Wheat Outlook
May 10, 2016
Volume 25, Number 28
Market Situation
Today’s Newsletter
Market Situation
WASDE
1
Crop Progress
4
Weather
5
WASDE. U.S. wheat ending stocks for the 2016/17 marketing year
topped a billion bushels in today’s World Agricultural Supply and
Demand Estimates. This is the highest level of ending stocks since
1.261 billion bushels in 1987. The stocks to use ratio for U.S.
wheat is right at 50% or about a 180 day supply estimated to be
on hand at the end of the marketing year.
U.S. Wheat Supply and Demand, 5/10/2016
Million bushels
2,500
Commitment of
Traders
6
Marketing Strategies
2016 Wheat
Marketing Plan
8
Upcoming
Reports/Events
2,000
1,500
1,000
500
9
0
Beginning Stocks
+226
Production
-54
2015/16
Imports
+10
Domestic Use
=
Exports
+36
+95
Ending Stocks
+51
May 16/17
1
Wheat Outlook
May 10, 2016
Volume 25, Number 28
U.S. Wheat Use
Million Bushels
2,000
1,750
1,500
1,250
1,000
750
500
250
80
/8
81 1
/8
82 2
/8
83 3
/8
84 4
/8
85 5
/8
86 6
/8
87 7
/8
88 8
/8
89 9
/9
90 0
/9
91 1
/9
92 2
/9
93 3
/9
94 4
/9
95 5
/9
96 6
/9
97 7
/9
98 8
/9
99 9
/0
00 0
/0
01 1
/0
02 2
/0
03 3
/0
04 4
/0
05 5
/0
06 6
/0
07 7
/0
08 8
/0
09 9
/1
10 0
/1
11 1
/1
12 2
/1
13 3
/1
14 4
/1
15 5
/1
16 6
/1
7
0
Ending Stocks
Feed and Residual
Exports
Food and Seed
WASDE, 5/10/2016
World wheat production in the 2016/17 crop year is down from the record high of 2015/16, but
only to what would be the second biggest wheat crop in history. With record carryover stocks,
even with lower production and increased use, global wheat ending stocks are higher and days
of use on hand up from a 125 day supply to 132 days, the highest in over 20 years.
WORLD
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
WHEAT
MMT
Beginning Stocks Production
156.48
618.87
154.43
596.53
134.50
612.65
129.35
683.53
169.24
687.09
201.94
650.79
198.19
695.99
196.16
657.94
177.07
715.26
193.77
725.91
216.54
734.05
May
242.91
726.99
Net Change
26.37
(7.06)
Percentage Change
12.2%
-1.0%
Imports
Feed Use
110.15
111.31
112.37
105.80
107.31
101.20
127.94
115.47
133.64
117.72
131.65
116.33
149.32
146.87
144.22
137.09
158.36
126.77
158.69
132.60
164.50
133.89
160.16
131.06
(4.34)
(2.83)
-2.6%
-2.1%
Total Use
620.92
616.46
617.80
643.65
654.39
654.55
696.92
679.65
698.56
705.43
707.68
712.56
4.88
0.7%
Exports Ending Stocks Stocks to Use Days on hand
116.16
154.43
0.25
90.78
110.96
134.50
0.22
79.63
109.56
129.35
0.21
76.42
129.78
169.24
0.26
95.97
135.80
201.94
0.31
112.64
132.43
198.19
0.30
110.52
157.78
197.26
0.28
103.31
137.36
174.46
0.26
93.69
165.91
193.77
0.28
101.25
164.37
212.07
0.30
109.73
166.87
242.91
0.34
125.29
163.92
257.34
0.36
131.82
(2.95)
14.43
0.02
6.53
-1.8%
5.9%
5.2%
5.2%
2
Wheat Outlook
May 10, 2016
Volume 25, Number 28
World Wheat Production
Billion bushels
30
25
20
15
10
5
0
U.S.
Foreign
WASDE 5/10/2016
World Wheat: Days of Use on Hand
140
132
120
106
100
80
60
40
20
0
Days of Use
20-yr avg
WASDE, 5/10/2016
3
Wheat Outlook
May 10, 2016
Volume 25, Number 28
Crop Progress. Condition ratings released Monday show another week of improvement in the
U.S. winter wheat crop. The crop condition index is up 1 point this week on a 1% decrease in
fair and a 1% increase in the good category. The crop index score stands at 365; average this
time of year 330.
2016 U.S. Winter Wheat Crop Condition Ratings
%
CCI
100
500
90
450
80
400
70
350
60
50
300
40
250
30
200
20
150
0
25-Oct
1-Nov
8-Nov
15-Nov
22-Nov
29-Nov
6-Dec
13-Dec
20-Dec
27-Dec
3-Jan
10-Jan
17-Jan
24-Jan
31-Jan
7-Feb
14-Feb
21-Feb
28-Feb
6-Mar
13-Mar
20-Mar
27-Mar
3-Apr
10-Apr
17-Apr
24-Apr
1-May
8-May
15-May
22-May
29-May
5-Jun
12-Jun
19-Jun
26-Jun
10
Very Poor
Poor
Fair
Good
Excellent
2015
100
Average
The 2016 Kansas Wheat Tour of May 2-5 reported expected Kansas wheat production this year
of 382 million bushels, up from the 2010-2015 average of 310 million bushels. The state
average yield is estimated at 48.6 bushels per acre, up from 37.0 last year and a recent five year
average of 37.9 bushels. Thanks to Dan O’Brien of Kansas State University for his wheat tour
report.
The Texas wheat rating slipped 2 points this week, down to 345. The percent rated poor and
good both increased 1% while the fair and excellent both declined 1%. The average crop index
score for Texas wheat at this time of year is 285.
4
Wheat Outlook
May 10, 2016
Volume 25, Number 28
2016 Texas Winter Wheat Condition Ratings
%
CCI
100
500
90
450
80
400
70
350
60
50
300
40
250
30
200
20
150
10
100
10/25
11/1
11/8
11/15
11/22
11/29
12/6
12/13
12/20
12/27
1/3
1/10
1/17
1/24
1/31
2/7
2/14
2/21
2/28
3/6
3/13
3/20
3/27
4/3
4/10
4/17
4/24
5/1
5/8
5/15
5/22
5/29
6/5
6/12
6/19
6/26
0
Very Poor
Poor
Fair
Good
Excellent
2016
Average
Weather. This morning’s precipitation forecasts call for light to moderate rainfall to cover
much of the hard red winter wheat production areas all week. Many areas of Texas will be
ready for harvest over the next couple of weeks.
Precipitation Forecast (http://www.wpc.ncep.noaa.gov/qpf/day4-7.shtml):
Days 1-3
Day 4-5
5
Wheat Outlook
May 10, 2016
Volume 25, Number 28
In the ENSO update Monday from the Climate Prediction Center, the actual
February/March/April temperature departure was +1.6°C and the observed weekly
temperature departure was +0.8°C. Both these readings keep us on a track to neutral
conditions in early summer and the return of La Nina in late fall.
Oceanic Nino Index (ONI)
ENSO Alert System Status: El Niño Advisory/La Nina Watch
El Niño is present and weakening (temperature above the +0.5° threshold for 5 consecutive overlapping 3-month seasons).
Positive equatorial sea surface temperature (SST) anomalies continue across most of the Pacific Ocean.
A transition to ENSO-neutral is likely during late Northern Hemisphere spring or early summer 2016,
with an increasing chance for La Niña during the second half of the year.
°C
3.0
2.5
Actual Measurements
Predicted
2.0
1.5
1.0
El Nino
0.5
Latest actual weekly
SST departure
Neutral 0.0
-0.5
La Nina
-1.0
-1.5
-2.0
El Niño/Southern Oscillation (ENSO) Diagnostic Discussion, 9 May 2016
http://www.cpc.ncep.noaa.gov/products/analysis_monitoring/enso_advisory/
Commitment of Traders. Futures positions held by Managed Money traders in the grain
commodity markets shifted strongly to net longs in corn over the last several weeks, joining the
bullish positioning in the soybean market. Managed money in the wheat markets continues to
be bearish.
6
Wheat Outlook
May 10, 2016
Volume 25, Number 28
Managed Money,
net long positions
Corn
12-Apr
19-Apr
26-Apr
3-May
net change
(146,384)
(29,272)
74,653
63,298
(11,355)
Soybeans
94,018
129,884
149,079
160,992
11,913
Chicago Wheat
(115,957)
(89,658)
(65,810)
(71,506)
(5,696)
KC Wheat
(20,465)
(13,755)
(875)
(5,781)
(4,906)
Total
(188,788)
(2,801)
157,047
147,003
(10,044)
Wheat, Corn, and Soybeans Speculative Investment
Net long contracts
¢/bu
200,000
700
680
100,000
660
0
640
620
-100,000
600
-200,000
580
560
-300,000
540
-400,000
520
-500,000
500
Managed Money
Price
Source: CFTC, 5/3/2016
7
Wheat Outlook
May 10, 2016
Volume 25, Number 28
The spread between new crop July Kansas City wheat and September is 17 cents today, above
full carry for that 60 day period (2 months x 6 cents per bushel/month = 12 cents). Any
percentage of carry above 67% is generally considered to be a bearish commercial market
indicator.
II Qtr 2016
May ’16 KC Wheat
4.8850
1-Apr
10-May
net change
% change
Jul ’16 KC Wheat
5.0250
4.6550
(0.3700)
-7.36%
Difference
0.1400
0.1725
0.0325
Nearby % Carry
May to Jul
Jul ’17 KC Wheat
117%
144%
27%
5.4875
5.2275
(0.2600)
4.4825
(0.4025)
-8.24%
-4.74%
Marketing Strategies
2016 Wheat Marketing Plan. I am 45% priced on the 2016 wheat crop. The best bet for a price
rally at this point looks to be spillover support from soybeans and corn, both of which were
higher following today’s WASDE. With positive prospects for U.S. production this year,
additional support could yet come from production problems overseas given that the U.S. only
accounts for 7% of world wheat production.
July 2016 KC Wheat and Marketing Plan
¢/bu
700
Early Season Price Rally / Early Crop Conditions
Emerging from Dormancy/Late Season Conditions
Harvest
650
600
550
500
400
10/9/2015: Sold 15% at 536½
3/7/2016: Sold 15% at 486
4/20/2016: Sold 15% at 489½
4/1/2015
4/13/2015
4/22/2015
5/1/2015
5/12/2015
5/21/2015
6/2/2015
6/11/2015
6/22/2015
7/1/2015
7/13/2015
7/22/2015
7/31/2015
8/11/2015
8/20/2015
8/31/2015
9/10/2015
9/21/2015
9/30/2015
10/9/2015
10/20/2015
10/29/2015
11/9/2015
11/18/2015
11/30/2015
12/9/2015
12/18/2015
12/30/2015
1/11/2016
1/21/2016
2/1/2016
2/10/2016
2/22/2016
3/2/2016
3/11/2016
3/22/2016
4/1/2016
4/12/2016
4/21/2016
5/2/2016
5/11/2016
5/18/2016
5/25/2016
6/1/2016
6/8/2016
6/15/2016
6/22/2016
6/29/2016
7/6/2016
7/13/2016
450
8
Wheat Outlook
May 10, 2016
Volume 25, Number 28
Upcoming Reports/Events.
May 20
June 7
June 10
June 24
June 30
Cattle on Feed
Grain Grading Workshop, Corpus Christi
WASDE
Cattle on Feed
Acreage
Grain Stocks
Mark Welch, Texas A&M AgriLife Extension Economist
600 John Kimbrough Blvd, Suite 335
College Station, Texas 77843
Tel. (979)845-8011
Fax. (979)845-4906
JMWelch@tamu.edu
The opinions and recommendations expressed are solely those of the author and are intended for educational purposes only as
part of the Texas A&M AgriLife Extension Service. The author and Texas A&M AgriLife Extension Service assume no liability
for the use of this newsletter. Educational programs of the Texas A&M AgriLife Service are open to all people without regard
to race, color, sex, disability, religion, age, or national origin.
The Texas A&M University System, U.S. Department of Agriculture, and the County Commissioners Courts of Texas
Cooperating
9