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June 19, 2014
Grain Market Outlook
2014 CME eSoybeans
10/18/2013 – 6/18/2014
Close: $12.13 on June 18th
Page | 4
I‐D. U.S. Soybean Supply‐Demand
U.S. Soybean Acreage, Yield & Production
The USDA left unchanged its projection of 2014 U.S. soybean planted and harvested acreage, U.S. average
yield, and U.S. soybean production. Updated estimates of U.S. soybean planted and harvested acreage will be
given in the USDA NASS Acreage report to be released on Monday, June 30, 2014. Any changes in projected
U.S. soybean acreage in the upcoming Acreage report will likely be included in the upcoming July 11th World
Agricultural Supply and Demand Estimates Report.
Following from the results of March 31st USDA NASS Prospective Plantings Report, the USDA continued to
project that 2014 U.S. soybean total planted acreage would be a record high 81.493 million acres (ma), up
from 76.533 ma in 2013, 77.198 ma in 2012, and 75.046 ma in 2011 (Table 1 and Figure 2). In addition, the
USDA projected 2014 U.S. soybean harvested acreage to be 80.5 ma, up from 75.869 ma in 2013, 76.164 ma in
2012, and 73.776 ma in 2011.
The forecast 2014 proportion of harvested‐to‐planted acreage for all U.S. soybeans is projected to be
98.7%, down from 99.1% in 2013, but comparable to 98.7% in 2012 and 98.3% in 2011. The U.S. average
soybean percent harvested‐to‐planted acreage over the years of 2004‐2013 has been 98.7% , with a high of
99.1% in 2007 and 2013, and a low of 98.3% in 2011. Using the 2004‐2013 average percent harvested‐to‐
planted acreage proportion of 98.7% would lead to a projection of 2014 U.S. harvested acres of 80.469 ma –
marginally less (down 31,000 acres) than the USDA’s projection of 80.5 ma, and within the rounding error of
100,000 acres for the forecast.
The projected 2014 U.S. average soybean yield of 45.2 bushels per acre (bu/ac) would be a record high, up
from 43.3 bu/ac in 2013, the drought affected 2012 yield of 39.8 bu/ac, and the historic high of 44.0 bu/ac in
2009 (Table 1 and Figure 3). Based on these 2014 acreage and yield forecasts, the USDA projected 2014 U.S.
soybean production to be a record high 3.635 billion bushels (bb) – which is up from 3.289 bb in 2013, 3.034
bb in 2012, 3.094 bb in 2011, 3.329 in 2010, and 3.359 bb in 2009 (Table 1).
U.S. Soybean Total Supplies
The USDA estimates that total supplies of U.S. soybeans for “new crop” MY 2014/15 are 3.775 bb – down
5 million bushels or ‘mb’ from May. Total “new crop” supplies of 3.775 bb result from beginning stocks of 125
mb, projected 2014 production of 3.635 bb, and projected imports of 15 mb (Table 1). Total supplies of 3.775
bb in “new crop” MY 2014/15 would be a record high, comparable to 3.655 bb in MY 2006/07 (2nd highest),
3.261 bb in MY 2007/08, 3.185 bb in MY 2008/09, 3.512 bb in MY 2009/10 (4th highest), 3.495 bb in MY
2010/11 (5th highest), 3.325 bb in MY 2011/12, 3.239 bb in MY 2012/13, and 3.519 bb in “current year” MY
2013/14 (3rd highest).
Beginning stocks of 125 mb in “new crop” MY 2014/15 are down 5 mb from May, but up from 141 mb in
“current year” MY 2013/14, 169 mb in MY 2012/13, and 215 mb in MY 2011/12. This forecast of lower
beginning stocks of 125 mb in “new crop” MY 2014/15 is comparable to the low of 112 mb which occurred in
MY 2004/05, and to what is at least a 40 year low of 103 mb in beginning stocks in MY 1977/78.
Imports of 15 mb in “new crop” MY 2014/15 are projected to be down from the record high of 90 mb in
“current year” MY 2013/14, and down from the 2nd highest amount of 36 mb in MY 2012/13. However, U.S.
soybean imports of 15 mb in “new crop” would represent a return to “normal” – being comparable to the
Page | 5
range of 10 – 16 mb in U.S. soybean imports for the MY 2007/08 through MY 2011/12 period, and of U.S.
soybean imports of less than 10 mb per marketing year going back to at least MY 1980/81.
U.S. Soybean Use by Category & Total Use
Domestic Crush: Projected U.S. soybean domestic crushings of 1.715 bb in “new crop” MY 2014/15 are up
from 1.700 bb for “current” MY 2013/14 (which is up 5 mb from May), 1.689 bb in MY 2012/13, and from
1.703 bb in MY 2011/12 (Table 1 and Figure 4). The record high amount of 1.808 bb of U.S. soybean domestic
crushings occurred in MY 2006/07, followed closely time and quantity‐wise with 1.803 bb in MY 2007/08.
U.S. Soybean Exports: Projected U.S. soybean exports of 1.625 bb in “new crop” MY 2014/15 would be a
record high, up from the current estimated high of 1.600 in “current” MY 2013/14 (Table 1 and Figure 4).
Beginning in MY 2006/07, U.S. soybean exports were 1.116 bb, followed by 1.159 bb in MY 2007/08, 1.279 bb
in MY 2008/09, 1.499 bb in MY 2009/10 (3rd highest on record), 1.505 bb in MY 2010/11 (2nd highest on
record), 1.365 bb in MY 2011/12, 1.320 bb in MY 2012/13, 1.600 bb in “current” MY 2013/14 (the historic
record high if actually attained), and now the projected new record high of 1.625 bb in “new crop” MY
2014/15.
Regarding the current pace of U.S. soybean export shipments and sales, as of June 5th, with 40 of 52 weeks
(76.9%) of “current” MY 2013/14 complete, 1.583 bb of U.S. soybeans had been shipped for export – equal to
98.9% of the USDA’s updated projection of 1.600 bb for “current” MY 2013/14. United States’ export
shipments will need to average only 1.43 mb per week through the remainder of the “current” 2013/14
marketing year to attain the USDA’s June WASDE projection of 1.600 bb. This compares to U.S. soybean
export shipments of 7.84 mb and 5.40 mb which occurred during the weeks ending May 29th and June 5th,
respectively. As a result, these recent U.S. soybean export shipments were “ahead of pace” to meet the USDA
marketing year U.S. forecast of 1.600 bb in the “current” 2013/14 marketing year. (Source: USDA Foreign
Agricultural Service U.S. Weekly Export Sales report ‐ http://apps.fas.usda.gov/export‐sales/esrd1.html).
Also as of June 5th an additional 72.0 mb of U.S. soybeans had been sold for future export sales in “current”
marketing year. Adding together 1.583 bb in past shipments plus 72 mb in forward sales amounts to 1.655 bb,
or 103.5% of the USDA’s 1.600 bb U.S. soybean export target for “current” MY 2013/14 in the June 11th USDA
WASDE report, with 76.9% (40/52 weeks) of the marketing year completed.
The strong pace of combined shipments and sales motivated the USDA to increase its U.S. soybean export
projection in the earlier May 9th WASDE report. However, after increasing the export projection in May, the
USDA left it unchanged from this higher level of 1.600 bb in the June WASDE report. Also, the distinct
possibility that the as of yet unshipped soybean sales could be cancelled before physical shipment occurs
motivated the USDA to not raise its forecast of 1.600 bb in exports even closer to the total of 1.655 bb total of
shipments plus forward sales as of June 5th. If this amount of additional U.S. soybean shipments were to
actually occur in the “current” 2013/14 marketing year, then there would be an additional 55 mb in U.S.
soybean usage (i.e., 1.655 – 1.600 bb = 55 mb).
As a consequence – with all other U.S. soybean supply‐demand factors remaining unchanged – if these
additional U.S. soybean exports occurred in “current” MY 2013/14, U.S. soybean ending stocks would drop
below 100 mb down to extremely low levels near 70 mb. However, this tight of an ending stocks situation for
U.S. soybeans in “current” MY 2013/14 (ending August 31, 2014) is not likely to occur (i.e., the U.S. soybean
industry would severely ration usage through higher prices in order to avoid it). But this illustration points out
Page | 6
the potential ramifications of all the current U.S. soybean export forward sales actually becoming “physical
shipments” in the current marketing year.
To illustrate, as of June 5th, outstanding sales of U.S. soybeans in “new crop” MY 2014/15 beginning
September 1, 2015 were 72.890 mb. This amount of forward sales amounts to 4.5% of projected “new crop”
MY 2014/15 sales of 1.625 bb. This total of 72.890 mb in forward “new crop” MY 2014/15 sales would be
expected to increase as the end of the “current” MY 2013/14 marketing year on August 31st approaches, and
unsold soybeans in “current” MY 2013/14 are “rolled” into the “new crop” 2014/15 marketing year.
The USDA anticipates a major reduction in the pace of U.S. soybean exports in the coming months as South
American soybean exports complete with those from the U.S. for World export shipments. Also, the spike in
U.S. soybean imports to a record high 90 mb in “current” MY 2013/14 seems to have in part been a reaction by
World soybean market suppliers such as Brazil to the tightening “current” marketing year ending stocks
situation in the United States in recent months.
Seed and Residual Use: Forecast seed use of 92 mb in “new crop” MY 2014/15 is down from 95 mb in
“current” MY 2013/14, but up from 89 mb in MY 2012/13, and from 90 mb in MY 2011/12 (Table 1 and Figure
4). Forecast residual use of 18 mb in “new crop” MY 2014/15 is up from 0 mb estimated in “current” MY
2013/14, and from 1 mb in MY 2012/13.
Total U.S. Soybean Use: Projected U.S. total use of 3.450 bb in “new crop” MY 2014/15 is a record high,
and is up from 3.395 bb in “current” MY 2013/14 (which is up 5 mb from May and up 35 mb from April) (Table
1 and Figure 4). Over the last eight (8) marketing years, total U.S. soybean use has been 3.081 bb in MY
2006/07, 3.056 bb in MY 2007/08, 3.047 bb in MY 2008/09, 3.361 bb in MY 2009/10 (3rd largest on record),
3.280 bb in MY 2010/11, 3.155 bb in MY 2011/12, 3.099 bb in MY 2012/13, the estimated amount of 3.395 bb
in “current” MY 2013/14 (2nd largest on record), and now the projected record high of 3.450 bb in “new crop”
MY 2014/15.
U.S. Soybean Ending Stocks, % Ending Stocks‐to‐Use, & Prices
U.S. soybean ending stocks for “new crop” MY 2014/15 are projected to be 325 mb, down 5 mb from May,
but up 200 mb from 125 mb in ending stocks in “current” MY 2013/14 (which is also down 5 mb from May and
down 10 mb from April). Projected “new crop” MY 2104/15 ending stocks of 325 mb would be the largest
amount since 449 mb in MY 2005/06 and 574 mb in MY 2007/08, and compares to 205 mb in MY 2007/08, 138
mb in MY 2008/09, 151 in MY 2009/10, 215 mb in MY 2010/11, 169 mb in MY 2011/12, 141 mb in MY
2012/13, and the estimate of 125 mb in “current” MY 2013/14 (Table 1 and Figure 4).
Percent (%) ending stocks‐to‐use of 9.42% forecast for “new crop” MY 2014/15 is up from the record low
of 3.68% now projected by the USDA for “current” MY 2013/14 (Table 1 and Figures 5‐6). Over the last eight
(8) years, U.S. soybean % ending stocks‐to‐use have been 18.6% in MY 2006/07, 6.7% in MY 2007/08, 4.5% in
MY 2008/09, 4.5% in MY 2009/10, 6.6% in MY 2010/11, 5.4% in MY 2011/12, 4.5% in MY 2012/13, the
estimate of 3.68% in “current” MY 2013/14, and now the projection of 9.42% for “new crop” MY 2014/15.
U.S. average soybean prices for “new crop” MY 2014/15 are projected to be $9.75‐$11.75 per bushel
(midpoint = $10.75) – down sharply from $13.10 /bu in “current” MY 2013/14 (which is up $0.10 /bu from
April) (Table 1 and Figures 5‐6). Over the last eight (8) marketing years, U.S. soybean prices have been $6.43
per bushel in MY 2006/07, $10.10 in MY 2007/08, $9.97 in MY 2008/09, $9.59 in MY 2009/10, $11.30 in MY
2010/11, $12.50 in MY 2011/12, a record high of $14.40 in MY 2012/13, $13.10 for “current” MY 2013/14, and
now a range midpoint projection of $10.75 / bu in “new crop” MY 2014/15.
Page | 7
I‐E. KSU U.S. Soybean Supply‐Demand Scenarios for “Next Crop” MY 2014/15
Projections for 2014 U.S. soybean production by the USDA and Kansas State University may very well end
up being overly optimistic – implicitly discounting the possibility of 2014 U.S. soybean crop production
problems in coming summer months. For example, the USDA is projecting that “new crop” 2014/15 marketing
year U.S. soybean prices will be in the range of $9.75‐$11.75 per bushel (midpoint of $10.75). Also, KSU
forecasts provided here are decidedly conservative in terms of projected U …
February 19, 2014
Grain Market Outlook
March 2014
CBOT eSoybeans
Close = $13.61
on Tuesday, Feb. 18
November 2014
CBOT Soybeans
Close = $11.38
on Tuesday, Feb. 18
Page | 3
I‐C. USDA U.S. Soybean Supply‐Demand for the “Current” 2013/14 Marketing Year
U.S. Soybean 2013 Acres, Yield & Production
The USDA left unchanged its projection of 2013 U.S. soybean planted acreage of 76.493 million acres (ma)
and of 75.688 ma harvested (Table 1 and Figure 2). The 2013 proportion of harvested‐to‐planted acreage for
U.S. soybeans is projected to be 99.13%, up from 98.66% in 2012, and near the average of 98.7% over the
2004‐2012 period. The USDA also maintained its projection of an average 2013 U.S. soybean yield of 43.3
bushels per acre (bu/ac) (Table 1 and Figure 3). The long term (1973‐2012) KSU trend yield projection for U.S.
soybeans in 2013 was 43.5 bu per acre (Source: KSU Soybean Market Outlook newsletter, June 17, 2013)
The USDA left unchanged its projection of 2013 U.S. soybean production of 3.289 billion bushels (bb), up
8.4% from 3.034 bb in 2012, and up 6.3% from 3.094 bb in 2011 (Table 1). If any further changes are
eventually to be made in the projection of 2013 U.S. soybean production by the USDA, they may not be done
until the 2014 Crop Production Summary in January 2015 if the USDA follows its usual procedures for making
such adjustments.
U.S. Soybean Total Supplies in “Current” MY 2013/14
The USDA estimates that total supplies of U.S. soybeans for “current” MY 2013/14 are 3.459 bb (up 5 mb
from January) – resulting from beginning stocks of 141 mb, projected 2013 production of 3.289 bb, and
projected imports of 30 mb (up 5 mb) (Table 1). Over the last eight (8) marketing years, total supplies of U.S.
soybeans have been 3.655 bb in MY 2006/07 (the record high), followed by 3.261 bb in MY 2007/08, 3.185 bb
in MY 2008/09, 3.512 bb in MY 2009/10, 3.495 bb in MY 2010/11, 3.325 bb in MY 2011/12, 3.239 bb in “last
year’s” MY 2012/13, and 3.459 bb in “current” MY 2013/14. Beginning stocks of 141 mb are the lowest since
138 mb in MY 2009/10, and illustrate the steadily increasing tightness of U.S. soybean supplies over the last
few years ‐ with 215 mb in MY 2011/12, 169 mb in “last year’s” MY 2012/13, and now a projected 141 mb in
“current” MY 2013/14.
U.S. Soybean Total Use & Use by Category in “Current” MY 2013/14
Domestic Crush: Projected U.S. soybean domestic crushings of 1.700 bb for “current” MY 2013/14 are up
0.7% from 1.689 bb in “last year’s” MY 2012/13, and marginally above 1.703 bb in MY 2011/12 (Table 1 and
Figure 4). The record high amount 1.808 bb of U.S. soybean domestic crushings occurred in MY 2006/07,
followed closely time and quantity‐wise with 1.803 bb in MY 2007/08.
U.S. Soybean Exports: Projected U.S. soybean exports of 1.510 in “current” MY 2013/14 are up 15 mb
from January, up 35 mb from December 2013, and up 60 mb from the November WASDE report of last year
(Table 1 and Figure 4). Over the 8 years, U.S. soybean exports have been supported by strong Chinese
soybean imports. Beginning in MY 2006/07, U.S. soybean exports were 1.116 bb, followed by 1.159 bb in MY
2007/08, 1.279 bb in MY 2008/09, 1.499 bb in MY 2009/10 (3rd highest on record), 1.501 bb in MY 2010/11 (2nd
highest on record), 1.365 bb in MY 2011/12, 1.320 bb in “last year’s” MY 2012/13, and now 1.510 bb in
“current” MY 2013/14 (the record high if actually attained).
Regarding the current pace of U.S. soybean export shipments and sales, as of February 6st, with 27 of 52
weeks (51.9%) of “current” MY 2013/14 complete, 1.162 bb of U.S. soybeans had been shipped for export –
equal to 77.7% of the USDA’s updated projection for “current” MY 2013/14 of 1.510 bb. An additional 419.4
mb of U.S. soybean had been sold for future export sales in “current” marketing year. Adding together 1.162
Page | 4
bb in past shipments plus 419.4 mb in forward sales amounts to 1.580 bb, or 105.7% of the USDA’s 1.510 bb
U.S. soybean export target for “current” MY 2013/14 in the February 10th USDA WASDE report with 51.9%
(27/52 weeks) of the marketing year completed.
The strong pace of combined shipments and sales motivated the USDA to increase its U.S. soybean export
projection in the February 10th WASDE report. Also, the distinct possibility that the as of yet unshipped
soybean sales could be cancelled before physical shipping takes place motivated the USDA to not raise its
forecast of 1.510 bb in exports even closer to the 1.580 bb total of shipments plus forward sales.
If substantive 2014 South American crop production problems eventually do develop in coming months,
then the higher figure of 1.580 bb in U.S. soybean exports for “current” MY 2013/14 is more likely to occur,
with the impact of markedly higher prices, additional rationing of U.S. soybean crush and exports, and possibly
at or below record low U.S. soybean ending stocks (i.e., below 112 mb in MY 2003/13) and percent ending
stocks‐to‐use (below 4.5% in MY 2003/04, MY 2008/09, and MY 2009/10).
Seed and Residual Use: Forecast seed use of 87 mb in “current” MY 2013/14 is down marginally from 89
mb in “last year’s” MY 2012/13, and from 90 mb in MY 2011/12 (Table 1 and Figure 4). Forecast residual use
of 12 mb in “current” MY 2013/14 is down 10 mb from January, but up from 1 mb in “last year’s” MY 2012/13,
and from ‐2 mb in MY 2011/12.
Total U.S. Soybean Use: Projected U.S. total use of 3.309 bb in “current” MY 2013/14 is up 5 mb from
January, up 34 mb from December, and up 66 mb from November (Table 1 and Figure 4). Over the last eight
(8) marketing years, U.S. soybean use have been 3.081 bb in MY 2006/07, 3.056 bb in MY 2007/08, 3.047 bb in
MY 2008/09, 3.361 bb in MY 2009/10, 3.280 bb in MY 2010/11, 3.155 bb in MY 2011/12, 3.099 bb in “last
year’s” MY 2012/13, and is now projected to be 3.309 bb in “current” MY 2013/14 – the largest amount since
MY 2009/10.
U.S. Soybean Ending Stocks, % Ending Stocks‐to‐Use, and Prices in “Current” MY 2013/14
U.S. soybean ending stocks for “current” MY 2013/14 are projected to be 150 mb, unchanged from
December‐January, but down 20 mb from November. Projected “current” MY 2013/14 ending stocks of 150
mb are comparable to from 205 mb in MY 2007/08, 138 mb in MY 2008/09, 151 in MY 2009/10, 215 mb in MY
2010/11, 169 mb in MY 2011/12, and is up from 141 mb in “last year’s” MY 2012/13 (Table 1 and Figure 4).
Percent (%) ending stocks‐to‐use of 4.53% for “current” MY 2013/14 U.S. soybeans in the February WASDE
report is down marginally from December 2013 / January 2014, but down from 5.24% in November and a
projection of 6.93% in August 2013 (Table 1 and Figures 5‐6). Over the last eight (8) years, U.S. soybean %
ending stocks‐to‐use have been 18.6% in MY 2006/07, 6.71% in MY 2007/08, 4.53% in MY 2008/09, 4.49% in
MY 2009/10, 6.55% in MY 2010/11, 5.35% in MY 2011/12, 4.55% in “last year’s” MY 2012/13, and is projected
to be 4.53% for “current” MY 2013/14.
U.S. average soybean prices for “current” MY 2013/14 are projected by the USDA to be $11.95‐$13.45 /bu
(midpoint = $12.70), up $0.20 per bu. on each end of the range from the January 2013 WASDE report (Table 1
and Figures 5‐6). Over the last eight (8) marketing years, U.S. soybean prices have been $6.43 per bushel in
MY 2006/07, $10.10 in MY 2007/08, $9.97 in MY 2008/09, $9.59 in MY 2009/10, $11.30 in MY 2010/11, $12.50
in MY 2011/12, a record high of $14.40 in “last year’s” MY 2012/13, and now a range midpoint projection of
$12.70 / bu in “current” MY 2013/14.
Page | 5
I‐D. Comments on Soybean Market Prospects for the Rest of the “Current” 2013/14 Marketing Year
Due to a) record high South American soybean supplies in “last year’s” MY 2012/13 coupled with
expectations to date (although concerns are now emerging) of even larger South American soybean supplies in
“current” MY 2013/14, and b) expectations of continued strength in Chinese soybean import demand in
“current” MY 2013/14, U.S. soybean price prospects are mixed and uncertain in regards to price outlook.
Both domestic and export demand for U.S. soybeans are likely to be strong through the coming months
until the 2014 South American soybean crop available for export in late winter ‐ spring 2014. Then the risk to
U.S. soybean exports is just as occurred in 2013, i.e., that U.S. export demand may decline sharply when large
exportable supplies of South American soybeans become available in 2014.
This scenario assumes that there will be continued strength of soybean import demand from China and
elsewhere – and also that improvements occur in Brazilian grain export logistical problems at their export
locations in 2014 in order to avoid the export handling, shipping, and “timeliness of product movement”
problems that occurred in early‐mid 2013. A key question is when will the bulk of exportable South American
soybean supplies will be available in 2014, and will the Brazilian export system be able to handle it efficiently
and in a timely manner?
In summary, U.S. soybean prices have been supported by Chinese export demand and also by U.S. farmer’s
“holding” of soybeans in storage rather than selling at lower than anticipated or needed grain prices. Also,
price weakness or at least “moderation” in soybean prices is likely to occur in the spring‐summer of 2014 if a
record high 2014 South American soybean crop is produced and moved into export channels in a timely
manner, and if prospects develop through the summer months for a large 2014 U.S. soybean crop to be
produced.
I‐E. KSU U.S. Soybean Supply‐Demand Scenarios for “Next Crop” MY 2014/15
The USDA and the Tendency To Project Full Production in Early Season Market Forecasts
The initial formal USDA projection of 2014 U.S. soybean production along with supply‐demand and price
prospects will be given at the 2014 USDA Agricultural Outlook Forum, February 20‐21, 2014 in Arlington,
Virginia (www.usda.gov/oce/forum). Since at least the winter of 2006/07 there has been a tendency for early
season projections of U.S. wheat production by the USDA, private industry analysts, and University Extension
Grain Marketing Specialists to be for “full production”, i.e., assuming trend line U.S. soybean yields or better
and generally large corn crops.
On Thursday, February 13th the USDA released its Agricultural Projections to 2023 available at the
following website: http://www.ers.usda.gov/publications/oce‐usda‐agricultural‐projections/oce141.aspx.
Based on relative grain prices and USDA WASDE projections in November 2013, the forecast of U.S. soybean
supply/demand and prices for “next crop” MY 2014/15 contained in the USDA report will likely face a number
adjustments before they are released in the February 20‐21, 2014 USDA Outlook Forum.
An adjusted version of the “next year” MY 2014/15 projected from the Agricultural Baseline is provided in
Table 1, with lower beginning stocks of 150 mb to match the February 2014 WASDE projection of ending
stocks projection for “current” MY 2013/14. All other changes in total supplies, ending stocks, and percent
ending stocks‐to‐use follow from the change in beginning stocks. With the reduction in projected percent
ending stocks‐to‐use (i.e., down to 5.32% versus 5.87% in the USDA baseline projection), the USDA’s price
Page | 6
projection was adjusted upward by $0.50 per bushel up to $10.25 per bushel. The USDA has stated publically
since the release of these Agricultural Projections to 2023 that changes in projected 2014 crop acreage may
occur in the upcoming February 20‐21, 2014 USDA Outlook Forum forecasts. But at this time, it seems likely
that the projection of a record high 2014 U.S. soybean yield of 45.2 bu/ac may be retained.
Projections for 2014 U.S. soybean production by the USDA and Kansas State University may very well
follow this same pattern of being overly optimistic – implicitly discounting the possibility of 2014 U.S. soybean
crop production problems. Such early season forecasts for 2014 as these by KSU given below are decidedly
conservative in terms of projected U …
February 17, 2014
Grain Market Outlook
March 2014 CME eCorn Futures
Aug. 26, 2013 – Feb. 14, 2014
Close of $4.45 ¼ on Fri., Feb. 14th
December 2014 CME eCorn Futures
Aug. 26, 2013 – Feb. 14, 2014
Close of $4.59 ¾ on Fri., Feb. 14th
Page | 3
I‐D. USDA U.S. Corn Supply‐Demand for the 2013/14 Marketing Year
U.S. Corn 2013 Acres, Yield & Production
The USDA left unchanged its projection of 2013 U.S. corn production of 13.925 billion bushels (bb), up
from a drought‐affected short crop of 10.780 bb in 2012. This USDA projection is based on record high planted
acreage of 95.365 million acres (ma), and harvested acreage of 87.668 ma (Table 1 and Figure 2). The USDA
also maintained its projection of an average U.S. corn yield of 158.8 bushels per acre (bu/ac). The January‐
February USDA 2014 projection of 158.8 bu/ac in average 2013 U.S. corn yields is down from the initial USDA
projection of 163.6 bu/ac at the February 22, 2013 USDA Outlook Forum (Table 1 and Figure 3).
Projected 2013 U.S. corn production of 13.925 bb is a record high, being up 3.145 bb ( 29%) from 10.780
bb in 2012, and up 13% from 12.360 bb in 2011 (Table 1). If any further changes are eventually to be made in
the projection of 2013 U.S. corn production by the USDA, they may not be done until the 2014 Crop
Production Summary in January 2015 if the USDA follows its usual procedures for making such adjustments.
U.S. Corn Total Supplies in “Current” MY 2013/14
The USDA estimates that total supplies of U.S. corn for “current” MY 2013/14 are 14.781 bb – resulting
from beginning stocks of 821 mb, projected 2013 production of 13.925 bb, and projected imports of 35 mb
(Table 1). Total supplies of 14.781 bb in MY 2013/14 would be a record high, comparable to 14.362 bb in MY
2007/08, 13.729 bb in MY 2008/09, 14.774 bb in MY 2009/10 (2nd largest), 14.182 bb in MY 2010/11 (3rd
largest), 13.517 bb in MY 2011/12, and 11.932 bb in “Last year’s” MY 2012/13. Beginning stocks of 821 mb are
the lowest since 426 mb in MY 1996/97, and substantiate the tightness of U.S. corn supplies during June‐
August 2013.
U.S. Corn Total Use & Use by Category in “Current” MY 2013/14
Total Use of U.S. corn for “current” MY 2013/14 is projected to be 13.300 bb – up 150 from January, up
250 mb from the December WASDE, and up 350 mb from November, while being up 19.7% from 11.111 bb in
“last year’s” MY 2012/13 (Table 1 and Figures 4 & 6). United States’ total corn use of 13.300 bb in “current”
MY 2013/14 would be the highest on record, comparable to 12.737 bb in MY 2007/08 (4th highest), 12.056 bb
in MY 2008/09, 13.066 bb in MY 2009/10 (2nd highest), 13.055 bb in MY 2010/11 (3rd highest), 12.528 bb in MY
2011/12, and 11.111 bb in “last year’s” MY 2012/13.
U.S. Ethanol Production and Corn Usage: Projected U.S. corn use for ethanol production of 5.000 bb in
“current” MY 2013/14 is up from 4.648 bb in “last year’s” MY 2012/13, while being equal to 5.000 bb in MY
2011/12. Figure 5 shows weekly U.S. oxygenated plant production of fuel ethanol as reported by the U.S.
Energy Information Administration (www.eia.gov) with a calculated estimate of corn use by Kansas State
University. Assuming 2.75 gallons of ethanol produced per bushel of corn, these calculations indicate that the
equivalent projected annual rate of U.S. corn used for ethanol production for “current” MY 2013/14 has
ranged from 4.64‐5.26 bb on a weekly basis since early September 2013 ‐ the beginning of the “current”
2013/14 marketing year – averaging a projection of 4.996 bb for MY 2013/14 over the September 2013 –
February 7, 2014 time period. This projection of 4.996 bb is consistent to USDA’s February 2014 WASDE report
estimate of 5.000 bb of corn to be used for ethanol production during the “current” 2013/14 marketing year.
U.S. Corn Use as Distillers Grains: An estimate of the U.S. corn equivalent amounts of distillers grains
(DDGS) use for direct livestock feeding and exports is provided in Figure 6 – which shows estimated a) DDGS
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corn equivalent U.S. domestic livestock feeding, and b) DDGS exports as well as other categories of U.S. corn
usage since MY 1989/90.
This analysis assumes 17.75 pounds of distillers dried grains and solubles (DDGS) per 56 pound bushel of
corn used in ethanol production. By these estimates, approximately 1.2‐1.3 bb of U.S. corn equivalent bushel‐
weights of DDGS are projected either to have been or are to be fed to U.S. livestock each marketing year since
MY 2010/11 – i.e., 1.265 bb in DDGS corn‐weight equivalents in MY 2010/11, 1.286 bb DDGS corn‐weight
equivalents in MY 2011/12, 1.196 bb in MY 2012/13, and 1.286 bb projected for MY 2013/14. Over the same
four most recent marketing years, DDGS exports in corn equivalent weights are estimated to range from 277
to 326 mb.
U.S. Corn Exports: Projected U.S. corn exports of 1.600 in MY 2013/14 are up 150 million bushels (mb)
from January, and up 118.8% from 731 mb a year ago in MY 2012/13 – the 39 year low since MY 1975/76. As
of February 6st, with 27 of 52 weeks (51.9%) of “current” MY 2013/14 complete, 618.7 mb of U.S. corn had
been shipped for export – equal to 38.7% of the USDA’s updated projection for “current” MY 2013/14 of 1.600
bb. An additional 743.2 mb of U.S. corn had been sold for future export sales in “current” marketing year.
Adding together 618.7 mb in past shipments plus 743.2 mb in forward sales amounts to 1.362 bb, or 85.1%
of the USDA’s 1.600 bb U.S. corn export target for “current” MY 2013/14 in the February 10th USDA WASDE
report with 51.9% (27/52 weeks) of the marketing year completed. The strong pace of combined shipments
and sales motivated the USDA to increase its U.S. corn export projection in the February 10th WASDE report.
Non‐Ethanol FSI: Forecast non‐ethanol food, seed and industrial (FSI) use of 1.400 bb in “current” MY
2013/14 compares to 1.396 bb in “last year’s” MY 2012/13, and 1.428 bb in MY 2011/12.
Feed and Residual Use: Forecast U.S. feed and residual use of 5.300 bb for “current” MY 2013/14 is
unchanged from January, but up 100 mb from November‐December and up 200 mb from August‐September
WASDE projections. Feed and residual use of 5.300 bb is up 22.3% from 4.335 bb in “last year’s” MY 2012/13,
while being up 16.3% from 4.557 bb in MY 2011/12.
U.S. Corn Ending Stocks, % Ending Stocks‐to‐Use, & Prices in “Current” MY 2013/14
U.S. corn ending stocks for “current” MY 2013/14 are projected to be 1.481 bb, down 150 mb from
January, down 311 mb from December and down 4066 mb from November 2013. However, the February
2014 projection of 1.481 bb is still up 660 mb (+80%) from 821 mb ending stocks in “last year’s” MY 2012/13
(Table 1 & Figure 4). “Current” MY 2013/14 U.S. corn ending stocks of 1.481 bb are comparable to 1.673 bb of
U.S. corn ending stocks for MY 2008/09, and 1.708 bb in MY 2009/10 – and above the recent downtrending
ending stocks of 1.128 bb in MY 2010/11, 989 mb in MY 2011/12, and 821 mb in MY 2012/13.
Projected percent (%) ending stocks‐to‐use of 11.1% in “current” MY 2013/14 is down from the January
WASDE projection of 12.4%, the December 2013 WASDE projection of 13.7%, and also down from the
September‐November 2013 forecasts of 14.6%‐14.7%. However, the February 2014 projection of 11.4% S/U
for “current” MY 2013/14 is still up significantly from 7.4% in “last year’s” MY 2012/13 (Table 1 & Figures 7‐8).
Over the last six (6) years, U.S. corn % ending stocks‐to‐use declined from 13.9% in MY 2008/09, to 13.1% in
MY 2009/10, 8.6% in MY 2010/11, 7.9% in MY 2011/12, and 7.4% in “last year’s” MY 2012/13, before being
projected now for the first time in five (5) years to increase to 11.1% in “current” MY 2013/14.
U.S. average corn prices for “current” MY 2013/14 are projected to be $4.20‐$4.80 bu/ac (midpoint =
$4.50) – up $0.10 on both ends of the range from January, but down from the record high of $6.89 /bu in “last
Page | 5
year’s” MY 2012/13 (Table 1 & Figures 9‐10). Since the beginning of the rapid expansion in U.S. ethanol
production in 2006, U.S. corn prices have generally risen, from $3.04 /bu in MY 2006/07, to $4.20 in MY
2007/08, $4.06 in MY 2008/09, $3.55 in MY 2009/10, $5.18 in MY 2010/11, $6.22 in MY 2011/12, up to the
record high of $6.89 in “last year’s” MY 2012/13 – with a decline now forecast to the price range midpoint
projection of $4.40 in “current” MY 2013/14.
I‐E. KSU U.S. Corn Supply‐Demand Scenarios for “Next Crop” MY 2014/15
The USDA and the Tendency To Project Full Production in Early Season Market Forecasts
The initial formal USDA projection of 2014 U.S. corn production along with supply‐demand and price
prospects will be given at the 2014 USDA Agricultural Outlook Forum, February 20‐21, 2014 in Arlington,
Virginia (www.usda.gov/oce/forum). Since at least the winter of 2006/07 there has been a tendency for early
season projections of U.S. corn production by the USDA, private industry analysts, and University Extension
Grain Marketing Specialists to be for “full production”, i.e., assuming trend line U.S. corn yields or better and
generally large corn crops.
On Thursday, February 13th the USDA released its Agricultural Projections to 2023 available at the
following website: http://www.ers.usda.gov/publications/oce‐usda‐agricultural‐projections/oce141.aspx.
Based on relative grain prices and USDA WASDE projections in November 2013, the forecast of U.S. corn
supply/demand and prices for “next crop” MY 2014/15 contained in the USDA report will face a number
adjustments before they are released in the February 20‐21, 2014 USDA Outlook Forum.
An adjusted version of the “next year” MY 2014/15 projected from the Agricultural Baseline is provided in
Table 1, with lower beginning stocks of 1.481 bb to match the February 2014 WASDE projection of ending
stocks projection for “current” MY 2013/14. All other changes in total supplies, ending stocks, and percent
ending stocks‐to‐use follow from the change in beginning stocks. With the reduction in projected percent
ending stocks‐to‐use (i.e., down to 16.04% versus 19.22% in the USDA baseline projection), the USDA’s price
projection was adjusted upward by $0.20 per bushel up to $3.85 per bushel. The USDA has stated publically
since the release of these Agricultural Projections to 2013 that changes in projected 2014 corn acreage may
occur in the upcoming February 20‐21, 2014 USDA Outlook Forum forecasts. But at this time, it seems likely
that the record high projection of a 2014 U.S. corn yield of 165.6 bu/ac maybe retained.
This tendency on the part of both the USDA and University grain market economists to project full
production and marked increases has been especially the case beginning in the winter of 2010 when preseason
U.S. pre‐season corn production forecasts have been markedly larger than what final U.S. corn crop production
totals have ended up being each year. A combination of drought and poor crop development conditions lead
to lower than originally expected U.S. corn production in 2010, 2011, and 2012. And although the 2013 U.S.
corn crop has ended up being record large, still it is markedly lower than original early 2013 production of
14.5+ bb.
Projections for 2014 U.S. corn production by the USDA and Kansas State University may very well follow
this same pattern of being overly optimistic – implicitly discounting the possibility of 2014 U.S. corn crop
production problems. Such early season forecasts for 2014 as these by KSU given below are decidedly
conservative in terms of projected U …
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Grain Market Outlook
high 165.3 bu/ac yields, a 13.935 billion bushel (bb) 2014
U.S. corn crop, 15.111 bb total supplies, 1.700 bb exports, 13.385 bb total use, 1.726 bb ending stocks, 12.9%
ending stocks‐to‐use, and $4.20 average price per bu. ($3.85 to $4.55). If 2014 U.S. corn wheat production
prospects decline from these “top end” projections, then price prospects could improve considerably from
these conservative 2014/15 price forecasts.
KSU U.S. Corn Forecast for “New Crop” MY 2014/15: KSU projections of “next crop” MY 2014/15 supply‐
demand balances and prices are as follows: a) “Likely Production” Scenario: 60% prob. of 91.7 ma planted,
91.9% harvested‐to‐planted acres, trend yields of 159.4 bu/ac, 13.437 bb 2014 U.S. corn production, 14.613 bb
U.S. corn supplies, 1.600 bb exports, 13.210 bb total use, 1.403 bb ending stocks, 10.6% S/U, & $4.40 /bu; b)
“Low Production” Scenario: 20% prob. of 89.9 ma planted, 91.9% harv.‐to‐plntd. acres, low yields of 149.4
bu/ac, 12.355 bb 2014 U.S. corn production, 13.551 bb U.S. corn supplies, 1.400 bb exports, 12.575 bb total
use, 976 mb ending stocks, 7.76% S/U, & $6.00 /bu; and c) “High Production” Scenario: 20% prob. of 93.4 ma
planted, 91.9% harv.‐to‐plntd. acres, yields of 164.4 bu/ac, 14.122 bb 2014 U.S. corn production, 15.288 bb
U.S. corn supplies, 1.700 bb exports, 13.535 bb total use, 1.753 bb ending stocks, 12.95% S/U, & $4.15 /bu.
World Corn Total Supplies of 1,148 mmt in “new crop” MY 2014/15 are up from 1,117 mmt in “current year”
MY 2012/13, and up from 1,003 mmt in MY 2011/12. Projected World corn ending stocks of 181.7 mmt
(18.8% S/U) in “new crop” MY 2014/15 are up from 168.4 mmt (17.8% S/U) in “current year” MY 2013/14, and
up from 138.2 mmt (16.0% S/U) in MY 2011/12. Forecast total MY 2014/15 corn production for major export
competitors Brazil (74.0 mmt – down 1.0) and Argentina (26.0 mmt – up 2.0) is projected to be 1.0% higher in
the coming year – with harvests available for use in the early months of 2015 to compete with the U.S. in
World grain export markets. However, these projections are still uncertain given the possibility of a strong El
Nino event beginning in mid‐2014. Ongoing geopolitical problems in the Black Sea region is reported to have
not had an appreciable impact on the availability of Ukraine corn to World markets, but would be a disrupting
market factor in World corn and coarse grain markets if it did so. …