KSU Agriculture Today Radio Notes - AgManager.info · Weekly Export Shipments week of 10/6/2016 for MY 2016/17 = 44.55 mb vs 47.5 mb/wk needed to meet USDA’s October 12 th projn

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KSU Agriculture Today Radio Notes

Daniel O’Brien, Extension Agricultural Economist, Kansas State University

For Radio Program to be aired 10:00-10:15 a.m., Friday, October 14, 2016

I. Grain Futures Closes, Changes & Carry on Thursday, October 13, 2016

Corn Futures Soybean Futures Ethanol Futures

Month Close Change Carry/mo Month Close Change Carry/mo Month Close Change

Dec 16 $3.49 ½ $0.1250 --- Nov 16 $ 9.56 ¼ $0.1075 --- Nov 16 $1.564 $0.029 ---

Mar 17 $3.59 ½ $0.1250 $0.03333 Jan 17 $ 9.64 ¾ $0.1125 $0.0425 Dec 16 $1.507 $0.031 No Carry

May 17 $3.66 $0.1225 $0.0325 Mar 17 $ 9.71 $0.1075 $0.03125 Jan 17 $1.471 $0.030 No Carry

July 17 $3.72 ½ $0.12 $0.0325 May 17 $ 9.78 $0.1075 $0.0350 Feb 17 $1.470 $0.030 No Carry

Sept 17 $3.79 ½ $0.1175 $0.0350 July 17 $ 9.84 ¼ $0.1125 $0.03125 Mar 17 $1.486 $0.030 $0.014

Dec 17 $3.88 ¼ $0.11 $0.02917 Aug 17 $ 9.83 ¾ $0.1150 No Carry Apr 17 $1.511 $0.030 $0.025

Mar 18 $3.97 ½ $0.1050 $0.03803 Sept 17 $ 9.72 ½ $0.1050 No Carry May 17 $1.518 $0.030 $0.007

May 18 $4.02 ¾ $0.10 $0.02625 Nov 17 $ 9.64 ¼ $0.0925 No Carry Jun 17 $1.518 $0.0025 No Carry

Kansas HRW Wheat Futures Chicago Wheat Futures MGEX Spring Wheat FuturesMonth Close Change Carry/mo Month Close Change Carry/mo Month Close Change Carry/mo

Dec 16 $4.14 $0.1550 --- Dec 16 $ 4.16 $0.1925 --- Dec 16 $5.32 $0.1025 ---

Mar 17 $4.31 $0.1575 $0.05667 Mar 17 $ 4.34 ¾ $0.1825 $0.0625 Mar 17 $5.31 ¾ $0.0925 $0.01083

May 17 $4.41 ¾ $0.16 $0.05375 May 17 $ 4.48 ½ $0.1850 $0.06875 May 17 $5.36 ½ $0.09 $0.0250

July 17 $4.52 ½ $0.1625 $0.05375 July 17 $ 4.60 ¼ $0.1825 $0.05875 July 17 $5.43 $0.0825 $0.03125

Sept 17 $4.67 $0.1575 $0.0725 Sept 17 $ 4.74 ½ $0.1725 $0.07125 Sept 17 $5.50 $0.07 $0.04

Dec 17 $4.89 $0.1575 $0.07333 Dec 17 $ 4.93 $0.17 $0.06167 Dec 17 $5.61 $0.0675 $0.03917

Mar 18 $5.03 ¾ $0.1575 $0.04917 Mar 18 $ 5.07 ¾ $0.1675 $0.04917 Mar 18 $5.70 $0.06 $0.0425

May 18 $5.13 $0.1525 $0.04625 May 18 $ 5.13 ¼ $0.165 $0.0275 May 18

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II. U.S. & World Drought Monitor, Moisture Accumulations & Forecasts (Weekly Weather and Crop Bulletin)

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III. Corn Market Information Weekly DEC 2016 Corn Futures

Key Corn & Grain Sorghum Supply‐Demand Factors: U.S. Corn Exports: “Neutral‐negative” short term MY 2016/17 U.S.

corn export shipments with “positive” long term outlook Weekly Export Shipments week of 10/6/2016 for MY 2016/17 = 44.55 mb

vs 47.5 mb/wk needed to meet USDA’s October 12th projn of 2.225 bb exports

Total shipments through 10/6/2016 for MY 2016/17 = 271.9 mb i.e., 12.2% of 2.225 bb USDA projn with 9.9% of MY complete (5.14/52 weeks)

Total sales (9/29/2016) for “new crop” MY 2016/17 = 811.1 mb i.e., 37.3% of 2.175 bb USDA projn w. 8.0% of MY complete (4.14/52 weeks)

U.S. Grain Sorghum Exports: “Negative” short term MY 2016/17 Export Shipments & “neutral‐positive” long term

Weekly Export Shipments wk of 10/6/2016 for MY 2016/17 = 3.5 mb vs 4.95 mb/wk needed to meet USDA’s October 12th projn of 250 mb exports

Total shipments through 10/6/2016 for MY 2016/17 = 18.1 mb i.e., 7.2% of 250 mb USDA projn with 9.9% of MY complete (5.14/52 weeks)

Total new sales (9/22/2016) for “new crop” MY 2016/17 = 39.2 mb i.e., 15.7% of 250 mb USDA projn w. 8.0% of MY complete (4.14/52 weeks)

World & U.S. Corn Supply‐Demand Fundamentals Mktg Yr World % S/U U.S. % S/U U.S. $/bu 2007/08 16.5% S/U 12.8% S/U $4.20 /bu 2008/09 18.3% S/U 13.9% S/U $4.06 /bu 2009/10 17.2% S/U 13.1% S/U $3.55 /bu 2010/11 14.5% S/U 8.7% S/U $5.18 /bu 2011/12 14.8% S/U 7.9% S/U $6.22 /bu 2012/13 15.3% S/U 7.4% S/U $6.89 /bu 2013/14 18.6% S/U 9.2% S/U $4.46 /bu 2014/15USDA 21.3% S/U 12.6% S/U $3.70 /bu 2015/16USDA 21.9% S/U 12.7% S/U $3.61 /bu 13.601 bln bu crop 2016/17USDA 21.3% S/U 16.0% S/U $3.25 /bu 15.057 bln bu crop

U.S. Grain Sorghum Supply‐Demand Fundamentals 2014/15USDA 67.6 bu/acUS 4.0% S/U $4.03 /bu 433 mln bu crop

2015/16USDA 76.0 bu/acUS 6.4% S/U $3.30 /bu 597 mln bu crop 2016/17USDA 77.2 bu/acUS 9.6% S/U $3.10 /bu 467 mln bu crop

DEC 2016 Corn (Weekly): $3.49 ½ on Th., Oct. 13, 2016

Monthly Corn Futures Continuation

Chart

DEC 2016 Corn: $3.49 ½ on Th., Oct. 13, 2016

$3.50$3.46

$3.18$3.09

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IV. Wheat Market Outlook Weekly DEC 2016 HRW Futures

Monthly Kansas HRW Wheat eFutures

Key Wheat Supply‐Demand Factors:

U.S. All Wheat Exports: “Neutral‐negative” Short Term Export Shipments with “positive” long run export prospects in “new crop” MY 2016/17 (Started 6/1/2016)

– Weekly Export Shipments wk of 10/6/2016 for “new crop” MY 2016/17 = 15.9 mb vs 17.8 mb /wk needed to meet USDA’s September 12th projn of 975 mb exports

– Total shipments through 10/6/2016 for “new crop” MY 2016/17 = 388.5 mb i.e., 39.8% of 975 mb USDA projn with 36.5% of MY complete (19/52 weeks)

– Total shipments + new sales 9/29/2016 for “new crop” MY 2016/17 = 529.75 mb i.e., 55.8% of 950 mb USDA projn with 34.6% of MY complete (18/52 weeks)

“Negative” World & U.S. Wheat S/D Fundamentals Mktg Yr World % S/U U.S. % S/U U.S. $/bu

2007/08 20.8% S/U 13.2% S/U $6.48 /bu 1,263 mb exports


2009/10 31.2% S/U 48.6% S/U $4.87 /bu 879 mb exports





2014/15 30.6% S/U 37.2% S/U $5.99/bu 864 mb exports

2015/16USDA 33.8% S/U 50.0% S/U $4.89 /bu 775 mb exports

2016/17USDA 33.8% S/U 50.1% S/U $3.70 /bu 975 mb exports

DEC 2016 KC Wheat (Weekly) $4.14 on Th., Oct. 13, 2016

DEC 2016 KC Wheat$4.14 on Th., Oct. 13, 2016

$4.14$3.97

$4.71

Monthly KS HRW Wheat

Futures Continuation

Chart

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Non-Convergence of CME Kansas HRW Wheat Futures

for the DEC 2015, JULY 2016, and SEPT 2016 Contracts

Daniel O’Brien, Extension Agricultural Economist – Kansas State University

October 12, 2016

Summary

Since the delivery period for the SEPT 2015 Chicago Mercantile Exchange (CME) Kansas Hard Red Winter

(HRW) wheat futures contract, basis bids at designated delivery elevator locations during futures contract

delivery periods have been markedly wider than the futures-cash price differentials at delivery designated in the

CME Kansas HRW wheat futures contract specifications. This market condition seems to be due to a

combination of excessive supplies of wheat and to non-convergence of futures with cash wheat prices during

delivery periods at designated delivery elevators.

During the late-August delivery period for the SEPT 2016 CME Kansas HRW wheat futures contract, truck

bids for ordinary wheat in Kansas City, MO – where a number of the designated delivery elevators for the CME

Kansas HRW wheat futures contracts are located – were $0.55-$0.58 per bushel under futures. At other CME

Kansas HRW wheat futures contract delivery elevator locations in Wichita, Hutchinson, and Salina, Kansas,

wheat basis levels (i.e., the difference between futures and local cash prices) of $0.80-$0.85 per bushel under

futures were recorded. These basis levels are markedly wider than the location-based price differentials

formally designated to occur during delivery according to CME Kansas HRW wheat futures contract

specifications, i.e., $0.12 per bushel under at Salina/Abilene delivery elevators, $0.09 per bushel under at

Hutchinson, $0.06 under at Wichita, and no discount or “par” at Kansas City, MO truck bid locations.

While this lack of convergence at designated delivery elevator locations between cash and futures prices for

HRW wheat has been due partly to a combination of wheat market supply-demand factors, it seems that issues

related to the design of the futures contract itself are also contributing significantly. This is particularly true in

regards to grain delivered by short futures position holders on CME Kansas HRW wheat futures contracts.

Potential remedies to non-convergence in the CME Kansas HRW wheat futures contract include instituting

a VSR on this contract as well as the Chicago wheat futures contract, or to raise the fixed storage rate paid on

warehouse receipts in the CME Kansas HRW wheat futures contract high enough to motivate “load out” cash

sales instead of storage on the part of long position holders.

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VI. Soybean Market Outlook Weekly NOVEMBER 2016 Soybean Futures

Monthly Soybean eFutures

Weekly NOV 2016 Soybeans $9.56 ¼ on Th., Oct. 13, 2016

Key Soybean Supply‐Demand Issues:

U.S. Soybean Exports: “Bullish” Short Run Export Shipments in MY 2015/16 and “positive” Forward Sales o Export Shipments for week of 10/6/2016 for “new crop” MY 2016/17 = 66.2 mb

vs 39.15 mb/wk needed to meet USDA’s October 12th projn of 2.025 bb exports

o Total shipments through 10/6/2016 for “new crop” MY 2016/17 = 191.2 mb i.e., 9.4% of 2.025 bb USDA projn with 9.9% of MY complete (5.14/52 weeks)

o Total new sales (9/29/2016) for “new crop” MY 2016/17 = 1,039.6 mb i.e., 52.4% of 1.985 bb USDA projn with 8.0% of MY complete (4.14/52 weeks)

World & U.S. Soybean Supply‐Demand Fundamentals Mktg Yr World % S/U U.S. % S/U U.S. $/bu

2007/08 22.9% S/U 6.7% S/U $10.10 /bu 1.159 bb expts

2008/09 19.4% S/U 4.5% S/U $ 9.97 /bu 1.279 bb expts

2009/10 25.2% S/U 4.5% S/U $ 9.59 /bu 1.499 bb expts

2010/11 27.8% S/U 6.6% S/U $11.30 /bu 1.505 bb expts

2011/12 20.4% S/U 5.4% S/U $12.50 /bu 1.365 bb expts

2012/13 21.1% S/U 4.5% S/U $14.40 /bu 1.328 bb expts

2013/14 22.4% S/U 2.7% S/U $13.00 /bu 1.638 bb expts

2014/15 26.1% S/U 5.0% S/U $10.10 /bu 1.842 bb expts

2015/16USDA 23.9% S/U 5.0% S/U $8.95 /bu 1.936 bb expts 2016/17USDA 23.5% S/U 9.6% S/U $9.05 /bu 2.025 bb expts

NOV 2016 Soybeans $9.56 ¼ on Th., Oct. 13, 2016

$9.56

$8.44 ¼ $7.76 ¼

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Documents

KSU Agriculture Today Radio Notes - AgManager.info · Weekly Export Shipments week of 10/6/2016 for MY 2016/17 = 44.55 mb vs 47.5 mb/wk needed to meet USDA’s October 12 th projn