Key Grain Market Decisions & Issues. Grain Market Outlook for Topics to be discussed.. Euro & Australia Currency per U.S.

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1 Grain Market Outlook for KSU Ag Lender s Conferences Garden City & Manhattan, Kansas October 4 5, 216 DANIEL O BRIEN EXTENSION AGRICULTURAL ECONOMIST Key Grain Market Decisions & Issues for Kansas Farmers & Agribusinesses 1) Marketing remaining 216 Wheat & Other Crops 2) Marketing 216 Fall Crops: Harvest vs Post-harvest sales 3) Storing & Handling of 216 Crops into 217 4) Crop production plans for 217 Prices & profitability? Planted Acres? Crop inputs? Storage availability in ? Topics to be discussed.. 1) Overall Grain Market Situation in Kansas, U.S., & World 2) Currency Exchange Rate impacts on U.S. grain exports & World grain prices 3) Market Outlook for Corn, Sorghum, Wheat & Soybeans 4) Market Risks & Opportunities What is expected to happen in & what could change (& when) U.S. Dollar Index U.S. Dollar Index (Trade Weighted) 198 Sept US Dollar Index (Trade Weighted) Year - Month U.S. Dollar Index U.S. Dollar Index vs World Grain $ s 198 Sept US Dollar Index (Trade Weighted) Corn Wheat Soybeans $6.5 $5.5 $4.5 $3.5 $2.5 $1.5 $.5 World Grain Prices (USD$ per bu) Euro & Australia Currency per U.S. Dollar U.S. Competitors in World Wheat Export Trade Weaker vs USD$

2 Canada & Mexico Exchange Rates - Monthly China & Brazil Exchange Rates - Monthly Weaker vs USD$ Weaker vs USD$ Key Buyer & Seller in World Soybean & Feedgrain Trade U.S. NAFTA Partners (with Canada Wheat Exports) Corn & Sorghum Markets CME Corn Futures Weekly Chart: August 214 Sept. 3, /4/216 close $3.18 ¼ $3.46 ½ DEC 216 $3.48 ¼ 1/4/216 $3.48 $3.1 CME Corn Futures Monthly Chart: August 27 Sept /4/216 close DEC 216 $3.48 ¼ 1/4/216 $2.9 $3.18 ¼ $3.1 $3.48

3 Corn Cash & Futures Prices Garden City Garden City, Kansas Local Elevators October 4, 216 Price $/bu $7 $6 $5 $4 $3 $2 $1 $ $3.6 $2.95 $.3 33 /mo $.3 5 /mo $3.48 $3.58 $3.65 $3.72 $3.79 $3.87 $2.19 $2.19 $ /mo $.3 25 /mo Futures Low Cash/FC$ High Cash/FC$ Mktg Loan

4 Corn Cash & Futures Prices Salina Salina, Kansas Local Elevators October 4, 216 Price $/bu $7 $6 $5 $4 $3 $2 $1 $ $3.48 $3.58 $3.65 $3.72 $3.79 $3.87 $3.22 $2.93 $2.88 $2.75 $.3 33 /mo $.3 5 /mo $2.5 $2.5 $ /mo $.3 25 /mo Kansas Corn Seasonal Cash $ Index Monthly Prices: 1999/2 214/15 + Forecast MY 216/17 Futures Low Cash/FC$ High Cash/FC$ Mktg Loan Sorghum Cash & Futures Prices Garden City Garden City, Kansas Local Elevators October 4, 216 Price $/bu $7 $6 $5 $4 $3 $2 $1 $ $2.53 $2.38 $.3 33 /mo $.3 5 /mo $3.48 $3.58 $3.65 $3.72 $3.79 $3.87 $1.9 $1.9 $ /mo $.3 25 /mo Sorghum Cash & Futures Prices Salina Salina, Kansas Local Elevators October 4, 216 Price $/bu $7 $6 $5 $4 $3 $2 $1 $ $2.68 $2.47 $.3 33 /mo $.3 5 /mo $3.48 $3.58 $3.65 $3.72 $3.79 $3.87 $1.91 $1.91 $ /mo $.3 25 /mo $3.2 Futures Low Cash/FC$ High Cash/FC$ Mktg Loan Futures Low Cash/FC$ High Cash/FC$ Mktg Loan U.S. Corn Acreage: U.S. Corn Yields: USDA 216 USDA Forecast = 174.4

5 U.S. Corn Production & Supplies U.S. Corn Use By Category U.S. Ethanol Production & Corn Use U.S. Corn Use - With DDGS #s (since 1989/9)

6 U.S. Corn Ending Stocks & % Stocks/Use U.S. Corn % Stocks/Use vs Price$ % End Stocks-to-Use , , , ,731 1, ,46 5, 4, 3, 2, 1, Million Bushels Marketing Year U.S. Corn Price$ vs U.S. % Stocks-to-Use MY 1973/74 through New Crop MY 216/17 World Corn (Maize) Production Regions World Corn Supply, Use & Stocks U.S. Corn $ USD adj vs World Less China % S/U MY 1973/74 through New Crop MY 216/17

7 U.S. Sorghum Acreage: U.S. Sorghum Yields: USDA 216 USDA Forecast = 75.7 U.S. Sorghum Production & Supplies NY 2/1 to New Crop MY 216/17 U.S. Sorghum Use & Ending Stocks MY 24/5 to New Crop MY 216/17 U.S. Sorghum & Corn % Stks/Use vs Sorghum $ MY 2/1 to MY 216/17

8 U.S. Feedgrain Market Prospects: Low Prices helping Use, but Large Supplies are limiting Record large World & U.S. feedgrain supplies Low Corn $ s have supported U.S. domestic use o Livestock Feed 216/17 = 5.65 bln bu (9 year high vs bb in 27/8) o Corn Ethanol 216/17 = bln bu (record high vs 5.2 bb last 2 yrs) o Other FSI 216/17 = 1.37 bln bu (4 year high vs bb in 211/12) o Exports 216/17 = bln bu (9 year high vs bb in 27/8) o Sorghum exports declining from China run World Coarse Grain Producers Coarse Grain Exporters * Note Weaker Currencies! * MY 214/15 MY 215/16 MY 216/17 MY 214/15 MY 215/16 MY 216/17 Coarse Grain Importers World Coarse Grain Supply, Use & Stocks No. Africa - Mdl. East China Japan South Korea Southeast Asia EU-28 Mexico Saudi Arabia Other MY 214/15 MY 215/16 MY 216/17

9 U.S. Sorghum Price$ vs World Coarse Grain % S/U MY 1975/76 through New Crop MY 216/17 Wheat Markets CME Kansas Hard Red Winter Wheat Weekly Chart: August 214 September 3, /4/216 close CME Kansas Hard Red Winter Wheat Monthly Chart: August 27 Sept /4/216 close $5.5 $7.3 ¾ DEC 216 $4.3 1/4/216 DEC 216 $4.3 1/4/216 $3.85 $3.67 $4.3 $4.33 $4.59 $6.1 $3.67 $4.3

10 Wheat Cash & HRW Wheat Futures Garden City, Kansas Local Elevators - October 4, 216 Price $/bu $8 $7 $6 $5 $4 $3 $2 $1 $ $2.68 $2.62 $.5 5 /mo $4.3 $4.2 $4.3 $4.41 $4.56 $3.11 $3.3 $3.3 $ /mo $.5 25 /mo $ /mo Futures Low Cash/FC$ High Cash/FC$ Marketing Loan Wheat Cash & HRW Wheat Futures Salina, Kansas Local Elevators - October 4, 216 Price $/bu $8 $7 $6 $5 $4 $3 $2 $1 $ $2.61 $2.98 $.5 5 /mo $ /mo $.5 25 /mo $4.3 $4.2 $4.3 $4.41 $4.56 $3.26 $3.26 $ /mo $3.32 Kansas Wheat Seasonal Cash $ Index Monthly Prices: 1999/ 214/15 + Current MY 216/17 Futures Low Cash/FC$ High Cash/FC$ Marketing Loan U.S. Wheat Seeded Acreage U.S. Wheat Acreage: est

11 U.S. Wheat Yields: est Record High U.S. Wheat Production & Supplies MY 24/5 Current Crop MY 216/17 Record High U.S. Wheat Use by Category MY 24/5 Current Crop MY 216/17 U.S. Wheat Ending Stocks & % Stocks/Use MY 2/1 Current Crop MY 216/17 % End Stocks-to-Use , , 3,5 3, 2,5 2, 1,5 1, 5 Million Bushels Marketing Year

12 U.S. Wheat Ending Stocks & Prices MY 26/7 Forecast Next Crop MY 217/18 KSU U.S. Wheat Price vs U.S. % Stocks-to-Use MY 1973/74 Current Crop MY 216/17 World Wheat Production Regions World Wheat Supply, Use & End Stocks MY 27/8 MY 216/17 World Wheat Producers: MY 214/15 216/ MY 214/15 MY 215/16 MY 216/17

13 World Wheat Exporters 5 ** Note Weak Currencies! ** MY 214/15 MY 215/16 MY 216/17 15 World Wheat Importers: MY 214/15 MY 216/ North Africa 17 Middle East SE Asia Brazil EU-28 FSU-12 China Others MY 214/15 MY 215/16 MY 216/ World Wheat Ending Stocks & % Stx/Use % Ending Stocks-to-Use U.S. Wheat Price ($) vs World %Stx/Use MY 1973/74 Current MY 216/17 Marketing Year U.S. Wheat Price USD$ adj vs World Less China %Stx/Use MY 1973/74 Current MY 216/17 U.S. Wheat Market Prospects: Moderate U.S. Exports Quality Issues, Large Stocks, & Low Prices U.S. wheat exports are finding support from a lack of milling quality wheat available in the World market U.S. HRW Wheat % protein, 6.7 lb test, 1.2% defects Vs 12.3% protein, 59.3 lb test wt, 1.7% defects in 215 U.S. Spring Wheat % protein, 61.2 lb test,.9% defects Vs 14.2% protein, 61.4 lb test wt, 1.% defects in 215 U.S. SRW Wheat % protein & 58.6 lb test, 1.4% defects Vs 1.% protein, 56.9 lb test wt, 4.3% defects in 215

14 World Wheat Market Prospects: Large Supplies A Buyer s Market (w. Quality concerns) Soybean Markets Record World Supplies & Usage Forecast in 216/17 o 4 th consecutive record high World wheat crop Varying 216/17 Crop Prospects by Country U.S., Australia*, Russia, Kazakhstan, Arg., Canada*, Pakistan, India E.U., N. Africa (with little change in Ukraine & China) World wheat exports to remain a buyer s market unless or until World supplies & stocks decline o All World vs World Less China perspective??? CME Soybean Futures Weekly Chart: August September 3, /4/216 NOV 216 $9.63 ½ on 1/4/216 CME Soybean Futures Monthly Chart: August 27 thru September /4/216 NOV 216 $9.63 ½ 1/4/216 $9.4 $8.53 $9.34 $9.64 $7.76 ¼ $8.53 $9.63

15 Soybean Cash & Futures Prices Garden City, Kansas Local Elevators October 4, 216 $ / bu $15 $12 $9 $6 $3 $.3 /mo $ /mo $ /mo $ /mo $9.64 $9.69 $9.76 $9.82 $9.88 $9.87 $9.76 $9.67 $8.69 $8.69 $8.53 $4.84 $4.84 $ Futures $s Low Cash/FC High Cash/FC Mktg Loan Soybean Cash & Futures Prices Salina, Kansas Local Elevators October 4, 216 Kansas Soybean Seasonal Cash $ Index Monthly Prices: 1999/ 214/15 + New Crop MY 216/27 $ / bu $15 $12 $9 $6 $3 $.3 /mo $.2 75 /mo $ /mo $ /mo $9.64 $9.69 $9.76 $9.82 $9.88 $9.87 $9.76 $9.67 $8.94 $8.88 $8.87 $8.64 $5.1 $5.1 $ Futures $s Low Cash/FC High Cash/FC Mktg Loan U.S. Soybean Acreage: U.S. Soybean Yields: USDA 216 = 48.9 bu/ac; 216 Trend = 45.8

16 U.S. Soybean Production & Supplies MY 21/2 New Crop MY 216/17 U.S. Soybean Use & Ending Stocks MY 24/5 New Crop MY 216/17 Record Highs Record Highs U.S. Soybean Ending Stocks & % Stx/Use MY 27/8 New Crop MY 216/17 % End Stocks-to-Use , Million Bushels U.S. Soybean % Stocks/Use vs Price$ MY 26/7 New Crop MY 216/17 Marketing Year

17 U.S. Soybean $ vs U.S. Stx-to-Use MY 1973/74 through Next Crop MY 216/17 World Soybean Supply, Use & Stocks MY 27/8 MY 216/17 World Soybean Producers MY 214/15 MY 216/ U.S. Brazil Argentina Paraguay China EU-28 Rest of World 214/15 215/16 216/ World Soybean Exporters U.S. Brazil Argentina Paraguay Rest of World 214/15 215/16 216/17 World Soybean Importers % /yr Chinese increase of 33.7 mmt in soybean imports over 6 years +.7% /yr % /yr +2.4% /yr % /yr China EU-28 Japan Mexico Rest of World 21/11 211/12 212/13 213/14 214/15 215/16 216/17 3 Up 11.1 mmt over 6 years

18 U.S. Soybean$ vs World % Stocks/Use MY 1973/74 - New Crop MY 216/17 U.S. Soybean Market Prospects: Strong Use & Exports but with Large Stocks, & Weak Prices U.S. soybean exports in 216/17 to remain historically large in spite of higher U.S. Dollar exchange rate o Depends on China imports & 217 South American crops Low Prices have supported record high U.S. Soybean Use o Crush 216/17 = 1.95 bln bu (record > 1.9 bb in MY 215/16) o Exports 216/17 = bln bu (record > 1.94 bb vs MY 215/16) o Uncertainty re: 217 South American soybean crop size Questions? Daniel O Brien Extension Agricultural Economist Kansas State university dobrien@ksu.edu KSUGrains on Twitter & Facebook