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February 13, 2019
Grain Market Outlook
Introduction – An Overview of the U.S. Corn Market & USDA Reports
Corn Market Overview
While the U.S. and World corn market has adequate supplies at this time, ending stocks have been
trending lower since the 2016/17 marketing year (MY). Market projections from the USDA are for this
“tightening up” to continue through “next crop” MY 2019/20 which begins on September 1, 2019 and will last
through August 31, 2020. By its’ behavior, it is evident that the U.S. corn market continues to have a group
“narrative view” that supplies of U.S. corn will remain plentiful through at least mid‐summer 2019.
Unless a short crop develops in South America in coming months, or there are serious corn planting delays
in April‐May 2019 in the United States – this predominant market narrative that there are“more than
adequate U.S. corn supplies” will continue to limit any major upward movement in U.S. corn prices throughout
Spring, Summer and Fall 2019.
Corn market price expectations in year 2019 are heavily influenced by seasonal grain futures price patterns
over the most recent years and decades. Over the last 20 years the frequency of economically important price
increases in DEC Corn futures from February to November is 25%. This occurred in years 2002 (up $0.20 /bu),
2006 (up $0.44 /bu), 2010 (up $1.47 /bu), 2011 (up $0.31 /bu), and 2012 (up $1.82 /bu). No such increase in
DEC Corn futures from the preceding February to the following November has occurred in the last six (6) years
– since the major U.S. drought and resulting short crop of year 2012. Since year 2012, February averages of
DEC Corn futures have been greater than average prices for the following month of November by $1.26 /bu in
2013, $1.13 in 2014, $0.32 in 2015, $0.37 in 2016, $0.47 in 2017, and $0.28 in 2018.
Consequently (and conversely), 75% of the time over the last two decades the monthly average of DEC
Corn futures during the previous February have been greater than during the following November just ahead
of the DEC Corn futures closing month. Taking all these things together, the “consensus narrative opinion” of
the corn market at this time seems to be that there will NOT be significant corn production problems in either
South America or the United States this year. As a result, DEC 2019 corn futures prices are most likely to end
up equal to or lower than current mid‐February levels near $4.00 per bushel once we get to Fall 2019.
U.S. Corn Market Factors “Taken Together”
Considering all these factors together, the outlook for U.S. corn markets in 2019 will continue to be
“conservative due to large domestic corn supplies, but with upward potential based on prospects for moderate
strength in domestic use and exports due to tighter foreign corn supply‐demand balances”.
The USDA’s Reports on February 8, 2019
On February 8, 2019 the United States Department of Agriculture (USDA) released a set of reports
providing market information that had been “back‐logged” since December 11, 2018 – the last USDA
agricultural market information released before the recent U.S. Federal government shutdown.
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The World Agricultural Outlook Board (WAOB) released its World Agricultural Supply and Demand
(WASDE) estimates (https://www.usda.gov/oce/commodity/wasde/) after cancelling the scheduled January 11th report due
to the U.S. government shutdown.
Similarly, the National Agricultural Statistical Service (NASS) released the latest Grain Stocks report for
December 1, 2018 U.S. grain stocks levels, the 2019 Winter Wheat & Canola Seedings report, the February
2019 Crop Production report, and the 2018 Annual Crop Production Summary report
(https://www.nass.usda.gov/Publications/Calendar/reports_by_date.php)
The USDA Foreign Agricultural Service (FAS) also released it’s February 2019 reports on World
Agricultural Production, and separate reports on World Markets and Trade for Grain and Oilseeds
(https://www.fas.usda.gov/data‐analysis/scheduled‐reports‐2019).
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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 trend 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, 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 exhibits a pronounced price low in August‐September 2016 with monthly prices climbing
steadily from October through January 2017 – with a sideways to declining trend during February, followed by
a trend higher in 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 were to become reality, it would signal the
JULY 2017 CME KS HRW Wheat Futures
August 20, 2015 – October 19, 2016
Close = $4.64 ¾ on 10/19/2016
DEC 2016 CME KS HRW Wheat Futures
August 20, 2015 – October 19, 2016
Close = $4.25 ¼ on 10/19/2016
Page | 5
likelihood of returns to storage for Kansas wheat over the October 2016 harvest through January 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
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).
Figure 2. Kansas Wheat Seasonal Price Index – Last 17 Marketing Years (MY 1999/00 – MY 2015/16)
plus “current crop” MY 2016/17 USDA projection (Source: KSU www.AgManager.info & USDA)
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 U.S. trading partner countries has averaged 94.3680 with a median value of 93.1623 – indicating some
positive skewness in U.S. dollar index values (i.e., a few very high values pulling up the average) (Figure 3).
The historic low in the U.S. dollar trade weighted index since 1973 was 69.0247 – occurring in August 2011.
The historic high of 143.9059 occurred in March 1985. Over the January 1973 through September 2016 period
the U.S. dollar index has declined at a rate of ‐0.0609 per month …
July 19, 2017
Grain Market Outlook
2017/18 ($5.14)
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“Old crop” MY 2016/17 for U.S. wheat began on June 1, 2016 and concluded on May 31, 2017. The
projected U.S. average cash price for U.S. hard red winter wheat 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).
USDA price model projections for “new crop” MY 2017/18 indicate that the final U.S. wheat season
average price will be $5.14 per bushel. 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
This projection of $5.14 per bushel is up $0.34 per bushel from the July 12th USDA WASDE midpoint
projection of $4.80, and nearly equal to the upper end of the USDA forecast range of $4.40‐$5.20 per bushel.
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 2017/18 of $5.14 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 “new crop” MY 2017/18) than have actually occurred over the June
1, 2016 through May 31, 2017 time‐frame (i.e., in “old crop” MY 2016/17).
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 ‐0.0580 per month …
February 16, 2014
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