Wheat Outlook - Texas A&M AgriLifeagrilife.org/agecoext/files/2013/08/W_2017-05-11.pdf ·...
Transcript of Wheat Outlook - Texas A&M AgriLifeagrilife.org/agecoext/files/2013/08/W_2017-05-11.pdf ·...
Wheat Outlook May 11, 2017 Volume 26, Number 26
1
Today’s Newsletter
Market Situation WASDE 1 Crop Progress 5 Weather 6 Commitment of Traders 9 Marketing Strategies 2017 Wheat Marketing Plan 12 Upcoming Reports/Events 13
Market Situation
WASDE. Mixed wheat market messages in yesterday’s World Agricultural Supply and Demand Estimates: U.S. wheat stocks to use ratio at the end of the new crop 2017/18 marketing year down 10%; world stocks to use went up.
For the U.S., adjustments to old crop numbers were a 10 million bushel increase in exports that were offset by a 5 million bushel increase in imports and a 5 million bushel decrease in food use. Ending stocks for 2016/17 (beginning stocks for 2017/18) were unchanged at 1.159 billion bushels. The season average farm price for old crop wheat went up 5 cents to $3.90.
With fewer acres and normal yields, the 2017 wheat crop is projected at 1.820 billion bushels, the smallest wheat crop since 2006. Total wheat supplies are estimated 295 million bushels below last year and use is down 50 million bushels. Ending stocks on May 31, 2018 are forecast at 914 million bushels, down 245 million from 16/17. The season average farm price is $4.25.
Wheat Outlook May 11, 2017 Volume 26, Number 26
2
U.S. Wheat Supply and Demand, 5/10/2017
0
500
1,000
1,500
2,000
2,500
Beginning Stocks Production Imports Domestic Use Exports Ending Stocks
2016/17 May 17/18
+183 -490 +10 = -15 -35 -245
Million bushels
U.S. Wheat Use
0
250
500
750
1,000
1,250
1,500
1,750
2,000
80/81
81/82
82/83
83/84
84/85
85/86
86/87
87/88
88/89
89/90
90/91
91/92
92/93
93/94
94/95
95/96
96/97
97/98
98/99
99/00
00/01
01/02
02/03
03/04
04/05
05/06
06/07
07/08
08/09
09/10
10/11
11/12
12/13
13/14
14/15
15/16
16/17
17/18
Million Bushels
Ending Stocks Feed and Residual Exports Food and Seed
WASDE, 5/10/2017
Wheat Outlook May 11, 2017 Volume 26, Number 26
3
Global wheat production for 2017/18 is down led by smaller crops in the U.S., FSU-12, and Australia. However, the 15.3 mmt reduction in crop size is offset by an increase in beginning stocks of 12.9 mmt and a reduction in use of 5.3 mmt. The ending stock estimate is up 2.9 mmt over last year and days of use on hand at the end of the marketing year up to a 128-day supply.
World Wheat Production
0
5
10
15
20
25
30
U.S. Foreign
Billion bushels
WASDE 5/10/2017
WORLD WHEAT MMTBeginning StoProduction Imports Feed Use Total Use Exports Ending Stocks Stocks to Use Days on hand
2005/06 156.48 618.87 110.15 111.31 620.92 116.16 154.43 0.25 90.782006/07 154.43 596.53 112.37 105.80 616.46 110.96 134.50 0.22 79.632007/08 134.50 612.65 107.31 101.20 617.80 109.56 129.35 0.21 76.422008/09 129.35 683.53 127.94 115.47 643.65 129.78 169.24 0.26 95.972009/10 169.24 687.09 133.64 117.72 654.39 135.80 201.94 0.31 112.642010/11 201.94 650.79 131.65 116.33 654.55 132.43 198.19 0.30 110.522011/12 198.19 695.99 149.32 146.87 696.92 157.78 197.26 0.28 103.312012/13 196.16 657.94 144.22 137.09 679.27 137.36 174.46 0.26 93.752013/14 177.07 715.26 158.36 126.77 697.95 165.91 193.77 0.28 101.332014/15 193.77 725.91 158.69 132.60 705.69 164.37 212.07 0.30 109.692015/16 217.51 737.00 169.95 136.51 712.08 172.85 242.42 0.34 124.262016/17 242.42 753.09 175.45 147.52 740.16 179.74 255.35 0.34 125.922017/18 May 255.35 737.83 178.53 138.54 734.89 178.35 258.29 0.35 128.29
Net Change 12.93 (15.26) 3.08 (8.98) (5.27) (1.39) 2.94 0.01 2.36Percentage Change 5.3% -2.0% 1.8% -6.1% -0.7% -0.8% 1.2% 1.9% 1.9%
Wheat Outlook May 11, 2017 Volume 26, Number 26
4
Wheat Production, Major Countries
0102030405060708090
100110120130140150160170
Argentina Australia Canada China EU FSU-12 India Pakistan US2013/2014 2014/2015 2015/2016 2016/2017 2017/2018
mmt
WASDE, 5/10/2017
88% of global wheat production
World Wheat: Days of Use on Hand
128
107
0
20
40
60
80
100
120
140
Days of Use 20-yr avg
WASDE, 5/10/2017
Wheat Outlook May 11, 2017 Volume 26, Number 26
5
Crop Progress. The condition of the U.S. and Texas wheat crops in last Monday’s Crop Progress slipped slightly from the previous week. Notable in the Kansas release was the comment that the effects of the recent snowfall and freezing temperatures were still being assessed. For all U.S. winter wheat, the percent rated very poor and poor both increased by 1, the fair declined by 1 and the good by 2, and the excellent category increased by 1. The crop condition index score fell 3 points to 344. The average index for this week of the growing season is 331.
2017 U.S. Winter Wheat Crop Condition Ratings
100
150
200
250
300
350
400
450
500
0
10
20
30
40
50
60
70
80
90
100
24-O
ct31
-Oct
7-N
ov14
-Nov
21-N
ov28
-Nov
5-D
ec12
-Dec
19-D
ec26
-Dec
2-Ja
n9-
Jan
16-J
an23
-Jan
30-J
an6-
Feb
13-F
eb20
-Feb
27-F
eb6-
Mar
13-M
ar20
-Mar
27-M
ar3-
Apr
10-A
pr17
-Apr
24-A
pr1-
May
8-M
ay15
-May
22-M
ay29
-May
5-Ju
n12
-Jun
19-J
un26
-Jun
Very Poor Poor Fair Good Excellent 2017 2016 Average
% CCI
2016: 55.3; Trend: 46.8 bu/ac
46.8
55.3
USDA Crop Progress, May 1, 2017
The Texas crop condition index fell 6 points this week to 328. Very poor was unchanged, poor increased 1%, fair was up 3%, good down 3%, and excellent decreased 1%. The average crop condition index for Texas wheat at this time of year is 287.
Texas wheat production estimates for 2017 from the National Agricultural Statistics Service are 69 million bushels off of 2.3 million harvested acres. The average yield is projected at 30 bushels per acre. These numbers compare to 89.6 million bushels of production last year from 2.8 million acres and a yield of 32.0 bushels per acre.
Wheat Outlook May 11, 2017 Volume 26, Number 26
6
2017 Texas Winter Wheat Condition Ratings
100
150
200
250
300
350
400
450
500
0
10
20
30
40
50
60
70
80
90
100
10/2
410
/31
11/7
11/1
411
/21
11/2
812
/512
/12
12/1
912
/26
1/2
1/9
1/16
1/23
1/30 2/
62/
132/
202/
27 3/6
3/13
3/20
3/27 4/
34/
104/
174/
24 5/1
5/8
5/15
5/22
5/29 6/
56/
126/
196/
26 7/3
Very Poor Poor Fair Good Excellent 2017 2016 Average
% CCI
2016: 32.0; 10-yr Average : 30.7 bu/ac
32.0
30.7
USDA Crop Progress, May 8, 2017
Weather. Drought conditions for the winter wheat producing areas are much improved compared to early March.
The heaviest precipitation in this area since last Tuesday is over eastern Colorado, northwest Kansas, and the Texas panhandle.
The forecast calls for dry conditions the next several days, a favorable outlook with much of the Texas crop ready to cut. Light rainfall is back in the forecast for early next week.
The Oceanic Nino Index is forecast to continue in mostly neutral territory this summer into early fall.
Wheat Outlook May 11, 2017 Volume 26, Number 26
7
March 7, 2017 May 9, 2017
Wheat Outlook May 11, 2017 Volume 26, Number 26
8
Precipitation Forecast (http://www.wpc.ncep.noaa.gov/qpf/day4-7.shtml):
ENSO Alert System Status: Not ActiveENSO-neutral conditions are present. Equatorial sea surface temperatures (SSTs) are near average across the central Pacific. They are above average in the eastern Pacific Ocean.ENSO neutral conditions are favored to continue through at least the Northern Hemisphere spring 2017, with increasing chances for El Nino development by late summer and fall.
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Actual Measurements Predicted
°C
El Niño/Southern Oscillation (ENSO) Diagnostic Discussion, May 8, 2017http://www.cpc.ncep.noaa.gov/products/analysis_monitoring/enso_advisory/
El Nino
Neutral
La Nina
Oceanic Nino Index (ONI)
Latest actual weekly SST departure
Days 1-3 Day 4-5
Wheat Outlook May 11, 2017 Volume 26, Number 26
9
Commitment of Traders. The Commitment of Traders Report from the CFTC last Friday showed preliminary positioning on the part of money managers ahead of this week’s WASDE report and trader response to the snowstorm and freeze in Kansas in late April. All contracts showed a reduction in short positions as net longs increased. Kansas City wheat is the only contract to move back into positive territory for net longs, +294 contracts. But this occurred not because there were more net long contracts held--net longs went down 4,283—but because of a decrease in short positions of 22,193. The initial sharp increase in wheat prices does not appear to have stimulated significant new buying.
Managed Money, net long positions 18-Apr 25-Apr 2-May
weekly contract change
weekly price change
Corn (160,377) (180,360) (170,603) 9,757 7.25
Soybeans (49,190) (52,475) (51,483) 992 14.25
Chicago Wheat (154,345) (171,269) (123,214) 48,055 45.25
KC Wheat (15,072) (17,616) 294 17,910 55.75
Total (378,984) (421,720) (345,006) 76,714
Speculative Investment in Corn
250270290310330350370390410430450
(300,000)
(200,000)
(100,000)
0
100,000
200,000
300,000
5-Ja
n2-
Feb
1-M
ar29
-Mar
26-A
pr24
-May
21-Ju
n19
-Jul
16-A
ug13
-Sep
11-O
ct8-
Nov
6-De
c3-
Jan
31-Ja
n28
-Feb
28-M
ar25
-Apr
Net Long Price
Net Long Contracts Price, ¢/bu
Wheat Outlook May 11, 2017 Volume 26, Number 26
10
Speculative Investment in Soybeans
800
850
900
950
1000
1050
1100
1150
1200
(100,000)
(50,000)
0
50,000
100,000
150,000
200,000
250,0005-
Jan
2-Fe
b1-
Mar
29-M
ar26
-Apr
24-M
ay21
-Jun
19-Ju
l16
-Aug
13-S
ep11
-Oct
8-N
ov6-
Dec
3-Ja
n31
-Jan
28-F
eb28
-Mar
25-A
pr
Net Long Price
Net Long Contracts Price, ¢/bu
Speculative Investment in KC Wheat
300320340360380400420440460480500
(40,000)(30,000)(20,000)(10,000)
010,00020,00030,00040,00050,000
5-Ja
n
2-Fe
b
1-M
ar
29-M
ar
26-A
pr
24-M
ay
21-Ju
n
19-Ju
l
16-A
ug
13-S
ep
11-O
ct
8-N
ov
6-De
c
3-Ja
n
31-Ja
n
28-F
eb
28-M
ar
25-A
pr
Net Long Price
Net Long Contracts Price, ¢/bu
Wheat Outlook May 11, 2017 Volume 26, Number 26
11
Speculator Positions in Hard Red Winter Wheat
380
390
400
410
420
430
440
450
460
470
480
0
20,000
40,000
60,000
80,000
100,000
120,000
7-Mar-17 14-Mar-17 21-Mar-17 28-Mar-17 4-Apr-17 11-Apr-17 18-Apr-17 25-Apr-17 2-May-17
Longs Shorts Price
Contracts Price, ₵/bu
The spread between the July and September Kansas City wheat futures contracts today is 17 cents, above full carry for that 60 day period (2 months x 6 cents per bushel/month = 12 cents). Any percentage of carry above 67% is generally considered to be a bearish commercial market indicator.
II Qtr 2017 3-Apr 11-May net change % change JUL ’17 KC Wheat 4.3225 4.4075 0.0850 1.97%
SEP ’17 KC Wheat 4.4825 4.5775 0.0950 2.12%
Difference 0.1600 0.1700 0.0100
% Carry JUL to SEP
133% 142% 8%
JUL ’18 KC Wheat 4.9850 5.1625 0.1775 3.56%
Wheat Outlook May 11, 2017 Volume 26, Number 26
12
Marketing Strategies
2017 Wheat Marketing Plan. I priced the first 20% of the 2017 wheat crop at 480 on the best prices we had seen since last summer. The weather rally last week provided an opportunity to add to pre-harvest sales. My trigger was a move of prices back below the 4-day moving average.
Lower U.S. ending stocks should provide some support for prices and we still do not know the full extent of crop loss in Kansas. A major price move will likely depend on crop developments outside the U.S. as we account for only about 8% of global production and 15% of world exports.
July 2017 KC Wheat and Marketing Plan
400
450
500
550
600
650
700
5/2/
2016
5/10
/201
65/
18/2
016
5/26
/201
66/
6/20
166/
14/2
016
6/22
/201
66/
30/2
016
7/11
/201
67/
19/2
016
7/27
/201
68/
4/20
168/
12/2
016
8/22
/201
68/
30/2
016
9/8/
2016
9/16
/201
69/
26/2
016
10/4
/201
610
/12/
2016
10/2
0/20
1610
/28/
2016
11/7
/201
611
/15/
2016
11/2
3/20
1612
/2/2
016
12/1
2/20
1612
/20/
2016
12/2
9/20
161/
9/20
171/
18/2
017
1/26
/201
72/
3/20
172/
13/2
017
2/22
/201
73/
2/20
173/
10/2
017
3/20
/201
73/
28/2
017
4/5/
2017
4/13
/201
74/
24/2
017
5/2/
2017
5/10
/201
75/
18/2
017
5/26
/201
76/
4/20
176/
10/2
017
6/16
/201
76/
22/2
017
6/28
/201
77/
4/20
177/
10/2
017
Early Season Price Rally / Early Crop Conditions Emerging from Dormancy/Late Season Conditions Harvest
¢/bu
2/24/2017: Sold 20% at 4805/4/2017: Sold 20% at 465
Wheat Outlook May 11, 2017 Volume 26, Number 26
13
Upcoming Reports/Events.
May 26 Cattle on Feed June 9 WASDE and Crop Production June 23 Cattle on Feed June 29 Hogs and Pigs June 30 Acreage
Grain Stocks September 18-20 Master Marketer, Castroville, Texas October 2-3 October 16-17 October 30-31 Mark Welch, Texas A&M AgriLife Extension Economist 600 John Kimbrough Blvd, Suite 335 College Station, Texas 77843 Tel. (979)845-8011 Fax. (979)845-4906 [email protected] The opinions and recommendations expressed are solely those of the author and are intended for educational purposes only as part of the Texas A&M AgriLife Extension Service. The author and Texas A&M AgriLife Extension Service assume no liability for the use of this newsletter. The Texas A&M AgriLife Extension Service provides equal access in its programs, activities, education and employment, without regard to race, color, sex, religion, national origin, disability, age, genetic information, veteran status, sexual orientation or gender identity. The Texas A&M University System, U.S. Department of Agriculture, and the County Commissioners Courts of Texas Cooperating