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March 30, 2018
Grain Market Outlook
gularly occurring in South America and the United States. Strong demand for
soybean imports from China, Japan, and other Asian countries have supported World soybean prices.
Longer term, from MY 2007/08 to “old crop” MY 2017/18, this strong upward trend in World soybean
production (up 5.6% annually) has “out‐paced” increases in World soybean use (up 5.0% per year). As long as
growth in World soybean production continues to outpace World soybean usage, then World soybean stocks
will remain at high levels with prices continuing at their current “moderate” levels – being affected positively
be ongoing strength in 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.
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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
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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.
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May 28, 2015
Grain Market Outlook
31.6% S/U) in “new crop” MY 2015/16 are up from
85.5 mmt (29.3% S/U) in “current” MY 2014/15, and up from 63.4 mmt (23.1 % S/U) in MY 2014/15.
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I. U.S. Soybean Market Situation and Outlook
I‐A. May USDA Reports & “New Crop” MY 2015/16 Projections
On May 12th the USDA World Agricultural Outlook Board (WAOB) released its May 2015 World
Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World soybean supply‐
demand and price projections for the 2013/14, “current” 2014/15, as well as the “new crop” 2015/16
marketing years. The “new crop” 2015/16 U.S. corn marketing year will begin on September 1, 2015 and will
last through August 31, 2016.
In the May 12th WASDE report the USDA released projections for the “new crop” 2015/16 marketing year
for corn, grain sorghum, wheat, soybeans and other major crops. Projections …
December 17, 2014
Grain Market Outlook
prospects for a corn futures price rally above say $5.00 appear limited – unless
unexpected and substantial crop production problems occur in other major coarse grain produc … … dgrains, wheat, soybeans
and other major crops will be the USDA Annual Crop Production Summary report to be released on Monday,
January 12, 2015. On that same day USDA NASS will also release the January 2015 Crop Production,
December Grain Stocks, and Winter Wheat Seedings reports.
Also on December 10th the USDA World Agricultural Outlook Board (WAOB) released its December 2014
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 2013/14 marketing year ended on August 31, 2014, while the “current crop” 2014/15 U.S. corn marketing
year will last from September 1, 2014 through August 31, 2015.
I‐B. Corn Futures Trends for the October‐December 2014 Period
Since the beginning of October 2014 corn futures prices have been generally trending higher – indicating at
the low trading price of $3.18 ¼ for the DECEMBER 2014 corn futures contract were indeed the fall harvest
low (i.e., unless March 2015 CME corn futures prices drop sharply before the end of this month). The
DECEMBER 2014 corn futures contract “went off the board” at $3.96 ¼ on December 12, 2014, closing up
$0.78 per bushel or 24.3% from the October 1st contract low.
A time of seasonal market weakness typically has occurred during the months of January‐February in large
crop – low price years. Therefore it is still possible that prices may trend lower again sometime before spring,
2015. However, the $3.18 ¼ low attained by the CME DECEMBER 2015 corn contract on October 1st could be a
key point of support for CME MARCH 2015 corn futures prices should such a seasonal price decline occur in
coming months.
The “current crop” MARCH 2015 corn futures market contract initially responded in a neutral‐to‐negative
manner to the information in the December 10th USDA reports, but since then has trended higher. On the day
of the report – Wednesday, December 10th – Chicago Mercantile Exchange (CME) MARCH 2015 corn futures
prices opened at $3.94 ¼ per bushel, and traded in a range of $3.89 ¼ ‐ $3.98 ¼ during the session, before
settling at $3.93 ¾ – down $0.01 ½ for the day (Figure 1). The USDA report findings were publicly released at
approximately mid‐session, i.e., 12:00 noon eastern time (11:00 a.m. central) that day. Since then, MAR 2015
has traded from a low of $3.92 ¼ on Thursday, December 11th to a high of $4.12 ½ on Monday, December 15th
before closing at $4.08 ½ on that same day.
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The CME MARCH 2015 corn contract is now the “lead” corn futures contract, representing current grain
market price prospects through mid‐March 2015 – being the futures contract which local basis adjustments
are made off of for current cash corn and grain sorghum price bids are made off of in North American grain
markets.
The “next crop” DECEMBER 2015 corn futures market contract also initially responded in a neutral‐to‐
negative manner to the information in the December 10th USDA reports, but since then has trended higher.
On the day of the report CME DECEMBER 2015 corn futures prices opened at $4.22 ¼ per bushel, trading
within the range of $4.16 ¾ ‐ $4.25 ¾ during the session, before settling at $4.21 – down $0.02 ½ per bushel
for the day (Figure 1). Since then, DECEMBER 2015 corn futures prices have traded in a range from a low of
$4.19 ½ on Thursday, December 11th to a high of $4.36 ½ on Monday, December 15th, before closing at $4.32 ¾
on that same day.
The CME DECEMBER 2015 corn contract is now the “next crop” corn futures contract, representing grain
market price prospects for the mid‐October through mid‐December 2015 time period. DEC 2015 is the futures
contract which local basis adjustments are made off of for “fall harvest 2015” corn and grain sorghum forward
contract price bids are made off of in North American grain markets.
Figure 1. MARCH 2015 and DECEMBER 2015 CME Corn Futures Price Charts (electronic trade) …