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2014 Risk and Profit Conference General Session Speakers
GENERAL SESSION I Grain Market Situation and Outlook
Dan O’Brien, Kansas State University Daniel O’Brien was raised on a grain and livestock farm in south central Nebraska. He received bachelors and masters degrees in Agricultural Economics from the University of Nebraska-Lincoln. After completing his Ph.D. at Iowa State, he worked as the Extension Agricultural Economist at the Northwest Research and Extension Center in Colby and was Northwest Area Extension Administrative Director starting in 2003 before returning to his Extension Agricultural Economist position in January 2007. His ongoing extension and applied research interests and efforts are in the areas of a) grain market supply-demand analysis, bioenergy impacts and risk management strategies, b) grain industry market structure, conduct and performance – focusing on grain handling and transportation issues, and c) economic analysis of irrigated and dryland cropping systems, and associated cropland leasing arrangements.
Abstract/Summary As of mid-August, large crop prospects for feedgrains and soybeans in the U.S. and South America have caused market prices to move sharply lower. There is a risk of Kansas cash corn and grain sorghum prices falling below $4.00/$3.50 per bushel, respectively, at fall harvest. Kansas soybean prices are also at risk to fall below $10.00 per bushel at harvest if production prospects are unchanged. In a similar vein, wheat prices in Kansas are forecast to be weak through the remaining summer and early fall months, falling to the $5.50-$6.25 range absent any changes in current market outlook or winter wheat seeding prospects. Given this pessimistic perspective for grain price prospects this fall, how should Kansas grain producer-sellers approach the marketing of their 2014 harvested crops, and what factors should they consider in making their planting decisions for 2015 crops? This presentation will focus partly on the current market situation and what we can anticipate for grain market trends through fall-early winter, 2014. But it will also focus on the factors that are most likely to be key determinants for market direction through late winter - early spring 2015, and how Kansas grain producers may be able to manage their marketings in light of them.
GRAIN MARKET OUTLOOKFOR 2014-2015
KSU RISK & PROFIT CONFERENCE
AUGUST 21, 2014
Daniel O’Brien, Extension Ag Economist
FEED GRAIN MARKET “DRIVERS” Forecasts of a large 2014 U.S. corn crop &
growing end stocks has caused Kansas cash & forward bids to fall $4.00 (low since 2010)
Unknowns: Final 2014 U.S. feedgrain acreage, freeze risk, actual yields & production
World Corn/Coarse Grain Supplies & Ending Stocks in “new crop” 2014/15
Q?: With our focus on large supplies, is 2014/15 Corn Use being underestimated?
CORN FUTURES - FEEDGRAIN CASH$GARDEN CITY, KS CASH & FORWARD CONTRACT 8/20/2014
$4.62
$3.60 $3.68 $3.81 $3.89 $3.95 $4.02$3.98
$3.75
$3.38 $3.27$3.47 $2.76
$2.00
$3.00
$4.00
$5.00
$6.00
Futures $s Corn Cash/FC Milo Cash/FC Cn-Ins 75%
$0.0433 /m$0.0413 /m
$0.0325 /m
$0.0267 /m
CBOT CORN FUTURESMONTHLY CONTINUOUS CHART: JUNE 2005 – JULY 2014 + 8/20/2014 CLOSE
$3.00
$4.00
$5.00
SEPT 2014Close = $3.59 ¾
8/20/2014
WHEAT MARKET “DRIVERS”Growing “new crop” 2014/15 World wheat
supplies & end stocks have caused cash prices to fall to $6.00 /bu (equal to lows since July 2010)
Unknowns: Final U.S. 2014 spring wheat crop, Key foreign crops, & world wheat feeding decline
Earlier forecasts of an “El Nino”-related drought for SE Asia-Australia seem not to be occurring (at least not as strong)
Question: Will Black Sea region geopolitical conflicts impact wheat export markets?
KS WHEAT FUTURES & CASH$HUTCHINSON, KS CASH & FORWARD CONTRACT $’S, 8/20/2014
$6.38 $6.19 $6.31 $6.40 $6.44 $6.34$5.98 $5.89
$5.90
$4.79 $4.764
5
6
7
8
9
Futures $s Wheat Cash/FC Wheat-Ins 75%
$0.04 /m $0.0292 /m$0.0213 /m
KCBT WHEAT FUTURESMONTHLY CONTINUOUS CHART: JUNE 2005 – JULY 2014 + 8/20/2014 CLOSE
≈$4.60
≈$6.00
SEPT 2014Close = $6.18 ¾
on 8/20/2014
SOYBEAN MARKET “DRIVERS”Tight “old crop” 2013/14 U.S. soybean S-D &
“strong” Chinese/World imports have kept cash prices ≥ $11.50 /bu (but lowest since January 2012)
Unknowns: Final U.S. 2014 planted acreage, freeze risk, actual yields & production
Forecasts of higher U.S. & South Americansoybean crops in “new crop” 2014/15 have caused harvest bids to fall ≤ $10.00 /bu
Question: How will South American soybean prospects develop in early 2015?
SOYBEAN FUTURES & CASH$LAWRENCE, KS CASH & FC PRICES, 8/20/2014
$11.36 $11.20$10.38 $10.46 $10.53 $10.59 $10.63
$12.28
$10.08
$8.52$7.79
$6.00
$9.00
$12.00
$15.00
Futures $s Soybean Cash/FC Soybean-Ins 75%
$0.0387 /m $0.0338 /m$0.03 /m
$0.0212 /m
CBOT SOYBEAN FUTURESWEEKLY CONTINUOUS CHART: JUNE 2005 – JULY 2014 + 8/20/2014 CLOSE
$12.50
$11.00
≈ $8.00
SEPT 2014Close = $11.19 ¾
on 8/20/2014
RMA PRICE DISCOVERY PERIODSFOR 2015 CROPS – PROJECTED PRICESA. 2015 Kansas HRW Wheat JULY 2015 Kansas Wheat Futures (Currently ≈ $6.38 /bu) Discovery Period: 8/15/2014– 9/15/2014 At 75% APH: Price coverage = 75% x $6.38 /bu ≈ $4.79
B. 2015 Kansas Corn DEC 2015 CBOT Corn Futures (Currently ≈ $4.08½ /bu) Discovery Period: 2/1/2015 – 2/28/2015 At 75% APH: Price coverage = 75% x $4.08½ /bu ≈ $3.07
C. 2015 Kansas Soybeans NOV 2015 CBOT Soybean Futures (Currently ≈ $10.38 /bu) Discovery Period: 2/1/2015 – 2/28/2015 At 75% APH: Price coverage = 75% x $10.38 /bu ≈ $7.79
CORN MARKET
2014 U.S. CORN SUPPLIESPlanted Area (Prevented planting?)
91.6 million acres vs 90.6 ma adjusted
Harvested Area 83.8 million ac. vs 82.8 ma adjusted
Yield (late crop development issues?) KSU: 164 (low) – 167.4 (likely) – 170 (high) USDAAugust = 167.4 bu/ac
Production (record?) KSU: 13.6 – 14.1 billion bu (USDAAug = 14.032 bb)
Total Supply (record?) KSU: 14.8 – 15.3 billion bu (USDAAug = 15.243 bb)
U.S. CORN ACREAGE
93.586.0 86.4 88.2 91.9 97.2 95.4 91.6 90.6 89.1
86.5 78.6 79.5 81.4 84.0 87.4 87.7 83.83982.92481.552
0
30
60
90
120
150
180
Mill
ion
Acr
es
Planted Acres Harvested Acres
USDAAugust in 2014 = 91.641 ma plantedKSUA (1.0 ma prevent planting) = 90.641 ma plantedKSUB (2.5 ma prevent planting) = 89.141 ma planted
U.S. CORN YIELDSUSDA 2014 = 167.4 BU/AC
164.7
153 147123
158.8
167.4 164 167.4 170
0
50
100
150
200
250
300
Yiel
d: B
u / A
cre
Yields KSU14 Low KSU14 Likely KSU14 High
2014 U.S. Yield Projections
U.S. CORN TOTAL SUPPLIES
1.09 0.962.11 1.97
1.304 1.624 1.673 1.7081.128 0.99 0.82 1.18
10.1 11.811.1 10.5 13.0 12.1 13.1 12.4 12.4
10.813.9 14.0
0.160
0
2
4
6
8
10
12
14
16
Bill
ion
Bus
hels
Beginning Stocks Production Imports
U.S. CORN USE IN 2014/15 (???) Ethanol – 5.075 bln bu. (1%)
“Blend wall” / RFS / Exports?
Other FSI – 1.385 bb (nc)
Exports – 1.725 bb (10%) vs 1.920 bb in MY 2013/14
Feed+Residual – 5.250 bb (1%) vs 5.175 bb in MY 2013/14
Total Use – 13.435 bb (1%) vs 13.600 bb in MY 2013/14 (record)
U.S. CORN USE - WITH EST. DDGS #S
02468
1012141618
Bill
ion
buC
orn
Equ
ival
ents
Livestock Feed Use
DDGS Feed
Other FSI
Ethanol
Exports
End StocksDDGS Exports
U.S. CORN SUPPLY-DEMANDUSDA WASDE REPORT: AUGUST 12, 2014
2012/13 2013/14 2014/15 Planted Ac. (mln.) 97.2 95.4 91.6 Harvested Ac (mln.) 87.4 87.7 83.8 Yield (bu./ac.) 123.4 158.8 167.4 Beginning Stocks 989 821 1,181 Imports 160 35 30 Production 10,780 13,925 15,243
Total Supplies 11,929 14,781 15,243
Ethanol 4,648 4,900 5,075 Other FSI 1,405 1,385 1,385 Exports 730 1,920 1,725 Feed & Residual 4,325 5,120 5,250
Total Use 11,108 13,600 13,435
End Stocks (%S/U) (7.4%) 821 (8.7%) 1,181 (13.5%) 1,808
U.S. Avg. Farm $ $6.89 $4.40-$4.50 $3.55-$4.25
U.S. CORN END STOCKS & %S/U
8211,181
1,808
25.0
5.0
20.0
9.0
20.0
13.9 13.1
7.4
8.7
13.5
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
0
4
8
12
16
20
24
28
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Mill
ion
Bus
hels
% E
nd S
tock
s-to
-Use
Marketing Year
KSU-U.S. CORN S-D FOR MY 2013/14 Likely Yield
1.0 mln ac. Likely Yield 2.5 mln ac.
High Yield 1.0 mln ac.
Planted Ac. (mln.) 90.6 97.4 90.6Harvested Ac (mln.) 82.9 81.6 82.9Yield (bu./ac.) 167.4 167.4 170Beginning Stocks 1,181 1,181 1,181Imports 30 30 30Production 13,881 13,652 14,098
Total Supplies 15,092 14,863 15,309
Ethanol 5,200 5,200 5,200Other Food, Seed, 1,400 1,400 1,400Exports 1,800 1,800 1,800Feed & Residual 5,300 5,300 5,300
Total Use 13,700 13,700 13,700End Stocks (%S/U) (10.1%) 1,392 (8.4%) 1,163 (11.7%) 1,609
U.S. Avg. Farm $ ≈ $4.25 ≈ $4.50 ≈ $4.00
U.S. SORGHUM SUPPLY-DEMANDUSDA WASDE REPORT: AUGUST 12, 2014
2012/13 2013/14 2014/15 Planted Ac. (mln.) 6.2 8.1 7.5 Harvested Ac (mln.) 5.0 6.5 6.4 Yield (bu./ac.) 49.8 59.6 67.1 Beginning Stocks 23 15 25 Imports 10 0 0 Production 247 389 429
Total Supplies 279 404 455
Food, Seed, Indust. 95 79 120 Exports 76 ***205 ***190 Feed & Residual 93 75 110
Total Use 264 379 420
End Stocks (%S/U) (5.7%) 15 (6.6%) 15 (8.3%) 35
U.S. Avg. Farm $ $6.33 $4.25 $3.30-$4.00
U.S. CORN %STOCKS/USE VS PRICE$
11.6 12.8 13.9 13.18.6 7.9 7.4 8.7 13.5 10.1
$3.04
$4.20 $4.06
$3.55
$5.18
$6.22$6.89
$4.45$3.90
KSU$4.25
$0
$2
$4
$6
$8
0
20
40
60
80
100
U.S
. Cor
n P
rice
$ / b
u
% E
nd S
tock
s-to
-Use
Marketing Year
U.S. CORN $ VS % STOCKS-TO-USEMY 1973/74 - 2014/15 AUGUST 12, 2014 USDA WASDE
2007/082008/09
2009/10
2010/11
$1
$2
$3
$4
$5
$6
$7
$8
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70
U.S
. Cor
n P
rice
U.S. Corn % Ending Stocks-to-Use
2012/13: 7.39% S/U, $6.89 /bu
2013/14: 8.68% S/U, $4.45 /bu2011/12
2014/15: $3.90 @ 13.45% S/U1995/96
WORLD COARSE GRAIN S-D
1,080 1,056
127 165 198
1,137 1,136
123 169
1,274
1,236
158207
1,2681,253
147
222
0
500
1,000
1,500
Production Usage Trade End Stocks
Mill
ion
Met
ric
Tons
2007/08 2008/09 2009/10
Large World Coarse Grain cropProspects (U.S. & Foreign)
World Coarse Grain Stks/Use• “Old Crop” 2013/14 = 16.8% • “New Crop” 2014/15 = 17.7%**
Highest since MY 2009/10 @ 17.8%
COARSE GRAIN EXPORTERS
2124
6 5
25
4
15
23
54
17
7 5
21
7
23 25
49
20
6 4
20
7
1923
0
10
20
30
40
50
60
Mill
ion
Met
ric
Tons
2012/13 2013/14 2014/15
COARSE GRAIN IMPORTERS
24
18
8
11
8 8
12
6
1
34
28
18
11 1210 10
16
11
1
34
29
19
11 1010 9
11 10
1
34
0
5
10
15
20
25
30
35
Mill
ion
Met
ric
Tons
2012/13 2013/14 2014/15
U.S. CORN $ VS WORLD %STKS/USEMY 1973/74 - 2014/15 AUGUST 12, 2014 USDA WASDE
2007/082008/09
2009/10
2010/11
$1
$2
$3
$4
$5
$6
$7
$8
10 15 20 25 30 35 40 45 50
U.S
. Cor
n P
rice
World Corn % Ending Stocks-to-Use
2012/13: 14.9% S/U & $6.89 /bu
2014/15: 17.7% S/U & $3.90 /bu
2006/07
2013/14: 16.8% S/U & $4.45 /bu
1973/74
13%-15% “Floor”
in World Corn% Stocks/Use
FEEDGRAIN MARKET PROSPECTS
Large 2014 Crops Expected DEC 2014 corn < $4.00 /bu
Final 2014 U.S. FeedgrainAcres, Yields, Production?
Planted Acres in 2015? Corn vs Soybeans vs other crops
2014/15 Market Prospects? A “storage-till-Spring” market –
holding grain & look for opportunities So. American Acres, Weather, & Crop
Prospects will move market till Spring
WHEAT MARKET
2014 U.S. WHEAT SUPPLIES
Planted Area - 56.5 mln ac.
Harvested Area – 46.2 mln ac. 81.9% Harvested-to-Planted Acres
Yield – 43.9 bu/ac vs. 47.2 bu/ac in 2013 (record high)
Production – 2.030 bln bu. vs. 2.130 bln bu. in 2014
Total Supply – 2.779 bln bu. vs. 3.016 bln bu. in 2014
U.S. WHEAT SEEDED ACREAGE
51.4 48.0 46.4 43.3 43.3 40.9 41.8 45.4 43.3 40.4 40.6 45.0 46.3 43.337.3 40.6 41.2 43.1 42.3 44.4
20.019.1
15.615.3 15.3 15.6 15.6
13.8 13.814.0 14.9
13.3 14.213.3
13.712.4 12.3 11.6 12.7
0
30
60
90
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Mill
ion
Acr
es
Winter Wheat (HRW, SRW, White) Other Spring Wheat (HRS, SW) Durum
Question: Will U.S. wheat acreage or in 2015? Up 5%? Up More?
?
U.S. WHEAT ACREAGE
63.2 59.253.6 54.4 55.7 56.2 56.5
55.7 49.9 47.6 45.7 48.9 45.2 46.2
84.8%
81.6%76.0%
85.4%83.8%87.6%
81.6%
84.4%88.1%84.3%
88.9%84.0%
87.9%
80.4% 81.9%
0%
20%
40%
60%
80%
100%
0
25
50
75
100
125
% H
arve
sted
/Pla
nted
Mill
ion
Acr
es
Planted Ac Harvested Ac % Harvested of Planted
2014 Planted: 318,000 acres – Harvested: 1,083,000 acres2014 Prevented Planted (FSA): 1,360,2190 acres
U.S. WHEAT YIELDSU.S. 2014 = 43.9 BU/AC
43.2
35.0
44.2
38.6
40.2
44.9 46.346.3
47.2
43.9
0
10
20
30
40
50
60
Yiel
d: B
u / A
cre
Record High
U.S. WHEAT TOTAL SUPPLIES
0.46 0.310.66
0.98 0.86 0.743 0.718 0.590
2.05 2.502.22
2.212.00 2.266 2.130 2.030
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Bill
ion
Bus
hels
Beginning Stocks Production Imports
2014/15 U.S. WHEAT USE
Food Use – 960 Million bu. (1%) Population & milling quality driven
Exports – 925 mln bu. (21%) Strong World competition
Feed+Residual – 155 mb (31%) Down sharply vs last 2 years
Total Use – 2.116 Billion bu. (13%) 300+ mln bu./year from last 2 yrs
U.S. WHEAT USE SINCE MY 2004/05
910 917 938 948 927 919 926 941 945 950 960
1,0661,003 9081,263
1,015 8791,289
1,051 1,012 1,176 925
181 157 117
16255
150
132162 384 223
155
0
500
1,000
1,500
2,000
2,500
3,000
Mill
ion
Bus
hels
Marketing Years
Feed +ResidualSeed
Exports
Food
U.S. WHEAT USE & END STOCKS
2,3152,017
2,418 2,231 2,414 2,426 2,116
306976 862 743 718 590 663
13.2%
48.4%
35.6% 33.3%29.7%
24.3%
31.3%
-20%
-10%
0%
10%
20%
30%
40%
50%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
% E
ndin
g St
ocks
-to-
Use
Mill
ion
Bus
hels
Marketing YearsTotal Use End Stocks % End Stocks/Use
U.S. WHEAT END STOCKS & %S/U
376
950
306
976
718
590
66016
40
23
27
13
29
48
30
24
32
0
500
1,000
1,500
2,000
2,500
05
101520253035404550
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Mill
ion
Bus
hels
% E
nd S
tock
s-to
-Use
Marketing Year
U.S. WHEAT SUPPLY-DEMAND AUG 12, 2014
2012/13 2013/14 2014/15 Planted Acres (mln.) 55.7 56.2 56.5 Harvested Ac. (mln.) 48.9 45.2 46.2 Yield (bu./ac.) 46.3 47.2 43.9 Beginning Stocks 743 718 590 Production 2,266 2,130 2,030 Imports 123 169 160
Total Supplies 3,131 3,016 2,779 Food & Seed 1,018 1,027 1,036 Exports 1,012 1,176 925 Feed & Residual 384 223 155
Total Use 2,414 2,426 2,116
End Stocks (%S/U) (29.7%) 718 (24.3%) 590 (31.3%) 663 U.S. Ave. Farm $ $7.77 $6.87 $5.80-$6.80
KSU-U.S. WHEAT S-D FOR MY 2013/14 USDA
August 2014 Lower
Exports Higher
Exports Planted Ac. (mln.) 56.5 56.5 56.5 Harvested Ac (mln.) 46.2 46.2 46.2 Yield (bu./ac.) 43.9 43.9 43.9 Beginning Stocks 590 590 590 Production 2,030 2,030 2,030 Imports 160 160 160
Total Supplies 2,779 2,779 2,779
Food & Seed Use 1,036 1,036 1,036 Exports**(Wildcard!) 925 ( 75*) 850 (125*) 1,150 Feed & Residual 155 155 155
Total Use 2,116 2,041 2,241 End Stocks (%S/U) (31.3%) 663 (36.2%) 738 (24.0%) 538 U.S. Avg. Farm $ $6.30 ≈$5.80 ≈$6.90
U.S. WHEAT % STX/USE VS PRICE$
2213
29
4836 33 30 24.3 31.3
$4.26
$6.48 $6.78
$4.87$5.70
$7.24 $7.77
$6.87 $6.30
$0
$2
$4
$6
$8
$10
0
25
50
75
100
125
150
U.S
. Pri
ce$
/ bu
% E
nd S
tock
s-to
-Use
Marketing Year
U.S. WHEAT $ VS U.S. STOCKS-TO-USEMY 1973/74 – “NEW CROP” MY 2014/15
2007/082008/09
2009/10
2010/11
USDA 2013/14$6.87 @
24.3% S/U
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$10.00
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95100
U.S
. Whe
at P
rice
U.S. Wheat % Ending Stocks-to-Use
2011/12
2012/13
USDA 2014/15$6.30 @
31.3% S/U
WORLD WHEAT SUPPLY-DEMAND
613 615
117 129
687651
137
202
696 688
158197
165184
716 705
152
193
0
300
600
900
Production Usage Trade End Stocks
Mill
ion
Met
ric
Tons
2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15
“New Crop” MY 2014/15 End Stocks = 193 mmtEnd Stks/Use = 27.4% (3 yr hi)
Vs. “Benchmark” MY 2007/08 End Stocks = 129 mmtEnd Stks/Use = 21.0%
WORLD WHEAT SUPPLY-DEMAND
477 477 489 482 497 501 508 512 516 530 538 542 550 565 570
109 110 114 100 108 115 111 102 121 121 116 146 137 132 135207 204 170 136 156 154 134 129
169 202 198 197 176 184 193
35% 35%
28%23%
26% 25%22% 21%
27%31% 30% 29%
26% 26% 27%
-30%
-20%
-10%
0%
10%
20%
30%
40%
0
200
400
600
800
1,000
1,200
1,400
% E
ndin
g St
ocks
-to-
Use
Mill
ion
met
ric
tons
(mm
t)
FSI Use Feed & Resid End Stocks %Stx/Use
WORLD WHEAT FEED USE
111 102 121 121 116146 137 132 135
17.9 16.619.1 18.6 17.7
21.3 19.9 19.0 19.1
21.7 21.0
26.6
31.0 30.328.7
25.6 26.3 27.4
0
5
10
15
20
25
30
35
0
100
200
300
400
500
600
700
% o
f Tot
al U
se
Feed
Use
(mm
t)
Feed & Resid. %Feed/Total Use World %Stocks/Use
Last 3 years (2011-2013) wheat feeding average = 137.6 mmt (19.8% total use)Previous 3 years (2008-2010) average = 119.3 mmt (18.4% total use)
WORLD WHEAT EXPORTS
28
23
19 19
4
11
6 7
19
32 32
23
20
2
19
8 10
2225 25
2119
7
23
69
24
0
15
30M
illio
n M
etri
c To
ns
MY 2012/13 MY 2013/14 MY 2014/15
WORLD WHEAT IMPORTS
22 2116
7 5 73
63
2521
16
74
8 7
69
23 2017
7 6 72
69
0
15
30
45
60
75
NorthAfrica
MiddleEast
SE Asia Brazil EU-28 FSU-12 China Others
Mill
ion
Met
ric
Tons
MY 2012/13 MY 2013/14 MY 2014/15
U.S. WHEAT $ VS WORLD %STKS/USEMY 1973/74 – “NEW CROP” 2014/15
2007/082008/09
2009/10
2010/11
“New Crop” MY 2014/15
$6.30 @ 27.4% S/U
$2
$3
$4
$5
$6
$7
$8
$9
$10
20 22 24 26 28 30 32 34 36 38 40
U.S
. Whe
at P
rice
World Wheat % Ending Stocks-to-Use
“Old Crop” MY 2013/14$6.87 @ 26.3% S/U
2011/12
MY 2012/13$7.77 @ 25.6% S/U
WHEAT MARKET PROSPECTS
U.S. Winter Wheat Ac. in 2015? Wheat revenue & insurance coverage? Prospects for successful crops in the U.S.
Central & Southern Plains?
Risk to World Wheat Exporters’ Crops in 2014/15 “Unanticipated” problems that may occur
in U.S., Australia, Argentina, EU, Black Sea Region, Canada, etc.
Risk of Geopolitical Conflicts Black Sea, Middle East….
SOYBEAN MARKETS
2014 U.S. SOYBEAN SUPPLIESPlanted Area – 84.8 mln ac.
Up from 76.5 mln ac in 2013
Harvested Area – 84.1 mln ac. Prevented plantings = 1.0-2.5 mln ac
Yield – 45.4 bu/ac KSU: 42 (low) – 45.4 (likely) – 46 bu/ac (high)
Production – 3.816 bln bu. (record!) Questions till harvest, acres likely
Total Supply – 3.971 bln bu. (record!) Up from 3.508 bln bu in MY 2013/14
U.S. SOYBEAN ACREAGE
75.564.7
75.7 77.5 77.4 75.0 77.2 76.584.8 83.8 82.3
74.664.1
74.7 76.4 76.6 73.8 76.2 75.9 84.1 83.1 81.6
98.8% 99.1% 98.6% 98.6% 99.0% 98.3% 98.7% 99.1% 99.1% 99.1% 99.1%
0%
20%
40%
60%
80%
100%
0
25
50
75
100
125
150
% H
vst/P
lntd
Ac
Mill
ion
Acr
es
Planted Acres Harvested Acres %Harvested/Planted
KSU
U.S. SOYBEAN YIELDSUSDA 2014: 45.4 BU/AC
3834
42 43 43 42 4044 44 42 40 43 45.4 42 45.4 46
0
20
40
60
80
Yiel
d: B
u / A
cre
Yield KSU14 Low KSU14 Likely KSU14 High
2014 KSUUSDAAugust
U.S. SOYBEAN TOTAL SUPPLIES
0.57 0.210.14 0.15 0.22 0.17 0.141 0.140
2.682.97 3.36 3.33 3.09 3.03 3.289 3.816
0.010 0.0130.015 0.014 0.016 0.041
0.0800.015
0.0
1.0
2.0
3.0
4.0
5.0
Bill
ion
Bus
hels
Beginning Stocks Production Imports
U.S. SOYBEAN USE IN MY 2014/15 Crush – 1.755 bln bu. (2%)
Soybean Oil & Meal demand
Exports – 1.675 bln bu. (2%) Competition with South America
Seed & Residual – 111 mln bu.
Total Use – 3.541 bln bu. (5%) Total Use with Supply & $s
U.S. SOYBEAN USE & END STOCKS
1,808 1,8031,662
1,7521,648 1,703 1,689 1,725 1,755
1,116 1,159 1,2791,499 1,501 1,365 1,317
1,640 1,675
574205 138 151 215 169 141 140 430
0
500
1,000
1,500
2,000
Mill
ion
Bus
hels
Marketing Years
Seed+Residual Crush Exports End Stocks
U.S. SOYBEAN SUPPLY-DEMANDUSDA WASDE REPORT – AUGUST 12, 2014
2012/13 2013/14 2014/15 Planted Acres (mln.) 77.2 76.5 84.8 Harvested Acres ( l )
76.2 75.9 84.1 Yield (bu./ac.) 39.8 43.3 45.4
Beginning Stocks 169 141 140 Imports 41 80 15
Production 3,034 3,289 3,816
Total Supplies 3,243 3,509 3,971
Crushings 1,689 1,725 1,755 Exports 1,317 1,640 1,675 Seed & Residual 97 5 111
Total Use 3,103 3,369 3,541
Ending Stocks (4.5%) 141 (4.2%) 140 (12.1%) 430 U.S. Avg. Farm $ $14.40 $13.00 $9.35-$11.35
U.S. SOYBEAN END STOCKS, %S/U
335132
348
112
574
138 215 140
430
14.0
5.4
13.4
4.5
18.6
4.5
6.6
4.2
12.1
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
02468
101214161820
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Mill
ion
Bus
hels
% E
nd S
tock
s-to
-Use
Marketing Year
KSU: U.S. SOYBEAN S/D: MY 2014/15 KSU: 1 ma
Planted Ac KSU: 1 ma Lower Yield
KSU: 2.5 ma Planted Ac
Planted Acres (mln.) 83.8 83.8 82.3 Harvested Ac. (mln.) 83.1 83.1 81.6 Yield (bu./ac.) 45.4 43.0 45.4
Beginning Stocks 140 140 140 Imports 15 15 15
Production 3,771 3,574 3,704
Total Supplies 3,926 3,729 3,859
Crushings 1,755 1,755 1,755 Exports *Wildcard* 1,675 1,675 1,675 Seed & Residual 111 111 111
Total Use 3,541 3,541 3,541
Ending Stocks (10.9%) 385 (5.3%) 188 (9.0%) 318 U.S. Avg. Farm $ $10.75 $12.55 $11.30
U.S. SOYBEAN %STX/USE VS PRICE$
18.76.7 4.5 4.5 6.6 5.4 4.5 4.2
12.1 10.9 9.0
$6.43
$10.10 $9.97 $9.59
$11.30$12.50
$14.40$13.00
$10.35$10.75
$11.30
$0
$3
$6
$9
$12
$15
0
12
24
36
48
60
U.S
. Pri
ce$
/ bu
% E
nd S
tock
s-to
-Use
Marketing Year
U.S. SOYBEAN $ VS STX-TO-USEMY 1973/74 – 2014/15 AUGUST 12, 2014 USDA REPORTS
2007/082008/09
2009/10
MY 2012/13$14.40 @4.5% S/U
MY 2014/15$10.35 @
12.1% S/U
$3
$5
$7
$9
$11
$13
$15
$17
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30
U.S
. Soy
bean
Pri
ce
U.S. Soybean % Ending Stocks-to-Use
2010/11
2003/04
2011/12
MY 2013/14$13.00 @ 4.2% S/U
WORLD SOYBEAN SUPPLY-DEMAND
212 221
77
43
284270
113
67
305283
11386
0
100
200
300
Production Usage Exports End Stocks
Mill
ion
Met
ric
Tons
2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15
World Soybean Stx/Usein MY 2014/15 = 30.2%
Compared to:24.9% in MY 2013/1421.9% in MY 2012/13
19.5% in MY 2008/09**
SOYBEAN EXPORTER SALES
36
42
86
10
45 46
94
9
46 45
94
10
0
30
60
U.S. Brazil Argentina Paraguay ROW
Mill
ion
Met
ric
Tons
2012/13 2013/14 2014/15
SOYBEAN IMPORT PURCHASES
50
13
3 4
17
59
13
3 4
16
73
133 4
18
0
20
40
60
80
China EU-28 Japan Mexico ROW
Mill
ion
Met
ric
Tons
2009/10 2010/11 2011/12 2012/13 2013/14 2014/15
U.S. SOYBEAN$ VS WORLD %STX/USEMY 1973/74 – 2014/15 AUGUST 12, 2014
2007/082008/09
2009/10
2012/13: $14.40 @ 21.9% S/U
2013/14: $13.00
@ 24.9% S/U
$3
$5
$7
$9
$11
$13
$15
$17
5 10 15 20 25 30 35 40 45
U.S
. Soy
bean
Pri
ce
World Soybean % Ending Stocks-to-Use
2010/11
1976/77
2011/12 2014/15$10.35
@ 30.2% S/U
SOYBEAN MARKET PROSPECTS
South America Prospects 2015 crop acre choices in Fall ‘14 Prospects for large crop in 2015
driving prices in Winter-Spring
U.S. Soybean Acres in 2015? Breakeven: 2.3 Soy$/Corn$ Ratio
Soy Market Prospects-2014/15 A Large Supply year Low $’s China demand continuing (?!?!)
QUESTIONS?DANIEL O’BRIEN – EXTENSION AGRICULTURAL ECONOMIST
KANSAS STATE UNIVERSITY
KSUGRAINS ON TWITTER & FACEBOOK
WWW.AGMANAGER.INFO
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