ksu agriculture today radio notes - agmanager.info · weekly export shipments week of 10/6/2016 for...
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KSU Agriculture Today Radio Notes
Daniel O’Brien, Extension Agricultural Economist, Kansas State University
For Radio Program to be aired 10:00-10:15 a.m., Friday, October 14, 2016
I. Grain Futures Closes, Changes & Carry on Thursday, October 13, 2016
Corn Futures Soybean Futures Ethanol Futures
Month Close Change Carry/mo Month Close Change Carry/mo Month Close Change
Dec 16 $3.49 ½ $0.1250 --- Nov 16 $ 9.56 ¼ $0.1075 --- Nov 16 $1.564 $0.029 ---
Mar 17 $3.59 ½ $0.1250 $0.03333 Jan 17 $ 9.64 ¾ $0.1125 $0.0425 Dec 16 $1.507 $0.031 No Carry
May 17 $3.66 $0.1225 $0.0325 Mar 17 $ 9.71 $0.1075 $0.03125 Jan 17 $1.471 $0.030 No Carry
July 17 $3.72 ½ $0.12 $0.0325 May 17 $ 9.78 $0.1075 $0.0350 Feb 17 $1.470 $0.030 No Carry
Sept 17 $3.79 ½ $0.1175 $0.0350 July 17 $ 9.84 ¼ $0.1125 $0.03125 Mar 17 $1.486 $0.030 $0.014
Dec 17 $3.88 ¼ $0.11 $0.02917 Aug 17 $ 9.83 ¾ $0.1150 No Carry Apr 17 $1.511 $0.030 $0.025
Mar 18 $3.97 ½ $0.1050 $0.03803 Sept 17 $ 9.72 ½ $0.1050 No Carry May 17 $1.518 $0.030 $0.007
May 18 $4.02 ¾ $0.10 $0.02625 Nov 17 $ 9.64 ¼ $0.0925 No Carry Jun 17 $1.518 $0.0025 No Carry
Kansas HRW Wheat Futures Chicago Wheat Futures MGEX Spring Wheat FuturesMonth Close Change Carry/mo Month Close Change Carry/mo Month Close Change Carry/mo
Dec 16 $4.14 $0.1550 --- Dec 16 $ 4.16 $0.1925 --- Dec 16 $5.32 $0.1025 ---
Mar 17 $4.31 $0.1575 $0.05667 Mar 17 $ 4.34 ¾ $0.1825 $0.0625 Mar 17 $5.31 ¾ $0.0925 $0.01083
May 17 $4.41 ¾ $0.16 $0.05375 May 17 $ 4.48 ½ $0.1850 $0.06875 May 17 $5.36 ½ $0.09 $0.0250
July 17 $4.52 ½ $0.1625 $0.05375 July 17 $ 4.60 ¼ $0.1825 $0.05875 July 17 $5.43 $0.0825 $0.03125
Sept 17 $4.67 $0.1575 $0.0725 Sept 17 $ 4.74 ½ $0.1725 $0.07125 Sept 17 $5.50 $0.07 $0.04
Dec 17 $4.89 $0.1575 $0.07333 Dec 17 $ 4.93 $0.17 $0.06167 Dec 17 $5.61 $0.0675 $0.03917
Mar 18 $5.03 ¾ $0.1575 $0.04917 Mar 18 $ 5.07 ¾ $0.1675 $0.04917 Mar 18 $5.70 $0.06 $0.0425
May 18 $5.13 $0.1525 $0.04625 May 18 $ 5.13 ¼ $0.165 $0.0275 May 18
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II. U.S. & World Drought Monitor, Moisture Accumulations & Forecasts (Weekly Weather and Crop Bulletin)
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III. Corn Market Information Weekly DEC 2016 Corn Futures
Key Corn & Grain Sorghum Supply‐Demand Factors: U.S. Corn Exports: “Neutral‐negative” short term MY 2016/17 U.S.
corn export shipments with “positive” long term outlook Weekly Export Shipments week of 10/6/2016 for MY 2016/17 = 44.55 mb
vs 47.5 mb/wk needed to meet USDA’s October 12th projn of 2.225 bb exports
Total shipments through 10/6/2016 for MY 2016/17 = 271.9 mb i.e., 12.2% of 2.225 bb USDA projn with 9.9% of MY complete (5.14/52 weeks)
Total sales (9/29/2016) for “new crop” MY 2016/17 = 811.1 mb i.e., 37.3% of 2.175 bb USDA projn w. 8.0% of MY complete (4.14/52 weeks)
U.S. Grain Sorghum Exports: “Negative” short term MY 2016/17 Export Shipments & “neutral‐positive” long term
Weekly Export Shipments wk of 10/6/2016 for MY 2016/17 = 3.5 mb vs 4.95 mb/wk needed to meet USDA’s October 12th projn of 250 mb exports
Total shipments through 10/6/2016 for MY 2016/17 = 18.1 mb i.e., 7.2% of 250 mb USDA projn with 9.9% of MY complete (5.14/52 weeks)
Total new sales (9/22/2016) for “new crop” MY 2016/17 = 39.2 mb i.e., 15.7% of 250 mb USDA projn w. 8.0% of MY complete (4.14/52 weeks)
World & U.S. Corn Supply‐Demand Fundamentals Mktg Yr World % S/U U.S. % S/U U.S. $/bu 2007/08 16.5% S/U 12.8% S/U $4.20 /bu 2008/09 18.3% S/U 13.9% S/U $4.06 /bu 2009/10 17.2% S/U 13.1% S/U $3.55 /bu 2010/11 14.5% S/U 8.7% S/U $5.18 /bu 2011/12 14.8% S/U 7.9% S/U $6.22 /bu 2012/13 15.3% S/U 7.4% S/U $6.89 /bu 2013/14 18.6% S/U 9.2% S/U $4.46 /bu 2014/15USDA 21.3% S/U 12.6% S/U $3.70 /bu 2015/16USDA 21.9% S/U 12.7% S/U $3.61 /bu 13.601 bln bu crop 2016/17USDA 21.3% S/U 16.0% S/U $3.25 /bu 15.057 bln bu crop
U.S. Grain Sorghum Supply‐Demand Fundamentals 2014/15USDA 67.6 bu/acUS 4.0% S/U $4.03 /bu 433 mln bu crop
2015/16USDA 76.0 bu/acUS 6.4% S/U $3.30 /bu 597 mln bu crop 2016/17USDA 77.2 bu/acUS 9.6% S/U $3.10 /bu 467 mln bu crop
DEC 2016 Corn (Weekly): $3.49 ½ on Th., Oct. 13, 2016
Monthly Corn Futures Continuation
Chart
DEC 2016 Corn: $3.49 ½ on Th., Oct. 13, 2016
$3.50$3.46
$3.18$3.09
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IV. Wheat Market Outlook Weekly DEC 2016 HRW Futures
Monthly Kansas HRW Wheat eFutures
Key Wheat Supply‐Demand Factors:
U.S. All Wheat Exports: “Neutral‐negative” Short Term Export Shipments with “positive” long run export prospects in “new crop” MY 2016/17 (Started 6/1/2016)
– Weekly Export Shipments wk of 10/6/2016 for “new crop” MY 2016/17 = 15.9 mb vs 17.8 mb /wk needed to meet USDA’s September 12th projn of 975 mb exports
– Total shipments through 10/6/2016 for “new crop” MY 2016/17 = 388.5 mb i.e., 39.8% of 975 mb USDA projn with 36.5% of MY complete (19/52 weeks)
– Total shipments + new sales 9/29/2016 for “new crop” MY 2016/17 = 529.75 mb i.e., 55.8% of 950 mb USDA projn with 34.6% of MY complete (18/52 weeks)
“Negative” World & U.S. Wheat S/D Fundamentals Mktg Yr World % S/U U.S. % S/U U.S. $/bu
2007/08 20.8% S/U 13.2% S/U $6.48 /bu 1,263 mb exports
2008/09 26.5% S/U 28.7% S/U $6.78 /bu 1,015 mb exports
2009/10 31.2% S/U 48.6% S/U $4.87 /bu 879 mb exports
2010/11 30.4% S/U 36.4% S/U $5.70 /bu 1,291 mb exports
2011/12 28.6% S/U 33.4% S/U $7.24 /bu 1,051 mb exports
2012/13 25.7% S/U 29.9% S/U $7.77 /bu 1,012 mb exports
2013/14 28.1% S/U 24.2% S/U $6.87 /bu 1,176 mb exports
2014/15 30.6% S/U 37.2% S/U $5.99/bu 864 mb exports
2015/16USDA 33.8% S/U 50.0% S/U $4.89 /bu 775 mb exports
2016/17USDA 33.8% S/U 50.1% S/U $3.70 /bu 975 mb exports
DEC 2016 KC Wheat (Weekly) $4.14 on Th., Oct. 13, 2016
DEC 2016 KC Wheat$4.14 on Th., Oct. 13, 2016
$4.14$3.97
$4.71
Monthly KS HRW Wheat
Futures Continuation
Chart
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Non-Convergence of CME Kansas HRW Wheat Futures
for the DEC 2015, JULY 2016, and SEPT 2016 Contracts
Daniel O’Brien, Extension Agricultural Economist – Kansas State University
October 12, 2016
Summary
Since the delivery period for the SEPT 2015 Chicago Mercantile Exchange (CME) Kansas Hard Red Winter
(HRW) wheat futures contract, basis bids at designated delivery elevator locations during futures contract
delivery periods have been markedly wider than the futures-cash price differentials at delivery designated in the
CME Kansas HRW wheat futures contract specifications. This market condition seems to be due to a
combination of excessive supplies of wheat and to non-convergence of futures with cash wheat prices during
delivery periods at designated delivery elevators.
During the late-August delivery period for the SEPT 2016 CME Kansas HRW wheat futures contract, truck
bids for ordinary wheat in Kansas City, MO – where a number of the designated delivery elevators for the CME
Kansas HRW wheat futures contracts are located – were $0.55-$0.58 per bushel under futures. At other CME
Kansas HRW wheat futures contract delivery elevator locations in Wichita, Hutchinson, and Salina, Kansas,
wheat basis levels (i.e., the difference between futures and local cash prices) of $0.80-$0.85 per bushel under
futures were recorded. These basis levels are markedly wider than the location-based price differentials
formally designated to occur during delivery according to CME Kansas HRW wheat futures contract
specifications, i.e., $0.12 per bushel under at Salina/Abilene delivery elevators, $0.09 per bushel under at
Hutchinson, $0.06 under at Wichita, and no discount or “par” at Kansas City, MO truck bid locations.
While this lack of convergence at designated delivery elevator locations between cash and futures prices for
HRW wheat has been due partly to a combination of wheat market supply-demand factors, it seems that issues
related to the design of the futures contract itself are also contributing significantly. This is particularly true in
regards to grain delivered by short futures position holders on CME Kansas HRW wheat futures contracts.
Potential remedies to non-convergence in the CME Kansas HRW wheat futures contract include instituting
a VSR on this contract as well as the Chicago wheat futures contract, or to raise the fixed storage rate paid on
warehouse receipts in the CME Kansas HRW wheat futures contract high enough to motivate “load out” cash
sales instead of storage on the part of long position holders.
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VI. Soybean Market Outlook Weekly NOVEMBER 2016 Soybean Futures
Monthly Soybean eFutures
Weekly NOV 2016 Soybeans $9.56 ¼ on Th., Oct. 13, 2016
Key Soybean Supply‐Demand Issues:
U.S. Soybean Exports: “Bullish” Short Run Export Shipments in MY 2015/16 and “positive” Forward Sales o Export Shipments for week of 10/6/2016 for “new crop” MY 2016/17 = 66.2 mb
vs 39.15 mb/wk needed to meet USDA’s October 12th projn of 2.025 bb exports
o Total shipments through 10/6/2016 for “new crop” MY 2016/17 = 191.2 mb i.e., 9.4% of 2.025 bb USDA projn with 9.9% of MY complete (5.14/52 weeks)
o Total new sales (9/29/2016) for “new crop” MY 2016/17 = 1,039.6 mb i.e., 52.4% of 1.985 bb USDA projn with 8.0% of MY complete (4.14/52 weeks)
World & U.S. Soybean Supply‐Demand Fundamentals Mktg Yr World % S/U U.S. % S/U U.S. $/bu
2007/08 22.9% S/U 6.7% S/U $10.10 /bu 1.159 bb expts
2008/09 19.4% S/U 4.5% S/U $ 9.97 /bu 1.279 bb expts
2009/10 25.2% S/U 4.5% S/U $ 9.59 /bu 1.499 bb expts
2010/11 27.8% S/U 6.6% S/U $11.30 /bu 1.505 bb expts
2011/12 20.4% S/U 5.4% S/U $12.50 /bu 1.365 bb expts
2012/13 21.1% S/U 4.5% S/U $14.40 /bu 1.328 bb expts
2013/14 22.4% S/U 2.7% S/U $13.00 /bu 1.638 bb expts
2014/15 26.1% S/U 5.0% S/U $10.10 /bu 1.842 bb expts
2015/16USDA 23.9% S/U 5.0% S/U $8.95 /bu 1.936 bb expts 2016/17USDA 23.5% S/U 9.6% S/U $9.05 /bu 2.025 bb expts
NOV 2016 Soybeans $9.56 ¼ on Th., Oct. 13, 2016
$9.56
$8.44 ¼ $7.76 ¼
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