Updated Supply/Demand/Price Prospects for Corn and Soybeans
August 15, 2016
Updated Supply/Demand/Price Prospects for Corn and Soybeans Scott Irwin and Darrel Good
[email protected] / d‐[email protected] Department of Agricultural and Consumer Economics
University of Illinois
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Scott Irwin and Darrel Good
[email protected] / d‐[email protected] Department of Agricultural and Consumer Economics
University of Illinois 1
Updated Supply/Demand/Price Prospects for Corn and Soybeans
August 15, 2016
bu. per ac.
Figure 1. U.S. Average Corn Yield
200
180
160
140
120
100
80
60
40
20
0
USDA = 175.1
Avg. Guess = 170.6
Yield Yield Deviation (bu./acre)
Figure 2 .Top 20 Trend Deviations for U.S. Average Corn Yield,
1960-2016 (2016 USDA Aug 1)
20
18.0
15
14.5
12.7 12.9 13.0
9.9
10
8.5
10.3 10.4
10.9 11.0 11.0
8.5
7.4
5
5.2
5.5
5.9
6.0
6.1
3.7
0
Year
Scott Irwin and Darrel Good
[email protected] / d‐[email protected] Department of Agricultural and Consumer Economics
University of Illinois 2
Updated Supply/Demand/Price Prospects for Corn and Soybeans
August 15, 2016
Figure 3. Corn Yield by State
August 1, 2016 Corn Yield
Bushels and Change from Previous Year
Figure 4. U.S. Corn Production
16,000
USDA = 15,153
Avg. Guess = 14,757
14,000
mil. bu.
12,000
10,000
8,000
6,000
4,000
2,000
0
Scott Irwin and Darrel Good
[email protected] / d‐[email protected] Department of Agricultural and Consumer Economics
University of Illinois 3
Updated Supply/Demand/Price Prospects for Corn and Soybeans
August 15, 2016
Figure 5. USDA August Corn Production Forecast
Minus Average Trade Guess
500
400
308
300
mil. bu.
354
302 289
185
200
100
396
150
100
56
73
55
83
0
-100
-55
-140
-200
-300
-400
-169
-192
-268
-287
-218
-273
-339
Figure 6. Final U.S. Corn Yield Estimate Minus August Forecast
15
11.50
10
8.70
8.40
bu.per ac.
5.70
4.30 4.80
4.40
5
4.40
2.30
1.70
0.00
0
-0.90
-5
3.60
-3.10
-0.40
-1.70 -1.10
-4.80
-5.80
-10
-12.20
-15
Scott Irwin and Darrel Good
[email protected] / d‐[email protected] Department of Agricultural and Consumer Economics
University of Illinois 4
Updated Supply/Demand/Price Prospects for Corn and Soybeans
August 15, 2016
Figure 7. Planted Acres of Corn Minus June Intentions
1,500
886
1,000
639
mil. ac.
500
0
-28
-255
-500
-1,000
320
187
47
-39
-407
-690 -633
-346
-463
-653
-1,039
-1,056
-1,500
-1,044
-898
-1,345
-2,000
-2,014
-2,500
mil. bu.
Figure 8. Monthly Corn Use for Ethanol Production
470
460
450
440
430
420
410
400
390
380
370
360
2014-15
Sep.
Oct.
Nov
Dec
Jan.
Needed to reach
USDA’s 5200
2015-16
Feb
Mar
Apr
May
June
July
Aug
Scott Irwin and Darrel Good
[email protected] / d‐[email protected] Department of Agricultural and Consumer Economics
University of Illinois 5
Updated Supply/Demand/Price Prospects for Corn and Soybeans
August 15, 2016
Figure 9. 2015‐16 Corn Export Progress
USDA projection
1,925 mb
Total‐to‐date
1,703 mb
Unshipped sales
305 mb
Needed per week
57.6 mb
Recent average
53 mb
Figure 10. Fourth Quarter Feed and Residual Use of Corn
1,200
mil. bu.
1,000
800
600
400
Needed to reach
USDA’s 5,200
973
760
668
684
649
495
542
452
404
330
247
200
0
Scott Irwin and Darrel Good
[email protected] / d‐[email protected] Department of Agricultural and Consumer Economics
University of Illinois 6
Updated Supply/Demand/Price Prospects for Corn and Soybeans
August 15, 2016
mil. bu.
Figure11. Sept 1 Corn Stocks Estimate Minus Average Guess
350
300
250
200
150
100
50
0
-50
-100
-150
-200
301
105
16
Balance
5
-33
-49 -41
-46
143
78
66
Figure 12.
Corn
166
157
51
4
-8
-54
-45
-90
-138
Supply: Planted Acreage (million acres) Harvested Acreage (million acres) Yield (Bushels / Acre) Beginning Stocks (million bushels) Total Production (million bushels) Imports (million bushels) Total Supply (million bushels) Consumption: Feed and Residual (million bushels) Ethanol (million bushels
Other Domestic (million bushels) Exports (million bushels) Total Consumption (million bushels) Ending Stocks (million bushels) Ending Stocks/Total Consumption (%) Average Price ($/bu.) 2016/17 2016/17
USDA‐8/12
Irwin & Good
94.1
86.6
175.1
1,706
15,153
50
16,909
94.1
86.6 173.0
1,756
14,973
25
16,754
5,675
5,600
5,275
1,375 2,175
14,500
2,409
16.6%
$3.15
5,300
1,375
2,150
14,425
2,329
16.1%
$3.40
Scott Irwin and Darrel Good
[email protected] / d‐[email protected] Department of Agricultural and Consumer Economics
University of Illinois 7
Updated Supply/Demand/Price Prospects for Corn and Soybeans
August 15, 2016
Figure 13. Reciprocal Regression Model Specification of U.S. Farm Price of
Corn and U.S. Ending Stocks-to-Use Ratio, 1990-91 - 2015-16*
$8.00
2012-13
Price ($/bu.)
$7.00
2011-12
$6.00
Strong Demand: y=8.52(1/x) + 5.44
2010-11
$5.00
Moderate Demand 1: y=8.52(1/x) + 4.20
2007-08
2013-14
$4.00
2008-09
2014-15
$3.00
$2.00
Weak Demand: y=8.52(1/x) + 2.96
2015-16
2009-10
Base: 1990-91 - 2005-06
y=8.52(1/x) + 1.62
$1.00
0
Source: USDA
Moderate Demand 2: y=8.52(1/x) + 3.50
5
10
15
20
Ending Stocks-to-Use Ratio (%)
25
30
* Projected
Figure 14. New Crop Corn Basis-South Central Illinois
$0.00
-$0.05
$ per bu.
-$0.10
-$0.15
-$0.20
-$0.25
2016
-$0.30
-$0.35
2015
-$0.40
-$0.45
Scott Irwin and Darrel Good
[email protected] / d‐[email protected] Department of Agricultural and Consumer Economics
University of Illinois 8
Updated Supply/Demand/Price Prospects for Corn and Soybeans
August 15, 2016
Figure 15. Carry in the CBOT Corn Futures Market
on August 12, 2016 (settlement prices)
$3.70
$3.64
$3.57
Price ($/bu.)
$3.60
$3.50
$3.50
$3.40
$3.43
$3.33
$3.30
$3.20
Dec 16
Mar 17
May 17
Jul 17
Sep 17
Delivery Month
Figure 16. U.S. Soybean Average Yield
USDA = 48.9
Avg. Guess = 47.5
60
bu.per ac.
50
40
30
20
10
0
Scott Irwin and Darrel Good
[email protected] / d‐[email protected] Department of Agricultural and Consumer Economics
University of Illinois 9
Updated Supply/Demand/Price Prospects for Corn and Soybeans
August 15, 2016
Yield Yield Deviation (bu./acre)
Figure 17. Top 20 Trend Deviations for U.S. Average Soybean Yield,
1960-2016 (2016 USDA Aug 1)
6
5.4
5
3.9
4
3.3 3.4
3
2
1
1.1
2.1 2.2
1.9 2.0
1.8
1.5 1.6 1.7
1.3 1.3 1.3 1.4
2.4
2.6 2.6
0
Year
Figure 18. Soybean Yield by State
August 1, 2016 Soybean Yield
Bushels and Change from Previous Year
Scott Irwin and Darrel Good
[email protected] / d‐[email protected] Department of Agricultural and Consumer Economics
University of Illinois 10
Updated Supply/Demand/Price Prospects for Corn and Soybeans
August 15, 2016
Figure 19. U.S. Soybean Production
USDA = 4,060
Avg. Guess = 3,941
4,500
4,000
mil.bu.
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Figure 20. USDA August Soybean Production Forecast
Minus Average Trade Guess
200
174
150
119
mil.bu.
100
50
53
67
45
35
11
1
0
-50
-100
-23
-16
-27
-14
-52
-66
-78
-109
-150
-28
-118
-118
-94 -102
Scott Irwin and Darrel Good
[email protected] / d‐[email protected] Department of Agricultural and Consumer Economics
University of Illinois 11
Updated Supply/Demand/Price Prospects for Corn and Soybeans
August 15, 2016
Figure 21. Final U.S. Soybean Yield Estimate Minus August Forecast
6
4.6
4
bu. per ac.
2
3.4
3.5
3.1
2.4
2.3
1.4
0.9
1.3
0.7
0.1
0
-0.3
-0.5 -0.6
-2
1.1
-0.5
-0.9
-2.7 -2.6
-4
-6
-6.0
-8
Figure 22. Planted Acres of Soybeans Minus June Intentions
1,500
1,185
500
592
399
300
660
000 ac.
0
-32
-235
-500
-1,000
-1,500
1,118
970
1,000
-162
-249
-475
-845
-695
-888
-1,071
-1,341
-1,464
-1,563
-2,000
-2,500
-2,489
-3,000
Scott Irwin and Darrel Good
[email protected] / d‐[email protected] Department of Agricultural and Consumer Economics
University of Illinois 12
Updated Supply/Demand/Price Prospects for Corn and Soybeans
August 15, 2016
Figure 23. 2015‐16 Soybean Export Progress
USDA projection
1,880 mb
Total‐to‐date 1,800 mb
Unshipped sales
201 mb
Needed/week
21 mb
Recent average
29 mb
Figure 24. Monthly Soybean Crush
165,000
2014-15
2015-16
160,000
Needed to reach
USDA’s 1,900
000 bu.
155,000
150,000
145,000
140,000
135,000
May
June
Jul
Aug
Scott Irwin and Darrel Good
[email protected] / d‐[email protected] Department of Agricultural and Consumer Economics
University of Illinois 13
Updated Supply/Demand/Price Prospects for Corn and Soybeans
August 15, 2016
Figure 25. September 1 Soybean Stocks Estimate
Minus Average Guess
80
61
60
37
mil. bu.
40
20
19
22
17
19
18
21
21
27
17
6
0
0
‐7
-20
‐10
‐17
‐22
-40
‐37
‐33
‐34
-60
Figure 26.
2016/17
2016/17
USDA- 8/12
83.7
Irwin & Good
Harvested Acreage (mil.)
83.0
83.0
Yield (bu./ac.)
48.9
48.0
Production (mil. bu.)
4,060
3,984
255
255
Supply:
Planted Acreage (mil.)
Soybean
Balance
Beginning stocks (mil. bu.)
Imports (mil. bu.)
83.7
30
20
4,346
4,259
Crush (mil. bu.)
1,940
1,940
Export (mil. bu.)
1,950
1,925
126
125
Total Supply (mil. bu.)
Consumption:
Seed and feed (mil. bu.)
Total Consumption(mil. bu.)
4,016
3,990
Ending stocks (mil. bu.)
330
269
Stocks‐to‐use
8.2%
6.7%
Average farm price ($/bu.)
$9.10 $9.50
Scott Irwin and Darrel Good
[email protected] / d‐[email protected] Department of Agricultural and Consumer Economics
University of Illinois 14
Updated Supply/Demand/Price Prospects for Corn and Soybeans
August 15, 2016
Figure 27. New Crop Soybean Basis-South Central Illinois
$0.00
-$0.05
$ per bu.
-$0.10
-$0.15
-$0.20
-$0.25
2016
-$0.30
-$0.35
-$0.40
1/8/2015
2015
2/8/2015
3/8/2015
4/8/2015
5/8/2015
6/8/2015
7/8/2015
8/8/2015
Figure 28. Carry in the CBOT Soybean Futures Market
on August 12, 2016 (settlement prices)
$9.90
$9.82
$9.82
Price ($/bu.)
$9.80
$9.77
$9.76
$9.75
$9.72
$9.70
$9.60
$9.50
$9.50
$9.40
Nov 16
Jan 17
Mar 17
May 17
Jul 17
Aug 17
Sep 17
Delivery Month
Scott Irwin and Darrel Good
[email protected] / d‐[email protected] Department of Agricultural and Consumer Economics
University of Illinois 15