year. Over the period of from September 1, 2014 through November 7, 2014, corn usage
for ethanol production was been on pace to reach 5.085 bb in “new crop” MY 2014/15. This estimate of 5.085
bb is less than the USDA’s adjusted November 2014 WASDE report estimate of 5.150 bb of corn to be used for
ethanol production during “new crop” MY 2014/15, with 10 of 52 weeks for 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 1.049‐1.164 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, 1.049 bb in MY 2012/13, 1.160 bb
projected for “old crop” MY 2013/14, and a projection of 1.164 bb in “new crop” MY 2014/15. Over the same
five most recent marketing years, DDGS exports in corn equivalent weights are estimated to range from 277 to
307 mb, with approximately 307 bb of DDGS‐corn equivalents projected for the “new crop” MY 2014/15 U.S.
corn marketing year.
U.S. Corn Exports: Projected U.S. corn exports of 1.750 in “new crop” MY 2014/15 are down from the
estimate of 1.917 bb in “old crop” MY 2013/14, but are up sharply from 730 mb in MY 2012/13 – the 40 year
Page | 5
low since MY 1975/76 (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 November 11th, through the tenth week of “new crop”
MY 2014/15 (10 of 52 weeks), 295.6 mb of U.S. corn had been physically shipped for export – equal to 16.9%
of the USDA’s updated projection for “new crop” MY 2014/15 of 1.750 bb. An additional 481.0 mb of U.S. corn
had been pre‐sold for future export shipments during the “new crop” 2014/15 marketing year – prior to
August 31, 2015 (the end of “new crop” MY 2014/15).
Adding together 295.6 mb in past shipments plus 481.0 mb in forward sales amounts to 776.6 mb, or
44.4% of the USDA’s 1.750 bb U.S. corn export target for “new crop” MY 2014/15 in the November 10th USDA
WASDE report with 19.2% (10/52 weeks) of the marketing year completed. United States’ corn exports will
need to average 34.6 mb per week for the remainder of the “new crop” 2014/15 marketing year to achieve the
USDA’s 1.750 bb projection. This compares to 17.5 mb and 23.7 mb of export shipments for the weeks ending
October 30th and November 6th, 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 1.385 bb (down 30 mb from
October) in “new crop” MY 2014/15 is greater than 1.363 bb (down 11 mb) in “old crop” MY 2013/14, and
compares to 1.397 bb in MY 2012/13, and 1.428 bb in MY 2011/12 (Figures 5 and 7).
Feed and Residual Use: Forecast U.S. feed and residual use of 5.375 bb in “new crop” MY 2014/15 is
unchanged from October but up 25 mb from the September WASDE report (Figures 5 and 7). This projection
of 5.375 bb in “new crop” MY 2014/15 is up from 5.132 bb for “old crop” MY 2013/14 (up 8 mb), and up from
4.315 bb in MY 2012/13 (down 25 mb). 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 November 13th Feed Outlook Report (http://www.http://usda.mannlib.cornell.edu/usda/current/FDS/FDS‐11‐13‐
2014.pdf) the USDA Economic Research Service (ERS) indicates that over the MY 2012/13 through “new 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 125.8 million metric tons (mmt) in MY 2012/13 (87.1% corn), and 137.0 mmt
in “old crop” MY 2013/14 (95.2% corn), and is projected to be 146.3 mmt in “new crop” MY 2014/15 (93.3%
corn). Over this same three year period, total U.S. Grain Consuming Animal Units were estimated to be 92.3
million in MY 2012/13, and 90.3 million in “current” MY 2013/14, and are projected to be 91.5 million in “new
crop” MY 2014/15.
As a result, U.S. Energy Feeds per Grain Consuming Animal Unit is estimated to be 1.363 metric tons per
animal unit (mt/au) in MY 2012/13, and 1.517 mt/au in “old crop” MY 2013/14, and is projected to be 1.599
mt/au in “new 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 “old crop” MY 2013/14,
and now into “new crop” MY 2014/15, the amount of energy feeds fed per animal unit and total feed use of
U.S. corn has and is projected to also increase.
Total Use of U.S. Corn for “new crop” MY 2014/15 is projected to be 13.660 bb – up 5 mb from October.
This amount is up from 13.546 bb in “old crop” MY 2013/14, and up sharply from 11.083 bb (down 25 mb) in
drought‐affected MY 2012/13 (Table 1 and Figures 5 & 7). United States’ total corn use has varied based
largely on available U.S. corn supplies in recent years, 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 current record high of 13.546 bb in “old crop” MY 2013/14, and the projected new record high
amount of 13.660 bb in “new crop” MY 2014/15.
Page | 6
U.S. Corn Ending Stocks, % Ending Stocks‐to‐Use, & Prices
U.S. corn ending stocks for “new crop” MY 2014/15 are projected to be 2.008 bb – down 73 mb from the
October WASDE report (Table 1 & Figure 4). This forecast amount of U.S. corn ending stocks of 2.008 bb in
“new crop” MY 2014/15 up from 1.236 bb in “old crop” MY 2013/14, and from 821 mb in MY 2012/13. 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, and 1.236 bb in “old crop” MY 2013/14, and are now projected to be 2.008 bb in “new crop” MY
2014/15.
Projected percent (%) ending stocks‐to‐use of 14.8% in “new crop” MY 2014/15 are up from 15.3% in the
October WASDE report (Table 1 and Figures 8‐9). United States’ 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 to 7.4% in “drought stricken” MY 2012/13, before increasing for the first
time in six (6) years to 9.1% in “old crop” MY 2013/14, and now to a projected level of 14.8% in “new crop” MY
2014/15.
U.S. average corn prices for “new crop” MY 2014/15 are projected to be in the range of $3.20‐$3.80 bu/ac
(midpoint = $3.50) (Table 1 & Figures 8‐9) – up from $3.10‐$3.70 (midpoint = $3.40) in the October WASDE
report, and equal to the forecast price range in the September 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, up to the record high of
$6.89 in “drought stricken” MY 2012/13. However, if the November 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 “old crop” MY 2013/14, and again down to $3.20‐$3.80 (midpoint = $3.50) in “new crop” MY 2014/15.
I‐D. KSU U.S. Corn Market Scenarios: “New Crop” MY 2014/15 & “Next Crop” MY
2015/16
Kansas State University forecasts of U.S. corn supply‐demand balances for “new crop” in the 2014/15 and
“next crop” 2015/16 marketing years are provided below. Given the market information available in mid‐
November 2014, these conservative price projections that follow seem reasonable – especially for the current
marketing year, i.e., “new crop” MY 2014/15. However, some marginal amount of 2014 U.S. corn production
uncertainty still remains that may be resolved in the January 12, 2015 USDA NASS Crop Production Annual
Summary report. Also, there is the possibility that the USDA is overly pessimistic in its projections of U.S. corn
usage in the “new 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.
These Kansas State University supply‐demand and price projections for “new crop” MY 2014/15 reflect
the possibility of U.S. corn usage being underestimated by the USDA in the current marketing year. However,
for “next crop” MY 2015/16, these KSU projections reflect the likelihood of a reduction in U.S. corn acreage in
2015, and how a possible return to trendline U.S. corn yields and a moderation of 2015 U.S. corn production in
would be likely affect U.S. corn supply‐demand balances and prices in the next marketing year, i.e., September
1, 2015 through August 31, 2016.
Page | 7
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 “new crop” MY 2014/15 are based on projections of
U.S. corn % ending stocks‐to‐use shown in Table 1 and Figures 8‐9.
A. “New Crop” 2014/15 KSU Scenario for U.S. Corn Supply‐Demand – 40% Probability
‐ Total Supplies …
July 16, 2014
Grain Market Outlook
Page | 2
I. U.S. Wheat Market Situation & Outlook
I‐A. July 2014 USDA Reports & Projections for “New Crop” MY 2014/15
On July 11, 2014 the USDA released two reports of consequence to wheat market prospects. The USDA
National Agricultural Statistical Service (NASS) released the July 11, 2014 Crop Production report, providing
the third monthly survey‐based projection of 2014 U.S. winter wheat production (following the May and June
USDA Crop Production reports), and the first such monthly survey‐based projection for 2014 U.S. durum and
other spring wheat categories. The July 11th USDA NASS Crop Production report made use of wheat‐related
2014 U.S. wheat planted and harvested acreage information released in the June 30th National Agricultural
Statistical Service (NASS) Acreage report.
In addition, the USDA World Agricultural Outlook Board (WAOB) released its July 11, 2014 World
Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World wheat supply‐
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 for U.S. wheat ended on May 31, 2014, while the “new crop”
2014/15 U.S. wheat marketing year will last from June 1, 2014 through May 31, 2015. The July 11th WASDE
report made use of the information released in both the NASS July 11th Crop Production and the June 30th
Quarterly Stocks reports. Information in the June 30th USDA NASS Quarterly Stocks report was used in
calculating adjustments to “old crop” MY 2013/14 U.S. wheat usage and ending stocks in the July 11th USDA
WASDE report.
The upcoming August 12th USDA NASS Crop Production report will provide another confirming in‐field
survey‐based forecast of the 2014 U.S. wheat crop – with a particular focus on other spring wheat and durum
wheat prospects as they stand in early August 2014. This 2014 U.S. wheat production estimate will provide the
basis for the August 11th WASDE report projection of U.S. wheat supply‐demand and prices.
I‐B. Kansas City Wheat Futures Trends Following the July 11 USDA Reports
Wheat futures contract prices had trended higher from late January to early May 2014 due to a) declines in
2014 U.S. hard red winter wheat production prospects compared to a year ago for, and b) geopolitical conflicts
in the Black Sea Region between Ukraine and Russia that put at risk and in question that region’s wheat and
coarse grains exports ‐ and ultimately were thought to provide a boost to U.S. wheat export prospects.
However, since the market high in early May, Kansas hard red winter wheat futures have trended sharply
lower as a) domestic U.S. hard red winter wheat crop prospects improved with adequate moisture and cooler
temperatures in the Great Plains, b) adequate‐to‐favorable weather occurred in the U.S. eastern Corn Belt for
at least “decent” 2014 U.S. soft red winter wheat production, c) major crop production problems were largely
avoided for other major wheat export competitors – although excess moisture has likely caused wheat
production problems in parts of Canada, and d) the ongoing geopolitical conflict between major wheat
exporters Russia and Ukraine in the Black Sea Region has not caused a major disruption in the flow of wheat
exports in World wheat markets.
In terms of specific price levels, after trading at a low of $6.08 ¾ on January 29th, electronic SEPTEMBER
2014 Kansas City Hard Red Winter Wheat futures prices trended sharply higher up to $7.81 ½ on March 20th,
and up to $8.57 ¼ on May 6th (Figure 1). Since then, SEPTEMBER 2014 Kansas Wheat futures have trended
Page | 3
markedly lower, trading as low as $6.32 ½ on July 11th – the day of the USDA July Crop Production and WASDE
reports.
“New crop” SEPTEMBER 2014 Kansas City wheat futures prices responded to the release of the July 11th
USDA reports by first trading lower on the day of the report, and then moving higher and lower in a volatile
manner on the succeeding two trading days. SEPTEMBER 2014 CBOT Kansas City wheat efutures prices
opened at $6.46 ¾ on Friday, July 11th – the day of the release of the USDA reports at midday (i.e., 11 a.m.,
central time), and traded in a low‐high range of $6.32 ½ to $6.47 ¼ during the session before closing at $0.11
lower for the day at $6.36 ¼ /bu (Figure 1). On Monday (July 14th) and Tuesday (July 15th), SEPTEMBER 2014
Kansas City wheat efutures prices traded in the range from a low of $6.34 ¾ up to a high of $6.47 ½ ‐ both on
June 14th, before closing at $6.39 on Tuesday, June 15th – down $0.07 ¼ /bu. from the previous trading day.
Figure 1. SEPTEMBER 2014 CME Kansas Wheat Futures Price Charts (electronic trade, 11/15/2013 to 7/15/2014)
I‐C. U.S. Wheat Production
U.S. All Wheat Acreage, Yield & Production
Following the results of June 30th USDA NASS Acreage report, in its July 11th Crop Production report the
USDA projected that 2014 U.S. wheat total planted acreage would be 56.474 million acres (ma), up from
56.156 ma in 2013, 55.666 ma in 2012, 54.409 ma in 2011 (Table 1 and Figures 1‐2). In addition, the USDA
projected 2014 U.S. wheat harvested acreage to be 46.240 ma, up from 45.157 ma in 2013, down from 48.921
ma in 2012, and up from 45.705 ma in 2011.
The 2014 proportion of harvested‐to‐planted acreage for all U.S. wheat is projected to be 81.9%, up from
80.4% in 2013, but down from 87.9% in 2012, and 84.0% in 2011 (Figure 2). The proportion of harvested‐to‐
planted U.S. wheat acreage in 2013 of 80.4% was the lowest since 81.6% in 2006 and 76.0% in 2002.
The projected 2014 U.S. average wheat yield of 43.1 bushels per acre (bu/ac) is up 0.8 bu/ac from the
USDA’s June projection, but down from the record high of 47.2 bu/ac in 2013, the previous records of 46.3
bu/ac in 2012 and 2010, and from 43.7 bu/ac in 2011 (Table 1 and Figure 3). The USDA projected 2014 U.S.
$6.08 ¾ Low
Jan. 29th
$7.01 Low
June 25th
$8.57 ¼ High
May 6th …
September 27, 2016
Grain Market Outlook
Kansas Soybean Seasonal Average Cash Price Trends
Seasonal average price index trends for Kansas soybeans over the last 15 years indicate definite seasonal
price trends (Figure 2). Since MY 1999/00 Kansas soybean prices have typically been weakest during the
harvest month of October, with an average seasonal price index of 91.4% of the unweighted average Kansas
soybean price for the September 1st through August 31st marketing year period. Kansas cash soybean prices
have tended to trend higher from harvest lows beginning in November all the way through to July of the
following summer (up to 108.1% of season average price) before beginning in August to decline toward
seasonal lows in the upcoming fall harvest (September‐October).
The most variability around these monthly indices has occurred as harvest approached and occurred at the
beginning of the marketing year (September‐October), during late spring in March‐April, and during the key
U.S. soybean crop development month of August – just prior to the start of the new crop marketing year on
September 1st of each year.
Season Average Prices for “New Crop” MY 2016/17
In the “new crop” 2016/17 marketing year for U.S. soybeans, price movements are projected to trend
contrary to normal historic seasonal price patterns (Figure 2) – trending higher from September through
November‐December 2016. Starting in January 2017 U.S. soybean prices are projected to move somewhat
sideways‐to‐higher through May 2017 – then lower in June, and higher again in July and August through the
end of the “new crop” 2016/17 marketing year. This projected pattern for “new crop” MY 2016/17 is counter
to the historic seasonal trend in Kansas in which harvest lows in October are following by consistent monthly
increases through July of the following calendar year.
Based on market information available through September 12th, the USDA’s futures‐based price model
(http://www.ers.usda.gov/data‐products/season‐average‐price‐forecasts.aspx) projects for “new crop” MY
CME NOV 2016 Soybean Futures
July 31, 2015 – September 27, 2016
CME MAY 2017 Soybean Futures
July 31, 2015 – September 27, 2016
Page | 5
2016/17 that the U.S. soybean season average price will be $9.40 per bushel – up moderately from the
September 12th USDA WASDE price projection of $9.05. These seasonal price patterns in Figure 2 are
calculated as a percent of the USDA’s futures‐based price model season average price for “new” MY 2016/17
of $9.40 /bu rather than the September 12th WASDE mid‐point price projection of $9.05 for U.S. soybeans.
Figure 2. Kansas Soybean Seasonal Price Index – Last 15 Marketing Years: MY 1999/00 – MY 2014/15
plus “New Crop” MY 2016/17 Estimate (Source: KSU www.AgManager.info & USDA ERS)
I‐C. U.S. Trade Weighted Dollar Index
Since 1973 the monthly average trade‐weighted index value of the U.S. dollar relative to the currencies
of U.S. trading partner countries has averaged 94.3679 with a median value of 93.1623 – indicating some
positive skewness (i.e., a few extremely high values pulling up the average) (Figure 3). The historic low in the
U.S. dollar trade weighted index since 1973 occurred in August 2011 at a value of 69.0247, while the historic
high of 143.9059 occurred in March 1985. Over the January 1973 through September 2016 period (i.e., using a
preliminary September 1‐16, 2016 average) the U.S. dollar index has declined at a rate of ‐0.0609 per month.
Since the August 2011 low of 69.0247, the recent upward trend in the relative value of the U.S. dollar
began in earnest following the dollar index value of 77.5948 in August. This upward trend continued through
January 2016 with the index climbing to a high of 95.2896 ‐ up 22.8% from August 2014. Since then the index
has declined moderately – falling to a low of 89.3747 in April 2016 – before trending essentially sideways to a
preliminary average of 90.0143 in September 2016.
In addition, since January 1980 the global price of soybeans has a monthly average of $2.80 per bushel (in
U.S. dollars) with a median value of $2.37 per bushel – which like the historic U.S. dollar index above indicates
positive skewness (i.e., a few extremely high values pulling up the average) (Figure 3). The historic low in the
global soybean prices since 1980 on a monthly basis was $1.58 per bushel – occurring in July 1999, while the
historic high of $6.23 per bushel occurred in August 2012 (in the midst of the extensive 2012 drought in the
96.5%
91.8%
93.8%
95.4 …