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Grain Market Outlook for 2018
2017 Farming for the Future Workshop
Pratt, Kansas
DANIEL O’BRIEN
EXTENSION AGRICULTURAL ECONOMIST
Topics to be discussed…..
1) Grain Market Analysis & Outlook
• Corn & Grain Sorghum
• Wheat
• Soybeans & Cotton
2) Economic “forces at work” in the grain markets& where they are taking us…
U.S. Dollar Index & Cash Prices
Monthly Chart: January 1973 through December 12, 201788.8
Avg. Index #Early DEC 2017
Corn & Sorghum Markets
U.S. Corn & Sorghum Supply-Use
• Prospects “LARGE” 14.6 billion bu 2017 U.S. Corn Crop
• Large Supplies & Stocks are limiting Feedgrain Price$’s
• Low Price$’s are supporting Corn Use
o Livestock Feed 2017/18 = 5.575 bln bu (10 year high – vs 5.858 bb in 2007/08)
o Ethanol 2017/18 = 5.525 bln bu (Record high – vs 5.439 bb last year)
o Other FSI 2017/18 = 1.460 bln bu (Record high – vs 1.452 bb in 2016/17)
o Exports 2017/18 = 1.925 bln bu (vs 2.293 bb in ‘16/17 & 1.901 in ‘15/16)
U.S. Corn & Grain Sorghum Stocks…..
• Corn: “Large” Stocks & % Stx/Use
o End Stocks 2017/18 2.437 bln bu (2nd highest since 1987/88)
o % Stocks/Use 2017/18 16.8% S/U (Highest since 2005/06)
• Grain Sorghum: “Tighter” Stocks & % Stx/Use than Corn
o End Stocks 2017/18 21 Mln bu (15 - 55 mb since 2008/09)
o % Stocks/Use 2017/18 5.7% S/U (Tightest since 2014/15)
CME Corn FuturesWeekly Chart: October 2008 – November 2017 + 12/13/2017
$2.90 $3.18 ¼ $3.01$3.49
MAR 2018$3.49
12/13/2017
Corn Cash & Futures Prices ($/bu)Pratt, KS Local Elevators – December 13, 2017
$3.37 $3.49 $3.57 $3.66 $3.73 $3.81
$3.24 $3.41
$3.51
$3.29
$3.51
$2.10 $2.10
$0
$1
$2
$3
$4
$5
$6
Pric
e $
/bu
Futures Low $ High $ Mktg Loan-Pratt
$0.0410 /mo
$0.0411 /mo
Kansas Corn Seasonal Cash $ IndexMonthly: Long Term Average & MY 2017/18 Projection
Long Term
2017/18
Grain Sorghum Cash & Corn Futures $’sPratt, KS Local Elevators – December 13, 2017
$3.37 $3.49 $3.57 $3.66 $3.73 $3.81
$3.04
$3.19 $3.19 $3.30
$1.86 $1.86
$0
$1
$2
$3
$4
$5
$6
Pric
e $
/bu
Futures Low $ High $ Mktg Loan-Pratt
$0.0410 /mo
$0.0411 /mo
Crop
BUT still
Large Supply
Domestic Use&
Exports
% Stocks/Use&
Prices
U.S. Corn AcreageFor 2018???
UP ≈ 0.5 to 1 million acres
U.S. Corn YieldsUSDA 2017 USDA Forecast = 175.4 bu/ac
Final 2017???Q? Is >175 bu/ac possible?
U.S. Corn Yields: 2000-2017Accuracy of November 1st USDA Forecasts
(0.8)
0.2 1.7
(1.0)
0.1
(0.5) (2.1) (2.3) (0.5)
1.5
(1.7)
0.1 0.8
(2.3) (2.4) (0.9) (0.7)(20)
0
20
40
60
80
100
120
140
100
110
120
130
140
150
160
170
180
Fore
ca
st E
rro
r (Bu
/ac
)
U.S
. Co
rn Y
ield
–Bu
/Ac
re
Year
Difference (bu/ac) November 1 USDA Forecast Final Yield
U.S. Corn Production & Supplies
Final 2017???U.S. Corn Production of
14.3-14.8 bln bu
U.S. Corn Use – By Category
U.S. Corn Use – By Category
U.S. Corn Exports – Weekly thru November 30, 2017
U.S. Corn Ending Stocks & % Stx/Use
1,967
8211,232
1,731 1,737
2,295 2,437 2,557
17.0
7.4
9.2
12.6 12.7
15.716.8
17.7
0
1,000
2,000
3,000
4,000
5,000
6,000
0
5
10
15
20
Mill
ion
Bush
els
% E
nd
Sto
cks-
to-U
se
Marketing Year
U.S. Corn % Stocks/Use vs Price$
U.S. Corn % Stocks/Use vs Price$
MORE Flexible $ responses
LESS
Fle
xib
le $
resp
ons
es
Corn % Stx/Use has trended
larger for 5 years running –
into “low $ flexible”
Δ Price$ / Δ Supply areas
World Corn (Maize) Production Regions
World Corn Supply, Use & Stocks
World Crop
BUT still
Large Supply
China
EU
Brazil
FSU-12
So. Africa
Mexico
Argentina
Canada
U.S. Corn Price$ vs “World-China” % S/UMY 1973/74 through “New Crop” MY 2017/18
Note impact of China
Grain Stocks policies on
World grain markets!!
“Total” vs “Accessible” World Corn Stocks
U.S. Sorghum Acreage
U.S. Sorghum YieldsUSDA 2018 USDA Forecast = 67.3 bu/ac
U.S. Milo $ vs U.S. Feedgrain % Stocks/UseMY 1973/74 thru “New Crop” MY 2017/18
Strong Sorghum Exports
have increased Prices vs
other feedgrains
Wheat Markets
U.S. Wheat Market Overview• U.S. Wheat Production trending lower (to a 15 year low in 2017)
• Large U.S. & World Stocks continue to limit Wheat Price$’s **
• “Moderate” Exports limiting 2017/18 U.S. Wheat Use
o Exports 2017/18 = 975 mln bu (778 mb – 1.291 bb range since 2008/09)
o Food Use 2017/18 = 950 mln bu (Level Food Use since MY 2012/13)
o Feed Use+ 2017/18 = 120 mln bu (Down from 228-365 mb in 2012 - 2013)
o HRW Exports 2017/18 = 405 mln bu (Down from 455 mb in MY 2016/17)
U.S. Wheat Stocks…..
• All U.S. Wheat: “Large” Stocks
o End Stocks 2017/18 960 mln bu (1.181 bb last year)
o % Stocks/Use 2017/18 45.5% S/U (53.2% S/U last year)
• U.S. HRW Wheat: “Large” Carryovers
o End Stocks 2017/18 470 mln bu (589 mb last year)
o % Stocks/Use 2017/18 53.7% S/U (62.5% S/U last year)
U.S. Wheat Quality & Grade
• U.S. HRW Wheat 2017 11.4% protein, 60.5 lb test, 0.6% dockage
o Versus 5 yr avg: 11.2% protein, 60.3 lb test wt, 0.6% dockage
• U.S. SRW Wheat 2017 9.5% protein, 59.1 lb test, 0.4% dockage
o Versus 5 yr avg: 9.8% protein, 58.4 lb test wt, 0.6% dockage
• U.S. Soft White Wheat2017 9.6% protein, 60.9 lb test, 0.5% dockage
o Versus 5 yr avg: 10.2% protein, 60.6 lb test wt, 0.5% dockage
• U.S. HRS Spring Wheat 2017 14.6% protein, 61.6 lb test, 0.5% dockage
o Versus 14.2% protein, 61.3 lb test wt, 0.9% defects in 2016
World Wheat Market Prospects:Large Supplies A “Buyer’s Market”
• Record Supplies & Large Usage Forecast for 2017/18
o 5 consecutive record high World wheat crops !!!
• Varying 2017/18 Crop Prospects by Country
• Still a “buyer’s market” for World Wheat Trade….but….
o Uncertainty about U.S. & World Crops in 2018?
o BUT a TIGHT “World-Less-China” supply situation has emerged***
CME Kansas Hard Red Winter WheatMonthly Chart: October 2008 – November 2017 + 12/13/2017
$4.33 $4.59
$6.01
$3.67 $4.16
MARCH 2018$4.16 ¼ 12/13/2017
Wheat Cash & HRW Wheat FuturesPratt, KS Local Elevators – December 13, 2017
$3.99 $4.16 $4.29 $4.45 $4.60 $4.82
$3.41 $3.41 $3.70$4.32
$2.94 $2.94
$0$1$2$3$4$5$6$7$8$9
Pric
e $
/bu
Futures High Price$ Mktg Loan-Pratt
$0.0575 /mo $0.0650 /mo $0.08 /mo $0.0713 /mo
Anticipated VSR Affect!!!
$0.0742 /mo
Crop
BUT still
Large Supply
Less Domestic Use&
Exports
Stocks/Use&
Prices
U.S. Wheat Seeded Acreage
2018 U.S. Winter Wheat Acres 4%+- Low Profits
- Disease pressure
- Wet / Delayed Planting @ Fall Seeding
U.S. Wheat Acreage
U.S. Wheat YieldsRecord High
U.S. Wheat Production & Supplies
U.S. Wheat Use by Category
U.S. All Wheat Exports – Weekly thru November 30, 2017
U.S. Hard Red Winter Wheat Exports - Weekly
U.S. Wheat Ending Stocks & % Stx/Use
876
456306
657976
590 752976
1,181960 838
37
22
13
29
49
24
37
5053
4540
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0
10
20
30
40
50
60M
illio
n Bu
she
ls
% E
nd
Sto
cks-
to-U
se
Marketing Year
U.S. Wheat Ending Stocks & Prices
U.S. Wheat Price vs U.S. Stocks-to-Use
World Wheat Production Regions
World Wheat Supply, Use & Stocks
U.S. Crops
BUT
Foreign Wheat
Russia, Turkey,
EU, India, China
BUT
Canada
Australia
Kazakhstan
Feed Use
Export Trade
Beg. Stocks
Production
Supplies
Ending Stocks
World Wheat Ending Stocks & % Stx/Use
209 203
136 128
204178 195
218241 255 268
3635
2321
31
26
2831
34 3536
0
100
200
300
400
500
600
700
0
10
20
30
40
Mill
ion
Me
tric
To
ns
% E
nd
ing
Sto
cks-
to-U
se
Marketing Year
U.S. Wheat Price ($) vs World % Stx/UseMY 1973/74 – “New Crop” MY 2017/18
Total World Wheat
% Skocks/Use
are “dismally” large!
U.S. Wheat $ vs Non-China % Stx/UseMY 1973/74 – “New Crop” MY 2017/18
Soybean & Cotton Markets
U.S. Soybean Market Prospects
• Strong Use & Exports - BUT Large Stocks, & Weaker Prices
U.S. soybean exports in 2017/18 to be historically large in spite of
large 2017 South American Production
Depends on continued growth in import demand from China, EU,
Southeast Asia, Mexico, & elsewhere
Questions & concerns have emerged in fall-winter 2017-2018 re:
2018 South American soybean crop risk (i.e., La Nina effects, etc.)
U.S. Soybean Supply-Use• 2017 U.S. Soybean Production & Supplies @ record HIGHS
• Large Soybean Stocks in U.S. & So. America** limit Price$’s
• Low Price$’s support Use in “New Crop” MY 2017/18 ***
o Soy Crush 2017/18 = 1.940 bln bu (Record – vs 1.899 bb 1 year ago)
o Exports 2017/18 = 2.225 bln bu (Record – vs 2.174 bb 1 year ago)
o Total Use 2017/18 = 4.306 bln bu (Record – vs 4.214 bb 1 year ago)
o SBM Use 2017/18 = 46.5 mln tons (vs 44.95 in MY 2016/17 & 45.1 in MY 2015/16)
U.S. Soybean & Cotton Stocks…..
• Soybean: “Large” Stocks & % S/U
o End Stocks 2017/18 445 mln bu (High vs 574 mb in 2006/07)
o % Stocks/Use 2017/18 10.3% S/U (High vs 18.6% in 2006/07)
• Cotton: “Large” 2017 Crop & “Growing” Stocks
o Production 2017/18 21.4 mln bales (17.2 & 12.9 mb last 2 years)
o End Stocks 2017/18 5.8 mln bales (2.75 & 3.8 mb last 2 years)
o % Stocks/Use 2017/18 32.0% S/U** (15.1% & 30.2% last 2 years)
CME Soybean Futures Monthly Chart: October 2008 – November 2017 + 12/13/2017
$7.76 ¼ $8.53 $9.00 ¼
$9.79
JAN 2018$9.79 ¼ 12/13/2017
Soybean Cash & Futures Price$’sPratt, KS Local Elevators - December 13, 2017
$9.79 $9.91 $10.02 $10.11 $10.13 $10.05 $9.98
$8.98 $8.89 $9.08
$4.96 $4.96
$0
$3
$6
$9
$12
$15
$18
Pric
e $
/bu
Futures High Price$ Mktg Loan (Pratt)
$0.0556/mo
$0.0529 /mo
Kansas Soybean Seasonal Cash $ IndexMonthly Prices: Long Term Average + “New Crop” MY 2017/18
MY 2017/18
Record Crop
and
Large Supply
Record Use&
Exports
Stocks/Use&
Prices
U.S. Soybean Acreage
For 2018???U.S. Soybean Planted Acres
UP ≈ 0.5 to 1 million ac.
U.S. Soybean YieldsUSDA 2017 = 49.5 bu/ac; 2018 Forecast = 48.4
U.S. Soybean Yields: 2000-2017Accuracy of November 1st USDA Forecasts
0.1 0.2 0.5 0.1
(0.4)
0.4
(0.1)
0.4 0.4 0.7
(0.4)
0.7 0.7 1.0 0.0
(0.3) (0.4)
(10)
0
10
20
30
40
50
60
20
25
30
35
40
45
50
55
Fore
ca
st E
rro
r (Bu
)
U.S
. So
ybe
an
Yie
ld –
Bu/A
cre
Year
Difference (bu/ac) November 1 USDA Forecast Final Yield
U.S. Soybean Production & Supplies
U.S. Soybean Use & End Stocks
U.S. Soybean Exports - Weekly
U.S. Soybean Ending Stocks & % Stx/Use
138 169 141 92191 197
301445 395
4.5%5.4%
4.5%
2.6%
5.0% 5.0%
7.1%
10.3%
8.9%
0
500
1,000
1,500
2,000
2,500
3,000
0%
4%
8%
12%
Mill
ion
Bu.
% E
nd
Sto
cks-
to-U
se
Marketing Year
U.S. Soybean % Stocks/Use vs Price$
U.S. Soybean $ vs U.S. Stx-to-UseMY 1973/74 through “Next Crop” MY 2017/18
World Soybean Supply, Use & Stocks
World Crop
U.S. Crop
Foreign Crop
Canada
China
Brazil**
Argentina**
Paraguay
India
Beg. Stocks
Production
Total Supply
Crush
Total Use
Trade
End Stocks
U.S. Soybean$ vs World %Stx/Use MY 1973/74 through “New Crop” MY 2017/18
Soybean Importer Purchases
52
126 3
16
97
149
4
26
0
50
100
China EU-28 SE Asia Mexico Rest of World
Mil
lio
n M
etri
c T
on
s
2010/11 2011/12 2012/13 2013/142014/15 2015/16 2016/17 2017/18
+13% /yr
+1.2% /yr+7.9% /yr +3.0% /yr
+9.7% /yr
China 41.2 mmt in 7 years
9.2 mmtin 7 years
Questions?
Daniel O’Brien – Extension Ag Economist
Blog: www.ksugrains.wordpress.com
KSUGrains on Twitter & Facebook
www.AgManager.info
