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Outlook for Feed Grain / Oilseed Markets

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Presentation on theme: "Outlook for Feed Grain / Oilseed Markets"— Presentation transcript:

1 Outlook for Feed Grain / Oilseed Markets
Presented to the National Chicken Council October 27, 2016 Bill Lapp Advanced Economic Solutions Omaha, NE

2 Advanced Economic Solutions
Outlook presented here relies on publicly available data sources CME & NYMEX futures history USDA supply/demand data Census bureau trade data CFTC commodity reporting data All opinions are those of Advanced Economic Solutions 10/27/2016 Advanced Economic Solutions

3 Key Market Drivers: - Value of US dollar
Changes in the value of the US dollar influence commodity prices A stronger US dollar is generally negative for commodity prices A weaker US dollar is generally positive for commodity prices The US dollar rose by 20% during late 2014, but has been more stable since A sharp move in the value of the US dollar (up or down) would impact commodity prices 10/27/2016 Advanced Economic Solutions Source: CME, AES

4 Key Market Drivers: - Favorable growing conditions / higher yields
10/27/2016 Advanced Economic Solutions Source: USDA, AES

5 Key Market Drivers: - Record Sept 1 Supplies of Corn/Soybeans/Wheat
10/27/2016 Advanced Economic Solutions Source: USDA, AES

6 Key Market Drivers: - Speculator (“Managed Money”) Participation
10/27/2016 Advanced Economic Solutions Source: CFTC, AES

7 Key Market Drivers: - USDA Upcoming Crop Reports
Weekly harvest updates (each Monday) Nov 9: USDA update of corn/soybean crop estimate (and supply/demand estimates) Dec 12: USDA update of supply/demand estimates Jan 12: USDA final corn/soybean crop estimates, December 1 stocks report, 2017 winter wheat seedings, and update of supply/demand 10/27/2016 Advanced Economic Solutions Source: USDA, AES

8 Key Market Drivers: - Slowing growth in ethanol usage of corn
After years of rapid growth ( ), corn use for ethanol has stabilized at B bushels Ethanol use is limited in the U.S. by the 10% “blend-wall” 10/27/2016 Advanced Economic Solutions Source: USDA, AES

9 Key Market Drivers: - Corn exports rising to 9 year high
US regaining exports due to shortfall in Brazil’s corn crop Strong weekly demand is helping support corn futures 10/27/2016 Advanced Economic Solutions Source: USDA, AES

10 Key Market Drivers: - Corn Stocks-Use to Remain near 12-13%
Historically, lower stocks-use ratio has been supportive to prices 2010/11 – 2013/14 Higher stocks-use ratio has led to lower corn prices 2014/15 – 2016/17F 10/27/2016 Advanced Economic Solutions Source: USDA, AES

11 Corn Futures Prices: 2012-Present
Corn prices in recent months have declined to multi-year lows, reflecting record US corn yields Price direction in coming months is expected to be driven by: USDA crop estimates in November & January Export demand and ethanol usage rates Changes in “Spec” positions Development of South American corn crops 10/27/2016 Advanced Economic Solutions Source: CME, AES

12 Key Market Drivers: - China Dominates World Soybean Trade
10/27/2016 Advanced Economic Solutions Source: USDA, AES

13 Key Market Drivers: - Soybean Stocks-Use Rising to 10-year High
Record US soybean crop has led to lower US soybean and soymeal prices Risks to 16/17 forecast: Revisions to US crop size S. American crop size Fund buying/selling China 10/27/2016 Advanced Economic Solutions Source: USDA, AES

14 Advanced Economic Solutions
Key Market Drivers: - Soybean price dictate direction of soymeal prices 10/27/2016 Advanced Economic Solutions Source: CME, AES

15 Soymeal Futures Prices: 2012-Present
Soymeal prices have remained above $300, in spite of a record 2016 US soybean crop Price direction in coming months is expected to be driven by: USDA crop estimates in November & January Changes in “Spec” positions Development of South American soybean crops Chinese import demand Soyoil price strength 10/27/2016 Advanced Economic Solutions Source: CME, AES

16 Outlook for Feed Grain / Oilseed Markets
Presented to the National Chicken Council October 27, 2016 Bill Lapp Advanced Economic Solutions Omaha, NE

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