Market Outlook with

Supply and Demand for Field Crops June 2017

Archie Flanders

Extension Economist

Northeast Research and Extension Center

Keiser, AR

For questions and comments related to this report contact Archie Flanders at 870-526-2199 ext. 108 or

aflanders@uaex.edu.

University of Arkansas, United States Department of Agriculture and County Governments Cooperating. The

Division of Agriculture offers its programs to all eligible persons regardless of race, color, national origin,

religion, gender, age, disability, marital or veteran status, or any other legally protected status, and is an

Affirmative Action/Equal Opportunity Employer.

Market Outlook with

Supply and Demand for Field Crops June 2017

Supply and Demand

The primary components of market conditions that determine prices for U.S. field crops are the

supply and demand situation for each crop and the value of the dollar. Supply and demand conditions

are indicated by stocks-to-use (S/U) ratios which are reported monthly (USDA, WASDE 2017). Stocks

are the ending quantity of a crop in the final month of the market year. Use is total distribution for the

market year and includes total domestic consumption and exports. Measures of S/U represent the

percentage of annual use that is available for the period between the end of the current crop market year

and the time when production from the subsequent market year enters the industry supply. Crop prices

attempt to ration supply with anticipated demand to achieve equilibrium stocks-to-use throughout the

market year.

Crops are traded in global markets with U.S. currency as the common medium of exchange. Fluctuations

in the value of the dollar relative to other currencies impacts U.S. crop prices. Increased value of the

dollar leads to increased expenditures in terms of currencies for international purchasers of U.S. crops.

This results in downward pressure for U.S. prices and could provide incentives for purchases from

foreign competitors producing crops.

Figure 1 presents the dollar index for the previous year with a comparison to the 2006-2015 annual

average (FSR 2017). Figures 2-16 present S/U measures with a comparison to the average for the 2006-

2016 period (USDA, ERS 2016; USDA, FAS 2017). Market years are September-August for corn and

soybeans, August-July for rice, cotton, and peanuts, and June-May for wheat. Current price forecasts are

compared to historical average prices that corrspond to historical S/U measures (USDA, NASS 2017).

Figure 1. Broad Dollar Index, Price Adjusted, Monthly May 2016 to

May 2017, Average 2006-2015 = 89.0

85

90

95

100

105

May

-16

Jun

-16

Jul-

16

Au

g-1

6

Sep

-16

Oct

-16

No

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6

Jan

-17

Feb

-17

Mar

-17

Ap

r-1

7

May

-17

Do

llar

Ind

ex

Month

The dollar index has been above the

2006-2015 annual average for the

previous 13 months. Increasing

strength of the dollar results in

downward pressure for U.S.

commodity prices. The index has

decreased for five consecutive months.

1

Figure 2. Corn U.S. Stocks-to-Use, 2006-2016 and Average Price =

$4.50/bu., Long-term Average S/U = 11.0, 2017 S/U and Price Forecasts

Figure 3. Corn ROW Stocks-to-Use, 2006-2016 and Average U.S. Price =

$4.50/bu., Long-term Average S/U = 19.0, 2017 S/U and Price Forecasts

Figure 4. Corn U.S. Stocks-to-Use, Year Ending August 2016, Projected

Year Ending August 2017, by September 2016 to August 2017 WASDE

Report, Long-term Average S/U = 11.0

7

8

9

10

11

12

13

14

15

16

17S/

U

Year

$4.50

$3.40

151617181920212223242526

S/U

Year

$3.40$4.50

10

11

12

13

14

15

16

17

Au

g-1

6

Sep

-16

Oct

-16

No

v-1

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Jan

-17

Feb

-17

Mar

-17

Ap

r-1

7

May

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Jun

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Jul-

17

Au

g-1

7

S/U

Month

U.S. corn S/U for 2017 is projected

greater than the long-term average which

results in downward pressure for price

that is below the corresponding average

of $4.50/bu. The current USDA price

forecast is $3.40/bu. for the crop

harvested in 2017. Historically, U.S.

corn price is significantly responsive to

S/U.

S/U in the rest of the world for 2017 is

projected approximately equal to the

long-term average. Ending 2017 S/U is

projected lower than 2016 S/U. The

current USDA price forecast is

$3.40/bu. for the crop harvested in 2017.

Without a surplus in foreign supply, a

significant weather event that negatively

impacts U.S. yield would lead to

upward pressure on U.S. price.

The June projection for August 2017

U.S. corn S/U is unchanged from the

May projection.

2

Figure 5. Soybean U.S. Stocks-to-Use, 2006-2016 and Average Price =

$10.50/bu., Long-term Average S/U = 5.0, 2017 S/U and Price Forecasts

Figure 6. Soybean ROW Stocks-to-Use, 2006-2016 and Average U.S. Price =

$10.50/bu., Long-term Average S/U = 27.0, 2017 S/U and Price Forecasts

Figure 7. Soybean U.S. Stocks-to-Use, Year Ending August 2016, Projected

Year Ending August 2017, by September 2016 to August 2017 WASDE

Report, Long-term Average S/U = 5.0

0

5

10

15

20S/

U

Year

$10.50

$9.30

20

25

30

35

S/U

Year

$10.50$9.30

3456789

10111213

Au

g-1

6

Sep

-16

Oct

-16

No

v-1

6

De

c-1

6

Jan

-17

Feb

-17

Mar

-17

Ap

r-1

7

May

-17

Jun

-17

Jul-

17

Au

g-1

7

S/U

Month

S/U in the rest of the world for 2017 is

less than the 2016 S/U and is

approximately equal to the long-term

average. The current USDA price

forecast of $9.30/bu. for the crop

harvested in 2017 is less than the long-

term average U.S. soybean price.

Without a surplus in foreign supply, a

significant weather event that

negatively impacts U.S. yield would

lead to upward pressure on U.S. price.

U.S. soybean S/U for 2017 is projected

greater than the long-term average

which results in downward pressure for

price that is below the corresponding

average price of $10.50/bu. The current

USDA price forecast is $9.30/bu. for the

crop harvested in 2017. Historically,

U.S. soybean price is significantly

responsive to S/U.

The June projection for August 2017

U.S. soybean S/U is slightly increased

from the May projection.

3

Figure 8. U.S. Long-Grain Rice Stocks-to-Use, 2006-2016 and Average Price =

$5.70/bu., Long-term Average S/U =14.0, 2017 S/U and Price Forecasts

Figure 9. All Rice ROW Stocks-to-Use, 2006-2016 and Average U.S.

LG Price = $5.70/bu., Long-tern Average S/U = 22.0, 2017 S/U and

Price Forecasts

Figure 10. U.S. Long-Grain Rice Stocks-to-Use, Year Ending July 2016,

Projected Year Ending July 2017, by August 2016 to July 2017 WASDE

Report, Long-term Average S/U = 14.0

10

11

12

13

14

15

16

17

18

19

20S/

U

Year

$5.70

$4.95

17

18

19

20

21

22

23

24

25

26

S/U

Year

$5.70

$4.95

13

14

15

16

17

18

19

20

21

Jul-

16

Au

g-1

6

Sep

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Oct

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Jan

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Feb

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Mar

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r-1

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May

-17

Jun

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Jul-

17

S/U

Month

U.S. long-grain rice S/U for 2016 is

projected greater than the long-term

average. The large carryover of

beginning stocks to the 2017 market

year is expected to depress 2017 price

below $5.70/bu. The current USDA

price forecast is $4.95/bu. for long-grain

rice harvested in 2017. Projected S/U

for 2017 represents a decrease from

projected 2016 ending S/U. Current

USDA price forecasts do not include

impacts of potential acreage reductions

due to Delta region flooding conditions.

S/U in the rest of the world for 2017 is

projected greater than the long-term

average which results in downward

pressure for price that is below the

corresponding long-grain rice average

of $5.70/bu. The current USDA price

forecast is $4.95/bu. for long-grain rice

harvested in 2017.

The June projection for the 2016-2017

ending long-grain rice S/U is decreased

for the third consecutive month.

Projections for the current market year

are greater than ending S/U for the

previous market year. Ending 2016

stocks represent beginning stocks for

the crop to be harvested in 2017.

4

Figure 11. U.S. Medium\Short Grain Stocks-to-Use, 2006-2016 and Average Delta

Price = $6.45/bu., Long-term Average S/U = 22.0, 2017 S/U and Price Forecasts

Figure 12. U.S. Medium\Short Grain Rice Stocks-to-Use, Year Ending July 2016,

Projected Year Ending July 2017, by August 2016 to July 2017 WASDE Report,

Long-term Average S/U = 22.0

Figure 13. Annual Rice Price, U.S. Long-Grain, Delta Medium\Short Grain,

and California Medium\Short Grain, 2008-2016 and 2017 Price Forecasts

10

15

20

25

30

35

40S/

U

Year

$6.45$5.09

20

25

30

35

Jul-

16

Au

g-1

6

Sep

-16

Oct

-16

No

v-1

6

De

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6

Jan

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Feb

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Mar

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Ap

r-1

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May

-17

Jun

-17

Jul-

17

S/U

Month

4.00

5.00

6.00

7.00

8.00

9.00

10.00

11.00

12.00

13.00

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

$/b

u.

YearDelta MSG CA MSG US LG

U.S. all medium\short-grain rice S/U for

2017 is projected less than the long-

term average. The current USDA price

forecast is $5.09/bu. for Delta

medium\short-grain rice harvested in

2017. Projected S/U for 2017 represents

a decrease from projected 2016 ending

S/U. Current USDA price forecasts do

not include impacts of potential acreage

reductions due to Delta region flooding

conditions.

The June projection for the 2016-2017

ending medium\short grain rice S/U is

decreased from previous 2017

projections. Projections for the current

market year are less than ending S/U

for the previous market year.

Large supplies have all rice markets

with declining price trends. Delta

medium\short-grain price is

converging to equal U.S. long-grain

rice price.

5

Figure 14. All Wheat U.S. Stocks-to-Use, 2006-2016 and Average Price =

$6.00/bu., Long-term Average S/U = 32.0, 2017 S/U and Price Forecasts

Figure 15. All Wheat ROW Stocks-to-Use, 2006-2016 and Average U.S.

Price = $6.00/bu., Long-term Average S/U = 26.0, 2017 S/U and Price

Forecasts

Figure 16. All Wheat U.S. Stocks-to-Use, Year Ending May 2016,

Estimated Year Ending May 2017, by June 2016 to May 2017 WASDE

Report, Long-term Average S/U = 32.0

10

15

20

25

30

35

40

45

50

55S/

U

Year

$6.00

$4.25

15

20

25

30

35

S/U

Year

$6.00

$4.25

20

30

40

50

60

May

-16

Jun

-16

Jul-

16

Au

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6

Sep

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Oct

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May

-17

S/U

Month

U.S. all wheat S/U for 2017 is

projected greater than the long-term

average which results in downward

pressure for price that is below the

corresponding average of $6.00/bu.

The current USDA price forecast is

$4.25/bu. for the crop harvested in the

2017 market year. Historically, U.S.

wheat price is significantly responsive

to S/U. Ending stocks in Figure 14

correspond to beginning stocks for

winter wheat to be planted in 2017 and

harvested in 2018.

All wheat S/U in the rest of the world

for 2017 is projected greater than the

long-term average which results in

downward pressure for price that is

below the corresponding average of

$6.00/bu. The current USDA price

forecast is $4.25/bu. for the crop

harvested in the 2017 market year.

Ending stocks in Figure 15 correspond

to beginning stocks for winter wheat

to be planted in 2017 and harvested in

2018.

Monthly projections for May 2017 U.S.

all wheat S/U was generally stable at

levels greater than the long-term average.

Ending stocks in Figure 16 correspond to

beginning stocks for winter wheat

harvested in 2017.

Soft red winter wheat ending S/U for the

current 2016-2017 market year is

estimated as 75.2 which compares to a

long-term average of 36.0. This exerts

downward pressure on prices for Arkansas

wheat planted in the fall of 2016 for

harvest in 2017.

6

Figure 17. Cotton U.S. Stocks-to-Use, 2006-2016 and Average Price =

$0.66/lb., Long-term Average S/U = 30.0, 2017 S/U and Price Forecasts

Figure 18. Cotton ROW Stocks-to-Use, 2006-2016 and Average U.S.

Price = $0.66/lb., Long-term Average S/U = 65.0, 2017 S/U and Price

Forecasts

Figure 19. Peanut U.S. Stocks-to-Use, 2006-2015 and Average Price =

$460/ton, Long-term Average S/U = 37.0, 2016 S/U and Price Forecasts

10

20

30

40

50

60

200620072008200920102011201220132014201520162017

S/U

Year

$0.66$0.64

30

40

50

60

70

80

90

100

110

200620072008200920102011201220132014201520162017

S/U

Year

$0.64

$0.66

10

20

30

40

50

60

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

S/U

Year

$460

U.S. cotton S/U for 2017 is projected

slightly greater than the long-term

average S/U. Projected 2017 price of

$0.64/lb. in the June WASDE report is

slightly less than the 2006-2015

average price. Projected 2017 price is

for lint only and does not include

cottonseed value. The 2017 S/U

projection is an increase from projected

2016 S/U.

Cotton S/U in the rest of the world for

2017 is projected greater than the long-

term average. 2017 ROW S/U is

projected to decline for the third

consecutive year. Superior fiber quality

of U.S. cotton creates potential for price

premiums, and U.S. cotton is often

blended with inferior foreign cotton.

U.S. peanut S/U for 2016 is projected

less than the long-term average S/U.

The USDA October 2016 estimate for

2015 peanut use was increased from the

estimate in the September report

(USDA, FAS 2017). Consequently,

beginning stocks for 2016 were

decreased. This leads to a decrease in

subsequent S/U projections for the

2016-2017 crop year to a level that is

less than the long-term average.

7

Table 1. U.S. Annual Animal Product Production

Beef Pork Broiler Turkey

Total Red

Meat &

Poultry Egg Milk

Year Million Pounds

Million

Dozen

Billion

Pounds

2016 25,221 24,941 40,695 5,981 97,612 8,565 212.4

2017 Projected 26,225 25,894 41,458 6,092 100,435 8,749 216.7

2018 Projected 27,110 26,910 42,275 6,255 103,318 8,890 221.7

Table 2. U.S. Annual Prices for Animal Products

Steers

Barrows

and Gilts Broilers Turkeys Eggs

Milk,

All

Year $/Cwt. $/Cwt. Cents/lb. Cents/lb. Cents/doz. $/Cwt.

2016 120.86 46.16 84.30 117.10 85.70 16.24

2017 Projected 124.00 47.00 92.50 103.500 84.50 18.00

2018 Projected 118.00 44.50 88.50 106.50 90.50 18.60

References

Federal Reserve System (FSR). 2017. Price-Adjusted Broad Dollar Index-Monthly Index, Washington, D.C.

Internet Site: http://www.federalreserve.gov/releases/h10/default.htm (Accessed June 2017).

U.S. Department of Agriculture, Economic Research Service (USDA, ERS). 2016. Rice Yearbook, Internet

site: http://www.ers.usda.gov/data-products/rice-yearbook.aspx#57028 (Accessed December 2016).

United States Department of Agriculture (USDA, FAS). 2017. Production, Supply and Distribution, USDA-

Foreign Agricultural Service, Washington, DC. Available online at http: https://apps.fas.usda.gov/psdonline/app/index.html#/app/advQuery (Accessed June 2017).

United States Department of Agriculture (USDA, NASS). 2017. U.S. & All States Data-Crops, USDA-

National Agricultural Statistics Service, Washington, DC. Available online at

http://www.nass.usda.gov/ (Accessed June 2017).

United States Department of Agriculture (USDA, WASDE). 2017. World Agricultural Supply and Demand

Estimates, WASDE-566, Washington, D.C., June 9, 2017. Internet Site:

http://www.usda.gov/oce/commodity/wasde/ (Accessed June 2017).

8