SRMEC Marketing Meeting, July 9, 2015

SRMEC
Southern Middle Tennessee
Marketing Meeting, July 9, 2015
Aaron Smith
Assistant Extension Professor
University of Tennessee
Overview
•
•
•
•
•
•
Harvest Futures and Cash Prices
Weather / Crop Conditions
June 30th USDA reports
Money Flow
Supply and Demand
China
• Continued short term volatility is likely
• Weather will continue to dictate market direction
• Changes in global demand and economic activity
remain a significant wild card
Oct/Nov Soybean Cash Quotes
15.00
14.00
Price $/bu
13.00
12.00
11.00
10.00
9.00
8.00
Lawrenceburg
Decherd
Guntersville, AL
• May have some more upside
potential ($4.60?)
• Weather in July will drive the
market
September Cash Quotes Cash
6.5
6
Price $/bu
5.5
5
4.5
4
3.5
3
Lawrenceburg
Decherd
Guntersville, AL
• Global weather in key wheat
producing areas will drive markets
• Markets are likely to continue in
the short term with a high
amount of volatility
• USD strength and the global economy will be important
for domestic prices and competitiveness with
international producers
Planted Acreage (2015: June 30
Acreage Report)
Commodity
2010
2011
2012
2013
2014
2015
2010-14 % Change
Avg.
'14 to '15
U.S.
Corn
88,192
91,936
97,291
95,365
90,597
88,897
92,676
-2%
Soybeans
77,404
75,046
77,198
76,840
83,701
85,139
78,038
2%
Wheat
52,620
54,277
55,294
56,236
56,822
56,079
55,050
-1%
Cotton
10,974
14,735
12,264
10,407
11,037
8,998
11,884
-18%
Tennessee
Corn
710
790
1,040
890
920
920
870
0%
1,450
1,290
1,260
1,580
1,640
1,850
1,444
13%
Wheat
225
400
405
640
530
470
440
-11%
Cotton
390
495
380
250
275
170
358
-38%
Soybeans
Quarterly Stocks Report June 30,2015
On
Farms
2014
Off
Farms
1-Mar
1-Jun
1-Sep
1-Dec
3,860,500
1,863,200
462,000
7,087,000
3,147,623
1,988,516
769,904
4,124,380
1-Mar
1-Jun
1-Sep
1-Dec
237,530
96,995
713,450
472,800
819,435
493,288
1,193,770
1,056,830
1-Mar
1-Jun
1-Sep
1-Dec
381,900
109,100
21,325
1,218,000
611,928
295,945
70,666
1,309,744
Date
Total All
Positions
(1,000 bushels)
Corn
7,008,123
3,851,716
1,231,904
11,211,380
All Wheat
1,056,965
590,283
1,907,220
1,529,630
Soybeans
993,828
405,045
91,991
2,527,744
On
Farms
2015
Off
Farms
Total All
Positions
4,380,000
2,275,000
3,369,806
2,171,701
7,749,806
4,446,701
278,710
155,170
861,697
597,466
1,140,407
752,636
609,200
246,300
717,399
379,104
1,326,599
625,404
1,000,000
Corn CFTC COT Positions by Trader Category
Hedgers
900,000
Number of Contracts
800,000
700,000
600,000
500,000
400,000
300,000
Speculators
200,000
100,000
0
1/6/2015
2/6/2015
3/6/2015
Non-Commercial Long
Commercial Long
4/6/2015
5/6/2015
Non-Commercial Short
Commercial Short
6/6/2015
Soybean CFTC COT Positions by Trader Category
600,000
Hedgers
Number of Contracts
500,000
400,000
300,000
200,000
Speculators
100,000
0
1/6/2015
2/6/2015
3/6/2015
4/6/2015
5/6/2015
Non-Commercial Long
Non-Commercial Short
Commercial Long
Commercial Short
6/6/2015
Corn Domestic Balance Sheet
12/13
13/14
Acres Planted
97.3
95.4
14/15
Supply
90.6
Acres Harvested
87.4
87.5
83.1
US Yield (Bu/Acre)
123.1
Beg. Stocks
Production
Imports
Total Supply
15/16
June
15/16
July
89.2
89.2
88.9
81.7
81.7
81.1
166.8
165.2
1,876
13,430
25
15,531
1,814
13,397
25
15,236
158.1 171.0
166.8
Supply (Million Bushels)
989
821
1,232
1,851
10,755 13,829 14,216 13,630
160
36
25
25
11,904 14,686 15,472 15,506
Use (Million Bushels)
4,315 5,034 5,250
5,300
4,641 5,134 5,175
5,200
Feed and Residual
Ethanol
Food, Seed &
1,397
Industrial
Exports
730
Total Use
11,083
U.S. Ending Stocks
821
Foreign Stocks
4,619
U.S. Avg. Season
Price ($/Bu)
U.S. Stocks/Use
15/16
May
1,369
1,347
1,360
5,300
5,200
1,360
1,917 1,825
1,900
1,900
13,454 13,597 13,760
13,760
1,232 1,876
1,746
1,771
5,581 5,880
5,810
5,913
Price and Stocks to Use Ratio
$3.55- $3.20$3.20$6.89 $4.46
$3.75
$3.80
$3.80
7.41% 9.16% 13.80% 12.69% 12.87%
13,790
1,476
• Reduced acreage and
wide spread weather
concerns have the
potential to reduce
domestic supplies
• Domestic use has some
question marks with
potential issues with RFS
and Feed Use
• Global economic
situation and export
demand
• Foreign production and
stocks could go either
way at this point for the
2015/16 MY
Soybean Domestic Balance Sheet
15/16
May
15/16
June
15/16
July
12/13 13/14
14/15
Supply
Acres Planted
77.2
76.8
83.7
84.6
84.6
85.1
Acres Harvested
76.1
76.3
83.1
83.7
83.7
84.2
US Yield (Bu/Acre)
40.0
44.0
47.8
46
46
45.1
Supply (Million Bushels)
Beg. Stocks
169
141
92
350
330
Production
3,042 3,358 3,969 3,850
3,850
Imports
41
72
30
30
30
Total Supply
3,252 3,570 4,091 4,230
4,210
Use (Million Bushels)
Crushing
1,689 1,734 1,815 1,825
1,830
Exports
1,317 1,647 1,810 1,775
1,775
Seed and Residual
105
97
136
130
130
Total Use
3,111 3,478 3,761 3,729
3,734
U.S. Ending Stocks 141
92
330
500
475
Foreign Stocks
1,948 2,330 2,794 3,035
2,950
Price and Stocks to Use Ratio
U.S. Average
$8.25$8.25$14.40 $13.00 $10.05
Season Price ($/Bu)
$9.75
$9.75
U.S. Stocks/Use
4.53% 2.65% 8.77% 13.41% 12.72%
287
3,797
30
4,114
3,734
380
• Demand continues to exceed
USDA projections and
consequently carry over
stocks into 2015/16 MYA
have decreased from 475
million bushels (Sept 14) to
less than 300 million bushels
(anticipated July WASDE
revision)
• If weather continues to be
unsupportive to prices we
could see additional price
increases
• Brazil and Argentina are “off
season” but combined with
the US provide about 80% of
global soybeans
Wheat Domestic Balance Sheet
15/16
May
15/16
June
15/16
July
55.4
48
55.4
48
56.1
47.3
43.5
44.2
44
712
2,121
140
2,973
752
2,081
140
2,973
12/13
13/14
Acres Planted
Acres Harvested
55.3
48.8
56.2
45.3
14/15
Supply
56.8
46.4
US Yield (Bu/Acre)
46.2
47.1
43.7
Beg. Stocks
Production
Imports
Total Supply
743
2,252
123
3,118
Supply (Million Bushels)
718
590
709
2,135
2,026
2,087
169
148
140
3,021
2,764
2,937
Food
Seed
Feed
Exports
Total Use
U.S. Ending Stocks
Foreign Stocks
951
73
364
1,012
2,400
718
5,735
U.S. Avg. Season
Price ($/Bu)
U.S. Stocks/Use
955
960
967
967
77
77
72
72
223
160
180
195
1,176
855
925
925
2,431
2,057
2,144
2,159
590
712
793
814
6,182
6,675
6,678
6,623
Price and Stocks to Use Ratio
$4.50- $4.40$7.77 $6.87
$6.00
$5.50 $5.40
29.92% 24.27% 34.61% 36.99% 37.70%
2,159
814
• Weather concerns
domestically and
internationally
continue to drive
markets
• Price competitiveness
on the international
markets has the
potential to be
dramatically altered
from global economic
conditions and USD
• Potential to use up
some global and
domestic stocks due
to anticipated supply
concerns
China Imports
3,000
Millions of Bushels
2,500
2,000
1,500
1,000
500
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Corn
Soybeans
Sorghum
Wheat
China Ending Stocks
7,000
6,000
Millions of Bushels
5,000
4,000
3,000
2,000
1,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Corn
Soybeans
Sorghum
Wheat
China Stocks-to-Use
90%
80%
70%
Stocks-to-Use
60%
50%
40%
30%
20%
10%
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Corn
Soybeans
Sorghum
Wheat
Take Home Message
• Weather is in the driver’s seat
• Likely to see continued volatility
• If you have not priced any (or a limited amount) of
2015 corn or soybean production this rally represents a
good opportunity to get into the market at a profitable
price point
– Need to think in terms of:
• Profit based marketing and risk reduction
• Do not over price but continue to look for incremental
opportunities
• While conditions have been challenging in some areas
of Tennessee we are in a better position than many
other areas