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May 22, 2017
Grain Market Outlook
Kansas Wheat Seasonal Average Cash Price Trends
Seasonal average price index trends for Kansas wheat over the last 17 marketing years indicate definite
seasonal impacts or trends in cash wheat prices (Figure 2). Since the 1999/2000 marketing year Kansas hard
red winter wheat cash prices have typically been weakest during the harvest month of July, with an average
seasonal price index of 98.4% of the unweighted marketing year average Kansas wheat cash price for the June
through May marketing year. However, Kansas cash wheat prices have then tended to trend higher after
harvest through September‐October, and then trended sideways from November through January, with
moderate seasonal strength in February‐March – followed by a sideways‐to‐lower trend during April and May.
The projected U.S. average cash price for U.S. hard red winter wheat in the “current crop” 2016/17
marketing year exhibited a pronounced price low in August‐September 2016 with monthly prices climbing
irregularly from October through March 2017 – with a sideways to declining trend during April‐May (Figure 2).
“Current crop” MY 2016/17 for U.S. wheat began on June 1, 2016 and will conclude on May 31, 2017. If this
projected price pattern becomes reality, it would signal the likelihood that returns to storage occurred for
Kansas wheat over the October 2016 through March 2017 period. These projections are taken from the USDA
Economic Research Service (ERS) wheat futures price forecast model, available online at the following web
address:
http://www.ers.usda.gov/data‐products/season‐average‐price‐forecasts.aspx
According to historic price patterns, most of the post‐harvest increase in Kansas wheat prices is usually
realized from July through October, with movement being mostly sideways through the remainder of the
marketing year. The most variability around these monthly indices have occurred during June‐July and the
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period when the Kansas hard red winter wheat crop breaks winter dormancy (i.e., February‐March), with
accompanying production uncertainty in late spring (i.e., May).
This updated version of the USDA futures‐based price model projects for “current” MY 2016/17 that the
final U.S. wheat season average price will be $3.92 per bushel. This is up $0.02 per bushel from the May 10th
USDA WASDE midpoint projection of $3.90. The seasonal price patterns presented in Figure 2 are calculated
as a percent of an adjusted USDA’s futures‐based price model season average price for “new crop” MY
2016/17 of $3.92 per bushel.
Projected prices for “next crop” MY 2017/18 that the final U.S. corn season average price will be $4.61 per
bushel. This is up $0.43 per bushel from the May 10th USDA WASDE midpoint projection of $4.25, and nearly
equal to the upper end of the USDA forecast range of $3.85‐$4.65 per bushel. However, the seasonal price
patterns presented in Figure 2 are calculated as a percent of an adjusted USDA’s futures‐based price model
season average price for “current” MY 2016/17 of $3.92 per bushel. This projection reflects higher projected
cash prices (i.e., from deferred futures prices and basis projections) for the June 1, 2017 through May 31, 2018
period (i.e., for “next crop” MY 2017/18) than have actually have occurred or are projected over the June 1,
2016 through May 31, 2017 time frame (i.e., in “current” MY 2016/17).
Figure 2. Kansas Wheat Seasonal Price Index – Last 17 Marketing Years (MY 1999/00 – MY 2015/16)
plus “Current Crop” MY 2016/17 & “Next Crop” MY 2017/18 Estimate (Source: KSU
www.AgManager.info & USDA ERS http://www.ers.usda.gov/data‐products/season‐average‐price‐forecasts.aspx)
U.S. Trade Weighted Dollar Index & Global Wheat Prices
Since 1973 the monthly average trade‐weighted index value of the U.S. dollar relative to the currencies
of major U.S. trading partner countries has averaged 94.3604 with a median value of 93.4719 – indicating
some positive skewness in U.S. dollar index values (i.e., a few higher values pulling up the average) (Figure 3).
The historic low in the U.S. dollar trade weighted index since 1973 was 69.0639 – occurring in August 2011.
The historic high of 143.9059 occurred in March 1985 – coinciding with the U.S. farm crisis period. Since
January 1973 the U.S. dollar index has declined on average at a rate of ‐0.0586 per month …
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