GENERAL SESSION I Grain Market Situation and Outlook Dan O ...€¦ · Australia, China, Russia,...

2015 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 Since January 2015 the prevailing concensus in feedgrain, oilseed and wheat markets has been that a "buyers market" exists, and that the current "large stocks - low price" situation in grain markets will continue through the remainder of 2015 into 2016 and possibly longer. Although over the next 12-18 months a number of possible threats to the size of U.S. and foreign corn, sorghum, soybean, sunflower, cotton, and wheat crops either now exist or have a tangible possibilitie of occurring that could change this current "large crop - low price" scenario, none of them has materially occurred to date to such a degree that grain markets have perceived the need to respond to them. In addition, the over-arching negative impact of financial and currency market trends (i.e., a high value for trade weighted U.S. dollars) and weak or uncertain demand for U.S. grain exports have also been negative factors affecting U.S. grain market price prospects. In this session we will first describe the current grain market situation, and then examine the key grain factors to watch in determining the path of grain markets from fall 2015 through 2016. The likelihood of alternative outcomes for corn, sorghum, wheat and soybean markets will be examined, with the probability of each scenario provided.

Grain Market Outlook in 2015-2016

DANIEL O’BRIENEXTENSION AGRICULTURAL ECONOMIST

Grain Market “Drivers”Key issues affecting grain markets over 1998-2015 Period

Soybean exports (to China) & ethanol use (U.S.) have “driven” grain Supply-Demand “Demand-pull” has caused higher prices, crop acreage

competition, & higher crop production

Transportation Logistics have Impacted Grain Exports U.S. exports have been limited by higher shipping costs to key

markets versus the Black Sea, Australia, & other competitors

Panama Canal improvements may help the U.S. to Asia mkts

More Grain Market “Drivers”Key issues

Wheat has increasingly substituted for Feedgrains in World Livestock Feed Markets since 2012

Issues of “Food” versus “Feed” quality wheat, & the degree of adoption by foreign livestock feeders

U.S. Grain Exports have been limited by U.S. Dollar More impact for wheat (several export competitors) than corn

& soybeans (competing mainly with South America & Ukraine)

U.S. Dollar Index (ICE Futures)Monthly Chart: June 2006 – July 2015 + 8/18/2015

96.2

SEP 201596.23 on 8/20/2015 am

Grain Market Price Behavior Economic principles shown in market patterns over time

Prices tend to return to breakeven cost over time

High grain prices & profits lead to economic responses that eventually cause lower prices & losses (& vice verse)

Evidence in Corn, Soybean & Wheat markets over 2005-2015

Market response to Supply Prospects & Prices Price = f(Supply): Varying $ response to “short” vs “abundant” Stocks/Use

Use = f(Prices): Usage affected conversely by “high” vs “low” prices

Wheat Markets

World Wheat Market Prospects:Large Supplies A “Buyer’s Market”

• Record World Supplies & Usage Forecast in 2015/16o 3 consecutive record large World wheat crops

• Varying 2015/16 Crop Prospects by Country Australia, China, Russia, Kazakhstan, Ukraine, Turkey, Iran, U.S.

Canada, E.U., India, Pakistan, Argentina

• World wheat exports likely to remain a “buyer’s market” unless or until World supplies & stocks declineo U.S. & World Crop Uncertainty in 2016? (El Nino…??)

CME Kansas HRW Wheat - DEC 2015Weekly Chart: May 2014 – August 20, 2015

DEC 2015$4.96

8/20/2015 am

World Wheat Supply & Use – August 12th WASDE

2014/15 Estimate

2015/16 Forecast

2015/16 vs2014/15

mmt mmt percent

Beginning Stocks 193 *Record* 210 +8.4%

Production 725 *Record* 727 +0.2%

Total Supply 919 *Record* 936 +1.9%

Food Use 574 *Record* 579 +0.7%

Feed Use 135 *3 yr high* 136 +1.2%

Total Use 709 *Record* 715 +0.8%

Export Trade 165 156 -5.4%

Ending Stocks 210 *Record* 222 +5.6%

% Stocks / Use 29.6% *6 yr high* 31.0% +1.4%

August 12, 2015

World Wheat Supply, Use & Stocks

613 615

116 129

687650

137203

696 689

158198166

725 704

165

210

727 714

156221

0

300

600

900

Production Usage Trade End Stocks

Mil

lio

n M

etri

c T

on

s

2007/08 2008/09 2009/10 2010/11 2011/122012/13 2013/14 2014/15 2015/16

2.3% /yr 2.0% /yr

4.3% /yr3 year uptrendin End Stocks

“New Crop” MY 2015/16 End Stocks = 221.5 mmtEnd Stks/Use = 31.0% (6 yr high)

Vs. “Benchmark” MY 2007/08 End Stocks = 128.8 mmtEnd Stks/Use = 21.0%

World Wheat Exporters

32 32

2319

2

19

8 10

2123

35

24

17

6

23

611

2025

31

18 19

6

23

6

1316

0

50M

illi

on

Met

ric

To

ns

MY 2013/14 MY 2014/15 MY 2015/16

World Wheat Importers

2521

16

74

7 7

71

2522 20

6 6 8

2

72

2519 19

7 7 72

69

0

20

40

60

80

NorthAfrica

MiddleEast

SE Asia Brazil EU-28 FSU-12 China Others

Mil

lio

n M

etri

c T

on

s

MY 2013/14 MY 2014/15 MY 2015/16

World Wheat Ending Stocks & % Stx/Use

177 183 164 156 165199 210 210 207 204

169136

156 153134 129

169203 199 198

177 193 210 221

32 33

30

29 29

3536 36 35 35

28

23

26 25

22 21

27

31 3029

26

2829.8 31.0

0

100

200

300

400

500

600

0

10

20

30

40

Mill

ion

Me

tric

To

ns

% E

nd

ing

Sto

cks-

to-U

se

Marketing Year

U.S. Wheat Market Prospects:Slow Exports, Growing Stocks, & Weak Prices

• U.S. wheat exports are likely to remain weak until the high U.S. dollar &/or record World stocks situation changeso U.S. & World Crop Uncertainty in 2016? (El Nino…??)

• U.S. Spring Wheat2015 Record yields, Large crop forecast

• U.S. HRW Wheat2015 12.3% protein, 58.9 lb test, 0.5% damageo Versus 13.3% protein, 60.7 lb test wt, 0.5% damage in 2014

• U.S. SRW Wheat2015 9.9% protein & 56.9 lb test, 3.4% damageo Versus 9.9% protein, 58.1 lb test wt, 0.9% damage in 2014

U.S. Wheat Production in 2015

Production = 2.136 bln bu2015

vs 2.026 bln bu2014 (record)

Yield = 44.1 bu/ac2015

vs 43.7 bu/ac2014

Harvested Acres = 48.4 million2015

vs 46.4 million2014

Planted Acres = 56.1 million2015

vs 56.8 million2014

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 46.8 43.336.6 40.6 40.9 43.2 42.4 40.6

20.019.1

15.615.3 15.3 15.6 15.6

13.8 13.814.0 14.9

13.3 14.113.2

13.512.3 12.3 11.6 13.0 13.5

0

20

40

60

80

Mil

lio

n A

cres

Winter Wheat Other Spring Wheat Durum

2015 U.S. Wheat acreage 1.3% vs 2014USDA Est. of All U.S. Wheat Acres in 2015 = 55.079 thsd ac. (743,000 acres)

U.S. Wheat Acreage

63.659.0

52.6 54.3 55.3 56.2 56.8 56.1

56.049.8 46.9 45.7 48.8 45.3 46.4 48.5

84.8%

81.6%76.0%

85.4% 83.8%87.6%

81.6%

84.4%88.1%

84.5%89.1%

84.2%88.2%

80.6% 81.6%

84.1%

0%

20%

40%

60%

80%

100%

0

25

50

75

100

125

% H

arv

est

ed

/Pla

nte

d

Mill

ion

Ac

res

Planted Acres Harvested Acres % Harvested of Planted

U.S. Wheat Yields

31.6

27.3

34.2

39.4

32.7

39.5

35.8

43.2

35

44.2

38.6

46.1

43.6

47.1

43.7

44.146.1

U.S. Wheat Yield Trend (1973-2015)Yield = 30.50 bu + 0.353 bu/yr

0

10

20

30

40

50

60

Yie

ld: B

u /

Ac

re

Year

U.S. Wheat Yields KSU 2016

Record High

U.S. Wheat Production & Supplies

2.1031.808 2.051

2.5122.209 2.163 1.993 2.252 2.135 2.026 2.136

0.5400.571

0.456

0.306 0.657 0.9760.863

0.743 0.7180.590

0.753

2.7252.501 2.620

2.945 2.9843.236

2.9683.118 3.022

2.7603.014

0

1

2

3

4

Billi

on

Bush

els

Production Beginning Stocks Imports Total Supply

U.S. Wheat Use by Category

919 926 941 951 955 958 967

8791,291

1,051 1,012 1,176854 925

142

85157 364

223

115 200

0

500

1,000

1,500

2,000

2,500

3,000

Mil

lio

n B

ush

els

Marketing Years

Feed +Residual

Seed

Exports

Food

All U.S. Wheat Supply-Use & Prices2011/12 2012/13 2013/14 2014/15 2015/16

Area Planted (mil. acres) 54.3 55.3 56.2 56.8 56.1

Yield (bu./acre) 43.6 46.2 47.1 43.7 44.1

Production (mil. bu.) 1,993 2,252 2,134 2,025 2,136

Beginning Stocks (mil. bu.) 863 743 718 590 753

Imports (mil. bu.) 112 123 169 144 125

Total Supply (mil. bu.) 2,968 3,118 3,022 2,760 3,014

Food Use (mil. bu.) 941 951 955 958 967

Seed Use (mil. bu.) 76 73 77 81 72

Exports (mil. bu.) 1,051 1,012 1,176 854 925

Feed & Residual (mil. bu.) 157 364 223 115 200

Total Use (mil. bu.) 2,226 2,400 2,431 2,008 2,164

Ending Stocks (%S/U) (mil. bu.) 33.4% 743 29.9% 718 24.3% 590 37.5% 753 39.3% 850

Season-Avg. Price ($/bu.) $7.24 $7.77 $6.87 $5.99 $5.10

U.S. HRW Wheat Supply-Use & Prices2011/12 2012/13 2013/14 2014/15 2015/16


Yield (bu./acre) 36.4 40.6 36.6 33.7 36.3

Production (mil. bu.) 782 998 747 738 856


Imports (mil. bu.) 0.5 18 19 10 10

Total Supply (mil. bu.) 1,170 1,333 1,109 985 1,160

Food Use (mil. bu.) 404 404 370 370 395

Seed Use (mil. bu.) 33 33 34 33 31

Exports (mil. bu.) 397 382 446 269 285


Total Use (mil. bu.) 853 990 872 691 796



U.S. Wheat Ending Stocks & % Stx/Use

571456

306

657

976863

743 718590

753 850

2722

13

29

49

3633

30

24

37.5 39.3

0

500

1,000

1,500

2,000

2,500

0

5

10

15

20

25

30

35

40

45

50M

illio

n Bu

she

ls

% E

nd

Sto

cks-

to-U

se

Marketing Year

U.S. Wheat Ending Stocks & Prices

27 2213

29

4936 33 30

2437.5 39.3 39.3 33.1

$3.42

$4.26

$6.48 $6.78

$4.87$5.70

$7.24 $7.77

$6.87$5.99

$5.10

KSU 70% prob

$5.50

KSU30% prob

$6.00

$0

$2

$4

$6

$8

$10

0

25

50

75

100

125

150

U.S

. Pric

e$

/ b

u

% E

nd S

toc

ks-t

o-U

se

Marketing Year

U.S. Wheat Price vs U.S. Stocks-to-Use

1985/86

1995/96

2007/08

2008/09

2009/10

2012/13MY 2013/14

24.3% S/U, $6.87 /bu

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

U.S. W

heat $ per bushel

U.S. Wheat % Ending Stocks‐to‐Use

USDA “New Crop” MY 2015/1639.3% S/U, $5.10 /bu

KSU “New Crop” MY 2015/1639.3% S/U, $5.50 /bu

“Old Crop” MY 2014/1537.5% S/U, $5.99 /bu

2011/12

2010/11

U.S. Wheat Price ($) vs World %Stx/UseMY 1973/74 – “New Crop” MY 2015/16

2007/08

2013/14$6.87 @ 28.0% S/U

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00

20 25 30 35 40

U.S

. Whe

at P

rice

World Wheat % Ending Stocks-to-Use

2011/12

2014/15$5.99 @

29.8% S/U

USDA 2015/16$5.10 @ 31.0% S/U

2012/13$7.77 @ 25.8% S/U

Corn & Sorghum Markets

World Corn & Sorghum Market Prospects:Large Supplies A “Buyer’s Market”

• Record World Supplies & Usage in 2015/16o 3 consecutive record large World coarse grain crops (like wheat)

• Varying 2015/16 Crop Prospects by Country Canada, No. Africa/Middle East, SE Asia, China, & Russia

U.S., Argentina*, Australia, Brazil*, E.U., Mexico, Ukraine

• Coarse grain exports likely to remain a “buyer’s market” until World stocks declineo U.S. & World Crop Uncertainty in 2016? (El Nino…??)

CME Corn Futures - DEC 2015Weekly Chart: May 2014 – August 20, 2015

DEC 2015$3.81

8/20/2015 am

World Corn Supply & Use – August 12th WASDE

2014/15 Estimate

2015/16 Forecast

2015/16 vs2014/15

mmt mmt percent

Beginning Stocks 175 *2nd highest* 197 +12.8%

Production *record* 1,006 986 +0.2%

Total Supply 1,181 *record* 1,183 +0.2%

Feed Use 597 *record* 606 +1.4%

Food, Seed, Industrial 387 *record* 382 -1.2%

Total Use 984 *record* 988 +0.4%

Export Trade *2nd highest* 129 123 -4.4%

Ending Stocks *3rd highest* 197 *4th highest* 195 -1.2%

% Stocks / Use 20.1% 19.8% +0.3%

World Corn Supply, Use & Stocks

796 775

99 130

825 819

97144

888 867

117 132131

1,006 973

129

197

986 986

123195

0

600

1,200


Mil

lio

n M

etri

c T

on

s

2007/08 2008/09 2009/10 2010/11 2011/122012/13 2013/14 2014/15 2015/16

3.0% /yr 3.4% /yr

3.2% /yrHigh last 3 yearsin Ending Stocks

“New Crop” MY 2015/16 End Stocks = 195.1 mmtEnd Stks/Use = 19.8% (2nd highest)


Coarse Grain Exporters

54

21

7 5

21

7

2326

56

20

74

27

8

2427

58

19

73

24

8

22 24

0

10

20

30

40

50

60

U.S. Argentina Australia Canada Brazil Russia Ukraine Other

Mil

lio

n M

etri

c T

on

s

2013/14 2014/15 2015/16

Coarse Grain Importers

31

18

11 1211 11

16

12

1

3433

17

11 1210 10 9

21

1

35

29

17

11 1210 9

15

21

1

35

0

10

20

30

40

NAfrica-M

East

Japan Mexico SaudiArabia

SouthKorea

SE Asia EU China Brazil Other

Mil

lio

n M

etri

c T

on

s

MY 2013/14 MY 2014/15 MY 2015/16

1,000

Total EU Corn Production 2015/2016 (Aug): 62.25 (million metric tons)

Corn Production (1,000 MT) for 2015/2016 (Aug)

39

August 12, 2015

U.S. Feedgrain Market Prospects:Strong domestic use, Exports, & Weak Prices

• Strong U.S. sorghum exports to China to continueo Depends on Chinese Ag Policy wrt managing corn reserves

• Low Corn Prices have supported U.S. domestic use o Livestock Feed2015/16 = 5.300 bln bu (tied for high since 2007/08)

o Corn Ethanol2015/16 = 5.250 bln bu (record, up 50 mb vs 2014/15)

o Other FSI2015/16 = 1.375 bln bu (up 20 mb, = average since 1998/99)

o Exports2015/16 = 1.850 bln bu (down vs 2.437 bb high in 2007/08)

o Uncertainty about 2015 U.S. corn crop through harvest

U.S. Corn Production in 2015


vs 14.216 bln bu2014 (record)

Yield = 168.8 bu/ac2015

vs 171.0 bu/ac2014 (record)


vs 83.1 million2014


vs 90.6 million2014

U.S. Corn Acreage

81.8 78.3

93.586.0 86.4 88.2 91.9 97.3 95.4 90.6 88.9

75.1 70.6

86.578.6 79.5 81.4 83.9 87.4 87.5 83.1 81.1

91.9% 90.2% 92.5% 91.4% 92.0% 92.4% 91.2% 89.8% 91.7% 91.8% 91.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

30

60

90

120

150%

Ha

rve

ste

d-t

o-P

lant

ed

Mill

ion

Ac

res

Planted Acres Harvested Acres % Harvested/Planted

U.S. Corn YieldsUSDA 2015 = 168.8 bu/ac; 2015 Trend1973-2014 = 162.3

138

160151

165

123

159

171 168.8

162.3

Yield Trend (1973-2014)Yield = 85.11 bu + 1.84 bu/yr

0255075

100125150175200225

Yie

ld: B

u /

Ac

re

1973-2015 U.S. Corn Yields KSU 2015 Trend

U.S. Corn Production & Supplies

11.112 10.53113.038 12.043 13.067 12.425 12.314

10.75513.829 14.216 13.686

2.1141.967

1.3041.624

1.6731.708 1.128

0.989

0.8211.232 1.77213.235

12.510

14.36213.681

14.749 14.16113.471

11.904

14.68615.472 15.531

0

3

6

9

12

15

18

Billi

on

Bush

els


U.S. Corn Use - With estimated DDGS #s

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Billi

on

bu

Co

rn E

qui

vale

nts

Marketing Year

Livestock Feed Use

DDGS Feed

Other FSI

Ethanol Product

Corn Exports

End StocksDDGS Exports

U.S. Corn Supply-Use & Prices2011/12 2012/13 2013/14 2014/15 2015/16


Yield (bu./acre) 147.2 123.1 158.1 171.0 168.8


Beginning Stocks (mil. bu.) 1,128 989 821 1,232 1,772

Imports (mil. bu.) 29 160 36 30 30


Ethanol (mil. bu.) 5,000 4,641 5,134 5,200 5,250

Food, Seed, & Other (mil. bu.) 1,428 1,397 1,369 1,355 1,375

Exports (mil. bu.) 1,543 730 1,917 1,850 1,850

Feed & Residual (mil. bu.) 4,557 4,315 5,034 5,300 5,300

Total Use (mil. bu.) 12,528 11,083 13,454 13,705 13,775

Ending Stocks (%S/U) (mil. bu.) 7.9% 989 7.4% 821 9.2% 1,232 12.9% 1,772 12.4% 1,713


U.S. Corn Ending Stocks & % Stx/Use

1,967

1,3041,624 1,673 1,708

1,128 989 8211,232

1,772 1,713

17.0

12.0 12.813.9 13.1

8.7 7.9 7.49.2

12.9 12.4

0

1,000

2,000

3,000

4,000

5,000

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$

11.6 12.8 13.9 13.18.7 7.9 7.4 9.2 12.9 12.4

$3.04

$4.20 $4.06$3.55

$5.18

$6.22$6.89

$4.46$3.70 $3.65

$0

$2

$4

$6

$8

0

20

40

60

80

100U

.S. C

orn

Pric

e$

/ b

u

% E

nd S

toc

ks-t

o-U

se

Marketing Year

U.S. Corn Price$ vs U.S. % Stocks-to-UseMY 1973/74-2015/16

2010/11

$1

$2

$3

$4

$5

$6

$7

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70

U.S

. Co

rn P

rice

U.S. Corn % Ending Stocks-to-Use

2012/13: 7.4% S/U, $6.89 /bu

2013/14: 9.2% S/U, $4.46 /bu2011/12

2014/15: 12.9% S/U @ $3.70 /bu

2015/16: 12.4% S/U, $3.65 /bu1995/96

U.S. Corn$ vs World Coarse Grain %S/UMY 1973/74 - 2015/16

2011/12

$1

$2

$3

$4

$5

$6

$7

$8

10 15 20 25 30 35 40 45 50

U.S

. Co

rn P

rice

World Coarse Grain % Ending Stocks-to-Use

2012/13: 14.8% S/U & $6.89 /bu

2014/15: 18.2% S/U & $3.70 /bu

2013/14: 17.1% S/U & $4.46 /bu

2015/16: 17.6% S/U & $3.50 /bu

1973/74

13%-15% “Floor”

in World Coarse Grain

% Stocks/Use

World Sorghum Supply & Use – 8/12 WASDE

2014/15 Estimate

2015/16 Forecast

2015/16 vs2014/15

mmt mmt percent

Beginning Stocks 6 4 -21.8%

Production 63 *high since 1996* 69 +9.3%

Total Supply 79 *high since 1987* 86 +8.7%

Feed Use 30 *high since 1996* 33 +10.9%

Food, Seed, Industrial 34 34 +0.5%

Total Use 64 *record* 67 +5.4%

Export Trade 11 *high since 1980* 14 +22.3%

Ending Stocks 4 5 +20.4%

% Stocks / Use 7.1% 8.1% +1.0%

World Sorghum Supply, Use & Stocks

57 57

7 5

58 59

6 5

61 59

8 6

63 64

114

69 67

14

5

0

50

100


Mil

lio

n M

etri

c T

on

s

2007/08 2008/09 2009/10 2010/11 2011/122012/13 2013/14 2014/15 2015/16

5.2% /yrsince 2011/12

4.4% /yrSince 2011/12

28.3% /yrSince 2011/12 “Sideways”

Ending Stocks

“New Crop” MY 2015/16 End Stocks = 5.4 mmtEnd Stks/Use = 8.1%

Vs. MY 2011/12 End Stocks = 4.65 mmtEnd Stks/Use = 8.2%

U.S. Sorghum Production in 2015

Production = 573 mln bu2015

vs 433 mln bu2014


vs 67.6 bu/ac2014


vs 6.4 million2014


vs 7.1 million2014

U.S. Sorghum Supply-Use & Prices2011/12 2012/13 2013/14 2014/15 2015/16


Yield (bu./acre) 54.0 49.6 59.6 67.6 74.6

Production (mil. bu.) 213 248 392 432 573


Imports (mil. bu.) 0.1 10 0.1 0.4 0

Total Supply (mil. bu.) 241 280 408 467 589

Alcohol-Industrial, Food (mil. bu.) 84 94 69 14 14

Seed (mil. bu.) 1 1 1 1 1

Exports (mil. bu.) 63 76 211 350 430


Total Use (mil. bu.) 218 265 374 450 550



Soybean Markets

World Soybean Market Prospects:Large Supplies A “Buyer’s Market”

• Record World Supplies & Usage in 2015/16o 3 consecutive record large World soybean crops (like wheat & corn)

• Varying 2015/16 Crop Prospects by Country Brazil, Paraguay, & the European Union

U.S., Argentina, & China

• World soybean exports to remain a “buyer’s market” until World supplies & stocks declineo U.S. & World Crop Uncertainty in 2016? (El Nino…??)

CME Soybean Futures NOV 2015Weekly Chart: May 2014 – August 20, 2015

NOV2015$9.05

8/20 am

World Soybean Supply & Use – 8/12 WASDE

2014/15 Estimate

2015/16 Forecast

2015/16 vs2014/15

mmt mmt percent

Beginning Stocks 63 *record* 81 +28.4%

Production *2nd highest* 319 *record* 320 +0.2%

Total Supply *2nd highest* 382 *record* 401 +4.8%

Domestic Crush *2nd highest* 258 *record* 272 +5.1%

Food, Seed, Other Use *2nd highest* 39 *record* 38 -0.1%

Total Use *2nd highest* 297 *record* 310 +4.4%

Export Trade *2nd highest* 124 *record* 127 +2.3%

Ending Stocks *2nd highest* 81 *record* 87 +7.8%

% Stocks / Use *3rd high* 27.4% *2nd high* 28.0% +0.6%

World Soybean Supply, Use & Stocks

212 222

77

43

261238

9161

240259

92

54

319297

124

81

320 310

127

87

0

200

400


Mil

lio

n M

etri

c T

on

s

2007/08 2008/09 2009/10 2010/11 2011/122012/13 2013/14 2014/15 2015/16

5.8% /yr 4.4% /yr

7.8% /yr 4 year uptrendin Ending Stocks

“New Crop” MY 2015/16 End Stocks = 86.9 mmtEnd Stks/Use = 28.0% (2nd highest)


Soybean Exporter Sales

45 47

85

9

50 50

95

11

47

54.5

105

11

0

30

60

U.S. Brazil Argentina Paraguay Rest of World

Mil

lio

n M

etri

c T

on

s

2013/14 2014/15 2015/16

Soybean Importer Purchases

0

50

100

China EU-28 Japan Mexico Rest of World

Mil

lio

n M

etri

c T

on

s

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

+10.2% /yr

+1.6% /yr ̶ 0.5% /yr +3.2% /yr

+7.3% /yr

U.S. Soybean Market Prospects:Strong Use & Exports, Large Stocks, & Weak Prices

• U.S. soybean exports to remain historically strong in spite of high U.S. Dollaro Depends on China import demand & 2016 South American crops

• Low Prices have supported U.S. Soybean Use o Crush2015/16 = 1.860 bln bu (record, up 15 mb vs 2014/15)

o Exports2015/16 = 1.725 bln bu (2nd highest, 100 mb vs 2014/15)

o Uncertainty about the 2015 U.S. corn crop through harvest

U.S. Soybean Production in 2015


vs 3.969 bln bu2014


vs 47.8 bu/ac2014


vs 83.1 million2014


vs 83.7 million2014

U.S. Soybean Acreage

72.0 75.564.7

75.7 77.5 77.4 75.0 77.2 76.883.7 84.3

71.3 74.664.1

74.7 76.4 76.6 73.8 76.1 76.383.1 83.5

98.9% 98.8% 99.1% 98.6% 98.6% 99.0% 98.3% 98.6% 99.2% 99.2% 99.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

25

50

75

100

125%

Ha

rve

ste

d-t

o-P

lant

ed

Mill

ion

Ac

res

Planted Acres Harvested Acres % Harvested/Planted

U.S. Soybean YieldsUSDA 2015 = 46.9 bu/ac; 2015 Trend1973-2014 = 45.2

41 4042 42

44

4440

44

47.8 46.9

45.2

Yield Trend (1973-2014)Yield = 25.74 bu + 0.45 bu/yr

0

25

50

Yie

ld: B

u /

Ac

re

U.S. Soybean Yields 1973-2015 KSU 2015 Trend

U.S. Soybean Production & Supplies

3.068 3.1972.677 2.967

3.361 3.331 3.097 3.042 3.3583.969 3.916

0.2560.449

0.574 0.205

0.138 0.1510.215 0.169

0.141

0.092 0.240

3.3273.655

3.261 3.1853.514 3.496 3.328 3.252

3.571

4.091 4.210

0.0

1.0

2.0

3.0

4.0

5.0

Billi

on

Bush

els


U.S. Soybean Use & End Stocks

1,808 1,803 1,662 1,752 1,648 1,703 1,689 1,734 1,845 1,860

1,116 1,159 1,279 1,499 1,501 1,365 1,3171,638 1,825 1,725

574205 138

151 215 169 14192

240 470

0

1,000

2,000

3,000

4,000

5,000

Mil

lio

n B

ush

els

Marketing Years

Crush Exports Seed+Residual End Stocks

U.S. Soybean Supply-Use & Prices2011/12 2012/13 2013/14 2014/15 2015/16


Yield (bu./acre) 42.0 40.0 44.0 47.8 46.9



Imports (mil. bu.) 16 41 72 30 30


Domestic Crush (mil. bu.) 1,703 1,689 1,734 1,845 1,860

Exports (mil. bu.) 1,365 1,317 1,638 1,825 1,725

Seed, Feed, Residual (mil. bu.) 91 105 106 181 132

Total Use (mil. bu.) 3,159 3,111 3,478 3,851 3,717



U.S. Soybean Ending Stocks & % Stx/Use

449 574205 138 151 215 169 141 92 240

470

15.6

18.6

6.7

4.5 4.56.6

5.4 4.52.7

6.2

12.6

0

1,000

2,000

3,000

4,000

5,000

0

5

10

15

20M

illio

n Bu

she

ls

% E

nd

Sto

cks-

to-U

se

Marketing Year

U.S. Soybean % Stocks/Use vs Price$

15.6 18.6

6.7 4.5 4.5 6.6 5.4 4.5 2.6 6.212.6

$5.66$6.43

$10.10 $9.97 $9.59

$11.30$12.50

$14.40$13.00

$10.05$9.15

$0

$4

$8

$12

$16

0

20

40

60

80

100

U.S

. So

ybe

an

Pric

e$

/ b

u

% E

nd S

toc

ks-t

o-U

se

Marketing Year

U.S. Soybean $ vs U.S. Stx-to-UseMY 1973/74 – 2015/16

2007/08

2008/09

2009/10

2012/13$14.40 @4.5% S/U “Current”

2014/15$10.05 @ 6.2% 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

. So

ybe

an

Pric

e

U.S. Soybean % Ending Stocks-to-Use

2010/11

2003/04

2011/12

“New Crop” 2015/16$9.15 @ 12.6% S/U

2013/14$13.00 @ 2.65% S/U

U.S. Soybean$ vs World %Stx/Use MY 1973/74 – 2015/16

2007/08

2008/09

2009/10

2012/13: $14.40 @ 21.5% S/U

2013/14 $13.00 @ 22.8% S/U

$3

$5

$7

$9

$11

$13

$15

$17

5 10 15 20 25 30 35 40 45

U.S

. So

ybe

an

Pric

e

World Soybean % Ending Stocks-to-Use

2010/11

1976/77

2011/12

2014/15$10.05

@ 28.5% S/U

2015/16$9.15

@ 30.5% S/U

World Cotton Supply & Use – 8/12 WASDE

2014/15 Estimate

2015/16 Forecast

2015/16 vs2014/15

Million bales Million bales percent

Beginning Stocks 103 111 +7.4%

Production 119 109 -8.4%

Total Supply 222 220 -1.1%

Domestic Use 112 115 +2.5%

Export Trade 35.5 34.5 -2.9%

World Ending Stocks 111 105 -5.0%

China Ending Stocks (60%) 67 (62%) 65 -3.4%

Non-China End Stocks (40%) 44 (38%) 41 -7.4%

U.S. Cotton Supply-Use & Prices2011/12 2012/13 2013/14 2014/15 2015/16


Yield (Lbs./ hvstd. acre) 790 887 821 838 795

Production (thsd short tons) 15,573 17,314 12,909 16,319 13,082

Beginning Stocks (thsd 40# bales) 2,600 3,350 3,800 2,350 3,700

Imports (thsd 40# bales) 19 10 13 12 10

Total Supply (thsd 40# bales) 18,192 20,674 16,722 18,681 16,792

Domestic Use (thsd 40# bales) 3,128 3,848 3,842 3,781 3,692

Exports (thsd 40# bales) 11,714 13,026 10,530 11,200 10,000

Total Use (thsd 40# bales) 14,842 16,874 14,372 14,981 13,692

Ending Stocks (%S/U) (thsd 40# bales) 22.6% 3,350 22.5% 3,800 16.4% 2,350 24.7% 3,700 22.6% 3,100

Season-Avg. Price ($0.00/lb) $0.883 $0.720 $0.779 $0.605 $0.65

Questions?Daniel O’Brien – Extension Agricultural Economist

Kansas State university

[email protected]

KSUGrains on Twitter & Facebook

www.AgManager.info

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