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February 19, 2015
Grain Market Outlook
g.
The USDA projects that foreign wheat supplies are more than adequate to “mitigate” shortfalls in 2014 U.S.
hard red winter wheat production in the Central and Southern plains states again in MY 2014/15 as in MY
2013/14. Also, no other major production problems in competing World wheat exporting countries have yet
emerged to the degree that the “large crop‐over‐supply” situation in World wheat markets has been changed.
However, there are developing concerns about wheat export supply availability from the Black Sea region, and
the ongoing possibility of crop problems developing among major World wheat producers / exporters. United
States’ wheat exports have been reduced by a recent strong positive trend in the U.S. dollar.
USDA U.S. Wheat Forecast for “current crop” MY 2014/15: The USDA maintained its projection of lower 2014
U.S. wheat production, reduced total use, increased ending stocks and % stocks‐to‐use, and lower prices in
“current crop” MY 2014/15 vs a year ago. The USDA’s projected “current crop” MY 2014/15 scenario is for a
2.026 billion bushel (bb) 2014 U.S. wheat crop, 2.776 bb total supplies (down 20 million bushels or ‘mb’ from
January on reduced imports), 900 mb exports (down 25 mb), 2.084 bb total use (down 25 mb), 692 mb ending
stocks (up 5 mb), 33.2% ending stocks‐to‐use (vs 32.6% last month), and a forecast U.S. price of $6.00 /bu
(range of $5.85 to $6.15) – compared to $5.90‐$6.30 ($6.10 midpoint) from January.
KSU U.S. Wheat Forecast for “next crop” MY 2015/16: KSU projections of “next crop” MY 2015/16 supply‐
demand balances and prices are represented in two scenarios, either “Trend Yield” or “Short Yield” scenarios,
which are as follows. A) “Trend Yield” Scenario: 60% prob. of 54.830 million acres (ma) planted, 46.105 ma
harvested, 45.9 bu/ac trend yield, 2.116 billion bu. (bb) production, 2.958 bb total supplies, 1.050 bb exports,
2.260 bb total use, 698 mb end stocks, 30.9% S/U, $6.20 /bu U.S. average price. B) “Short Yield” Scenario: 40%
prob. of 54.830 ma planted, 46.105 ma harvested, 43.5 bu/ac trend yield, 2.006 bb production, 2.858 bb total
supplies, 1.025 bb exports, 2.224 bb total use, 634 mb end stocks, 28.5% S/U, $6.45 /bu U.S. average price.
The key assumption in these KSU projections is that there will be a moderate recovery in U.S. wheat exports.
USDA World Wheat: World wheat total supplies of 912.5 mmt in “current crop” MY 2014/15 are up from
891.6 mmt in MY 2013/14, and 855.4 mmt in MY 2012/13. Projected World wheat ending stocks in “current
crop” MY 2014/15 of 197.9 mmt (27.7% S/U) are up from 187.5 mmt (26.6% S/U) in MY 2013/14, and from
174.5 mmt (25.8% S/U) in MY 2012/13. For perspective, these figures can be compared to the historic World
wheat ending stocks and ending stocks‐to‐use minimums of 129.7 mmt and 21.1% S/U in MY 2007/08.
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I. U.S. Wheat Market Situation & Outlook
I‐A. February USDA Reports & “Current Crop” MY 2014/15 Projections
On February 10th the USDA World Agricultural Outlook Board (WAOB) released its February 2015 World
Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World corn supply‐demand
and price projections for both the 2013/14 as well as for “current crop” 2014/15 marketing years. The “current
crop” 2014/15 U.S. wheat marketing year will last from June 1, 2014 through May 31, 2015, with the “new
crop” 2015/16 marketing year beginning on June 1, 2015.
I‐B. CME Hard Red Winter Wheat Futures & U.S. Dollar Index Trends
Since market highs of $8.62 per bushel on May 6, 2014 for the MARCH 2015 contract, Kansas hard red
winter wheat futures trended sharply lower through the later part of September‐early October – with the
MARCH 2015 contract trading as low as $5.54 per bushel on October 1, 2014. Following the early October low
the MARCH 2015 contract trended higher through October – up to the $6.16‐$6.17 range before trading lower
again in early November (down to $5.70 ¼ on 11/10/2014) – after which wheat futures markets trended
higher. On Wednesday, December 18th CME Hard Red Winter Wheat futures traded as high as $7.05 ¾ per
bushel – followed then by a downtrend in prices through late January‐early February 2015, with MARCH 2015
Kansas hard red winter wheat futures declining as low as $5.33 on February 2nd.
After a $0.24 ½ /bu move higher on February 3rd, MARCH 2015 Hard Red Winter Wheat futures prices
responded to the release of the February 10th USDA reports by trading lower for the day. MARCH 2015 HRW
wheat efutures prices opened at $5.61 ¾ on Tuesday, February 10th. The USDA reports were released at
midday (i.e., 11 a.m., central time). Prices declined as high as $5.63 ½ and as low as $5.52 ¾ per bushel during
the session before closing $0.09 ½ lower for the day at $5.54 /bu (Figure 1). Since then, MARCH 2015 wheat
traded in an essentially sideways pattern until February 17‐18, when 1) weather and crop development
concerns in the U.S., and 2) concerns about Black Sea geopolitical conflicts and future availability of wheat
exports from that region of the World, caused prices to go as high as $5.82 ¼ before settling at $5.62 ¼ on
2/17, and then to trade as high as $5.70 and as low as $5.46 ¾ on 2/18, before closing at $5.48 for the day.
Figure 1. MARCH 2015 & JULY 2015 CME Kansas Wheat Futures Price Charts (electronic trade) …
December 18, 2014
Grain Market Outlook
… … e 2014/15 marketing year during this same time period, b) a second consecutive year of near
record large world coarse grain production which lessened the demand for wheat feed use, and c) an uptrend
in the value of the U.S. dollar against other major World currencies – making the effective price of U.S. wheat
higher for World import buyers.
However, since those wheat futures market lows in the last half of September‐early October ($5.54 on
10/1/2014), and again in early November ($5.70 ¼ on 11/10/2014), wheat futures markets have trended
higher. Reasons for this price uptrend include a) the onset and intensification of the most recent El Nino
weather pattern – which has caused dry growing conditions and reduced wheat production prospects in
Australia – a major World wheat exporter, and 2) emerging geopolitical, logistical and financial problems in the
Black Sea Region countries – posing a threat to their ability to supply wheat exports to World wheat markets.
On Wednesday, December 17th CME Hard Red Winter Wheat futures traded as high as $6.85 per bushel – up to
the highest level since July 8th of this year.
MARCH 2015 Hard Red Winter Wheat futures prices responded to the release of the December 10th USDA
reports by trading lower for the day. MARCH 2015 HRW wheat efutures prices opened at $6.22 ¾ on
Wednesday, December 10th the high for the day. The USDA reports were released at midday (i.e., 11 a.m.,
central time). Prices declined as low as $6.13 per bushel during the session before closing $0.04 ½ lower for
the day at $6.17 ½ /bu (Figure 1). Since then, MARCH 2015 HRW wheat efutures prices have trended higher,
rising from a low of $6.10 ½ on December 11th up to a high of $6.82 ¾ on December 17th before closing at
$6.81 ½ on that same day.
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Figure 1. MARCH 2015 & JULY 2015 CME Kansas Wheat Futures Price Charts (electronic trade) …
June 16, 2014
Grain Market Outlook
… Low
April 11th
$8.55 ½ High
May 6th $7.13 ¼ Close
June 13th
$7.02 Low
June 12th
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eventually impact 2014 World wheat markets if such conditions prolong and cause more pronounced crop
damage in coming weeks and months (such as occurred in both 2010 and 2012 in that region of the World).
“Next crop” or “new crop” JULY 2014 Kansas City wheat futures prices have responded to the release of
the May 9th USDA reports by trading generally lower. JULY 2014 CBOT Kansas City wheat efutures prices
opened at $7.28 on Wednesday, June 11th – the day of the release of the USDA reports at midday (i.e., 11 a.m.,
central time), and traded in a low‐high range of $7.03 ¼ to $7.31 ¼ during the session before closing $0.21 ¾
lower for the day at $7.04 ¼ /bu (Figure 1). On Thursday (June 12th) and Friday (June 13th), JULY 2014 Kansas
City wheat efutures prices traded in the range from a low of $7.02 on June 12th up to a high of $7.19 ½ on June
13th, before closing at $7.13 ¼ on Friday, June 13th – up $0.07 ¼ per bushel from the previous trading day.
Longer term, after trading at a low of $5.99 ¾ on January 29th, electronic July 2014 Kansas City Hard Red
Winter Wheat futures prices trending sharply higher up to $7.94 ¼ on March 20th, and up to $8.55 ½ on May
6th. Since then, July 2014 Kansas Wheat futures have trended lower, trading as low as $7.02 on Jto since.
Futures trended generally higher since the low, moving as high as $8.55 ½ on May 6th prior to the lower closes
following the May 9th USDA reports.
I‐C. U.S. Wheat Production
U.S. All Wheat Acreage, Yield & Production
Following the results of March 31st USDA NASS Prospective Plantings Report, the USDA projected that
2014 U.S. wheat total planted acreage would be 55.815 million acres (ma), down from 56.156 ma in 2013 and
55.666 ma in 2012, but up from 54.409 ma in 2011 (Table 1 and Figures 1‐2). In addition, in the WASDE
report the USDA projected 2014 U.S. wheat harvested acreage to be 45.9 ma, up from 45.157 ma in 2013,
down from 48.921 ma in 2012, and up from 45.705 ma in 2011. Updated estimates of U.S. wheat planted and
harvested acreage will be given in the USDA NASS Acreage report to be released on Monday, June 30, 2014.
The forecast 2014 proportion of harvested‐to‐planted acreage for all U.S. wheat is projected to be 82.2%,
up from 80.4% in 2013, but down from 87.9% in 2012 and 84.0% in 2011. The proportion of harvested‐to‐
planted U.S. wheat acreage in 2013 of 80.4% was the lowest since 81.6% in 2006 and 76.0% in 2002.
The projected 2014 U.S. average wheat yield of 42.3 bushels per acre (bu/ac) is down 0.4 bu/ac from May,
and down from the record high of 47.2 bu/ac in 2013, the previous records of 46.3 bu/ac in 2012 and 2010,
and 43.7 bu/ac in 2011 (Table 1 and Figure 3). The USDA projected 2014 U.S. wheat production to be 1.942
billion bushels (bb) – down 21 million bushels (mb) from May, and down from 2.130 bb in 2013, 2.266 bb in
2012, and 1.999 bb in 2011 (Table 1).
U.S. Winter Wheat Acreage, Yield, and Production for 2014
In its June 11th USDA Crop Production report the USDA projected U.S. winter wheat planted acreage to be
42.007 million acres (ma). These acres of winter wheat were seeded in the fall of 2013 with the intention of
harvesting them in the summer of 2014. This projection of 42.007 ma planted in the U.S. in 2014 is down from
43.090 ma in 2013, but greater than 41.224 ma in 2012, and 40.646 ma in 2011 (Figure 1). As indicated above,
updated estimates of U.S. winter wheat planted and harvested acreage will be given in the USDA NASS
Acreage report to be released on Monday, June 30, 2014. Winter wheat harvested acreage in the U.S. in 2014
is projected to be 32.572 ma – with an implicit 2014 U.S. winter wheat percent harvested‐to‐planted acres of
77.5%. This compares to U.S. winter wheat harvested acreage in 2013 of 32.402 ma – with an implicit 2013
U.S. winter wheat percent harvested‐to‐planted acres of 75.2%. The extreme drought conditions and freeze
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damage that have occurred this past fall and winter in the U.S. Great Plains states of Texas, Oklahoma, Kansas,
Colorado and Nebraska have been the primary factors leading to a lower than normal forecast of percent
harvested‐to‐planted acreage in 2014. Even with recent moisture received in parts of Kansas in recent weeks,
it is possible that the carryover impact of earlier wheat crop development problems in these states will cause
the proportion of 2014 harvested‐to‐planted acres to decline even further, possibly even below the 75.2%
level of 2013.
Winter wheat yields in 2014 in the U.S. are projected to be 42.4 bu/ac, down from 43.1 bu/ac in May,
down from the record high of 47.4 bu/ac in 2013. United States’ 2014 winter wheat production is forecast to
be 1.381 bb, down 0.021 bb (21.445 million bushels or ‘mb’) from May, and down from 1.534 bb in 2013. Of
the 2014 total U.S. All Wheat Production of 1.963 bb, 2014 U.S. hard red winter wheat production is forecast
to be 720 mb – down 26 mb from May – but down marginally from 744 mb in 2013. U.S. 2014 soft red winter
wheat production is forecast to be 454 mb, down from 565 mb a year ago – primarily due to lower U.S. soft
red winter wheat planted acreage in 2014. White winter wheat production in the U.S. in 2014 is projected to
be 206 mb, down 3 mb from May, and down from 225 mb in 2013.
U.S. Other Spring & Durum Wheat Acr …
September 6, 2018
Grain Market Outlook
… of 1,288.6
mmt in MY 2016/17.
World Exports: World corn exports of a 159.6 mmt are projected for “new crop” MY 2018/19, up 8.2%
from 147.5 mmt in “old crop” MY 2017/18, but down 0.2% from the record high of 160.0 mmt in MY 2016/17
(Figure 14).
World Ending Stocks (% Stocks/Use): Projected World corn ending stocks of 155.5 mmt (14.15% S/U)
in “new crop” MY 2018/19, are down from 193.3 mmt (18.1% S/U) in “old crop” MY 2017/18, down from the
record high 227.8 mmt (21.5% S/U) in MY 2016/17, and 210.1 mmt (21.2% S/U) in MY 2015/16 (Figure 14 &
15a). Projected Foreign (Non‐U.S.) corn ending stocks of 112.7 mmt (12.9% S/U) in “new crop” MY 2018/19, is
down from 141.8 mmt (16.95% S/U) in “old crop” MY 2017/18, and is down from 169.6 mmt (20.0% S/U) in MY
2016/17.
World‐Less‐China Ending Stocks (% Stocks/Use): An alternative view of the World corn supply‐
demand is presented if Chinese corn usage and ending stocks are isolated from the World market (Figures
15b‐c). “World‐Less‐China” corn ending stocks are projected to be 97.0 mmt (11.4% S/U) in “new crop” MY
2018/19, down from 113.8 mmt (13.8% S/U) in “old crop” MY 2017/18, and down from 127.1 mmt (15.3% S/U)
Page | 6
in MY 2016/17. These figures show that World stocks‐to‐use of corn less China’s direct influence are projected
to be 19% lower (i.e., 11.44% S/U for the “World‐Less‐China” versus 14.15% S/U for the “World” overall in
“new crop” MY 2018/19).
World versus China Ending Stocks: At the same time, these figures also show that Chinese ending
stocks of corn as proportion of the World total are declining – down from 52.7% in MY 2015/16, to 44.2% in
MY 2016/17, to 41.15% in “old crop” MY 2017/18, and now are projected to be 37.6% in “new crop” MY
2018/19 (Tables 2‐9). 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
eventually increase Chinese import demand for U.S. feedgrains if and when China has a severe short crop
situation and limited stockpiles available to meet domestic demand.
5. F …
May 28, 2010
Energy
and E-15 is projected to meet 61% and 75%,
respectively … adopted with no changes in other selected U.S. corn
supply-use … corn, oilseeds, and many other crops remain at historically …
May 28, 2010
Cash Prices & Marketing Strategies
and E-15 is projected to meet 61% and 75%,
respectively … adopted with no changes in other selected U.S. corn
supply-use … corn, oilseeds, and many other crops remain at historically …
January 1, 1998
Hedging & Options
trader would be required to meet initial
futures market margin … educational purposes. All other rights reserved. In each … insurance,
option costs can be added to other production and
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Price Risk Publications
trader would be required to meet initial
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option costs can be added to other production and
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April 29, 2019
Land Buying and Valuing
Valuation
Department) and others for their assistance with … court-ordered sales, or other transactions that may keep … market is insufficient to meet the supply available. Where …
December 16, 2020
Non‐business capital losses for that year
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