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January 21, 2015
Risk Management Strategies
Department of Agricultural Economics, K-State
Research and Extension …
August 12, 2014
Risk Management Strategies
Jr.
Professor, Agricultural Economics.
Kansas State University
2014 …
February 20, 2013
Risk Management Strategies
Extension
Extension Agricultural Economics
Website:
A I fwww.Agmanager …
July 19, 2018
Grain Market Outlook
The USDA released their wheat production, supply‐demand and price projections for the U.S. for “new
crop” MY 2017/18 in the July 12th Crop Production & WASDE reports (Tables 1a‐b).
U.S. wheat plantings are forecast to be 47.821 million acres (ma) in 2018, up from the record low of 46.012
ma in 2017, but down from 50.119 ma in 2016 (Table 1, Figure 5). Harvested acres are forecast at 39.571 ma
in 2018 (82.75% harvested‐to‐planted), up from the record low of 37.586 ma (81.7% harvested‐to‐planted) in
2017, but down from 43.850 ma in 2016 (87.5% harvested‐to‐planted) (Table 1, Figure 5). The 2018 U.S.
average wheat yield is estimated at 47.5 bu/ac, up from 46.3 bu/ac in 2017, but down from the 2016 record
high of 52.7 bu/acre (Table 1, Figure 6).
Wheat production in the U.S. in 2018 is forecast to be 1.881 billion bushels (bb), up from 1.741 bb in 2017,
but down from 2.309 bb in 2016. Projected “new crop” MY 2018/19 total supplies are forecast at 3.117 bb, up
from 3.079 bb in “old crop” MY 2017/18, and down from 3.402 bb in MY 2016/17 (Table 1, Figure 7).
U.S. Wheat total use of 2.132 bb is forecast for “new crop” MY 2018/19 (up 35 mb from June), up from
1.978 bb in “old crop” MY 2017/18 (down 18 mb from June), and from 2.222 bb in MY 2016/17 (Table 1,
Figure 8). By usage category, U.S. wheat exports are projected to be 975 mb (up 25 mb from June) in “new
crop” MY 2018/19, and up from 901 mb in “old crop” MY 2017/18, while being down from 1.051 bb in MY
2016/17 (Table 1, Figures 9 & 10).
CommentaryKSU: U.S. wheat exports fell to 47‐year lows of 778 mb and 864 mb in MY 2015/16 and MY
2014/15, respectively, to levels just marginally above those pre‐“Russian Grain Deal” in 1972. This is more
evidence of the only marginally competitive position that U.S. wheat exports find themselves in among foreign
export competitors in recent years. However, tightening supplies of foreign wheat exporters may cause U.S.
wheat exports to strengthen in the later part of “new crop” MY 2018/19 (i.e., likely fall 2018)
Food Use of U.S. wheat is projected to be 965 million bushels (mb) in “new crop” MY 2018/19, up
marginally from 963 mb in “old crop” MY 2017/18, and trending higher from 943 mb in MY 2016/17 (Table 1,
Figure 8). Feed & Residual Use of U.S. wheat is projected to be 130 mb in “new crop” MY 2018/19 (up 10 mb
from June), up from 50 mb in “old crop” MY 2017/18 (down 20 mb from June), and from 161 mb in MY
2016/17 (Table 1, Figure 8).
CommentaryKSU: With the USDA’s forecast of tighter U.S. corn and total feedgrain supplies along with
higher feedgrain prices, the USDA is anticipating that feeding wheat to livestock will become more
economically viable.
Page | 5
The USDA projected “new crop” MY 2018/19 ending stocks to be 985 mb (46.2% stocks/Use), down from
1.100 bb in “old crop” MY 2017/18 (up 20 mb from June) (55.6% stocks/use), and 1.181 bb in MY 2016/17
(53.15% stocks/use) (Table 1, Figures 11 & 12).
CommentaryKSU: Although only a moderate reduction, the forecast of 985 mb in ending stocks for “new
crop” MY 2018/19 is the lowest in five (5) years since 752 mb (37.3% stocks/use) in MY 2014/15. Still, until
either a major wheat production shortfall or what would now be a “surprise” surge in U.S. wheat exports
occurs, the U.S. will likely remain in the current “large supply – large ending stocks” situation.
United States’ wheat prices are projected to be in the range of $4.50‐$5.50 /bu – averaging $5.00 /bu in
“new crop” MY 2018/19 (down $0.10 /bu from June). This would be up from $4.73 /bu in “old crop” MY
2017/18 (down $0.02 /bu from June), from $3.89 in MY 2016/17, and $4.89 /bu in MY 2015/16, but still down
from $5.99 /bu in MY 2014/15 (Table 1, Figures 11 & 12). CommentaryKSU: It is estimated by KSU that these
USDA projections for “new crop” MY 2018/19 have a 50% probability of occurring.
G. Three Alternative KSU U.S. Wheat S/D Forecast for “New Crop” MY 2018/19 …
April 3, 2018
Grain Market Outlook
Page | 3
I. USDA Reports, Corn Futures, Seasonal Prices & U.S. Dollar
I‐a. March 8th USDA Crop Production & WASDE Reports
On February 23rd the USDA Office of the Chief Economist (OCE) released its projections of U.S. Grain and
Oilseeds Outlook for “new crop” MY 2018/19 at the 94th annual Agricultural Outlook Forum in Arlington,
Virginia. The “new crop” 2018/19 marketing year for U.S. corn will begin on September 1, 2018 and will last
through August 31, 2019. The next USDA U.S. soybean production and supply‐demand estimates for the “new
crop” 2018/19 marketing year will be released in the May 10th USDA WASDE report, and will be based on
USDA Economic Research Service (ERS) projections from the March 29th USDA Prospective Plantings Report
acreage report, using historic harvested‐to‐planted acreage relationships, and a selected 2018 trend yield.
On March 8th the USDA World Agricultural Outlook Board (WAOB) released its March 2018 World
Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World soybean supply‐
demand and price projections for the 2015/16, 2016/17, and “old crop” 2017/18 marketing years (MY). “Old
crop” MY 2017/18 for U.S. corn began on September 1, 2017 and will last through August 31, 2018.
On March 29th the USDA National Agricultural Statistics Service (NASS) released its Prospective Plantings
and Grain Stocks reports. Both the Prospective Plantings report and on‐farm portion of the Grain Stocks
report are defined by NASS as “probability surveys” that were conducted during the first two weeks in March.
This combined survey included approximately 82,900 farm operators as a representative sample of U.S. farm
producers. Data from farm operators was collected by “mail, internet, telephone, or personal interview.”
The off‐farm portion of the March 29th Grain Stocks survey was an effort to have a complete enumeration
or “counting” of all 8,500 known commercial grain storage facilities – totaling approximately 11.2 billion
bushels in commercial grain storage capacity. Reports were received from about 90% of these facilities by the
USDA, with estimates made for the remaining 10% who had not responded to the survey.
The first USDA National Agricultural Statistics Service (NASS) estimate of 2018 U.S. soybean production
based on actual farmer surveys and in‐field corn plot measurements will be presented in the August 10, 2018
USDA NASS Crop Production report. This will be followed by similar reports in the September, October, and
November, and the final summary report for 2018 to be released in January 2019.
I‐b. CME MAY & DECEMBER 2018 Corn Futures Trends
MAY 2018 CME Corn Futures
Following a high of $4.30 on July 11, 2017, MAY 2018 Chicago Mercantile Exchange (CME) corn futures
prices trended downward through late summer, fall, and mid‐winter to a low of $3.53 ¾ on January 12, 2018
(Figure 1). After that MAY 2018 corn futures prices first trended higher then lower again, first being up to a
high or $3.95 ¼ on March 13, 2017, before declining to a low of $3.77 ¼ on March 23rd and closing at $3.73 ½
on March 28th. Then following the USDA Reports released the morning of March 29th, MAY 2018 CME corn
futures traded as high as $3.89 ¼ that same day, and up to $3.92 ½ on April 2nd before closing at $3.87 ¼ that
same day.
Page | 4
DECEMBER 2018 CME Corn Futures
DECEMBER 2018 corn futures have followed a similar trading pattern to MAY 2018 corn futures. Following
highs of $4.29 ½ on July 11, 2017 and $4.28 on July 20th, DEC 2018 Chicago Mercantile Exchange (CME) corn
futures prices trended downward through late summer, fall, and into winter to lows of $3.79 ¼ on December
17‐18, 2017, $3.79 ¾ on January 12, 2018 (Figure 1). After that DEC 2018 corn futures prices first trended
higher then lower again, first being up to a high of $4.12 on March 14, 2018, before declining to a low of $3.91
½ on March 23rd and closing at $3.97 on March 28th. Then following the USDA Reports released the morning
of March 29th, DEC 2018 CME corn futures traded as high as $4.11 ¾ that same day, and up to $4.16 on April
2nd before closing at $4.11 ¼ that same day.
CME Corn Futures MAY 2018 – SEPT 2018 Contract Spreads
The total futures carrying charge or “term spread” between MAY 2018 and SEPT 2018 corn futures on
Monday, April 2nd was $0.15 ½ per bushel (i.e., $4.02 ¾ for SEPT 2018 Corn less $3.87 ¼ for MAY 2018 Corn),
or $0.03875 per bu. per month over 4 months. This compares to commercial grain storage charges in Kansas in
the range of $0.04 to $0.05 per bushel per month – and some as high as $0.06 per bushel per month in
adjoining states – before accounting for interest, additional handling costs, or other discounts.
Figure 1. MAY & DECEMBER 2018 CME Daily Corn Futures Price Charts (as of April 2, 2018) …
August 15, 2016
Breakout session presentations
Missouri-Columbia in Agricultural Economics. He has worked
with 130 … Master’s degree in Agriculture Economics in 1986
and Kansas State … Bachelor’s degree in Agricultural Economics in
1982. Mark grew up on …
July 1, 2012
Land Buying and Valuing
Department of Agricultural Economics
Kansas State University …
July 26, 2012
Agribusiness Papers
Department of Agricultural Economics
Kansas State University …
March 1, 2004
Assessing Business Opportunities
Department of Agricultural Economics, Kansas State University …