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May 21, 2010
Christopher Wolf (MSU)
• Nov. 2007; 1,000 surveys in MI
– … increasingly
encouraged transition
• Implication: “Fighting …
August 1, 2017
Breakout Sessions
Economist position in January 2007. His ongoing
extension and … Renewable Fuels Standard (RFS), transition from E-10 to E-15 fuel blends … $1.47 /gDDGS = $0.33 /g
CBOT Soybean Oil Futures
Monthly Continuous Chart: June 2008 through July 2017 + 8/10/2017
$33.52
$ / cwt
AUG 2017$33.52 / cwt8/10/2017
Biodiesel & Soybean Oil PricesISU Biodiesel Plant Model (April 2007 – August 4, 2017***)
$5.51
$2.68
$5.74
$4.51 …
December 3, 2015
Grain Market Outlook
ices lower. Record World total wheat
supplies of 944.7 mmt in “new crop” MY 2015/16 are up from the previous record of 918.7 mmt in “old crop”
MY 2014/15, and from 892.3 mmt in MY 2013/14. These are the three highest years of World wheat
production on record. Projected record World wheat ending stocks in “new crop” MY 2015/16 of 227.3 mmt
(31.7% S/U – 14 year high) are up from 211.7 mmt (29.9% S/U) in “old crop” MY 2014/15, and up from 193.6
mmt (27.7% S/U) in MY 2013/14. For perspective, these supply‐demand figures are comparable to the 38 year
low World wheat ending stocks of 128.8 mmt and percent ending stocks‐to‐use of 21.0% S/U in MY 2007/08.
Page | 2
I. U.S. Wheat Market Situation & Outlook
I‐A. November USDA Reports & “New Crop” MY 2015/16 Projections
On November 10th the USDA World Agricultural Outlook Board (WAOB) released its November 2015
World Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World wheat supply‐
demand and price projections for the 2013/14, “old crop” 2014/15, and 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.
I‐B. CME Kansas Hard Red Winter Wheat MARCH & JULY 2016 Futures
Since market highs of $6.40 ¼ per bushel for the CME MARCH 2016 Kansas hard red winter wheat futures
contract that occurred on June 30, 2015, MARCH 2016 futures have trended sharply (Figure 1). The slow pace
of U.S. wheat exports (caused by record large World wheat production prospects in “new crop” MY 2015/16,
and the historically high value of the U.S. dollar) has been the key factor causing the recent sharp decline in
CME MARCH 2016 Kansas HRW wheat futures prices.
Figure 1. MARCH & JULY 2016 CME Kansas Wheat Futures Price Charts …
December 22, 2015
Grain Market Outlook
hest
level in 14 years (since MY 2001/02). The 38‐year low in World wheat ending stocks of 128.6 mmt and percent
ending stocks‐to‐use of 20.9% S/U occurred in the last major “short crop” marketing year in MY 2007/08.
There are ongoing concerns in the World wheat market about a) potential wheat production problems and
supply prospects in the Black Sea region and elsewhere), b) foreign geopolitical changes and conflicts, and c)
spillover impacts from volatile World economic, financial and currency markets. Even so, the “large crop‐over
supply” situation currently existing in World & U.S. wheat markets continues to have a strong negative
influence on World wheat prices. For wheat prices are to recover significantly before summer‐2016 it is likely
that significant World wheat production problems and/or trade disruptions would need to occur. Ongoing
strength in the U.S. dollar exchange rate is a serious negative factor that is limiting U.S. wheat exports, raising
U.S. wheat ending stocks, and causing sharply lower U.S. wheat prices.
USDA U.S. Wheat Forecast for “New Crop” MY 2015/16: The USDA made no adjustments in its supply‐
demand forecasts for U.S. wheat in the “new crop” 2015/16 marketing year – with 2.052 billion bushels (bb)
production, 2.930 bb total supplies, 800 million bushels (mb) of exports, 2.019 bb of total use, 911 mb ending
stocks, and 45.1% ending‐stocks‐to‐use (up to the highest level since 48.6% in MY 2009/10). A price range of
$4.80‐$5.20 /bu was forecast with a midpoint of $5.00 /bu –the lowest level since $4.87 /bu in MY 2009/10.
KSU U.S. Wheat Forecast for “new crop” MY 2015/16: Two possible domestic wheat market scenarios are
forecast by Kansas State University for “new crop” MY 2015/16: A) “Lower Exports” Scenario: 80% prob. of the
same U.S. wheat supply estimates as the USDA, but with U.S. exports dropping below “old crop” 2014/15
levels to 750 mb exports, with 961 mb ending stocks, 48.8% S/U, and $4.85 /bu U.S. average price; and B)
“Higher Exports” Scenario: 20% prob. of supply prospects again equal to the USDA’s, but with higher U.S.
wheat exports, i.e., 900 mb exports, with 811 mb ending stocks, 38.3% S/U, and $5.85 /bu U.S. average price.
USDA U.S. Wheat Forecast for “Next Crop” MY 2016/17: In their Agricultural Projections to 2025 the USDA
provided a forecast of U.S. wheat market outlook for the “next crop” 2016/17 marketing year beginning June
1, 2016. The USDA projected 2016 U.S. wheat plantings of 53.0 million acres (ma) – down 1.644 ma from
2015. Forecast 2016 harvested acres of 44.9 ma would be down 2.194 ma vs 2015. With projected yields of
45.9 bu/ac (up from 43.6 bu/ac in 2015), 2016 U.S. wheat production is projected to be 2.060 bb (up
marginally vs 2015), with 2016/17 total supplies equaling 3.096 bb (up from 2.930 bb in “new crop” MY
2015/16). With forecast “next crop” MY 2016/17 total use of 2.198 bb, and ending stocks of 928 mb (42.8%
S/U), U.S. wheat prices are projected to be $4.40 /bu – down from $5.00 /bu in “new crop” MY 2015/16.
Page | 2
I. U.S. Wheat Market Situation & Outlook
I‐A. December 2015 USDA WASDE Report
On December 9th the USDA World Agricultural Outlook Board (WAOB) released its December 2015 World
Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World wheat supply‐
demand and price projections for the 2013/14, “old crop” 2014/15, as well as the “new crop” 2015/16
marketing years. The “new crop” 2015/16 marketing year for U.S. wheat began on 6/1/2015 and will last
through 5/31/2016.
I‐B. CME Kansas Hard Red Winter Wheat MARCH & JULY 2016 Futures
Since a market high of $6.40 ¼ per bushel for the Chicago Mercantile Exchange (CME) MARCH 2016
Kansas hard red winter wheat futures contract on June 30, 2015, MARCH 2016 futures have trended sharply
lower (Figure 1). The slow pace of U.S. wheat exports (caused by record large World wheat supply 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 “current crop” CME MARCH 2016 Kansas HRW wheat futures prices.
Figure 1. MARCH & JULY 2016 CME Kansas Wheat Futures Price Charts …
September 6, 2016
Grain Market Outlook
perspective on how historically large World total wheat stocks and World wheat percent stocks‐to‐use
are, the 34‐year low in World wheat ending stocks of 128.7 mmt and at least a 57‐year low in percent ending
stocks‐to‐use of 20.9% S/U both occurred in MY 2007/08, the last major World wheat “short crop” marketing
year. The “large crop‐over supply” situation that exists in World and U.S. wheat markets continues to have a
strong prevailing negative influence on World wheat prices.
The broader “large supply – low price” situation in the World wheat market may be “masking” or “obscuring”
at least a couple of other significant issues. First, while the quantity of wheat available in the World is plentiful,
the available supply of high protein milling wheat is less so. This factor may help U.S. Hard Red Spring wheat
markets and other sources of moderate to high protein wheat in the U.S. and abroad. Second, while the
supply of wheat in World markets overall is growing, the supply of wheat in the “World Less China” is
projected to have “contracted” in “current crop” MY 2016/17 compared to a year ago to the tightest supply
situation since MY 2013/14.
It is likely that significant World wheat production problems and/or trade disruptions would need to occur in
coming months and early in year 2017 in order to have wheat prices recover significantly by spring‐summer
2017. Ongoing strength in the U.S. dollar exchange rate – although it has been weakening or “moderating” in
recent months – also is a serious negative factor that is limiting U.S. wheat exports, resulting in higher U.S.
wheat ending stocks and % ending stocks‐to‐use, and causing U.S. and Kansas wheat cash prices to fall sharply
– down to the marketing loan rate in most of Kansas.
USDA U.S. Wheat Supply/Demand Forecast for “Current Crop” MY 2016/17: The USDA projected 2016 U.S.
wheat plantings of 50.816 million acres (ma) – down 3.828 ma (‐7.0%) from 2015. The USDA also forecast
2016 harvested acres of 44.093 ma which would be down 3.001 ma (‐6.4%) vs 2015. Based on projected 2016
U.S. wheat yields of 52.6 bu/ac (up from 43.6 bu/ac in 2015), 2016 U.S. wheat production is projected to be
2.321 bb (vs 2.052 bb in 2015), with total supplies of 3.417 bb (up from 2.917 bb in “old crop” MY 2015/16),
and total use of 2.317 bb (up from 1.936 bb in “old crop” MY 2015/16).
Given these numbers, the USDA projected “current crop” MY 2016/17 ending stocks of 1.100 bb (vs 981 mb a
year ago), with percent ending stocks‐to‐use of 47.5% S/U (vs 50.7% last year). U.S. wheat average prices are
Page | 2
projected to be in the range of $3.35 to $4.05 (midpoint = $3.70 /bu) – down from $4.89 /bu in “old crop” MY
2015/16 and $5.99 /bu in MY 2014/15. It is assumed by Kansas State University that these USDA projections
for “current crop” MY 2016/17 have an 80% probability of occurring.
Alternative KSU U.S. Wheat S/D Forecast for “Current Crop” MY 2016/17: As an alternative to the USDA’s
projection, one potential KSU‐Scenario for U.S. wheat supply‐demand and prices is presented for “current
crop” MY 2016/17 – and is given a 20% probability of occurring. Assuming the same 2016 acreage, yields,
imports, and production as USDA, as well as food and seed use, the alternative scenarios assumes a) higher
U.S. wheat exports (1.075 bb vs 985 mb by USDA), and b) lower feed and residual use (320 mb vs 330 mb by
USDA).
KSU “Higher Exports with Spring 2017 U.S. Wheat Development Problems” Scenario (20% probability) assumes
for “current crop” MY 2016/17: 2.321 bb production, 3.417 bb total supplies, 1.075 bb exports, 320 mb feed &
residual use, 1.396 bb ending stocks, 40.50% S/U, & $4.25 /bu U.S. wheat average price.
KSU U.S. Wheat S/D Forecasts for “Next Crop” MY 2017/18: Two alternative KSU‐Scenarios for U.S. wheat
supply‐demand and prices are presented for “next crop” MY 2017/18. These scenarios assume a 5% decline in
U.S. wheat planted and harvested acreage in 2017 (with a 7% decline for U.S. winter wheat, and no changes
for other spring wheat and durum wheat classes. These KSU projections also assume at least a continued
moderation in the value of the U.S. dollar during the “next crop” 2017/18 marketing year, with some
improvement in U.S. wheat exports as a result.
KSU Scenario A) “Trend Yield, Higher Exports” Scenario (65% probability) assumes for “next crop” MY
2017/18: 48.258 ma planted, 41.873 ma harvested, 47.0 bu/ac trend yield, 2.072 bb production, 3.287 bb total
supplies, 1.000 bb exports, 250 mb feed & residual use, 2.286 bb total use, 1.001 bb ending stocks, 43.79%
S/U, & $3.95 /bu U.S. wheat average price; and
KSU Scenario B) “Lower Yield, Average Exports” Scenario (35% probability) assumes for “next crop” MY
2017/18: 48.258 ma planted, 41.873 ma harvested, 43.6 bu/ac lower yield, 1.922 bb production, 3.137 bb total
supplies, 980 mb exports, 240 mb feed & residual use, 2.256 bb total use, 881 mb ending stocks, 39.05% S/U,
& $4.35 /bu U.S. wheat average price.
…
General Sessions
2014
A political decision to transition away
from ad hoc disaster … Cost
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8,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 … baselines?
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2007 2008 2009 2010 2011 2012 …
April 19, 2017
Grain Market Outlook
percent ending stocks‐to‐use (S/U) of 34.05% ‐ up from 34.0% last year, and from 30.85% two years ago –the
highest since MY 2005/06.
For a perspective on how historically large World total wheat stocks and World wheat percent stocks‐to‐use
now are, in MY 2007/08 the 34‐year low in …
June 22, 2016
Grain Market Outlook
… Harvested of Planted
Page | 9
Three KSU “Trend Yield” Scenarios (i.e., the KSU “Trend Yield – Moderate $USD” Scenario – 30%
probability, the KSU “Trend Yield – Foreign Crop Problems – Moderate $USD” Scenario – 15% probability, and
the KSU “Trend Yield – Fall 2017 Crop Problems – Moderate $USD” Scenario – 20% probability) with a
combined estimate of 65% probability of occurring assume that 2016 U.S. average wheat yields will be 46.0
bu/ac. This projection is a trend‐line forecast for year 2016 based on all yields over the 1973‐2015 time period.
For this KSU forecast of 2016 U.S. wheat yields to be true, lower yields will need to occur for spring wheat in
the northern states and for soft red winter wheat in the eastern Corn Belt – both being a distinct possibility
given the “high temperature” July‐August 2016 weather forecasts for the United States.
U.S. Wheat Production: The USDA forecast in its June 10th WASDE report – based on forecast 2016
planted acreage (49.559 ma), implicit harvested acreage (42.737 ma), and yield (48.6 bu/ac) – that 2016 U.S.
wheat production to be 2.007 billion bushels (bb) (Table 1 and Figure 7). This USDA forecast scenario of
2.077 bb is given a 35% probability of occurring by KSU estimates, and is up from 2.052 bb in 2015, and 2.026
bb in 2014, and within the 2004‐2013 range of 1.808‐2.512 bb (average = 2.128 bb, median = 2.135 bb).
By KSU projection estimates, there is a combined 65% likelihood of 2016 U.S. wheat production of U.S.
wheat of approximately 1.920 bb based on KSU acreage assumptions (i.e., 41.737 bb harvested acres and 46.0
bu/ac trend line yields) (Table 1).
U.S. Winter Wheat Production: In its June 10th NASS Crop Production report the USDA projected 2016
U.S. winter wheat production to be 1.507 bb – up 136.9 million bushels (mb) (+10.0%) from 1.370 bb in 2015,
and up from 1.377 bb in 2014, down from 1.543 bb in 2013, and down from 1.631 bb in 2012.
In this report, 2016 U.S. Hard Red Winter wheat production is forecast to be 938 mb in 2016, up 13.4%
from 827 mb in 2015 and up 26.9% from 739 mb in 2014. Soft Red Winter wheat production is forecast to be
355 mb in 2016, down marginally from 359 mb in 2015 and down 21.9% from 455 mb in 2014. White Winter
wheat production is projected to be 214 mb in 2016, down from 219 mb in 2015 and 224 mb in 2014.
Figure 6. U.S. All Wheat Yield (1973‐2015) and USDA 2016 Projection as of June 10, 2016 WASDE, with KSU
Long‐Term Trend Estimate for 2016
31.6
27.3
34.2
39.4
32.7
39.5 …
December 30, 2016
Grain Market Outlook
tocks‐to‐use (S/U) of
34.1% ‐ up from 33.8% last year, and from 30.8% two years ago – up to the highest level since MY 2005/06.
For a perspective on how historically large World total wheat stocks and World wheat percent stocks‐to‐use
now are, in MY 2007/08 the 34‐year low in … major World wheat “short crop”
marketing year. The situation in MY 2007/08 compares to projections of 252.1 mmt ending stocks and 34.1%
ending stocks‐to‐use projected for “current” MY 2016/17. The “large crop‐over supply” situation that now
exists in World and U.S. wheat markets continues to have a strong prevailing negative influence on U.S. and
World wheat prices.
However, the broader large crop‐over supply‐low price” situation in the World wheat market may be “hiding”
at least a couple of other important market issues. First, while the quantity of wheat available in the World is
plentiful, the available supply of high protein milling wheat is less so. This factor may eventually help exports
of both U.S. Hard Red Spring (HRS) wheat (higher protein – good quality) and U.S. Hard Red Winter (HRW)
wheat (moderate protein – good quality) relative to World wheat export competitors. As evidence of this,
exports of U.S. HRW wheat have been occurring at the pace needed to meet USDA projections – helped by
both low purchase prices and acceptable protein and quality. This raises the outside possibility of improved
U.S. HRW prices in coming months. Second, while the supply of wheat in World markets overall has grown,
the supply of wheat in the “World Less China” is projected to have actually “contracted” or “diminished” in
“current crop” MY 2016/17 compared to a year ago – down to the tightest supply‐balances situation since MY
2013/14. If this “China factor” eventually leads to noticeably tighter available global supplies of exportable
wheat to occur in coming months, it could have a positive impact U.S. wheat market prices in Spring 2017.
Even so, given the broader World wheat market’s current focus – it is likely that significant World wheat
production problems and/or trade disruptions would need to occur in year 2017 in order to have wheat prices
recover significantly by spring‐summer 2017. Ongoing strength in the U.S. dollar exchange rate is a serious
negative factor that is limiting the competitive affordability of U.S. wheat exports. These factors have resulted
in higher U.S. wheat ending stocks and % ending stocks‐to‐use, and have caused U.S. and Kansas wheat cash
prices to fall sharply – down to and below the marketing loan rate in most of Kansas in fall / early winter 2016.
Page | 2
USDA U.S. Wheat Supply/Demand Forecast for “Next Crop” MY 2017/18: On December 1, 2016 the USDA
released their preliminary Long Term Agricultural Projections to 2026, in which they projected 2017 U.S.
wheat plantings of 48.500 million acres (ma) – down from 50.154 ma in 2015. The USDA also forecast 2016
harvested acres of 41.100 ma which would be down from 43.890 ma a year ago. Trendline 2017 wheat yields
for 2017 are projected at 47.1 bu/a, down from the 2016 record of 52.6 bu/ac, while 2017 U.S. wheat
production is forecast to be 1.936 billion bushels (bb), down from 2.310 bb in 2015. Projected “next crop” MY
2017/18 total supplies are 3.199 bb (down from 3.410 bb in “current” MY 2016/17), with total use of 2.206 bb
(down from 2.267 bb in “current” MY 2016/17).
Given these numbers, the USDA projected “next crop” MY 2017/18 ending stocks of 933 million bushels (mb)
(vs 1.143 bb a year ago), with percent ending stocks‐to‐use of 45.0% S/U (vs 50.4% last year and 50.0% the
previous year). United States wheat average prices are projected to average $4.00 /bu – up from $3.70 in
“current” MY 2016/17, but down from $4.89 /bu in MY 2015/16 and $5.99 /bu in MY 2014/15. It is assumed
by Kansas State University that these USDA projections for “next crop” MY 2016/17 have a 50% probability of
occurring.
Three Alternative KSU U.S. Wheat S/D Forecast for “Next Crop” MY 2017/18: As an alternative to the USDA’s
projection, three potential KSU‐Scenarios for U.S. wheat supply‐demand and prices are presented for “next
crop” MY 2017/18. These scenarios assume lower 2017 U.S. planted (47.624 ma) and harvested (38.385 ma)
wheat acres than the USDA – due to larger than normal amounts of “graze out” and “crop switching” in 2017.
KSU Scenario 1) “Lower Acres, Trend Yield” Scenario (30% probability) assumes for “next crop” MY 2017/18:
47.624 ma planted, 38.385 ma harvested, 47.0 bu/ac trend yield, 1.804 bb production, 3.067 bb total supplies,
960 mb exports, 200 mb feed & residual use, 2.191 bb total use, 876 mb ending stocks, 39.98% S/U, & $4.00‐
$4.50 /bu U.S. wheat average price;
KSU Scenario 2) “Lower Acres, Trend Yield, +20% Exports” Scenario (10% probability) assumes for “next crop”
MY 2017/18: 47.624 ma planted, 38.385 ma harvested, 47.0 bu/ac trend yield, 1.804 bb production, 3.067 bb
total supplies, 1.152 bb exports***, 200 mb feed & residual use, 2.383 bb total use, 684 mb ending stocks,
24.10% S/U, & $5.25‐$5.75 /bu U.S. wheat average price;
KSU Scenario 3) “Lower Acres, Short Crop Yield” Scenario (10% probability) assumes for “next crop” MY
2017/18: 47.624 ma planted, 38.385 ma harvested, 43.6 bu/ac low yield***, 1.674 bb production, 2.937 bb
total supplies, 925 mb exports, 200 mb feed & residual use, 2.156 bb total use, 781 mb ending stocks, 36.22%
S/U, & $4.40‐$4.90 /bu U.S. wheat average price.
…
February 4, 2016
Grain Marketing Presentations
“Next Crop” MY 2016/17
2007/08
2008/09
2009/10
MY 2012/13
$14.40 … “New Crop” MY 2015/16
2007/08
2013/14
$6.87 @ 27.8 … Nina in December 2016. The transition will
cause drought and …