Commodity Outlook: September 2017 West Central Illinois: July 2017 William George Senior Agriculture Economist U.S. Department of Agriculture Foreign Agriculture Service Office of Global Analysis
Commodity Outlooks are all about Looking Forward.. The Trick is Determining where the Market is Going
Corn and Wheat (HRW) $/BU Soybean ($/BU) Record U.S. Soy Plantings and Brazil Harvest Send Soybean Price Lower 5,25 Commodity Price Trends U.S. Cash (KC & Cent Ill) 10,20 4,75 Initial USDA Area Forecast 10,00 9,80 4,25 3,75 Early Dryness So. Plains Brazil Soybean Harvest March USDA Intentions 9,60 9,40 9,20 9,00 3,25 Jan Feb Mar Apr May Jun HRW Corn Soybean 8,80
Corn and Wheat (HRW) $/BU Soybean ($/BU) Wheat and Soybean Prices Rise in July 5,25 5,05 4,85 4,65 4,45 4,25 4,05 3,85 3,65 3,45 3,25 Commodity Price Trends U.S. Cash (KC & Cent Ill) Jan Feb Mar Apr May Jun July HRW Corn Soybean No. Plains Drought Yield Concerns & USDA Planting Report 10,20 10,00 9,80 9,60 9,40 9,20 9,00 8,80
Corn and Wheat (HRW) $/BU Soybean ($/BU) Prices Declined Following USDA s August Forecast Commodity Price Trends U.S. Cash (KC & Cent Ill) 5,25 5,05 4,85 4,65 4,45 4,25 4,05 3,85 3,65 3,45 3,25 Jan Feb Mar Apr May Jun July Aug HRW Corn Soybean USDA August Yield Forecast 10,20 10,00 9,80 9,60 9,40 9,20 9,00 8,80
Price Impact of September USDA Forecasts Less than August August August September September
U.S. Crop Trends Wheat, Corn, Soybeans
Million Hectares 88 86 Growth in Area Harvested for Wheat, Corn and Soybeans in the U.S Slows 3-Crop Total Area % of Global Wheat Corn Soybeans 20% 84 19% 82 80 18% 78 76 17% 74 72 16%
U.S. Soybean Harvested Area Continues to Expand Million Acres 100 90 80 70 60
Million Tons MT/HA U.S. Soybean Production to Reach New Record on Larger Area and Above Trend Yield 140 120 100 80 60 40 20 0 3,6 3,4 3,2 3 2,8 2,6 2,4 2,2 2 Production Yield
Grams/Pod 0.350 0.345 0.340 0.335 0.330 0.325 0.320 0.315 0.310 0.305 0.300 0.295 0.290 0.285 0.280 0.275 0.270 0.265 0.260 2012 Soybean Objective Yield Region Pods Per 18 Square Feet vs. Implied Pod Weight Sept -17 2013 2014 2015 2016 2008 2006 2009 2007 2005 2004 2011 2010 1,400 1,450 1,500 1,550 1,600 1,650 1,700 1,750 1,800 1,850 1,900 Pods Per 18 Square Feet Implied Pod Weight = (Published Yield / Pods) /0.0889 USDA-NASS 9-12-17
U.S. Corn Harvested Area Declines on Slowing Trend Million Acres 100 90 80 70
Production Yield U.S. Corn Production to Decline with Reduced Yield Million Metric Tons 400 350 300 250 200 Drought MT/HA 12 11 10 9 8 7 150 6
Lbs/Ear 0.370 0.360 0.350 0.340 0.330 0.320 0.310 0.300 0.290 0.280 2005 Corn Objective Yield Region Ears Per Acre vs. Implied Ear Weight 2004 2006 2007 2008 2010 2011 2016 Aug-17 2009 Sept-17 2013 2015 2014 0.270 2012 0.260 25,000 25,500 26,000 26,500 27,000 27,500 28,000 28,500 29,000 29,500 Ears Per Acre Implied Ear Weight = (Published Yield * 56) / Ears USDA-NASS 9-12-17
U.S. Wheat Harvested Area Trending Lower Million Hectares 30 25 20 15 10
Wheat Production and Yield Decline in 2017 Million Metric Tons 70 65 60 55 MT/HA 4,0 3,6 3,2 50 45 40 35 30 2,8 2,4 2,0 Production Yield
Wheat Yields and Production Fall in 2017
Where does this take us into 2017/18? Lets look at each commodity separately
Million Tons Record Soybean Stocks to Continue into 2018 40 35 30 25 20 15 10 5 0 Soybean Exporter Ending Stocks Local Year Volume and Percent of Use 2000/01 2004/05 2008/09 2012/13 2016/17 14% 12% 10% 8% 6% 4% 2% 0%
Percent Disappearance Million Tons Current Exporter Stocks Remain High Stocks to Use Comparable to 2011 35% 30% 25% 20% 15% 10% 5% Soybean Exporter Ending Stocks Sept: Volume and Percent of Disappearance 80 70 60 50 40 30 20 10 0% 2000/01 2004/05 2008/09 2012/13 2016/17 0
Current and Forecast U.S Farm Prices Comparable to 2010 Soybean Exporter Ending Stocks/Use U.S. Cash Price ($/BU) 35% 30% 25% 20% 15% 10% 5% 0% $4,54 $4,38 $5,53 $7,34 $5,74 $5,66 $6,43 $14,40 $12,50 $13,00 $11,30 $10,10 $9,97 $9,59 $10,10 $8,95 $9,50 $9,30 $16,00 $14,00 $12,00 $10,00 $8,00 $6,00 $4,00 $2,00 $0,00
Million Tons China s Demand Drives Imports Trends in Global Soybean Imports 100 90 80 70 60 50 40 30 20 10 0 1995/1996 2002/2003 2009/2010 2016/2017 China EU Other
Million Tons Soybean Trade Eclipses Meal in Consumption Growth 6,0 5,0 4,0 3,0 2,0 1,0 0,0-1,0-2,0-3,0-4,0 Trends in Soybean Meal Imports Meal & Bean Equivalent (excluding China) 2002/2003 2005/2006 2008/2009 2011/2012 2014/2015 2017/2018
Million Tons Import Growth Accelerates 14,0 3-yr Avg Annual Soybean Import Growth 12,0 10,0 8,0 6,0 4,0 2,0 0,0 1998/1999 2004/2005 2010/2011 2016/2017
Million Tons Consumption Growth Mirrors Trade Adds to Total Demand 3-yr Avg Annual Soybean Import and Consumption Growth 20,0 18,0 16,0 14,0 12,0 10,0 8,0 6,0 4,0 2,0 0,0 1998/1999 2004/2005 2010/2011 2016/2017
Exports Set Records Every Year in Brazil and U.S. Trends in Global Soybean Trade Brazil United States 44.594 50.143 52.860 59.058 61.235 46.829 50.612 54.383 62.500 64.000 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018
Exports from Other Markets Fail to Match U.S. and Brazil Growth Trends in Global Soybean Trade Argentina Canada Paraguay Ukraine Uruguay ROW 692 3.150 1.261 4.900 3.469 1.007 1.210 1.293 3.114 2.173 2.870 2.422 2.369 2.900 4.488 5.310 6.600 3.763 4.236 4.570 1.538 2.400 2.950 5.500 5.800 7.842 10.575 9.921 6.500 8.000 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018
Grain Bins and Silo Bags are found on many Farms Producers have Many On-Farm Storage Options
U.S. Dollars/Metric Ton South American Producers Facing Sticker Shock 550 US Dollar Equivalent Export Price 500 450 400 350 300 Jan 15 Jul 15 Jan 16 Jul 16 Jan 17 Jul 17 US Gulf, FOB Brazil Paranagua, FOB Argentina Up River, FOB
US Dollars/Metric Ton Export Market Competitive on Price 480 460 440 420 400 380 360 340 320 300 Soybean Export Price Jan 15 Jul 15 Jan 16 Jul 16 Jan 17 Jul 17 US Gulf, FOB Brazil Paranagua, FOB Argentina Up River, FOB
MILLION TONS Global Corn Stocks Forecast to Decline 250 GLOBAL CORN STOCKS 200 150 81 100 111 101 81 100 50 0 59 68 31 44 44 60 59 25 21 44 45 61 65 59 65 62 2011/2012 2013/2014 2015/2016 2017/2018 Other U.S. China
MILLION TONS U.S. Corn Prices Face Further Declines 250 GLOBAL CORN STOCKS 200 $6,22 $6,89 150 100 $4,46 $3,70 $3,61 $3,35 $3,20 50 0 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 Other U.S. China Price
Global Corn Consumption Growth Continues to Trend Higher GLOBAL CORN CONSUMPTION (1,000 MT) US China Other Asia Eur/FSU ROW 218.902 221.619 91.401 93.525 93.368 94.320 188.000 200.000 268.945 278.671 238.878 250.488 256.038 104.673 104.809 99.262 99.850 102.800 103.174 107.949 113.414 116.117 120.677 208.000 202.000 217.500 232.000 238.000 277.961 262.973 292.958 301.792 298.785 313.577 316.245 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018
Global Corn Exports Forecast to Decline Trends in Global Corn Trade United States Brazil Argentina Ukraine ROW 24.471 20.004 17.102 20.967 21.799 19.661 18.963 34.461 19.069 16.595 21.642 13.996 21.884 21.500 27.500 35.000 21.035 21.500 28.500 34.000 48.790 47.421 48.288 56.518 46.992 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018
Global Wheat Stocks Forecast to Rise in the Coming Year WHEAT STOCKS (THOUSAND TONS) 23.487 20.211 51.550 49.679 19.538 31.232 16.065 38.258 20.477 44.510 26.552 32.234 38.544 44.126 25.382 42.621 123.998 129.038 126.880 140.475 152.707 177.759 182.198 196.687 Other Other Major Exporters US
Million Tons U.S. Prices to Rise as Lower U.S. Production Reduces Domestic Stocks Wheat Stocks 300 250 $7,24 $7,77 $6,87 $9,00 200 150 $5,70 $5,99 $4,89 $3,89 $4,60 $6,00 100 $3,00 50 0 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 Other Other Major Exporters US Price $0,00
Global Wheat Consumption Continues to Grow at a Slow Pace WHEAT CONSUMPTION ROW ME/N Afr India Asia (excl India) EU 127.234 119.250 117.300 124.677 129.850 188.544 193.769 185.004 188.022 188.788 128.500 127.250 199.809 197.801 81.408 83.824 93.848 93.102 88.551 97.500 99.000 97.749 98.123 101.239 101.083 103.776 105.188 106.765 195.093 192.204 193.369 193.390 198.023 204.791 205.655 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018
Global Exports Forecast to Remain Near Current Levels GLOBAL WHEAT EXPORTS Russia/Ukr European Union United States Canada Australia Argentina Other 24804 25.389 26.184 29334 25.065 11.700 11.500 30.308 9.600 2.250 5.301 18.615 16.590 16.124 24.000 19.000 21.851 12.925 28.091 23.268 24.170 22.129 20.250 20.500 9.494 3.550 24.661 18.600 18.647 21.168 28.716 26.535 17.352 32.012 23.523 16.575 18.953 28.606 34.686 27.000 29.500 27.544 35.147 35.455 32.032 16.728 22.786 23.086 27.063 18.498 28.364 34.069 42.974 45.800 47.500 8.285 2 0 1 0 / 2 0 1 1 2 0 1 1 / 2 0 1 2 2 0 1 2 / 2 0 1 3 2 0 1 3 / 2 0 1 4 2 0 1 4 / 2 0 1 5 2 0 1 5 / 2 0 1 6 2 0 1 6 / 2 0 1 7 2 0 1 7 / 2 0 1 8
Outlook Summary: What You See is What You Get Current Corn and Soybean Prices Expected into 2018 Wheat Prices Forecast to Rebound from Current Lows with lower production in the U.S. and Australia and increased competition from Russia and Eastern Europe in Export Markets. Strong Demand Growth Boosts Soybeans Potential to Move Markets Corn Markets will Likely Follow Soybeans