2017/18 Crop Market Outlook & Strategies · 2017/18 Crop Market Outlook & Strategies Frayne Olson,...

2017/18 Crop Market Outlook & Strategies

Frayne Olson, PhDCrop Economist/Marketing Specialist

Director – Burdick Center for [email protected] 701-231-7377 (o) 701-715-3673 (c)

NDSU Extension ServiceND Agricultural Experiment Station

Dept. of Agribusiness & Applied Economics

Key Points• U.S. production (yield) is strong, but demand

is also very good.• Export pace and S.A. production is current

focus.• Geopolitical events and trade negotiations

are the wildcards.• Picking the top is nearly impossible!• Strategies:

– Make several smaller sales.– Place sell orders at key price levels in advance.

World Soybean Prod, Use & Stocks/Use(Million Metric Ton)

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Jan. 12, 2017 USDA ‐WASDE & PSD Custom Query

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Stocks‐to‐Use Total Production Total Use

U.S. Soybean – Total Prod. & Use(Billion Bushels)

Jan. 12, 2017 WASDE Report & Oil Yearbook Table 3

U.S. Soybean Supply & Demand TableU.S. Soybean 2015/2016 2016/2017 (est.) 2017/2018 (Jan)

Planted A. 82.7 Mill. A. 83.4 Mill. A. 90.1 Mill. A.Harvested A. 81.7 Mill. A. 82.7 Mill. A. 89.5 Mill. A.Yield/Harvest A. 48.0 bu. 52.0 bu. 49.1 bu.Beginning Stocks 191 Mill. Bu. 197 Mill. Bu. 302 Mill. Bu.Production 3,926 Mill. Bu. 4,296 Mill. Bu. 4,392 Mill. Bu.Imports 24 Mill. Bu. 22 Mill. Bu. 25 Mill. Bu.

Total Supply 4,140 Mill. Bu. 4,515 Mill. Bu. 4,718 Mill. Bu.Crushings 1,886 Mill. Bu. 1,899 Mill. Bu. 1,950 Mill. Bu.Exports 1,942 Mill. Bu. 2,174 Mill. Bu. 2,160 Mill. Bu.Seed 97 Mill. Bu. 105 Mill. Bu. 106 Mill. Bu.Residual 18 Mill. Bu. 36 Mill. Bu. 35 Mill. Bu.

Total Use 3,944 Mill. Bu. 4,213 Mill. Bu. 4,248 Mill. Bu.Ending Stocks 197 Mill. Bu. 302 Mill. Bu. 470 Mill. Bu.

USDA – WASDE – Jan. 12, 2017


Planted A. 82.7 Mill. A. 83.4 Mill. A. 90.1 Mill. A.Harvested A. 81.7 Mill. A. 82.7 Mill. A. 89.5 Mill. A.

Yield/Harvest A. 48.0 bu. 52.0 bu. 49.1 bu.Beginning Stocks 191 Mill. Bu. 197 Mill. Bu. 302 Mill. Bu.Production 3,926 Mill. Bu. 4,296 Mill. Bu. 4,392 Mill. Bu.Imports 24 Mill. Bu. 22 Mill. Bu. 25 Mill. Bu.



Private estimates:Average = 49.5High = 50.0Low =49.0



Planted A. 82.7 Mill. A. 83.4 Mill. A. 90.1 Mill. A.Harvested A. 81.7 Mill. A. 82.7 Mill. A. 89.5 Mill. A.Yield/Harvest A. 48.0 bu. 52.0 bu. 49.1 bu.Beginning Stocks 191 Mill. Bu. 197 Mill. Bu. 302 Mill. Bu.

Production 3,926 Mill. Bu. 4,296 Mill. Bu. 4,392 Mill. Bu.Imports 24 Mill. Bu. 22 Mill. Bu. 25 Mill. Bu.



Total Production is fifth record year in a row!

(2.2% above last year’s record)


U.S. Soybean Use

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CrushingsExportsSeed & Residual




Total Supply 4,140 Mill. Bu. 4,515 Mill. Bu. 4,718 Mill. Bu.

Crushings 1,886 Mill. Bu. 1,899 Mill. Bu. 1,950 Mill. Bu.Exports 1,942 Mill. Bu. 2,174 Mill. Bu. 2,160 Mill. Bu.Seed 97 Mill. Bu. 105 Mill. Bu. 106 Mill. Bu.Residual 18 Mill. Bu. 36 Mill. Bu. 35 Mill. Bu.


If correct, Crushingswould be a another new record due to

increased feed usage and strong export demand for meal.

(2.7% increase)





Crushings 1,886 Mill. Bu. 1,899 Mill. Bu. 1,950 Mill. Bu.Exports 1,942 Mill. Bu. 2,174 Mill. Bu. 2,160 Mill. Bu.Seed 97 Mill. Bu. 105 Mill. Bu. 106 Mill. Bu.Residual 18 Mill. Bu. 36 Mill. Bu. 35 Mill. Bu.


RFS for biodiesel is very important in today’s market.

32.6% of soybean oil is forecast to be used in biodiesel.




Total Supply 4,140 Mill. Bu. 4,515 Mill. Bu. 4,718 Mill. Bu.Crushings 1,886 Mill. Bu. 1,899 Mill. Bu. 1,950 Mill. Bu.

Exports 1,942 Mill. Bu. 2,174 Mill. Bu. 2,160 Mill. Bu.Seed 97 Mill. Bu. 105 Mill. Bu. 106 Mill. Bu.Residual 18 Mill. Bu. 36 Mill. Bu. 35 Mill. Bu.


Exports are forecast to decrease1.0% from last year due to slow

start to export season.


Weekly U.S. Soybean Export Sales(09/01/2013 – 01/18/2018)

USDA‐FSA Weekly Export Sales Report

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U.S. Soybean Export Destinations

(1,000 Metric Ton)

2016 Soybean Exports by Country – FAS Online

Country 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

China 23,506.9 21,522.4 27,602.2 29,640.8 29,855.0 36,148.3Mexico 3,153.1 2,565.4 3,194.5 3,438.8 3,252.6 3,665.0Indonesia 1,711.0 1,682.4 2,291.5 1,875.9 2,028.6 2,296.9Japan 1,673.6 1,751.0 1,826.4 2,011.4 2,145.6 2,137.2Netherlands 606.8 734.6 1,015.6 1,879.4 2,037.7 2,044.9Taiwan 912.6 1,120.0 1,133.6 1,310.8 1,232.9 1,292.7



Total Supply 4,140 Mill. Bu. 4,515 Mill. Bu. 4,718 Mill. Bu.Crushings 1,886 Mill. Bu. 1,899 Mill. Bu. 1,950 Mill. Bu.

Exports 1,942 Mill. Bu. 2,174 Mill. Bu. 2,160 Mill. Bu.Seed 97 Mill. Bu. 105 Mill. Bu. 106 Mill. Bu.Residual 18 Mill. Bu. 36 Mill. Bu. 35 Mill. Bu.


Will the dispute with North Korea impact trade relations

with China?


Ocean Vessel Movements in Asia

www.chinaag.org ‐ Jan. 29, 2017




Total Use 3,944 Mill. Bu. 4,213 Mill. Bu. 4,248 Mill. Bu.

Ending Stocks 197 Mill. Bu. 302 Mill. Bu. 470 Mill. Bu.

Stocks‐to‐Use Ratio is forecast to increase from

7.2% to 11.1%

Total Production is increasing faster than Use.


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U.S. Soybean – Total Prod. & Use(Billion Bushels)


Mar. CBOT Soybean Pricing Points

DTN Prophet X – 02‐01‐18 am

Historical Soybean Production(Million Metric Ton)

Jan. 12, 2017 WASDE Report & PSD Tables 21, 22 and 23

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United States Brazil Argentina

Brazilian Percent Soil Moisture

USDA – FAS – Crop Explorer

Jan. 21, 2018SMOS

Hazard (wet) ≈ 90% ‐ 100%Optimum ≈ 50% – 80%Hazard (dry) ≈ 0% ‐ 40%

Argentine Percent Soil Moisture

USDA – FAS – Crop Explorer

Jan. 21, 2018SMOS

Hazard (wet) ≈ 90% ‐ 100%Optimum ≈ 50% – 80%Hazard (dry) ≈ 0% ‐ 40%

World Wheat Prod, Use & Stocks/Use(Million Metric Ton)

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USDA – WASDE‐ Jan. 12, 2017 & PSD Custom Query


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Who holds wheat ending stocks?

2016/17 2017/18China: 43.9% → 47.8%U.S. : 12.7% → 10.0%Russia: 4.3% → 6.1%


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Without China Production and Use


U.S. All Wheat – Total Prod. & Use(Billion Bushels)

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Jan. 12, 2017 WASDE Report & Wheat Yearbook Table 6

U.S. All Wheat 2015/2016 2016/2017 (est.) 2017/2018 (Jan)

Planted A. 55.0 Mill. A. 50.1 Mill. A. 46.0 Mill. A.

Harvested A. 47.3 Mill. A. 43.9 Mill. A. 37.6 Mill. A.

Yield/Harvest A. 43.6 bu. 52.7 bu. 46.3 bu.

Begin Stocks 752 Mill. Bu. 976 Mill. Bu. 1,181 Mill. Bu.

Production 2,062 Mill. Bu. 2,309 Mill. Bu. 1,741 Mill. Bu.

Imports 113 Mill. Bu. 118 Mill. Bu. 155 Mill. Bu.


Food 957 Mill. Bu. 949 Mill. Bu. 950 Mill. Bu.

Seed 67 Mill. Bu. 61 Mill. Bu. 62 Mill. Bu.

Feed & Residual 149 Mill. Bu. 157 Mill. Bu. 100 Mill. Bu.

Exports 778 Mill. Bu. 1,055 Mill. Bu. 975 Mill. Bu.


Ending Stocks 976 Mill. Bu. 1,181 Mill. Bu. 989 Mill. Bu.

U.S. All Wheat Supply & Demand Table

















Planted A. 55.0 Mill. A. 50.1 Mill. A. 46.0 Mill. A.Harvested A. 47.3 Mill. A. 43.9 Mill. A. 37.6 Mill. A.













Planted Acreage is lowest since 1919, when USDA first

began to track wheat plantings.


Winter Wheat Seedings – Jan. 12, 2018

Winter Wheat Seedings ReportWinter Wheat Seedings (million acres)

TotalWinter

Hard Red

Winter

Soft Red Winter

WhiteWinter

Average Trade Estimate 31.307 22.327 5.555 3.435Highest Trade Estimate 32.000 23.100 5.900 3.600

Lowest Trade Estimate 30.100 21.100 5.180 3.120

USDA 2017 seedings 32.696 23.426 5.733 3.537USDA 2018 seedings 32.608 23.100 5.980 3.560




Yield/Harvest A. 43.6 bu. 52.7 bu. 46.3 bu.Begin Stocks 752 Mill. Bu. 976 Mill. Bu. 1,181 Mill. Bu.











2017 N.D. Avg. HRSW = 41.0 bu./a.2016 N.D. Avg. HRSW = 46.0 bu./a.

2017 N.D. Avg. Durum = 24.0 bu./a.2016 N.D. Avg. Durum = 40.5 bu./a.







Production 2,062 Mill. Bu. 2,309 Mill. Bu. 1,741 Mill. Bu.Imports 113 Mill. Bu. 118 Mill. Bu. 155 Mill. Bu.









Total Production is 24.6% below 2016, and lowest since 2002.


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USDA – WASDE – Jan. 12, 2017 & USDA Wheat Yearbook ‐Table 5









Food 957 Mill. Bu. 949 Mill. Bu. 950 Mill. Bu.Seed 67 Mill. Bu. 61 Mill. Bu. 62 Mill. Bu.






Food use changes with U.S. population growth and flour extraction rates.













Exports 778 Mill. Bu. 1,055 Mill. Bu. 975 Mill. Bu.Total Use 1,951 Mill. Bu. 2,222 Mill. Bu. 2,087 Mill. Bu.



Exports are critical for U.S. wheat prices and are forecast to decrease

7.6%.


Weekly U.S. All Wheat Export Sales(06/01/2014 – 01/18/2018)


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Weekly U.S. HRS Wheat Export Sales(06/06/2013 – 01/18/2018)


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U.S. All Wheat Export Destinations

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2016 All Wheat Exports by Country – FAS Online

Country 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

Mexico 3,495.9 2,760.5 2,940.3 2,721.1 2,318.1 3,089.7Japan 3,512.1 3,544.0 2,674.3 3,120.5 2,434.0 2,819.7Philippines 2,038.6 1,965.2 2,013.1 2,337.9 2,118.4 2,729.2Nigeria 3,248.0 3,002.1 2,629.4 1,904.0 1,401.2 1,540.4South Korea 1,983.0 1,385.0 1,287.0 1,148.1 1,073.7 1,275.5Taiwan 887.9 1,038.1 980.0 1,001.6 1,033.7 1,049.1

Trans-Pacific Partnership 11

• Trade agreement including:– Australia, New Zealand, Canada, Japan,

Mexico, Brunei, Chile, Malaysia, Peru, Singapore, Vietnam.

• Will be signed on March 8, 2018• Will give Australia and Canada a $65/mt.

reduction in tariff rates relative to the U.S.– $65/mt. = $1.77/bu.

















Ending Stocks remain large.

Stocks‐to‐Use Ratio is forecast to decrease from

53.2% to 47.4%

U.S. All Wheat – Total Prod. & Use(Billion Bushels)

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U.S. Spring Wheat – Total Prod. & Use(Million Bushels)


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Mar. MGEX Wheat Pricing Points

DTN Prophet X – 02‐01‐18 pm

Questions?

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