Wheat Outlook
April 12, 2016
Volume 25, Number 22
Market Situation
Today’s Newsletter
Market Situation
WASDE
1
Crop Progress
2
Weather
6
Commitment of
Traders
8
WASDE. USDA raised ending stock estimates for both U.S. and
world markets in today’s World Agricultural Supply and Demand
Estimates. U.S. ending stocks are up on a 10 million bushel
decrease in the feed and residual category. The estimated season
average farm price dropped from $5.00 to $4.95 which raises the
estimated PLC payment for the 2015/16 marketing year to $0.55.
The U.S. stocks to use ratio is back above 50%, the highest since
1986.
Small increases in beginning stocks and production combined with
a slight decline in use to raise world wheat carryover from a 122
day supply last month to 123 days on hand, the highest since 126
in 2001.
Marketing Strategies
2016 Wheat
Marketing Plan
10
Upcoming
Reports/Events
10
1
Wheat Outlook
April 12, 2016
Volume 25, Number 22
U.S. Wheat Supply and Demand, 4/12/2016
Million bushels
2,500
2,000
1,500
1,000
500
0
Beginning Stocks
Production
+0
Imports
+0
+0
Domestic Use
=
-10
Exports
Ending Stocks
+0
2014/15
May 15/16
Jun 15/16
Jul 15/16
Aug 15/16
Sep 15/16
Nov 15/16
Dec 15/16
Jan 15/16
Feb 15/16
Mar 15/16
Apr 15/16
+10
Oct 15/16
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
6
0
Ending Stocks
Feed and Residual
Exports
Food and Seed
WASDE, 4/12/2016
2
Wheat Outlook
April 12, 2016
Volume 25, Number 22
Season Average Wheat Price vs. U.S. and
World Ending Stocks-to-Use
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
100
90
80
70
60
50
40
30
20
10
0
U.S. Ending
Stks.-to-Use
Average Price
World Ending
Stks.-to-Use
Percent
$/Bu.
1969/70 – 2015/16
69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15
WORLD
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2015/16
2015/16
2015/16
2015/16
2015/16
2015/16
2015/16
2015/16
2015/16
2015/16
2015/16
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
May
200.97
718.93
June
200.41
721.55
212.06
July
721.96
August
209.66
726.55
September
211.31
731.61
October
212.11
732.79
November
211.69
732.98
December
212.07
734.93
January
212.79
735.39
February
214.51
735.77
March
214.65
732.32
April
214.80
733.14
Net Change
0.15
0.82
Percentage Change
0.07%
0.11%
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
153.61
136.06
155.12
138.97
155.26
133.20
155.07
136.10
156.24
138.08
157.80
137.72
157.85
138.62
159.20
138.29
159.67
137.98
161.27
135.14
160.34
133.49
160.54
132.92
0.20
(0.57)
0.12%
-0.43%
Total Use
620.92
616.46
617.80
643.65
654.39
654.55
696.92
679.65
698.56
705.43
716.59
719.56
714.20
714.74
716.36
716.41
717.37
717.14
716.14
711.41
709.37
708.69
(0.68)
-0.10%
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
156.95
203.32
0.28
103.56
154.41
202.40
0.28
102.67
158.07
219.81
0.31
112.34
156.21
221.47
0.31
113.10
157.58
226.56
0.32
115.44
160.58
228.49
0.32
116.41
160.41
227.30
0.32
115.65
161.66
229.86
0.32
116.99
161.56
232.04
0.32
118.27
163.13
238.87
0.34
122.56
162.73
237.59
0.33
122.25
163.13
239.26
0.34
123.23
0.40
1.67
0.00
0.98
0.25%
0.70%
0.80%
0.80%
3
Wheat Outlook
April 12, 2016
Volume 25, Number 22
World Wheat Production
Billion bushels
30
25
20
15
10
5
0
U.S.
Foreign
WASDE 4/12/2016
Wheat Production, Major Countries
mmt
170
160
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0
Argentina Australia Canada
2011/2012
2012/2013
China
EU 28
2013/2014
FSU-12
India
2014/2015
Pakistan
US
2015/2016
WASDE, 4/12/2016
4
Wheat Outlook
April 12, 2016
Volume 25, Number 22
World Wheat: Days of Use on Hand
140
123
120
100
80
60
40
20
0
Days of Use
20-yr avg
WASDE, 4/12/2016
Crop Progress. The condition rating of the U.S. winter wheat crop slipped last week with 1%
increases in very poor, poor, and good categories and a 1% decrease in good and a 2% decrease
in wheat rated excellent. The crop index score of 353 is down from 361 last week but still
above the 338 average.
%
2016 U.S. Winter Wheat Crop Condition Ratings
100
CCI
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
5
Wheat Outlook
April 12, 2016
Volume 25, Number 22
Texas wheat ratings were down as well with 2% increases in fair and good and a 4% decrease in
the excellent category. The crop index stands at 339, compared to 345 last week and a 294
average.
%
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. Declining winter wheat crop condition ratings reflect moisture deficits through much
of the High Plains, from Texas up through southern Nebraska. The precipitation outlook
improves in days 4 and 5 of the most recent forecast.
6
Wheat Outlook
April 12, 2016
Volume 25, Number 22
Precipitation Forecast:
Days 1-3
Day 4-5
http://www.wpc.ncep.noaa.gov/qpf/day4-7.shtml
In Monday’s ENSO update, the latest weekly sea surface temperature (SST) departure is +1.3°C,
down from 1.5°C the week before. The mean of forecast models has taken a cooler turn over
the last two weeks, pointing more decidedly toward La Nina this fall. The newest predicted
path is following closely to that of the winter of 1997 and spring and summer of 1998.
ENSO forecast March 28:
ENSO Forecast April 11:
Oceanic Nino Index (ONI)
Oceanic Nino Index (ONI)
ENSO Alert System Status: El Niño Advisory
A strong 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 close to a 50% chance for La Niña conditions to develop by the fall.
ENSO Alert System Status: El Niño Advisory
A strong 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 close to a 50% chance for La Niña conditions to develop by the fall.
°C
3.0
2.5
°C
3.0
Actual Measurements
Predicted
2.5
2.0
1.5
1.0
El Nino
Actual Measurements
Predicted
2.0
1.5
Latest actual weekly
SST departure
1.0
El Nino
0.5
0.5
Neutral 0.0
Neutral 0.0
-0.5
La Nina
-1.0
-1.5
-2.0
El Niño/Southern Oscillation (ENSO) Diagnostic Discussion, 28 March 2016
http://www.cpc.ncep.noaa.gov/products/analysis_monitoring/enso_advisory/
Latest actual weekly
SST departure
-0.5
La Nina
-1.0
-1.5
-2.0
El Niño/Southern Oscillation (ENSO) Diagnostic Discussion, 11 April 2016
http://www.cpc.ncep.noaa.gov/products/analysis_monitoring/enso_advisory/
7
Wheat Outlook
April 12, 2016
Volume 25, Number 22
Oceanic Nino Index (ONI) in previous 5 El Nino years and
current estimate
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
1997/98
2002/03
2004/05
2006/07
2009/10
2015/16 est
El Niño/Southern Oscillation (ENSO) Diagnostic Discussion, April 11 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 reported last week by the CFTC show a strong bearish increase in corn,
other markets about steady. Cumulatively, there was a decrease in long positions of 12,717
contracts and an increase of 44,100 in shorts.
Investments by Index traders, mostly longs, have been steady the last several months at around
600,000 contracts. This level of involvement represents about $10 billion dollars less buying
interest in grains than was committed by this group in 2010, when they held +900,000
contracts.
Managed Money,
net long positions
Corn
15-Mar
22-Mar
29-Mar
5-Apr
net change
(198,258)
(163,659)
(116,502)
(175,604)
(59,102)
Soybeans
23,515
52,853
70,155
70,278
123
Chicago Wheat
(65,326)
(82,063)
(71,935)
(70,394)
1,541
KC Wheat
(15,087)
(11,304)
(12,283)
(11,662)
621
Total
(255,156)
(204,173)
(130,565)
(187,382)
(56,817)
8
Wheat Outlook
April 12, 2016
Volume 25, Number 22
Wheat, Corn, and Soybeans Speculative Investment
Net long contracts
¢/bu
800,000
700
680
600,000
660
400,000
640
620
200,000
600
0
580
560
-200,000
540
-400,000
520
-600,000
500
Index Funds
Source: CFTC, 4/8/2016
Managed Money
Price
-$10 bil since 2010
The July Kansas City wheat contract set a new life of contract low on Monday at 452¾. The
spread between old crop May Kansas City wheat and new crop July is still just above 10 cents.
With a cost of carry from May to July of 12 cents (2 months at 6 cents per bushel per month),
this calculates to a percent of carry of 85%, a number that is in the commercial market bearish
range (carry <33% bullish and carry >66% bearish).
II Qtr 2016
May ’16 KC Wheat
1-Apr
4.7775
12-Apr
net change
% change
Jul ’16 KC Wheat
4.8850
4.5750
(0.3100)
-6.35%
Difference
0.1075
0.1025
(0.0050)
Nearby % Carry
May to Jul
Jul ’17 KC Wheat
90%
85%
-4%
5.4875
5.2350
(0.2525)
4.4725
(0.3050)
-6.38%
-4.60%
9
Wheat Outlook
April 12, 2016
Volume 25, Number 22
Marketing Strategies
2016 Wheat Marketing Plan. Wheat was down 16 cents on Monday, ahead of today’s bearish
WASDE, and closed back up 3 cents today, back up to the previous contract low on March 2nd. I
made my most recent sale on modest seasonal price strength and intend to do the same again
between now and late May. I will price the final 30-40% at harvest.
July 2016 KC Wheat and Marketing Plan
¢/bu
Early Season Price Rally / Early Crop Conditions
700
Emerging from Dormancy/Late Season Conditions
Harvest
650
600
550
500
450
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
5/9/2016
5/16/2016
5/23/2016
5/30/2016
6/6/2016
6/13/2016
6/20/2016
6/27/2016
7/4/2016
7/11/2016
10/9/2015: Sold 15% at 536½
3/7/2016: Sold 15% at 486
Upcoming Reports/Events.
April 22
May 3 & 4
May 10
May 20
Cattle on Feed
Grain Grading Workshop, Amarillo
WASDE
Short-term Energy Outlook
Cattle on Feed
10
Wheat Outlook
April 12, 2016
Volume 25, Number 22
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
11