Wheat Market Outlook - Spring 2017

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1 Wheat Market Outlook - Spring 217 Industry Outlook Conference Denver, Colorado April 2, 217 DANIEL O BRIEN EXTENSION AGRICULTURAL ECONOMIST U.S. Dollar Index (Trade Weighted) 1973 early April 217

2 U.S. Dollar Index vs World Grain $ s 198 Early April 217 U.S. Dollar Index US Dollar Index (Trade Weighted) Corn Wheat Soybeans 15 $18 $ $14 1 $12 $1 75 $8 5 $6 $4 25 $2 $ World Grain Prices (USD$ per bu)

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4 Wheat Markets World Wheat Market Prospects: Large Supplies A Buyer s Market (w. Quality concerns) Record World Supplies & Usage Forecast in 216/17 o 4 th consecutive record high World wheat crop 217 Wheat Production & Supply Prospects o Lower acres in U.S., but few/no emerging Non-U.S. threats yet World wheat exports to remain a buyer s market unless or until World supplies & stocks tighten o Alternative All World vs World Less China perspectives???

5 U.S. Wheat Quality & Exports Moderate U.S. Exports Quality Issues, Large Stocks, & Low Prices U.S. wheat exports have been slowed by large competitive World supplies of fair quality Wheat, but tight high protein U.S. HRW Wheat 216 : 11.5% protein / 6.5 lb/bu test weight Vs year avg: 12.8% protein / 6.3 lb/bu test weight U.S. HRS Wheat 216 : 14.1% protein / 61.6 lb/bu test weight*** Vs year avg: 14.2% protein / 61.4 lb/bu test weight U.S. SRW Wheat 216 : 9.4% protein / 58.6 lb/bu test weight Vs year avg: 1.% protein / 58.5 lb/bu test weight CME Kansas Hard Red Winter Wheat Monthly Chart: February 28 March /19/217 close MAY 217 $4.16 ¾ 4/19/217 $6.1 $4.59 $3.67 $4.17 $4 33

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9 HRW Wheat Cash & CME KS HRW Futures $ s Hutchinson, KS Local Elevators April 19, 217 $7 $6 $ /mo $.8 /mo $ /mo $ /mo $Price / bu $5 $4 $3 $4.17 $4.3 $4.46 $3.41 $3.59 $3.5 $3.2 $3.23 $3.23 $4.72 $4.9 $2 $1 $ Futures Low Cash/FC$ High Cash/FC$ Marketing Loan Kansas Wheat Seasonal Cash $ Index Monthly Prices: 1999/ 215/16 + Current MY 216/17

10 Wheat Prices & 217 Costs KSU Hutchinson, KS Local Elevators April 19, 217 $Price / bu $7 $6 $5 $4 $3 $2 $1 All Costs Direct Costs $5.44 $4.37 $3.59 $ bu/ac Yield Non-irrigated $3.5 $ June 217 July 217 Futures High FC$ Direct Cost /bu All Costs /bu SRW Wheat Cash & Chicago Wheat Futures $ s Toledo, OH Local Elevators April 19, 217 $Price / bu $7 $6 $5 $4 $3 $2 $1 $ $.7 75 /mo $4.19 $4.35 $4.49 $4.9 $4.17 $3.88 $3.89 $.7 /mo $ /mo $2.66 $2.66 $ /mo $4.71 $4.88 Futures Low Cash/FC$ High Cash/FC$ Marketing Loan

11 SWW Wheat Cash & Chicago Futures $ s Wasco, OR Local Elevators April 19, 217 $6 $Price / bu $5 $4 $3 $4.76 $4.76 $4.35 $4.35 $4.19 $4.35 $4.49 $3.55 $3.55 $4.71 $4.88 $2 $1 $ Futures Low Cash/FC$ High Cash/FC$ Marketing Loan

12 HRS Wheat Cash & Minneapolis Futures $ s Minot, ND Local Elevators April 19, 217 $Price / bu $9 $8 $7 $6 $5 $4 $3 $2 $1 $ $5.37 $5.45 $5.52 $5.61 $5.7 $4.62 $4.67 $4.57 $.4 /mo $ /mo $.2 83 /mo $2.65 $2.65 $.3 8 /mo Futures Low Cash/FC$ High Cash/FC$ Marketing Loan

13 Durum Wheat Cash & Minneapolis Futures $ s Williston, ND Local Elevators April 19, 217 $Price / bu $8 $7 $6 $5 $4 $3 $2 $1 $ $5.8 $.4 /mo $ /mo $5.37 $5.45 $5.52 $5.61 $5.7 $4.75 $2.98 $2.98 $ /mo $.3 83 /mo Futures Low Cash/FC$ High Cash/FC$ Marketing Loan U.S. Wheat Seeded Acreage

14 U.S. Wheat Acreage: est U.S. Wheat Yields: est Record High

15 U.S. Wheat Production & Supplies MY 24/5 Next Crop MY 217/18 Highest since bb in 1987/88 U.S. Wheat Use by Category & Stocks MY 24/5 Next Crop MY 217/18 *!!!*

16 U.S. Wheat Export Shipments MY 212/13 thru MY 216/17 1,2 1, 212/13 Million Bushels /14 214/15 215/ /17 Weeks of Marketing Year (June 1 st to May 31 st ) U.S. Wheat Ending Stocks & % Stocks/Use MY 25/6 Next Crop MY 217/18 % End Stocks-to-Use , , 3,5 3, 2,5 2, 1,5 1, 5 Million Bushels Marketing Year

17 U.S. Wheat Ending Stocks & Prices MY 26/7 Next Crop MY 217/18 USDA U.S. Wheat Price vs U.S. % Stocks-to-Use MY 1973/74 Next Crop MY 217/18

18 World Wheat Production Regions

19 World Wheat Supply, Use & End Stocks MY 27/8 Current MY 216/17 World Wheat Producers: MY 213/14 216/17 2 Million Metric Tons MY 213/14 MY 214/15 MY 215/16 MY216/17

20 World Wheat Exporters - Since MY 213/ ** Note Weaker Currencies! ** 3 Million Metric Tons MY 213/14 MY 214/15 MY 215/16 MY 216/17 Euro & Russia Exchange Rates EU: Wheat Exports/Soy Imports Russia: Wheat Exports Russian Ruble Vs All Currencies Europe EURO vs USD$ USD$ stronger vs Euro$ & Ruble since mid 214, but???? pattern with Ruble of late.

21 World Wheat Importers: MY 213/14 MY 216/17 3 Million Metric Tons North Africa Middle East Southeast Asia Sub Shrn Africa Eastern Asia South America North America FSU-12 Others MY 213/14 MY 214/15 MY 215/16 MY 216/17

22 World Wheat Ending Stocks & % Stx/Use % Ending Stocks-to-Use Million Metric Tons Marketing Year U.S. Wheat Price ($) vs World %Stx/Use MY 1973/74 Current MY 216/17

23 U.S. Wheat Price USD$ adj vs World Less China %Stx/Use MY 1973/74 Current MY 216/17 U.S. Grain Production & ALL Grain Stocks Trends for the 1969/7 216/17 Marketing Years Billion Bushels s Farm Crisis & Freedom to Farm Ethanol & Soy Exports /1 ALL STOCKS of U.S. Cn-GS-Sb-Wht 12/1 OFF-FARM STOCKS U.S. Cn-GS-SB-Wht U.S. Total Cn-GS-Sb-Wht Production

24 U.S. Grain Production & OFF-FARM Stocks Trends for the 1969/7 216/17 Marketing Years Billion Bushels s Farm Crisis & Freedom to Farm Ethanol & Soy Exports /1 OFF-FARM STKS of U.S. Cn-GS-SB-Wht U.S. Total Cn-GS-Sb-Wht Production OFF-FARM STORAGE 7-Year Average U.S. Grain Production & ALL Grain Stocks Trends Since MY 26/7 for Corn, Sorghum, Wheat & Soybeans Billion Bushels /1 ALL STOCKS of U.S. Cn-GS-Sb-Wht 12/1 OFF-FARM STKS of U.S. Cn-GS-SB-Wht U.S. Cn-GS-Sb-Wht Production

25 Kansas Production & Stocks of Major Crops Trends for the 1969/7 216/17 Marketing Years 2, Ethanol & Soy Exports Million Bushels 1,6 1, s Farm Crisis & Freedom to Farm Dec. 1 ALL STOCKS OF KS 4 Major Crops Dec. 1 KS OFF-FARM 4 Crop Stocks KS Corn-Milo-Soybeans-Wheat Crops Kansas Grain Production & OFF-FARM Stocks Trends Since MY 26/7 Million Bushels 1,6 1, ,87 1, ,361 1, ,124 1, ,332 1, ,627 1, /1 ALL STOCKS OF KS Cn-GS-Sb-Wht 12/1 OFF-FARM Kansas Grain Stocks Kansas Cn-GS-Sb-Wht Production

26 Questions? Daniel O Brien Kansas State University KSUGrains on Twitter Daniel O Brien on Facebook