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October 1, 2011
Connecting Livestock Producers with Recent Economic Research (CLPER)
Canadian-U.S. Fed Cattle Transactions Basis.” Journal
of Agricultural …
April 1, 2010
Connecting Livestock Producers with Recent Economic Research (CLPER)
are well served to utilize basis adjusted forecasts implied …
May 4, 2020
Grain Market Outlook
bu. 75% APH Selection
(Basis $0.10 /bu under, Net cash … bu. 70% APH Selection
(Basis $0.10 /bu under, Net cash … bu. 75% APH Selection
(Basis $0.10 /bu under, Net cash …
January 11, 2021
Feeder Cattle Pricing
and vice versa, subject to basis risk. This practice reduces … price plus a prediction of basis 34 weeks into the future … the future. The predicted basis used here is the average …
December 26, 2018
Grain Market Outlook
Kazakhstan wheat exports are forecast to be 8.50 mmt in “current” MY 2018/19, down from 9.00 mmt
in “old crop” MY 2017/18, but up from 7.40 mmt in MY 2016/17.
World total usage of wheat is projected to be a record high of 745.25 mmt in “current” MY 2018/19 – up
marginally from 744.16 mmt in “old crop” MY 2017/18, and from 739.86 mmt in MY 2016/17 (Figure 13).
World wheat ending stocks are projected to be 268.10 mmt in “current” MY 2018/19 – the 2nd highest in
history following the record high of 279.94 mmt in “old crop” MY 2017/18, and 261.04 mmt in MY 2016/17
(Figure 13). Since MY 2007/08, World wheat ending stocks have been growing an average of 12.7 mmt per
marketing year (by 9.9% annually) from the 10‐year low of 179.02 mmt in MY 2012/13 – out‐pacing the annual
growth in total use of 11.9 mmt per year (+1.9% annually) (Figures 14a‐b).
The distorting effect perpetually large Chinese wheat ending stocks on World wheat ending stocks figures
of will be examined in the following section.
World wheat percent ending stocks‐to‐use (% S/U) are forecast to be 35.97% in “current” MY 2018/19 ‐
the 2nd highest on record (Figures 14a‐b). The record high is 37.62% in “old crop” MY 2017/18, up from
35.28% on MY 2016/17 (3rd highest on record). World wheat % stocks‐to‐use have consistently increased each
year from the recent low of 26.02% in MY 2012/13 to the present – increasing to 28.5% in MY 2013/14; 31.7%
in MY 2014/15; 34.2% in MY 2015/16, 35.3% in MY 2016/17; and to the record high of 37.6% S/U in “old crop”
MY 2017/18; before a projected moderate decline to 36.0% in “current” MY 2018/19.
C. “World‐Less‐China” Wheat Supply‐Demand – “11‐Year LOW Ending Stocks”
The broader “large crop‐over supply‐low price” situation in the World wheat market continues to
“obscure” or “mask” the effect of large but somewhat isolated Chinese wheat stocks on actually available
World wheat supplies and stocks.
From a “World‐Less‐China” perspective, forecast ending stocks‐to‐use of 20.01% for “current” MY 2018/19
would be the lowest level in 11 years – since 17.54% S/U in MY 2007/08 (Figures 15a‐b). “World‐Less‐China”
wheat ending stocks‐to‐use are forecast to be down sharply from 23.86% in “old crop” MY 2017/18, and from
the range of 22.05% to 27.48% during the MY 2008/09 – MY 2017/18 period.
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This “World‐Less‐China” perspective compares to the aggregated “World” perspective, in which forecast
World wheat ending stocks‐to‐use of 35.97% for “current” MY 2018/19 would be the 2nd highest level in 12
years – down only from the high of 37.62% S/U in “old crop” MY 2017/18 (Figures 14a‐b).
IF in coming months this “China supply isolation factor” eventually leads to noticeably tighter available
global supplies of purchasable wheat for buyers to gain possession of to meet their domestic needs, it could
yet have a significant positive impact on U.S. and World wheat market prices during the January‐May period of
“current” MY 2018/19. However, unless there is such a noticeable “tightening” in accessible, available wheat
supplies for buyers in the broader, with a predominant move AWAY FROM a large aggregate global supplies
perspective over TO tight available “World‐Less‐China” supplies situation, the market’s attention on this factor
may not positively affect the pro‐active purchasing of World wheat market participants. The information in
the following section may be an impetus for that change.
D. Wheat Futures & Kansas Cash Markets Since the December 11th
CME Kansas HRW Wheat Futures
Since the USDA’s December 11th Crop Production and World Agricultural Supply and Demand Estimates
(WASDE) report, CME MARCH 2019 Kansas Hard Red Winter (HRW) Wheat futures have traded first higher,
and then lower. On the day of the reports, MAR 2019 Kansas HRW wheat futures opened at $5.10 ¼ /bu, and
traded in the range of $5.01 ½ to $5.14 ½ before closing $0.05 ½ lower to $5.02 ½ . Since then, MAR 2019
HRW wheat futures first trended higher, trading as high as $5.24 ½ on December 14th, but then trended down
to a low of $4.97 ½ on December 24th , before closing at $5.02 ½ /bu on that same day (Figure 1).
Kansas Cash Wheat Prices & Basis
On December 21st – th …
March 25, 2019
Grain Market Outlook
Wheat Market Overview
Hard red winter wheat market prices in the U.S. have weakened considerably since late January
2019. Ongoing weakness in export shipments of U.S. wheat on the one hand, and declining prospects
for future U.S. wheat export sales on the other, have been the main causes along with general
bearishness across grain futures prices.
In Fall‐Winter 2018 prospects for short wheat crops among some major World wheat exporters
improved prospects for U.S. export sales in the later part of the “current” 2018/19 marketing year
(MY). “Current” MY 2018/19 began on 6/1/2018 and will finish on 5/31/2019. In particular, short
crops in the Black Sea Region countries of Russia, Ukraine and Kazakhstan, parts of the European
Union (France and other countries), and Australia were of concern.
However, a combination of #1) large carryover stocks in World markets from “old crop” MY
2017/18, #2) successful wheat crops in many other exporting and importing countries in the World,
and #3) the willingness of the Black Sea Region countries to sell down their domestic reserve stocks
to maintain their export market shares, worked together to limit any improvement in U.S. wheat
exports, and consequently limit any price gains from such an event.
The selling off of domestic inventories may have allowed Russia and other countries to have
maintained their export market shares in “current” MY 2018/19, but it makes them more vulnerable
to any repeated crop shortfalls that could occur in “new crop” MY 2019/20 – which will begin on June
1, 2019. The risk of tightening stocks is that these countries place themselves at risk to the effect of
market shortfalls in the future – because they have reduced their “buffer” stocks.
Going forward, it seems that wheat production risk in the major exporting countries – including
the United States, Russia, Ukraine, Australia, and the European Union – will be the key driving factor
in U.S. grain markets in year 2019. The possibility of rumored sizable increases in Chinese purchases
of U.S. wheat and other agricultural products IF a trade agreement between the U.S. and China is
completed could provide a surprise boost to U.S. wheat exports in coming months. But it seems
judicious to not count on that occurring until such a trade agreement is finalized.
B. Trends in CME Kansas Hard Red Winter Wheat Futures
Prices for the MAY 2019 Chicago Mercantile Exchange (CME) Kansas Hard Red Winter (HRW)
Wheat futures contract declined from a high of $5.23 per bushel (/bu) on January 25, 2019 to a low of
$4.18 ¼ /bu on March 12th, a drop of $1.04 ¼ or 20%. Since then, MAY 2019 CME HRW wheat has
moved higher to a close of $4.45 on March 22nd – down 15% from late‐Jan. 2019 highs (Figures 1‐2‐
3abc).
Page | 2
Currently CME MAY 2019 Kansas HRW Wheat futures are trading near historic lows since the
beginning of year 2007. Prices for MAY 2019 futures in the $4.40‐$4.50 range compare to longter
term lows of: a) $4.33 /bu for the MAY 2007 contract on 4/2/2007; b) $3.98 ¾ /bu for MAY 2017 on
4/21/2019; and $4.04 /bu for DEC 2017 on 11/28/2018. IF crop conditions and crop progress for the
2019 U.S. HRW Wheat crop are “good” in April 2019 it is possible that prices could AGAIN decline to
$4.00 /bu or less (Figures 1‐2).
It is notable that a record large net short (or sell) position is held by Management Money
(Speculator) traders in CME HRW wheat according to the most recent March 19th Commodity Futures
Trading Commission (CFTC) Commitment of Traders Report (Figures 3abc). Actual short (sell)
positions held by Management Money (Spec) traders are near record levels, combined with declining
long positions on these contracts. This report can be found at the following web address:
https://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm
Taken together, these data indicate a predominant “bearishness” among Management Money
(Spec) traders in the CME Kansas HRW Wheat futures contract. This consensus “bearish market
narrative” or “pessimistic group mindset” would have to be overcome or changed by some
combination of World and U.S. wheat supply‐demand factors in the wheat market for CME futures to
begin to move appreciably higher. The key issue to watch in these markets will likely be whether
there continue to be successful aggregate crop production prospects among major World wheat
producing, exporting, and importing countries throughout calendar year 2019.
C. Kansas HRW Wheat Cash Price & Basis Levels
In central Kansas …
February 14, 2018
Grain Marketing Presentations
Options Watch narrower Basis (Yes post sales*)
What … Maybe, but watch for better basis bids
• Buy Puts Maybe … Buy Calls No if wide Basis (+ rally protection)
Soybean …
July 5, 2022
Ag Law Issues
2008). But, for an accrual basis taxpayer, the taxpayer’s … matter involving an accrual basis
supermarket chain that had … rewards
were issued on the basis of purchases.
Loyalty reward …
September 8, 2023
Production Publications
corn yields on a per week basis. When the USDA estimate
came …
September 11, 2023
Production Publications
soybean yields on a per-week basis. When the USDA
estimate came …