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December 21, 2017
Grain Market Outlook
hipments have been “slow” to date in the current
marketing year. However, the USDA maintains its optimism for “new crop” MY 2017/18 U.S. corn exports
because of a) low U.S. corn prices, b) expectations of significantly tighter foreign stocks and percent (%)
stocks‐to‐use for corn, and c) the eventual “using up” of competing South American corn exports in early 2018.
Early forecasts are for 2018 Brazilian corn production to be 95 million metric tons (mmt) in this marketing
year with harvests lasting from February through May. Early forecasts are for 2018 Argentina corn production
to be 42 mmt in this marketing year with harvests lasting from March through May. However, dry conditions
may limit 2018 corn production in Argentina and southern Brazil – and subsequently support U.S. corn exports.
Fourth, a continuing threat exists of U.S. and Foreign economic and/or financial system disruptions that
could impact grain, energy, and other commodity markets in 2018. World geo‐political events could provide
“shocks” to U.S. and World energy and grain markets which could in turn impact grain prices in either direction
depending on the circumstances, the countries involved, and their role in global corn export trade.
4. USDA Supply‐Demand & Price Forecast for “New Crop” MY 2017/18
In the December 12th Crop Production reports, the USDA left unchanged its projections of a) projected
yields up to a record high of 175.4 bu/ac (vs the previous record of 174.6 in 2016), and b) 2017 U.S. corn
production up to 14.578 bb – down from the record high of 15.148 bb in 2016. The also USDA left unchanged
its forecast “new crop” MY 2017/18 total supplies to 16.922 bb – down marginally (20 mb) from last year’s
record high. Total use is forecast at 14.485 bb – raised 50 mb from November on higher ethanol use, but still
down 162 mb from last year’s record high. Ending stocks are projected to be a 2.437 bb (16.8% S/U) – up from
2.295 bb (15.7% S/U) in “old crop” MY 2016/17. United States’ corn prices are projected to average $3.20 /bu
(range of $2.85‐$3.55). This is down $0.16 /bu from $3.36 /bu from “old crop” MY 2016/17. This scenario is
given an 80% likelihood of occurring by KSU Extension Agricultural Economist D. O’Brien.
5. Alternative KSU Supply‐Demand & Price Forecast for “New Crop” MY 2017/18
Two alternative KSU‐Scenarios for U.S. corn supply‐demand and prices are presented for “new crop” MY
2017/18. These projections are to show how varying corn export outcomes could affect the USDA’s projection
in the December 9, 2017 WASDE report.
A ‐ KSU “Higher Exports” MY 2017/18 Scenario: “2.250 bb Exports” Scenario (10% probability) assumes:
90.348 ma planted, 82.890 ma harvested, 175.4 bu/ac trend yield, 14.539 bb production, 16.884 bb total
supplies, 2.250 bb exports, 14.785 bb total use, 2.099 bb ending stocks, 14.20% S/U, & $3.55 /bu U.S. corn
average price;
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B ‐ KSU “Lower Exports” MY 2017/18 Scenario: “1.800 bb Exports” Scenario (10% probability) assumes:
90.348 ma planted, 82.890 ma harvested, 175.4 bu/ac trend yield, 14.539 bb production, 16.884 bb total
supplies, 1.800 bb exports, 14.360 bb total use, 2.524 bb ending stocks, 17.58% S/U, & $3.20 /bu U.S. corn
average price;
6. USDA Supply‐Demand & Price Forecast for “Next Crop” MY 2018/19
In the November 28th Long Term Baseline projections, the USDA forecast for “next crop” MY 2018/19 that
2018 U.S. corn planted and harvested acres would equal 91.0 million acres (ma) and 83.7 ma, respectively,
both up from 90.429 ma planted and 83.119 ma harvested in 2017. Corn yields in 2018 are forecast at 173.5
bu/ac, down from the record high of 175.4 bu/ac in 2017. U.S. corn production is 2018 is projected to be
14.520 bb – down from 14.578 bb now projected for 2017.
The USDA forecast “new crop” MY 2017/18 total supplies to 17.007 bb – adjusted for changes in the
December WASDE report in MY 2017/18 ending stocks. Total use is forecast at 14.450 bb – down 35 mb from
this current marketing year. Ending stocks are projected to be a 2.557 bb (17.7% S/U) – up from 2.437 bb
(16.8% S/U) in “new crop” MY 2017/18. United States’ corn prices are projected to average $3.30 /bu – up
from $3.20 /bu in “new crop” MY 2017/18.
5. World Corn Supply‐Demand – With & Without China
World corn production of 1,044.8 million metric tons (mmt) is projected for “new crop” MY 2017/18, down
2.9% from the record of 1,074.8 mmt in “old crop” MY 2016/17, but still up 7.3% from 973.5 mmt in MY
2015/16. World corn total supplies of 1,272.1 mmt are down marginally from the record high 1,290.5 mmt in
“old crop” MY 2016/17, but up from 1,183.2 mmt in MY 2015/16.
World corn exports of a 151.6 mmt are projected for “new crop” MY 2017/18, down 7.6% from the record
high of 164.1 mmt in “old crop” MY 2016/17, and up 26.7% from 119.7 mmt in MY 2015/16. Projected World
corn ending stocks of 204.1 mmt (19.1% S/U) in “new crop” MY 2017/18 are down from the record high 227.3
mmt (21.4% S/U) in “old crop” MY 2016/17, and from 214.9 mmt (22.2% S/U) in MY 2015/16. Projected
Foreign (Non‐U.S.) corn ending stocks of 142.2 mmt (16.5% S/U) in “new crop” MY 2017/18 are down from
169.0 mmt (19.8% S/U) in “old crop” MY 2016/17, and from 170.8 mmt (23.1% S/U) in MY 2015/16.
An alternative view of the World corn supply‐demand is presented if Chinese corn usage and ending stocks
are isolated from the World market. “World‐Less‐China” corn ending stocks are projected to be 124.5 mmt
(15.0% S/U) in “new crop” MY 2017/18, down from 126.6 mmt (15.2% S/U) in “old crop” MY 2016/17, but up
from 104.1 mmt (13.9% S/U) in MY 2015/16. These figures show that World stocks‐to‐use of corn less China’s
direct influence are projected to be approximately 21% lower (i.e., 15.0% S/U for the “World‐Less‐China”
versus 19.1% S/U for the “World” overall in “new crop” MY 2017/18).
At the same time, these figures also show that Chinese ending stocks of corn as proportion of the World
total are declining – down from 51.5% in MY 2015/16, to 44.3% in “old crop” MY 2016/17, and down to 39.0%
in “new crop” MY 2017/18. The deliberate actions in recent years ‐ taken by the Chinese government to
reduce feedgrain stockpiles – is impacting the relative amount of World total corn stocks they hold. These
actions may increase Chinese import demand for both U.S. corn and grain sorghum.
…
December 28, 2017
Grain Market Outlook
to both U.S. grain sorghum and corn market prices. Just as with U.S.
corn, wheat, and soybeans, current cash bids for grain sorghum are below full economic cost of production in
m … port projections sharply – up 50
million bushels (mb) to 260 mb for this marketing year ending August 31, 2018. And in a textbook example of
economic “crowding out” – this strong foreign export demand for U.S. grain sorghum has raised domestic
prices and is causing a projected shifting of usage away from U.S. domestic livestock feeding and ethanol
production in “new crop” MY 2017/18.
The USDA also released Long Term Agricultural Projections on November 28th that anticipate both an
increase in U.S. grain sorghum average prices to $3.30 per bushel (equal to the U.S. corn price forecast), and a
1 million acre (+17%) increase in grain sorghum planted acreage in the “next crop” 2018/19 marketing year.
B. Kansas Cash Grain Sorghum Prices
On December 26th cash grain sorghum price bids at major grain elevators in Western Kansas were in the
range of $3.08 ‐ $3.31 /bu – with basis levels $0.45 to $0.22 /bu under CME MARCH 2018 corn futures. The
high bid of $3.31 /bu was in Colby, where the corn price that same day was $3.00 /bu ($0.53 under MARCH).
Central Kansas cash grain sorghum price bids ranged from $3.17 ½ to $3.48 /bu with basis $0.35 to $0.05 /
bu under. The high bid of $3.48 /bu was in Salina, where the highest corn price was $3.09 ¾ /bu ($0.43 under
MARCH).
In East Central Kansas at Topeka, the highest reported grain sorghum price bid was $3.87 ½ /bu (basis =
$0.35 over MARCH 2018 corn) – compared to the highest corn bid of $3.09 ¾ /bu ($0.43 under MARCH).
Kansas ethanol plant price bids for grain sorghum on Dec. 26th ranged from $3.42 to $3.57 /bu, with basis
$0.10 under to $0.05 over. Ethanol plant corn bids were $3.32‐$3.79 /bu, with basis $0.20 under to $0.27 over.
Page | 2
C. Market Factors for U.S. Grain Sorghum & Other Feedgrains in 2018
1) Whether the recent strength in U.S. Grain Sorghum exports to China and Japan continues through Spring‐
Summer 2018 will be THE key factor in grain sorghum price prospects for at least the first half of the year.
IF the recent pace of U.S. grain sorghum exports were to continue at the levels of November‐early
December 2017 through August 2018, then total U.S. grain sorghum exports would end up being over 300
million bushels in “new crop” MY 2017/18 by KSU estimates.
2) Usage of U.S. grain sorghum for ethanol production and livestock feeding is likely to be “crowded out” by
strong sorghum exports in “new crop” MY 2017/18 – should they continue at their current pace through
Spring‐Summer 2018. However, there are ample to abundant supplies of low priced U.S. corn available
for these domestic U.S. feedgrain usage industries to use without interruption. This is occurring when
continued strong domestic U.S. fuel ethanol use and livestock feeding of the 2017 crop U.S. feedgrains are
anticipated for the remainder of the “new crop” 2017/18 marketing year.
3) Given the pace of U.S. grain sorghum exports, it is likely that there will be reduced grain sorghum storage
beyond the Winter months – as attractive pricing opportunities perform their “demand pull” effect upon
farmer’s marketing actions.
4) Higher U.S. grain sorghum prices relative to competitive feedgrains will likely “draw” increased 2018 U.S.
grain sorghum planted acreage – as projected by the USDA in its Long Term Agricultural Projections. The
question may be “Just how many more acres of grain sorghum will U.S. farmers plant in 2018?” It is
possible that higher acreage and good growing conditions could bring about an increase in 2018 U.S. Grain
Sorghum production to 450‐500+ million bushels – much larger than the USDA’s 2018 forecast of 384 mb.
D. USDA Forecast for “Next Crop” MY 2018/19 & “New Crop” MY 2017/18
In its November 28th Long Term Agricultural Projections, the USDA projected 2018 U.S. Grain Sorghum
plantings of 6.700 million acres (ma), up 17% or ≈ 1 ma from 5.709 ma in 2017. Harvested acres U.S. grain
sorghum in 2018 are projected to be 5.700 ma, up from 5.049 ma in 2017. Average yields in 2018 in the U.S.
are forecast at 67.3 bu/ac, down from 70.4 bu/ac in 2017. As a result, 2018 U.S. Grain Sorghum production is
forecast to be 384 mb – up from 356 mb in 2017, but down from 480 mb in year 2016 and 597 mb in 2017.
Forecast “next crop” MY 2018/19 U.S. Grain Sorghum total supplies are 405 mb (vs 391 this marketing
year, and 519‐620 mb the 2 years before). United States’ Grain Sorghum exports are projected to be 230 mb
in “next crop” 2018/19 – down from 260 mb in “new crop” MY 2017/18, and less than 241 mb in MY 2016/17.
Total use of U.S. Grain Sorghum in “next crop” MY 2018/19 of 370 mb is unchanged from “new crop” MY
2017/18 – but down from 485‐583 mb the two previous years.
Ending stocks of U.S. Grain Sorghum in “next crop” MY 2018/19 are projected to be 35 mb (9.46%
Stocks/Use) – up from 21 mb (5.68% Stocks/Use) in “new crop” MY 2017/18.
The season average price for U.S. Grain Sorghum in “next crop” MY 2018/19 is projected to be $3.30 /bu –
up from $3.10 /bu in “new crop” MY 2017/18.
This scenario for “new crop” MY 2017/18 is given an 80% likelihood of occurring by KSU Extension
Agricultural Economist D. O’Brien.
Page | 3
E. Alternative KSU Supply‐Demand & Price Forecast for “New Crop” MY 2017/18
Two (2) alternative KSU projections for “new crop” MY 2017/18 U.S. Grain Sorghum Total Use include the
following forecasts:
1) “Higher Exports” scenario (10% probability) for “new crop” MY 2017/18: 2017 Planted / harvested acres of
5.519/4.812 ma, 2017 production of 339 mb, total supplies of 339 mb, exports of 290 mb, total use of 359
mb, ending stocks of 13 mbb, 3.62% ending stocks‐to‐use, and $3.40 /bu U.S. average price.
2) “Lower Exports” scenario (10% probability) for “new crop” MY 2017/18: 2017 Planted / harvested acres of
5.519/4.812 ma, 2017 production of 339 mb, total supplies of 339 mb, exports of 230 mb, total use of 350
mb, ending stocks of 23 mbb, 6.57% ending stocks‐to‐use, and $3.00 /bu U.S. average price.
F. World Coarse Grain Supply‐Demand
The USDA projected that “new crop” 2017/18 marketing year World Coarse Grain total supplies of 1,586.3
mmt will be down 2.0% from 1,618.7 mmt in “old crop” MY 2016/17, but still up 5.2% over 1,507.35 mmt in
MY 2015/16. Projected World Coarse Grain total use of 1,354.1 mmt in “new crop” MY 2017/18 is down
marginally from “old crop” MY 2016/17, but up 7.9% over 1,254.9 mmt in MY 2015/16. “Coarse Grains”
include grain sorghum, corn, barley, oats, rye, millet, and mixed grains.
World Coarse Grain ending stocks are forecast to decline, with the USDA projecting ending stocks of 232.2
mmt in “new crop” MY 2017/18, down 11.5% from 262.4 mmt in “old crop” MY 2016/17, and down 8.0% from
252.4 mmt in MY 2015/16. Although World Coarse Grain ending stocks are projected to be the eighth highest
on record in “new crop” MY 2017/18 at 232.2 mmt, World Coarse Grain percent ending stocks‐to‐use in “new
crop” MY 2017/18 are forecast to actually decline to 17.15% ‐ to the lowest level since 17.12% in MY 2013/14.
This is indicative that strong World usage for coarse grains at low prices is expected to continue.
…
March 30, 2018
Grain Market Outlook
n demand, but held “in check” by more than adequate world supplies.
The potential for soybean market disruptions from trade policy‐related confrontations between the U.S. and
China has emerged as an issue in early 2018. These economic – geopolitical tensions so far have not resulted
in official direct tariffs or import limitations by China on U.S. soybeans. However, it is reported that Chinese
buyers of soybeans have responded by aggressively pursuing Brazilian soybean imports, and to a degree have
at least moderated their purchases of U.S. soybeans in recent months. So, although no official action has been
taken by China against U.S. soybean imports, such tensions have to a degree already affected U.S. soybean
trade by “pressuring” Chinese buyers to redirect their buying focus toward Brazil, Argentina, Paraguay, and
wherever else globally they can secure soybean and oilseed products.
B. Soybean Market Response to the March 8th & 29th USDA Reports
Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on March 8th
soybean futures prices had moved primarily lower. From the March 8th close of $10.64, CME MAY 2018
Soybean futures prices have traded from a high of $10.63 on 3/9/2018 down to a low of $10.09 ¼ on March
23rd, before closing at $10.18 on Wednesday, March 28th – the day prior to the USDA Quarterly Stocks &
Prospective Plantings reports on March 29th. Then on the day of the March 29th USDA reports, CME MAY
2018 Soybean futures responded positively, trading from a low of $10.12 ½ to a high of $10.50 ¾ before
closing at $10.44 ¾ – up $0.26 ¾ per bushel for the day.
Kansas cash soybean prices at terminals in central and eastern Kansas ranged from $9.42 ¾ to $9.89 ¾ /bu on
March 29th – with basis ranging from $1.02 under to $0.60 under MAY 2018 Soybean futures. That same day
in western Kansas, major grain elevator bids ranged from $9.10 to $9.45 per bushel – with basis ranging from
$1.35 under to $1.00 under.
C. World Soybean Supply‐Demand Findings in the March 8th WASDE USDA Report
On March 8th for the “old crop” 2017/18 marketing year (MY) to end on August 31, 2018, the USDA projected
the following.
Page | 2
First, that World soybean total supplies would be 437.5 million metric tons (mmt) (down 3.0%) with total use
of 34.8 mmt (up 4.2%) for “old crop” MY 2017/18. With supplies moving lower and demand increasing, there
has been a moderate “tightening” of projected World ending stocks of soybeans.
Second, that World soybean exports will continue trending higher – up to a record high to 150.6 mmt in the
“old crop” 2017/18 marketing year. This amount of World soybean exports of 150.6 mmt in “old crop” MY
2017/18 would be up from previous records of 147.5 mmt last year, and 132.6 mmt two years ago. World
soybean exports have been growing annually at a 9.1% rate since the 2007/08 marketing year.
Third, that World soybean ending stocks would be a 94.4 mmt in “old crop” MY 2017/18 ‐ down from the
record high of 96.65 mmt in MY 2016/17, but still up from 78.3 mmt in MY 2015/16. Overall, World soybean
ending stocks have grown at an 8.0% rate annually since the 2007/08 marketing year.
Fourth, that World soybean percent ending stocks‐to‐use (% S/U) would be 27.5% ‐ the 2nd highest on record
but down from the record high of 29.3% last year, while being up from 24.9% and 25.7% the two years prior.
D. USDA U.S. Soybean Supply/Demand for “Old Crop” MY 2017/18 & “New Crop” MY 2018/19
The USDA released their soybean production, supply‐demand and price projections for the U.S. for “old crop”
MY 2017/18 in the March 8th WASDE report, for “new crop” MY 2018/19 in its February 23rd USDA Ag Outlook
Forum projections, for 2018 planted acres in the March 29th Prospective Plantings report, and for November‐
February 2018 usage of U.S. soybeans and March 29th Grain Stocks report.
U.S. soybean plantings are forecast to be 88.982 million acres (ma) in 2018, down from 90.142 ma in 2017, and
83.433 ma in 2016. Harvested acres are forecast by Kansas State University to be 88.222 ma in 2018 (99.15%
harvested‐to‐planted – latest 5 year average), down 1.45% from 89.522 ma in year 2017, but up 6.7% from
82.696 ma in 2016.
The 2018 U.S. average soybean yield is forecast at 48.5 bu/ac, down from a KSU‐adjusted estimate of 49.79
bu/ac in 2017, and from the 2016 record of 52.0 bu/acre. This KSU adjustment to the most recent official
USDA estimate on March 8th was made following the March 29th grain stocks report. The USDA estimate of
March 1, 2018 U.S. soybean stocks came in approximately 65 mb larger than trade estimates. Given that
estimates of U.S. soybean domestic crush, exports, and seed use for the November‐February 2018 quarter are
known with some accuracy, it seems that the unexplained increase in U.S. soybean stocks on March 1st may be
due to the USDA underestimating the size of the 2017 U.S. soybean crop. As a result, if 2017 soybean planted
and harvested acreage are left unchanged, and 65 mb is added to the size of the 2017 U.S. soybean crop, then
this KSU‐adjusted estimate of 2017 U.S. soybean yields is raised to 49.79 bu/ac – up from the latest USDA’s
official 2017 U.S. soybean yield estimate of 49.1 bu/ac.
Soybean production in the U.S. in 2018 is forecast to be 4.279 billion bushels (bb), down from the KSU‐
adjusted record high of 4.457 bb in 2017 (vs the latest USDA estimate of 4.392 bb – see discussion above), but
up from 4.296 bb in 2016. After these adjustments, projected “new crop” MY 2018/19 U.S. soybean total
supplies are forecast at 4.924 bb, up from a KSU‐adjusted 4.783 bb in “old crop” MY 2017/18, and from 4.515
bb in MY 2016/17. Record high U.S. soybean total use of 4.415 bb is forecast for “new crop” MY 2018/19, up
from 4.163 bb in “old crop” MY 2017/18, and from 4.213 bb in MY 2016/17.
With previously mentioned changes in 2017 U.S. soybean production resulting from the outcome of the March
29th Grain Stocks report, the KSU‐adjusted USDA projection for “new crop” MY 2018/19 U.S. soybean ending
Page | 3
stocks equals 509 million bushels (mb) (11.52% stocks/use), down from a KSU‐adjusted estimate of 620 mb in
“new crop” MY 2017/18 (14.89% stocks/use), but up from 302 mb in MY 2016/17 (7.17% stocks/use).
United States’ soybean prices are projected to average $9.40 /bu in “new crop” MY 2018/19, up from $9.30
/bu in “old crop” MY 2017/18, but down from $9.47 in MY 2016/17, and comparable to $8.95 /bu in MY
2015/16, and $10.10 /bu in MY 2014/15. It is estimated by Kansas State University that these KSU‐adjusted
USDA projections for “new crop” MY 2018/19 have a 55% probability of occurring.
D. Two Alternative KSU U.S. Soybean S/D Forecasts for “New Crop” MY 2018/19
To represent possible alternative outcomes from the KSU‐adjusted USDA February 23rd projection for “new
crop” MY 2018/19, two potential KSU‐Scenarios for U.S. soybean supply‐demand and prices are presented.
KSU Scenario 1) “HIGHER 2018 U.S. Soybean Production” Scenario for “new crop” MY 2018/19 (25%
probability): 88.982 ma planted, 99.15% harvested‐to‐planted, 88.222 ma harvested, 52.0 bu/ac average
yield, 4.588 bb production, 5.233 bb total supplies, 2.350 bb exports, 2.000 bb domestic crush, 135 mb seed &
residual use, 4.485 bb total use, 748 mb ending stocks, 16.68% Stocks/Use, & $8.50 /bu U.S. soybean average
price.
KSU Scenario 1) “LOWER 2018 U.S. Soybean Production” Scenario for “new crop” MY 2018/19 (20%
probability): 88.982 ma planted, 99.15% harvested‐to‐planted, 88.222 ma harvested, 42.0 bu/ac average
yield, 3.705 bb production, 4.350 bb total supplies, 2.000 bb exports, 1.960 bb domestic crush, 135 mb seed &
residual use, 4.095 bb total use, 255 mb ending stocks, 6.23% Stocks/Use, & $11.00 /bu U.S. soybean average
price.
…
May 1, 2003
Livestock & Meat Demand
C. Schroeder
Agricultural Economics
Kansas State University … Needs Fellow
Agricultural Economics
Ted C. Schroeder
tcs@ksu.edu … Professor
Agricultural Economics
Waters Hall
Kansas …
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