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WEEKLY FUNDAMENTAL REVIEW
EXECUTIVE SUMMARY
November 3, 2014
Volume 27, Issue 48
Corn/Milo Updates
WORLD CROP UPDATE – Dryness, slow pace of planting leads
Cordonnier to cut Brazil estimate 1 MMT to 72.0; Argentina is
unchanged at 21.0.
EXPORT SHIPMENTS – CORN: 16.8 TW; 28.9 LW; 31.3 LY; 2935 Expected; 34 Needed. O/S are down 25% from 13/14.
MILO: 5.3 mbu TW; 6.5 LW; 1.3 LY; 3.7 NEEDED. YTD: 61 TW;
27 LY.
EXPORT SALES – 19.3 TW, 40.6 LW and 59.8 (average
estimate) LY; 28-35 Expected; 23/week Needed. MILO: 4.5
TW; 9.2 LW; 3.8 LY; 2.4 Needed. YTD: 116 TY; 60 LY. O/S: 71
TY, 40 LY.
ETHANOL – Margins rose 14 cents to $.48. Gains came from a
14 cent improvement in Chicago Platts and the DDGS
contribution was up $.03. A 4 cent off-set came from higher
corn costs and rising natural gas prices.
SUPPLY/DEMAND UPDATE – Carry-out up 96 mbu to 2.367
bbu, net of 4 mbu increase in ethanol grind and 100 mbu
reduction in exports.
SUMMARY – CZ14 paralleling 2009 quite well in terms of price
direction. CZ may finally be in a trading pattern of $3.50-$3.75,
subject to crop size. CZ09/CH10 exhibited considerable
weakness during November. Unless the pace of shipments
picks up, CZ/CH could move similarly to 09/10.
Livestock Updates
LIVESTOCK MARGINS – Un-hedged steer sold LW profited $48
to $101/head. Steer placed TW proj. $203/head loss. Unhedged hog profited $15 to $27/head. Sows bred TW proj.
$32/head profit. Dairy’s profit $9.10/cwt on Oct milk. Broilers
profit $1.18/bird. Eggs positive 38.1¢/dz.
Soybean Updates
WORLD CROP UPDATE – Brazil Ag attaché maintains 94.0
production estimate; Cordonnier dropped his estimate by 1 to
94.0; Oil World more pessimistic, down 3 to 92.0 for Brazil and
sees Argentina 1 lower at 54.0.
EXPORT SHIPMENTS – A record 101.8 mbu TW; 83.2 LW; 82.6
LY; 78-83 EXPECTED; 30.1 NEEDED. DESTINATIONS: China,
78.6 TW, 66.2 LW; EU, 3.6; Other Asia, 5.6; Mexico, 2.4; S
Korea, 2.3; Other W Hemi, 3.6.
EXPORT SALES – 48.7 TW, 79.6 LW; 58.1 LY; 37-55 Expected;
10.2 Needed. China accounted for nearly 80% of this week’s
net sales total at 38.6 million. 4-week sales 25% above seasonal
“average”. Non-PRC/UNK O/S at 10-year high, up 60% vs LY.
In each issue:
Corn/Milo…………….2
Ethanol.……………....8
Livestock……………..15
Soybean…………………..19
Wheat……………..……...27
Director’s Corner………34
Weekly Fundamental Review – November 3, 2014
BIODIESEL– Higher sbo oil trimmed margins; RB and crude SBO
fell 15 cents to (41) for the former & (21) for crude. Choice white
grease margins were 3 lower to $.36; stabilized poultry fat/yellow
grease gained 3 to $.32 and $.31/gallon, respectively.
CASH CRUSH/CENSUS – Once again, meal led the soy complex
higher. Board crush soared 69 cents to $1.89. Central/Eastern
processors were able to raise posted meal offers $15-$20 per ton.
Decatur was pegged at $3.82.bu; Fostoria, $3.85 and Lincoln,
$3.40.
SUPPLY/DEMAND UPDATE – Analog years would support a ½
bpa increase in yields; while meal exports are off to a slow
start, $3+ crush margins to keep crush forecast intact. Look for
USDA to add 25-50 to exports next Monday.
SUMMARY — Few beans being loaded out of S AM; QI U.S.
exports on a pace to hit 725 mbu; non-PRC demand (sb sales) at a
10-year high, as are meal sales; stratospheric crush margins; S Am
planting behind average but weather looks favorable. Difficult to
imagine global protein demand will be able to keep up with
supply, in the absence of additional price pressure.
Wheat Updates
WORLD CROP UPDATE – Fairly good agreement among the
indicators that USDA’s SRW export est. of 155mbu is on target.
Mini “spike” in buying has occurred recently—will it continue?
U.S. CROP CONDITIONS – Winter wheat planting climbs 6 points
to 90%, which is a point above the avg. but equal to 2013. Ilinois
and Missouri still 14 and 11 points, respectively, behind the avg.
pace. Emergence nationally at 77%, up 5 points vs.the avg.
Good/Excellent ratings unchanged at 59% compared to 63% at
this time a year ago. It’s important to emphasize that there is a
very low correlation between fall crop ratings and final yield.
EXPORT SHIPMENTS – Very poor, again. 7.7mbu TW vs. 7.8 LW,
8.9 LY, 17.4 BOY & once again sharply below trade range of 11-17.
EXPORT SALES – Decent. Sales of 16.3mbu were up from last
week’s 11.0, LY’s 15.5 and above the trade range of 11-14.
SUPPLY/DEMAND UPDATE – WASDE report could show
reduction in crop size in Australia and Argentina vs. last month.
Updated look at U.S. HRW pegs 14/15 carryout at 207mbu, 15/16
at 321.
SUMMARY – Wheat has gotten a long-awaited boost from (1)
spillover support from bounce in corn and beans; (2) ideas of a
reduction in 2015 SRW plantings; and (3) less-than-ideal start for
15/16 Russian crop. Still plenty of old-crop export competition
available, however. Choppy into the report.
Highlights:
Director’s Corner: U.S. soybean market could have a real battle
between domestic crushers and the export market for supplies.
Advance Trading
www.advance-trading.com
309-747-9021
CORN/MILO
WORLD CROP UPDATE - Cordonnier took Brazil down 1 to 74.0 (reduced area/lateness of planting) while
maintaining Argentina at 21.0. The IGC came out at 23 and 75 for Argentina and Brazil, respectively.
CROP PROGRESS - Corn Harvested: 65% TW; 46% LW; 71% LY; 73% AVE. Milo Mature: 94% TW; 91%
LW; 99% LY; 95% AVE. Milo Harvested: 65% TW; 56% LW; 74% LY; 70% AVE. MN made up the most
ground last week, going from 22 points behind average to only 2; IA picked up 15; IL 12 and SD, 17.
Crop ratings have concluded with last week’s report. Harvesting reached 65%, past trade thinking of
around 60% and now leaves the U.S. only 6 point behind 2013 and 8 points off the 5-year average.
MN made up the most ground last week, going from 22 points behind average to only 2; IA picked up
15; IL 12 and SD, 17. At the other extreme, progress was limited in some states. MI dropped from 17 to
20 points behind and WI producers were able to narrow the deficit by only 2
Major Corn Producing States, Harvest Progress Versus Average
State:
WI
MI
IA
ND
IN
CO
NE
TX
SD
PA
US
MO
OH
KY
MN
NC
IL
KS
TN
TY
33
31
61
48
58
61
60
86
61
51
65
78
52
88
71
96
77
86
96
Source:
Weekly Fundamental Review – November 3, 2014
5 Year
Versus
Ave TW
58
-25
51
-20
75
-14
61
-13
70
-12
72
-11
71
-11
96
-10
70
-9
59
-8
73
-8
85
-7
55
-3
90
-2
73
-2
98
-2
78
-1
86
0
94
2
NASS, November 3, 2014.
Versus
Ave LW
-27
-17
-29
-30
-16
-15
-19
-16
-26
-10
-19
-13
-8
-3
-22
-5
-13
-3
2
2
Corn Progress
MBU Harvested
USDA
USDA
USDA
USDA 5 yr Avg
ATI
USDA
USDA
USDA
AVG TW
LW
LY
AVG 08 Yield 11 Yield 12 Yield 13 Yield
Yield
14 Yield 11 Harv 12 Harv 13 Harv
78
1802 1381 1722 1456
179
157
105
178
154
201
12.4
12.3
11.8
70
620
471
746
603
160
146
99
177
149
186
5.8
6.0
5.9
51
113
77
160
166
138
153
133
155
148
170
2.2
2.4
2.3
55
322
223
410
297
135
158
123
177
159
182
3.2
3.7
3.7
58
164
99
214
268
137
156
121
146
147
162
3.3
3.3
3.1
69 3022 2250 3252 2790
158
154
110
172
152
188
26.9
27.6
26.7
75
1490
879
1556 1645
171
172
137
165
164
190
13.7
13.7
13.1
73
941
544
900
937
164
156
165
160
166
175
7.7
8.3
8.2
85
468
408
353
314
144
114
75
136
119
180
3.1
3.3
3.2
71
950
634
1120 1064
163
160
142
170
163
181
9.6
9.1
9.6
74 3849 2464 3929 3961
164
160
139
162
160
183
34.1
34.4
34.0
61
169
77
178
181
124
105
122
110
116
127
2.1
3.5
3.6
70
497
277
493
458
133
132
101
138
131
148
5.0
5.3
5.9
67
666
355
671
639
134
124
109
127
126
140
7.0
8.8
9.5
72
84
61
100
111
137
133
133
131
140
145
1.3
1.0
1.0
86
509
462
437
433
134
107
96
127
122
160
4.2
4.0
4.0
96
246
220
265
225
125
93
130
138
129
154
1.5
1.6
2.0
86
839
743
802
769
134
109
110
131
127
156
7.0
6.5
7.0
90
195
182
199
157
136
139
68
170
131
160
1.3
1.5
1.4
94
126
123
111
88
118
131
85
156
125
147
0.7
1.0
0.8
91
321
305
311
245
122
136
75
165
129
155
2.0
2.5
2.3
98
102
98
121
90
78
84
117
142
110
124
0.8
0.8
0.9
59
78
59
103
76
133
111
132
147
133
152
1.0
1.0
1.1
77
179
157
224
166
110
99
125
145
122
139
1.8
1.8
2.0
73 9409 6658 9887 9140
154
147.2 123.4 158.8
149.1
175.7
84.0
87.4
87.7
% Harvest
STATE
IL
IN
MI
OH
WI
ECB
IA
MN
MO
NE
WCB
ND
SD
N PLAINS
CO
KS
TX
S PLAIN
KY
TN
MID SOUTH
NC
PA
EAST
US
TW
77
58
31
52
33
61
61
71
78
60
65
48
61
57
61
86
86
82
88
96
91
96
51
71
65
LW
59
44
21
36
20
45
36
41
68
40
41
22
34
30
44
78
77
73
82
94
86
92
39
62
46
LY
82
72
46
62
48
70
72
69
81
69
71
45
61
55
77
86
96
88
82
87
84
98
64
79
71
USDA
14 Harv
11.7
5.8
2.2
3.5
3.1
27.6
13.2
7.8
3.3
8.8
34.4
2.8
5.4
8.8
1.0
3.7
1.9
6.5
1.5
0.8
2.5
0.8
1.0
1.8
83.1
USDA
12 Prod
1.29
0.60
0.32
0.45
0.40
3.05
1.88
1.37
0.25
1.29
4.79
0.42
0.54
0.96
0.13
0.38
0.20
0.72
0.10
0.08
0.19
0.10
0.13
0.23
10.78
USDA
13 Prod
2.10
1.04
0.35
0.66
0.45
4.59
2.16
1.30
0.44
1.62
5.52
0.40
0.81
1.20
0.13
0.51
0.28
0.91
0.24
0.13
0.37
0.12
0.16
0.28
13.92
ATI
14 Prod
2.35
1.07
0.37
0.63
0.50
4.93
2.51
1.37
0.60
1.58
6.06
0.35
0.80
1.15
0.14
0.59
0.30
1.03
0.23
0.12
0.35
0.10
0.15
0.25
14.6
Sorghum Progress
% Mature
STATE
KS
NE
SD
% Harvested
TW
LW
LY 5 Yr Avg. TW
LW
LY
MBU Harvested
5 Yr Avg. TW
LW
LY
USDA USDA USDA
5 yr
ATI
USDA USDA
USDA
ATI
USDA USDA USDA
ATI
5 Yr Avg. Yield 11 Yield 12 Yield 13 Yield 14 Yield 14 Harv 11 Harv 12 Harvest 13 Harvest 14 Prod 11 Prod 12 Prod 13 Prod 14
94
90
97
96
52
38
65
62
98
71
107
93
55
39
59
65
68
2.00
2.10
2.80
2.65
110.0
81.9
156.4
180.6
100
98 100
98
71
50
75
67
7
5
7
5
94
59
67
82
83
0.07
0.06
0.14
0.12
6.6
3.5
8.0
10.0
95
93
99
100
80
69
68
80
9
8
15
8
60
42
80
60
66
0.11
0.14
0.28
0.15
6.6
5.9
12.0
9.9
WEST 95
91
97
96
56
42
66
63
114
84
129
106
57
40
60
72
69
2.18
2.30
3.22
2.92
123.2
91.3
176.4
200.5
96
84 100
98
41
25
56
53
3
2
3
3
35
20
24
34
33
0.14
0.15
0.24
0.25
4.9
3.0
6.0
8.3
60
50
81
75
8
5
13
26
0
0
0
1
64
42
34
49
50
0.02
0.02
0.07
0.08
1.3
0.8
2.6
3.8
96
94 100
90
73
62
72
62
14
12
11
6
21
27
55
43
53
0.08
0.15
0.27
0.33
1.7
4.1
18.2
17.5
94
93
97
92
79
76
81
78
96
93
104
80
49
59
56
56
60
1.15
1.90
2.30
2.10
56.4
112.1
117.6
125.0
93
91
97
92
72
67
76
73
113
106 119
90
46
54
52
54
56
1.39
2.22
2.88
2.76
64.3
119.9
144.3
154.7
100 100 99
98
74
64
68
74
5
5
3
2
72
58
82
77
89
0.03
0.06
0.06
0.08
2.4
3.2
6.2
6.7
95
97
75
57
85
75
1
1
2
2
91
60
94
85
97
0.02
0.03
0.02
0.02
1.8
1.6
2.0
2.0
98
74
62
73
74
7
6
5
4
79
59
87
80
91
0.05
0.08
0.08
0.10
4.2
4.8
8.1
8.7
100 100 100
100
100
99
99
99
14
14
13
7
72
84
102
83
101
0.09
0.14
0.13
0.17
6.5
11.3
16.8
16.6
100 100 100
100
100 100 100
100
10
10
12
10
87
100
107
94
106
0.12
0.12
0.11
0.10
10.8
12.3
10.2
10.1
100 100 100
100
100
99
99
100
24
23
25
17
81
92
105
88
103
0.21
0.26
0.24
0.26
17.3
23.6
27.0
26.8
94
95
65
56
74
70
262
226 288
221
54.6
49.8
59.6
61.9
65.4
3.93
5.0
6.5
6.2
215
247
368.0
403.8
CO
NM
OK
TX
Southwest
MO
IL
Central
AR
LA
South
US
93 100
98.8 98
91
99
99
EXPORT SHIPMENTS - CORN: 16.8 TW; 28.9 LW; 31.3 LY; 29-35 Expected; 34 Needed. YTD: 270 mbu TY;
207 mbu LY. DESTINATIONS: Mexico, 4.4 TW, 5.7 LW; OW Hemi, 6.0 TW, 11.7 LW; Japan, 3.6 TW, 5.4
LW; Taiwan, 400 K TW, 600 LW; S Korea, 0 TW, 5.3 LW; N Africa, 0 TW, 0 LW, Mid-East, 0 TW, 0 LW.
PORT ACTIVITY: Lakes: 260 K TW, 579 LW; ATL; 64 mbu TW, 302 LW; Miss River, 14.4 mbu TW, 21.0 LW;
Cal, 8 TW, 11 LW; Puget, 0 W, 0 LW; Columbia River, 0 TW, 2.6 LW; and Interior, 2.1 TW, 3.1 LW.
MILO SHIPMENTS: 5.3 mbu TW; 6.5 LW; 1.3 LY; 3.7 NEEDED. YTD: 61 TW; 27 LY. DESTINATIONS:
China, 2.2 TW; 5.9 LW; Kenya, 2.2; Sudan, 1.0; Japan, 0 TW, 0 LW. PORT ACTIVITY: S Texas, 4.1 N Texas,
984 K; CA, 28 K; Int, 236 K.
Shipments Summary Week #
TW
LW
Million Bu
LY
14/15
YTD
13/14
YTD
# of
Weeks
9
BOY/wk BOY/wk
TY
LY
YTD %
LY
Corn
16.8
28.9
31.4
269.8
206.7
43
34.4
40.0
131%
Milo
5.3
6.5
1.3
61.2
27.5
43
3.7
4.1
223%
Weekly Fundamental Review – November 3, 2014
3
CORN SALES –19.3 TW, 40.6 LW and 59.8 (average estimate) LY; 28-35 Expected; 23/week Needed.
YTD: 738 TY; 801 LY. O/S: 483 TY; 634 LY. Sales were disappointing as Unknown cancelled 3.6 and
Jamaica, 2.5. Positive numbers were recorded by South Korea (5.3); Peru (3.5); Mexico (3.2); Japan
(3.1); Colombia (2.9); Costa Rica (2.2); Egypt (3.0) and Canada (1.9). In addition, a total of 1.3 mbu went
El Salvador, Taiwan, Guatemala, Trinidad, China, Panama and Hong Kong.
Export Sales Week #
TW
LW
Million Bu
8
LY
TY
YTD
LY
YTD USDA USDA BOY/wk BOY/wk O/S O/S
O/S
New Crop O/S
YTD Change 14/15 13/14
TY
LY
TY LY CHANGE
TY
LY
Corn
19.3
40.6 172.3
738
801
-8%
Milo
4.5
9.2
116
60
94%
11.4
1,750 1,925
220
215
23.0
25.5
483 634
-24%
34.7
29.9
2.4
3.5
71
79%
0.0
0.0
40
\
Unshipped Corn Export Sales (mbu-#8)
EUR
FSU
Far East
China
Africa
W Hemi
Unknown
Total
SON Exports
09/10 10/11 11/12 12/13 13/14) 14/15 Change
0
1
0
0
0
0
0
0
0
0
0
0
0
0
166
219
185
77
105
81
(24)
0
0
59
7
129
2
(127)
2
27
2
0
0
2
+2
154
131
177
101
230
239
+9
83
142
186
98
170
160
(10)
405
520
610
283
634
483
(151)
467
452
406
221
350
400
50
Weekly Fundamental Review – November 3, 2014
4
Near-term export outlook: 20-27 per week near-term with a port break-down of 15-20 via the Gulf; 0-2
off the PNW and 2-5 million per week of Interior shipments.
Corn Monthly Sales Activity
110
90
Million Bushels
70
50
30
10
-10
-30
Japan China
Oth
Taiwa S
W Canad Mexic Unkn
Other Africa
Other
n Korea
Hemi
a
o
own
Asia
TY
18
0
2
5
0
5
83
2
46
23
0
LY
34
31
2
0
5
0
91
2
67
17
0
Average
24
7
3
6
2
2
29
2
17
-3
1
MILO SALES -4.5 TW; 9.2 LW; 3.8 LY; 2.4 Needed. YTD: 116 TY; 60 LY. O/S: 71 TY, 40 LY. Of the 4.5
million sold, China took 6.7 and Unknown cancelled 2.2 million.
Weekly Fundamental Review – November 3, 2014
5
Date
09/25/2014
10/02/2014
10/09/2014
10/16/2014
10/23/2014
10/30/14
Gulf in
Port
36
45
42
50
55
Number of Grain Vessels in Port
Loaded 7
Due 10
C/SB/W
Days
Days
Inspections
44
74
43,995
41
61
63,077
44
79
66,307
45
66
62,300
41
60
67,082
79,185
PNW in
Port
15
14
15
12
15
10/23/2008
30
42
60
42,137
10
10/22/2009
60
40
64
38,709
13
10/21/2010
42
57
67
55,477
11
10/20/2011
24
39
57
41,314
12
10/25/2012
50
39
57
51,509
17
10/24/2013
56
44
65
62,628
20
Source: USDA AMS. One week lag between in number in port and inspections.
PNW
C/SB/W
12,946
17,120
22,925
33,318
29,176
28,450
28,986
24,123
33,998
28,697
20,276
32,181
55 vessels were in port at the Gulf, up 5 from the previous week, only 1 less than the corresponding
2013 figure and 9 more than the 5-year average. 41 ships were loaded over the past week, down 4 from
a week earlier and versus 44 for both 2013 and the average for the period. The number due in the next
10 days dropped 6 to 60, 3 less than last year and
2 below the average. Total volume of corn,
soybeans and wheat exported in the latest week
was September 1 to-date high of 67.1 million, up
nearly 5 from a week. This compares to 62.6 in
the corresponding year ago week as the Gulf
demonstrated the ability to ship nearly the same
amount of wheat and corn as last year while
boosting the soybean volume by 5 million to 44.2
mbu.
Combined loadings of the 3 commodities are
expected to continue averaging 60-70 over the
next month. The up-coming 4-week period in
Weekly Fundamental Review – November 3, 2014
6
2013 saw Mississippi River inspections average 63.5 million per week, including 3.5 wheat; 15.3 corn and
44.7 million soybeans. By commodity we expect 3-4 wheat; 15-20 corn and 40-45 soybeans.
The PNW count increased 3 to 15, equal to the average for the time frame but 3 less than a year ago.
Total PNW volume in the latest week was 29.2 million (10/23), down from 33.3 in the previous period.
The former figure is 3 million less than the year ago week but 1.4 mbu above average. After a 2-week
hiatus, PNW corn volume increased to 2.6 million the week of 10/23, or 2.5 million MORE than in 2013.
Weekly volume for the up-coming month averaged 29+ for the 3 commodities with corn in the 7.0-7.5
range each week. Expect 30 +/- per week from the PNW over the next month, with a mix of 5-7 wheat,
3-5 corn and 20-25 soybeans.
Barge Movement of corn declined 1.8 million to 6.8 the week of October 25th, 2 million less than the
2013 total and well under the average of 9.2 mbu. A smaller total on the Ohio accounted for 75% of the
decline while the quantity of corn moving through Lock and Dam #26 was off 400,000 bushels. This
week’s total is the smallest barge volume for this week since at least the fall of 2003 and likely accounts
for some of the recent strength seen in the CIF basis.
Total barge volume of 7-10 million per week should support near-term corn exports of 25-29 mbu per
week. Note this week at 14.4 was 600 K bushels below the low end of ATI’s 15025 forecast.
Barge Grain Movement: Corn (1,000 bu)
Week Ending: (9)
10/24/09
10/23/10
10/22/11
10/27/12
10/26/13
Miss Lock 27
6,847
7,493
6,078
5,489
5,578
OH Lock 52
4,564
1,539
4,171
905
3,150
Ark Lock 1
0
50
0
0
150
Miss
Total
11,411
9,082
10,249
6,395
8,878
Miss River
Exports (4 wk)
20,782
23,260
17,149
10,980
20,673
9/27/14
3,229
6,807
50
10,086
17.5-25.0/23,816
10/04/14
5,932
5,902
100
11,934
20-30/30,764
10/11/14
4,543
5,841
50
10,434
23-27/21,927
10/18/14
4,461
4,175
0
8,636
23-27/21,927
10/25/14
4,037
2,804
0
6,841
15-25/14,352
Source: USDA AMS. Assumes 1 week delay between movement and inspections.
Weekly Fundamental Review – November 3, 2014
7
GULF EXPORT DEMAND PERSPECTIVE—Gulf oriented unshipped sales of the 4 principal grains was little
changed at 1.60 bbu in the latest week and is now down 74 million bushels year to year. Note that the
grain/soybean total is now 74 million less than a year ago as gains in soybeans (+48) and milo (+31) are
not sufficient to offset a smaller out-standing total for corn (-146 mbu) and SRW (down 7). As corn
continues to trail the 13/14 pace, inshipped sales of all 5 commodities are now approximately 670 K MT
below the 2013 total.
Old and New Crop Unshipped Sales with Comparisons, mbu (10/23)
O/C- TY O/C-LY N/C-TY N/C-LY Total-TY Total-LY Change
Corn
483
634
35
30
518
664
-146
SB
977
929
3
3
980
932
48
Milo
71
40
0
0
71
40
31
SRW
34
42
0
0
34
42
-7
Total
1,565
1,645
38
33
1,603
1,677
-74
SBM ( K MT)
6,013
4,128
73
0
6,086
4,128
+1,958
Grains + SBM(KMT) 48,670 48,539 1,060
868
48,730
49,407
-677
SPOT DRY MILL ETHANOL MARGINS –
Margins rose 14 cents to $.48. Gains
came from a 14 cent improvement in
Chicago Platts and the DDGS
contribution was up $.03. A 4 cent offset came from higher corn costs and
rising natural gas prices.
Weekly Fundamental Review – November 3, 2014
TW
Midwest Ethanol Cash
Market
per gal
Margins
Cash Corn Price (fro m bids )@ $3.74
$1.33
Natural Gas @ $4.33
$0.17
Operational Costs
$0.22
DDG Credit @ $100
$0.28
ICO Credit $0.298
$0.05
Ethanol Production Cost
Chicago Platts Swap
Ethanol Basis
Spot Margin Ethanol c/gallon
Spot Margin in Corn $/bu
West Dest. Plt Spot Margin
$1.39
$1.81
$0.06
$0.48
$1.34
0.78
LW
LY
Market
per gal Market per gal
$3.63
$1.30 $4.08
$1.46
$3.86
$0.16 $3.75
$0.15
$0.22
$0.23
$88
$0.25
$208
$0.55
$0.285
$0.05 $0.420 $0.08
$1.38
$1.67
$0.05
$0.34
$0.96
0.74
$1.21
$1.72
-$0.10
$0.49
$1.36
0.68
8
ETHANOL FORWARD MARGINS-
11/3/2014
November 2014
December 2014
January 2015
February 2015
March 2015
April 2015
May 2015
June 2015
July 2015
August 2015
September 2015
October 2015
Platts-basis
Ethanol $/g
NYMEX
RBOB $/g
$1.87
$1.79
$1.74
$1.72
$1.71
$1.70
$1.70
$1.70
$1.69
$1.69
$1.68
$1.67
$2.11
$2.11
$2.12
$2.14
$2.34
$2.34
$2.34
$2.33
$2.31
$2.29
$2.17
$2.15
C IL Cash
NYMEX
Model
Gross
EToH-RBOB Corn c/bu NG $/mtbu DGG $/t Cost $/g
-$0.18
-$0.27
-$0.32
-$0.36
-$0.57
-$0.58
-$0.57
-$0.57
-$0.56
-$0.54
-$0.43
-$0.41
373.75
386.00
373.75
386.00
394.75
394.75
401.00
401.00
406.75
406.75
406.75
415.00
$4.33
$4.43
$4.35
$4.35
$4.05
$4.03
$4.04
$4.08
$4.10
$4.09
$4.11
$4.21
$100
$100
$103
$103
$105
$105
$105
$107
$107
$109
$109
$111
Cash Cost
Cost $/g
11/3
Gross
Margin
$/g
$0.22
$0.22
$0.22
$0.22
$0.22
$0.22
$0.22
$0.22
$0.22
$0.22
$0.22
$0.22
$0.68
$0.54
$0.55
$0.49
$0.46
$0.46
$0.44
$0.43
$0.41
$0.41
$0.40
$0.36
$0.41
$0.41
$0.41
$0.41
$0.41
$0.41
$0.41
$0.41
$0.41
$0.41
$0.41
$0.41
11/3
10/26
Cash
Cash
Margin Margin
$/g
$/g
Change
$0.48
$0.32
$0.33
$0.27
$0.24
$0.24
$0.22
$0.21
$0.19
$0.19
$0.18
$0.14
$0.34
$0.33
$0.26
$0.22
$0.19
$0.20
$0.18
$0.18
$0.14
$0.15
$0.13
$0.11
$0.14
-$0.01
$0.07
$0.05
$0.05
$0.04
$0.04
$0.03
$0.05
$0.04
$0.05
$0.03
IL ETOH Margin Calculation Assumptions
CBOT nearby corn less cash basis
NG futures represent proxy for cash, +30c basis
EToH-RBOB = EToH +12c/g - RBOB
EIA Weekly Ethanol
ETHANOL GRIND – Ethanol output roared back this week, up
Week Ending
41,000 barrels per day to an average of 937 K. This week’s total
24-Oct
17-Oct
Change
Ethanol Production
937
896
41
was 26 K above the comparable week for 13/14. Implied grind
Midwest
860
817
43
Thousand Barrels per Day
was 4 ½ mbu greater at 103 million and nearly 4 million above
Ethanol Imports
0
0
0
13/14. YTD total grind is estimated to be 13 million ahead.
East Coast
0
0
0
West Coast
0
0
0
Ethanol stocks were down sharply, falling 900,000 barrels to
Gulf Coast
0
0
0
17.04 million, a 23-week low and suggesting a sizable export
Thousand Barrels per Day
program. The year-on-year inventory surplus declined from 2.44
Blender Demand
878
876
2
East Coast
322
322
0
mb to 2.08 million this week. Ethanol imports were again
Midwest
234
241
-7
Gulf Coast
143
135
8
reported at zero. Blender demand was little changed this week,
Rocky Mountain
27
27
0
West Coast
151
152
-1
up only 2 K per day to 878. East Coast consumption was
Thousand Barrels per Day
unchanged at 322 K barrels; Midwest demand slipped 7 K to 234
Fuel Ethanol Stocks 17,039
17,940
-901
thousand barrels per day while the Gulf Coast posted an 8 K
East Coast
6,073
6,743
-670
Midwest
5,556
5,515
41
increase, to 143 K barrels. Blender demand on the West Coast
Gulf Coast
2,699
3,039
-340
Rocky Mountain
355
364
-9
eased 1 K to 151 K; Rocky Mountain demand remained steady at
West Coast
2,355
2,279
76
Thousand
Barrels
27 K. Regional inventory changes included a 670 K draw on the
East Coast which pulled inventories down to 6.07 million. Gulf Coast stocks were also down sharply,
falling 340 K to 2.7 million. Inventories on the West Coast and Midwest both recorded increases with
the former up 76 K to 2.36 million and the latter, 41 K higher at 5.56 million. Rocky Mountain reserves
slipped 9 K to 355 thousand.
Weekly EIA Ethanol Data
Sep 1 toBalance
Ethanol
Grind
Ethanol
date
Grind
Production (K
Stocks (K
Of Year*
Week #8
bls)
Mbu
bls)
Grind (mbu)
% Change
TW
937
103.0
17,039
768
1.7%
4,357
LW
896
98.5
17,940
LY
911
99.1
14,961
755
3,893
Change
26
3.9
2,078
13
463.9
*Assumes USDA 5.125 bbu estimate for 14/15. Source: EIA Weekly Ethanol Report; Grind is an ATI
estimate.
Weekly Fundamental Review – November 3, 2014
9
Daily Average Fuel Ethanol Production During Week
Fuel Ethanol Stocks at End of Week
1,000
23
22
21
20
Million Barrels
Thousand Barrels
950
900
850
19
18
17
16
800
15
2010/11
2011/12
2012/13
2013/14
2012/13
7-Aug
28-Aug
17-Jul
5-Jun
2013/14
26-Jun
15-May
3-Apr
24-Apr
13-Mar
20-Feb
9-Jan
2011/12
30-Jan
19-Dec
7-Nov
2010/11
2014/15
28-Nov
17-Oct
5-Sep
26-Sep
7-Aug
14
28-Aug
17-Jul
5-Jun
26-Jun
15-May
3-Apr
24-Apr
13-Mar
20-Feb
9-Jan
30-Jan
19-Dec
7-Nov
28-Nov
17-Oct
5-Sep
26-Sep
750
2014/15
FOREIGN EXCHANGE - CIF corn values increased 24 cents (5%) from last week. Values for Brazil are up
8%. European values are up 7% and Japanese values are 10% stronger. Values for Mexico are up 5%
from last week. As compared to last year, CIF corn is down 11%. Values in real are 2% lower. Values in
euro are down 4%, but values in yen are 1% higher. Values in peso are down 8% from last year.
Values for Toledo corn increased 11 cents (3%) from last week. Toledo corn values in Canadian dollars
are also up 3% from a week ago. As compared to a year ago, Toledo corn prices in US dollars are down
16% and prices in Canadian dollars are 9% lower.
Cif Corn
Cif
Real
Euro
Yen
11/3/14
10/27/14
11/4/13
% LW
% LY
Mex.Peso
4.55
11.27
3.63
510.64
4.31
10.47
3.40
466.23
5.10
11.54
3.78
503.76
105%
108%
107%
110%
89%
98%
96%
101%
(Units of foreign currency equivalent to one bushel, CIF US Gulf)
11/3/14
10/27/14
11/4/13
% LW
% LY
61.29
58.47
66.67
105%
92%
Toledo Corn
Toledo Canadian $
3.60
4.05
3.49
3.92
4.26
4.44
103%
103%
84%
91%
LOAN/LDP ACTIVITY— Corn loans for the 2013 crop continue to be redeemed. FSA reported the
amount of corn under loan fell 4.2 mbu during the latest week. This was up 2.1 mbu from the 2.1 mbu
redeemed the week before. Total 2013/14 corn currently reported under loan is 16.1 mbu. This is up
13.5 mbu from the 2.7 mbu under loan at this time last year.
2013 crop
Daily loan
Total loan
10/27
-0.6
20.4
10/28
-0.5
19.9
10/29
-0.3
19.6
10/30
-0.8
18.8
10/31
-0.7
18.1
11/3
-2.0
16.1
Change
-4.2
Maturity Dates For 2013 Corn Under Loan
Mbu Maturing
Nov.
5.0
Dec.
1.0
Jan.
1.3
Feb.
1.0
For the 2014 crop, 13.5 mbu of corn was placed under loan during the latest week. This was up 3.4 mbu
from the 10.1 mbu that entered the loan program the week before. Total 2014/15 corn currently
reported under loan is 46.1 mbu. This is up 38.8 mbu from the 7.3 mbu reported under loan at this time
last year.
Weekly Fundamental Review – November 3, 2014
10
2014 crop
Daily loan
Total
10/27
3.9
32.7
10/28
1.8
34.4
10/29
2.2
36.6
10/30
4.1
40.7
10/31
2.5
43.2
11/3
2.9
46.1
Change
13.5
Maturity Dates For 2014 Corn Under Loan
Mbu Maturing
May
1.3
Jun.
6.4
Jul.
38.4
WORLD PRICES—Higher futures and an escalating basis
at Gulf pushed U.S. export values higher, up $11 to $194
per MT. The PNW delivered basis was off 20-25 cents,
limiting the price gain to $9, or approximately $211 per
MT, FOB. Brazil saw the largest gain with Paranagua cif
values rising $18 to $191. More modest increases were
seen for both Argentina and the Black Sea, up $6 each
to $180 and $179, respectively as these remain the two
cheapest origins. In contrast, China continues to see
some pressure with North China values losing $6 per MT
to $352; values in the South fell even more, down $11
to $413.
Ocean freight appears to have stabilized, at least for the
time being. Freight quotes out of South America found
56-60 K tonne vessels up $1 per MT to $39.50; a 54-58 K
Panamax from Santos to China was indicated at $33.50,
up $.50 from a week earlier. U.S. ocean freight to China was similarly higher: a 55 K tonne vessel from
the Gulf was reported $.50 higher at $45 and to Japan, steady at $46. PNW freight was $1 to $1.25
more expensive this week to Japan and China, at $25.50 and $24.50, respectively.
SUPPLY/DEMAND UPDATE - November WASDE preview . . . Past large crop years suggest there may be
justification for as much as a 3 bpa increase in yield next Monday. The final acreage total remains a
question-mark and we are assuming no change in either the planted or harvested total. Ethanol export
demand could open the door for a 25 or so mbu increase in expected corn grind but uncertain if the
USDA will make that adjustment this month. As far as exports are concerned, it is difficult to find a
comparable analog year in terms of YTD sales, accumulated exports and unshipped sales. While we
certainly don’t anticipate an increase in the forecast, in excess of a 50 million bushel reduction seems
excessive, at this point.
ATI SUPPLY/DEMAND CHANGES—Yield forecast at 175.7 remains 1.5 bpa above the USDA’s October
estimate while noting recent years with increases from BOTH Sep to Oct and Oct to Nov have averaged
2.2 bpa. Increase in weekly ethanol grind suggests an annual grind of 5.146 bbu, up 4 from a week ago
and now 21 above the USDA on expectations for additional exports. This week’s poor export
performance and comparative world prices were a definite wake-up call on foreign demand. Forecast
lowered 100 mbu as a result to 1.625 bbu, which is now 100 mbu below the USDA. With expected use
lowered 96 mbu, ending stocks are now estimated at 2.367 bbu, 286 mbu more than the USDA October
forecast.
Weekly Fundamental Review – November 3, 2014
11
USDA2
11/3/2014
CORN
USDA2
2013/14
2014/15
USDAOct
2015/16
Planted Acres (myn a)
Harvested Acres
Abandonment
Yield
Beginning Stocks
Production
Imports
Total Supply & Impts
Feed/Residual
Food, Seed, Industrial
Ethanol for Fuel
Domestic Use, Total
Exports
Total Use
2012/13
97.2
87.4
-10.1%
123.4
989
10,780
160
11,929
4,339
6,039
4,641
10,378
730
11,108
2013/14
95.4
87.7
-8.1%
158.8
821
13,925
36
14,782
5,125
6,504
5,130
11,629
1,917
13,546
ATI
95.4
87.7
-8.1%
158.8
821
13,925
36
14,782
5,125
6,504
5,130
11,629
1,917
13,546
2014/15
90.9
83.1
-8.6%
174.2
1,236
14,475
25
15,737
5,375
6,530
5,125
11,905
1,750
13,655
Poor
90.9
83.1
-8.6%
170.7
1,236
14,182
30
15,448
5,216
6,476
5,046
11,692
1,700
13,392
Trend
90.9
83.1
-8.6%
175.7
1,236
14,594
30
15,860
5,316
6,550
5,146
11,866
1,625
13,492
High
90.9
83.1
-8.6%
180.7
1,236
15,013
30
16,279
5,519
6,676
5,246
12,195
1,650
13,845
Ending Stocks
U.S. Stocks/Use Ratio
821
7.4%
1,236
9.1%
1,236
9.1%
2,081
15.2%
2,056
15.3%
2,367
17.5%
2,434
17.6%
Expected CZ Range
Expected Avg Farm PriceRange
NA
$6.89
NA
$4.46
NA
$4.46
$3.10-$3.70
Change
0.0
0.0
0.0
0
0
0
0
0
4
4
4
(100)
(96)
Trend
88.5
81.3
-8.1%
167.2
2,367
13,593
30
15,990
5,336
6,490
5,100
11,826
1,800
13,626
96
2,364
17.3%
$3.00-$5.75 $2.90-$5.75 $2.80-$5.75
$3.45
$3.29
$3.15
$3.25-$5.75
$3.25
2 USDA Oct
11/3/2014
SORGHUM
USDA2
USDA2
Planted Acres (myn a)
Harvested Acres
Abandonment
Yield
Beginning Stocks
Production
Imports
Total Supply
Feed and Residual
Food Seed & Indust.
Domestic Use, Total
Exports
Total Use
2012/13
6.2
5.0
-19.4%
49.8
23
247
10
279
93
95
188
76
264
2013/14
8.1
6.5
-19.8%
59.6
15
389
0
404
88
70
158
212
370
Ending Stocks
U.S. Stocks/Use Ratio
Avg. Farm Price
15
5.7%
6.43
34
9.3%
4.28
2013/14
ATI
8.1
6.5
-19.8%
59.6
15
389
0
404
88
70
158
212
370
2014/15
USDAOct
2014/15
7.2
6.200
-13.9%
65.4
34
404
0
439
90
90
180
220
400
34
38
9.3%
9.6%
4.28 $2.95-$3.55
Poor
Trend
High
Change
6.7
6.2
-7.9%
60.4
34
373
7.2
6.2
-14.3%
65.4
34
404
6.7
6.2
-7.9%
70.4
34
435
0
0
407
90
90
180
210
390
438
100
95
195
220
415
469
110
105
215
230
445
0
0
0
0
0
0
17
4.4%
$3.15
23
5.6%
$3.01
24
5.4%
$2.88
0
2 USDA Oct
SUMMARY—CZ14 seems to be paralleling 2009 quite well of late in terms of price direction. If that
holds, CZ may indeed finally be in a trading pattern of $3.50-$3.75 for the balance of the contract and, in
the absence of major change in the fundamentals. Note that 2009 did see CZ/CH exhibit considerable
weakness during November. Unless the pace of shipments picks up, CZ/CH could move similarly to
09/10. Acreage and yield changes are possible but the latter does not seem as if it will have a significant
negative impact on supply.
CZ/CH and CH/CK
Weekly Fundamental Review – November 3, 2014
12
CZ, “Big” Yield Years
PRODUCTION ESTIMATES—Current production estimates for the South American corn and soybean
crops are shown in the following table. Red denotes recent updates.
Date
USDA 14
10/10/14
USDA 13
10/10/14
ABIOVE
09/25/14
AgroConsult
09/29/14
AgRural
04/25/14
Arg Ag Min
08/29/14
BA Grain Exchange 09/04/14
Celeres
10/02/14
CONAB
10/09/14
Cordonnier
10/20/14
IGC
10/30/14
Oil World
10/28/14
Informa
10/03/14
Safras
10/02/14
Source: USDA, Trade sources.
Arg C
23.0 (23.0)
25.0 (25.0)
Brazil C
75.0 (75.0)
79.3 (79.3)
Arg SB
55.0 (55.0)
54.0 (54.0)
56.6 (NA)
33.0 (33.0)
25.2 (25.0)
Brazil SB
94.0 (94.0)
86.7 (86.7)
91.0 (86.5 LY)
94.8 (95.1) 14/15
85.6 (85.6)
53.0 (53.0)
55.5 (55.5)
78.0 (79.5)
91.4 (91.3)
76.6-78.9 (LY: 79.9)
88.8-92.4 (LY: 86.1)
22.0 (22.0)
74.0 (75.0)
55.0 (55.0)
94.0 (95.0)
23.0
75.0
54.0 (55.0)
89.0 (92.0)
23.0 (23.0)
70.6 (70.8)
55.5 (55.0)
92.5 (90.8)
95.5 (95.9)
Weekly Fundamental Review – November 3, 2014
13
WORLD CORN AND FEED WHEAT PRICES-
Weekly Fundamental Review – November 3, 2014
14
LIVESTOCK
Production Cost and Return for Kansas Cattle Feeders
LIVESTOCK MARGINS -
Returns for Fat Cattle Sold
TW
Feed bought when cattle placed
Placement Date
5/30/14
Corn Futures ($/bu.)
N
$4.66
Basis ($/bu.)
$0.72
Corn Cost ($/bu.)
$5.38
Total Feed Cost (cwt)
$33.98
LW
LY
5/23/14
$4.76
$0.65
$5.40
$33.91
5/31/13
$6.63
$1.21
$7.84
$46.40
Total Cost (cwt)
Cash Steer (cwt)
$163.87
$167.70
$160.86
$169.70
$137.74
$131.94
$600
Est. Profit/Loss (Head)
$47.91
$110.50
($72.51)
$500
Feed cost spread out over feeding period
Corn ($/bu.)
$4.57
$4.64
Total Feed Cost (cwt)
$29.78
$30.12
Total Cost (cwt)
$159.59
$157.00
Cash Steer (cwt)
$167.70
$169.70
Est. Profit/Loss (Head)
$101.40
$158.73
$6.53
$39.52
$130.73
$131.94
$15.15
Production Cost and Return for Kansas Cattle
$1,400
Projected Production Cost
at Time of Placement
$180
$1,300
$1,200
$170
$1,100
$1,000
Cash Kansas Steer Price
$ / cwt Live Weight
$160
$900
Projected Steer Price on Oct.$800
31
CME Futures Adjusted for Basis
$700
$150
$140
Estimated Production Cost
Feed Bought at Placement
$130
$400
$300
$100
$0
Return per Head
$110
-$100
$ / Head
$200
$120
-$200
3/20/15
2/20/15
1/23/15
11/28/14
12/26/14
-$300
10/31/14
9/5/14
8/8/14
7/11/14
6/13/14
5/16/14
4/18/14
3/21/14
2/21/14
1/24/14
12/27/13
11/29/13
11/1/13
10/3/14
Sale Date
$100
Projected Returns for Feeder Cattle Placed
TW
LW
750# Feeder (cwt)
$242.50
$242.50
Corn Futures ($/bu.)
Basis ($/bu.)
Corn ($/bu.)
Total Feed Cost (cwt)
Proj. Breakeven (cwt)
Proj. Sale Price (cwt)
Proj. Profit/Loss (Head)
Z
$3.77
$3.53
$0.45
$4.22
$27.44
$184.74
$168.49
($203.18)
$0.45
$3.98
$26.32
$183.60
$166.53
($213.40)
Cash cattle prices fell from the previous week’s record highs,
but still left producers with profitable estimated returns.
Kansas cash cattle prices last week of $167.70/cwt were
down $2.00/cwt from the previous week’s record high of $169.70. However, even with the lower price,
a feedyard that was not hedging profited from $47.91 to $101.40 per head depending on how the feed
was purchased. Projected production costs for feedyards increased last week on firmer feed costs.
Losses are expected when the cattle are sold. The average cash price for 750-pound feeder steers was
unchanged last week at $242.50/cwt. Expected corn costs over the next several months gained
$0.24/bushel from the week before to $4.22/bushel. At these levels, we pencil a breakeven price of
$184.74/cwt, up $1.14/cwt. With cash cattle in early April projected to be $168.49/cwt, a feedyard
could expect a loss of $203.18 per head.
Production Cost and Return for Upper Midwest Dairy
Returns Milk Sold In:
Production Cost and Return for Upper Midwest Dairy
$25
$45
Projected Milk
$42
Price on Oct. 31
CME Class III Futures $39
$24
$23
$22
$36
Milk Price
$33
$20
$30
$19
$27
Projected Production Cost
CBT Corn & SBM Futures
on Oct. 31 Adjusted for Basis
$18
$17
$16
$24
$21
$18
Milk Production Cost
$15
$15
$14
$12
$13
$9
$12
$6
Return per CWT
$11
$3
$10
$ / cwt
$ / cwt
$21
$0
5/1/15
3/27/15
2/20/15
1/16/15
12/12/14
11/7/14
10/3/14
-$3
8/29/14
7/25/14
5/16/14
4/11/14
3/7/14
1/31/14
12/27/13
11/22/13
10/18/13
9/13/13
8/9/13
7/5/13
5/31/13
4/26/13
6/20/14
Sale Date
$9
Corn Cost ($/bu.)
Soybean Meal ($/ton)
DDG ($/ton)
Total Feed Cost ($ cwt Milk)
Total Cost ($ cwt Milk)
September
2014
$3.34
$496.50
$120.00
$9.70
$15.42
September
2013
$4.71
$483.75
$217.75
$11.44
$17.12
Milk Price ($/cwt)
Est. Profit/Loss ($ cwt Milk)
$24.60
$9.18
$18.14
$1.02
Projected Returns for Milk Sold In:
Corn Cost ($/bu.)
Soybean Meal ($/ton)
DDG ($/ton)
Total Feed Cost ($ cwt Milk)
October
2014
$3.17
$345.34
$104.00
$8.97
April
2015
$3.96
$327.30
$127.00
$9.04
Proj. Total Cost ($ cwt Milk)
Proj. Milk Price ($/cwt)
Est. Profit/Loss ($ cwt Milk)
$14.69
$23.79
$9.10
$14.76
$16.90
$2.14
Strong milk prices are providing producers large positive returns. Milk prices in September were a
record high $24.60/cwt, passing the previous record of $24.31/cwt from April. Futures project milk
prices will fall rather sharply over the next several months. But, feed costs are expected to remain
Weekly Fundamental Review – November 3, 2014
15
moderate and should allow producers to maintain positive returns. Our estimates indicate that during
September, it cost a typical Upper Midwest dairy about $15.42/cwt to produce 100 pounds of milk. This
was below the September Class III milk price of $24.60/cwt, leaving producers with a profit of $9.18 for
every 100 pounds of milk produced. Estimated production costs for October are $14.69/cwt. With
October milk futures at $23.79/cwt, a profit of $9.10 per 100 pounds of milk is expected. Futures
project production costs out in April will be near $14.76/cwt. With April milk futures at $16.90/cwt,
producers would have a profit of $2.14/cwt.
Production Cost and Return for Ia./So.Min.Hog Producer
Returns for Fat Hogs Sold
Production Cost and Return for Iowa/So. Minnesota Hogs
$100
$95
TW
Feed bought when hog farrowed
Farrowing Date
5/2/14
Corn Futures ($/bu.)
N
$4.94
Basis ($/bu.)
$0.02
Corn Cost ($/bu.)
$4.96
Soybean Meal ($/ton)
N
$483.75
LW
LY
4/25/14
$5.02
($0.02)
$5.00
$489.25
5/3/13
$6.44
$0.44
$6.88
$416.50
$350
Basis ($/ton)
Meal Cost ($/ton)
$20.00
$503.75
$20.00
$509.25
$26.00
$442.50
$300
Total Feed Cost (cwt)
$33.18
$600
$90
$550
$85
$500
$80
$450
Projected Hog Price on Oct. 31
CME Futures Adjusted for Basis
$75
$400
$70
Estimated Production Cost
Feed Bought at Farrowing
$65
$50
$150
$45
$100
$40
$50
8/14/15
7/17/15
-$50
6/19/15
1/2/15
1/30/15
12/5/14
11/7/14
9/12/14
10/10/14
8/15/14
7/18/14
6/20/14
5/23/14
4/25/14
3/28/14
2/28/14
$30
$0
Sale Date
5/22/15
Return per Head
4/24/15
$35
$33.47
$38.42
Total Cost (cwt, live wt.)
$58.18
$58.47
Cash Hog (cwt, live wt.)
$64.35
$68.80
Est. Profit/Loss (Head)
$15.43
$25.82
Feed cost spread out over feeding period
Corn ($/bu.)
$3.91
$3.99
Soybean Meal ($/cwt)
$477.23
$484.27
$63.42
$62.39
($2.58)
$5.97
$483.73
Total Feed Cost (cwt)
Total Cost (cwt, live)
Cash Hog (cwt, live)
$28.68
$53.68
$64.35
$29.17
$54.17
$68.80
$36.27
$61.27
$62.39
Est. Profit/Loss (Head)
$26.67
$36.58
$2.81
Projected Returns for sow being bred
TW
Corn Futures ($/bu.)
H
$3.89
Basis ($/bu.)
($0.01)
Corn Cost ($/bu.)
$3.88
Soybean Meal ($/cwt)
H
$327.40
LW
$3.89
($0.03)
$3.87
$327.40
Basis ($/cwt)
Meal Cost ($/cwt)
Total Feed Cost (cwt)
Proj. Breakeven (cwt, live)
Proj. Cash Hog (cwt, live)
Est. Profit/Loss (Head)
$0.67
$328.07
$24.54
$49.54
$63.64
$35.24
($1.33)
$326.07
$24.55
$49.55
$62.16
$31.53
Iowa/Minnesota Cash Hog
Per CWT, Live Weight
Cash hog prices have fallen to their lowest level since early
February, but are still providing producers with positive
returns. The Iowa/So. Minnesota weekly average price
declined $4.45/cwt from the week before to $64.35/cwt. At
this price, our calculations indicate a typical Iowa hog
producer with un-hedged hogs still profited from $15.43 to
$26.67 per head, depending on how
$100
the feed was purchased. Futures
project cash hog prices will work lower
$90
through the rest of the year, but will
still provide producers with profitable
$80
returns. A sow bred today would
$70
farrow a pig in February and with
estimated corn costs at $3.88/bushel
$60
and soybean meal at $326.07/ton,
expected production costs are
$50
$49.55/cwt to raise the pig to a live
market weight in August. With cash
$40
hogs projected to be $62.16/cwt, a
$30
pork producer would be left with a
profit of $31.53 per animal.
$ / Head
$55
$250
Projected Production Cost
$200
at Time of Farrowing
3/27/15
$60
2/27/15
$ / cwt Live Weight
$650
Cash Iowa/So Min.
Hog Price
Weekly Fundamental Review – November 3, 2014
16
Production Cost and Return for Chicken Integrator
Weekly Fundamental Review – November 3, 2014
$1.00
$2.50
$0.50
$2.25
Return per Bird
$2.00
$ / Bird
$1.50
$2.75
$0.00
Sale Date
-$0.50
Broiler Egg Set
225
220
215
2001 - 2012
Range
210
2014
205
200
2013
195
190
185
180
15-Nov
6-Dec
15-Nov
6-Dec
27-Dec
4-Oct
25-Oct
4-Oct
25-Oct
13-Sep
23-Aug
2-Aug
12-Jul
21-Jun
31-May
19-Apr
10-May
29-Mar
175
Broiler Chicks Placed
185
180
175
2001 - 2012
Range
2014
170
165
2013
160
155
150
27-Dec
13-Sep
23-Aug
2-Aug
12-Jul
21-Jun
31-May
19-Apr
10-May
145
29-Mar
Broiler egg sets remain above a year
ago. Egg set during the week ending
October 25th increased 2.0% from the
week before and was 2.3% above a
year earlier. Average egg set over the
last four weeks was 3.8% above last
year. Egg sets are also above the 5year average for this time of year. Last
week’s egg set was 4.8% larger than
the average set for this time for 2009
through 2013 and over the last four
weeks, egg set has averaged 4.3%
above the five year average. Chick
placements during the latest week
were also up from a year
ago. Placements were up 3.8% from a
year ago during the latest week and
placements over the last four weeks
have averaged 3.0% above last year.
$2.00
$3.00
8-Mar
Estimated margins for chicken
producers remain profitable, but did
narrow last week as chicken prices fell
while feed costs firmed. Income from
both whole broilers and further
processed chicken cuts fell 7 cents last
week to $4.56 per bird. Our estimates
indicate feed, growout costs and
processing for an average integrator
gained a penny from the week before
to $3.38 per bird. As a result,
estimated returns for integrators
narrowed 8 cents from the week
before, but still indicate a profit of
$1.18 per bird. Over the last four
weeks, an integrator has had an
average profit of $1.27 per bird.
$2.50
Total Cost
$3.25
8-Mar
$0.37
$3.00
$3.50
15-Feb
$1.26
$3.50
$3.75
15-Feb
$1.18
$4.00
$4.00
11/03/12
12/01/12
12/29/12
01/26/13
02/23/13
03/23/13
04/20/13
05/18/13
06/15/13
07/13/13
08/10/13
09/07/13
10/05/13
11/02/13
11/30/13
12/28/13
01/25/14
02/22/14
03/22/14
04/19/14
05/17/14
06/14/14
07/12/14
08/09/14
09/06/14
10/04/14
11/01/14
Est. Profit/Loss (Bird)
$4.50
$4.25
25-Jan
43.72
$3.92
$5.00
$4.50
25-Jan
46.85
$4.63
$5.50
$4.75
4-Jan
45.78
$4.56
$6.00
Total Income
$5.00
4-Jan
Leg Quarters (cents/lb)
Total Income ($/bird)
$6.50
$5.25
$ / Bird
LY
$4.92
$501.04
$1.63
$3.55
88.98
132.16
Million
LW
$3.97
$468.04
$1.49
$3.37
105.28
160.45
Million
TW
$4.02
$467.40
$1.50
$3.38
103.73
149.39
Corn Cost ($/bu.)
Soybean Meal ($/cwt)
Total Feed Cost ($/bird)
Total Cost ($/bird)
National Broiler (cents/lb)
B/S Brests (cents/lb)
Production Cost and Return for Chicken Integrator
$5.50
Returns for Bird Processed
17
Production Cost and Return for Midwest Egg Producer
LW
$3.22
$365.20
28.5
50.7
92.5
41.8
LY
$4.27
$414.90
34.7
58.9
94.0
35.1
325
130
300
120
275
Egg Price
110
250
100
225
90
200
80
175
Weekly Fundamental Review – November 3, 2014
150
125
100
75
50
25
0
-25
10/4/14
8/30/14
7/26/14
6/21/14
5/17/14
3/8/14
4/12/14
2/1/14
12/28/13
11/23/13
9/14/13
10/19/13
7/6/13
8/10/13
6/1/13
4/27/13
3/23/13
2/16/13
1/12/13
12/8/12
11/3/12
Margins remain profitable for egg
70
producers last week, but did narrow as
60
Production Cost
50
egg prices held steady while feed costs
40
increased. Average Midwest farm level
30
prices for medium and large eggs were
20
unchanged last week at 92.5
10
Return per Dozen
Sale Date
cents/dozen. Total production costs
0
firmed 3.7 cents/dozen from the week
before to 54.4 cents/dozen. As a
result, producer margins narrowed 3.7
cents/dozen, but still indicate a positive margin of 38.1 cents/dozen. Over the last four weeks, egg
producers have had an average profit of 41.9 cents/dozen.
Cents / Dozen
TW
$3.49
$404.00
31.3
54.4
92.5
38.1
Cents / Dozen
Corn Cost ($/bu.)
Soybean Meal ($/cwt)
Total Feed Cost (cents/doz.)
Total Cost (cents/doz.)
Farm Egg Price (cents/doz.)
Est. Profit/Loss (cents/doz.)
Production Cost and Return for Midwest Egg Producer
140
Returns for Eggs Produced
18
SOYBEANS
WORLD CROP UPDATE – Brazil Ag attaché maintains 94.0 production estimate; Cordonnier dropped his
estimate by 1 to 94.0; Oil World more pessimistic, down 3 to 92.0 for Brazil and sees Argentina 1 lower
at 54.0.
CROP PROGRESS: Harvest: 83% TW; 70% LW; 85% LY; 83% AVG. Note strong gain in east of the
Mississippi, especially the more northern states of MI, WI along with IN, IL and OH who all narrowed the
deficit versus the 5-year average by 12 or more points.
Major Soybean Producing States, Harvest Progress Versus Average
KY
MI
IN
OH
KS
MO
TN
IL
WI
US
IA
MS
NE
LA
NC
MN
AR
SD
ND
TY
5 Year
51
69
71
83
73
84
72
83
72
80
64
70
62
66
83
84
80
81
83
83
91
90
93
91
95
93
98
95
30
26
98
91
86
76
99
89
97
85
Source: NASS, November 3, 2014
Weekly Fundamental Review – November 3, 2014
Vs Ave TW
-18
-12
-11
-11
-8
-6
-4
-1
-1
0
1
2
2
3
4
7
10
10
12
Vs Ave LW
-18
-29
-25
-23
-18
-13
-7
-14
-16
-6
-4
1
-2
-1
2
7
11
12
15
19
Soybean Progress
USDA
ATI
USDA
USDA
USDA
ATI
MBU Harvested
USDA
USDA 5 yr Avg ATI
USDA
USDA
LY AVG TW
LW
LY
AVG 12 Yield 13 Yield Yield 14 Yield 11 Harv 12 Harv 13 Harv 14 Harv Prod 11 Prod 12 Prod 13 Prod 14
91 84 458
348
431
376
50
50
49
54
8.9
8.9
9.5
9.9
0.42
0.45
0.47
0.53
87 84 216
148
233
218
52
52
49
55
5.3
5.1
5.2
5.5
0.24
0.26
0.27
0.30
81 83
72
44
69
71
45
45
43
44
1.9
2.0
1.9
2.2
0.09
0.09
0.09
0.10
90 83 176
122
200
184
50
50
49
51
4.5
4.6
4.5
4.9
0.22
0.23
0.22
0.25
80 81
64
47
48
56
39
39
43
48
1.6
1.7
1.6
1.8
0.07
0.07
0.06
0.09
88 83 986 710 981 906
49
49
48
52
22.3
22.4
22.6
24.2
1.04
1.09
1.11
1.26
94 90 459
409
396
414
46
46
49
55
9.2
9.3
9.3
9.9
0.48
0.42
0.42
0.54
95 91 299
287
264
266
42
42
42
44
7.0
7.0
6.6
7.3
0.27
0.29
0.28
0.32
62 70 165
118
125
143
36
36
39
47
5.2
5.3
5.6
5.6
0.19
0.19
0.20
0.26
97 93 269
247
248
244
54
54
54
55
4.8
5.0
4.8
5.4
0.26
0.27
0.26
0.30
88 87 1192 1061 1033 1067
44
44
46
50
26.3
26.6
26.3
28.1
1.20
1.17
1.16
1.42
88 85 189
181
124
111
31
31
31
33
4.0
4.7
4.6
5.9
0.11
0.14
0.14
0.19
91 89 218
211
169
153
41
41
40
44
4.1
4.7
4.6
5.1
0.15
0.19
0.19
0.22
% Harvested
STATE
IL
IN
MI
OH
WI
ECB
IA
MN
MO
NE
WCB
ND
SD
TW LW
83 63
73 50
71 44
72 50
80 59
77 55
91 81
98 94
64 46
95 87
88 79
97 93
99 96
N PLAINS 98
KY 51
TN 62
MID SOUTH
56
AR 86
LA 98
MS 93
DELTA
91
KS 72
NC 30
OTHER
59
US 83
94
40
49
44
77
96
88
84
52
21
43
70
89
49
45
47
72
99
93
83
80
18
62
85
87 406 392 293 264
69
42
33
41
45
66
48
38
32
37
68
90
71
73
83
76 133
119
101
97
95
73
71
54
42
91 104
98
85
74
84 310 289 240 213
80 106
77
105
108
26
20
14
9
13
64 126
91
114 120
83 3259 2749 2854 2737
36
50
47
48
44
49
46
45
37
34
36
44.0
36
50
47
48
44
49
46
45
37
34
36
44.0
35
44
40
42
40
43
42
41
36
32
34
43.5
38
44
44
44
43
47
48
45
38
35
37
47.7
8.0
1.5
1.3
2.7
3.3
1.0
1.8
6.1
3.8
1.4
5.1
73.8
9.5
1.5
1.2
2.7
3.2
1.1
2.0
6.2
3.8
1.6
5.4
76.2
9.2
1.7
1.6
3.2
3.2
1.1
2.0
6.4
3.5
1.5
5.0
76.3
11.0
1.8
1.6
3.3
3.3
1.4
2.2
6.9
4.0
1.7
5.7
83.4
0.27
0.06
0.04
0.10
0.13
0.04
0.07
0.23
0.10
0.04
0.14
3.09
0.34
0.07
0.06
0.13
0.14
0.05
0.09
0.28
0.14
0.05
0.19
3.35
0.33
0.08
0.07
0.16
0.14
0.05
0.09
0.29
0.13
0.05
0.18
3.36
EXPORT SHIPMENTS - 101.8 mbu TW; 83.2 LW; 82.6 LY; 78-83 EXPECTED; 30.1 NEEDED. YTD: 405 TY;
344 LY. DESTINATIONS: China, 78.6 TW, 66.2 LW; EU, 3.6 TW, 4.9 LW; Japan, 1.6 TW; 1.2 KW; Other
Asia, 5.6 TW; 2.0 LW; Mexico, 2.4 TW, 3.6 LW; Egypt, 0 LW, 0 LW; S Korea, 2.3 TW, 0 LW; Other W Hemi,
3.6 TW, 2.0 LW. PORT ACTIVITY: Lakes, 4.1 TW, 1.8 LW; ATL, 3.0 TW, 1.9 LW; Miss River, 54.9 TW, 42.0
LW; Columbia River, 19.1 TW, 14.5 LW; Puget Sound, 7.3 TW, 9.8 LW; Interior, 8.9 mbu TW, 8.5 K LW;
East Gulf, 2.2 TW; 0 LW; N Texas, 2.3 TW, 2.2 LW.
Shipments Summary
Soybean Week # 9
SBM/SBO Week # 4
TW
LW
LY
14/15
YTD*
13/14
YTD*
# of w k
left
BOY/w k BOY/w k YTD %
TY
LY
LY
Soybeans
101.8
83.2
82.6
404.5
344.5
43
30.1
30.2
117%
Soybean Meal
150.6
142.6
530.8
10,496.9
9,133.5
48
8.1
20.9
115%
Soybean Oil
13.3
24.4
22.8
811.4
690.0
48
2.9
6.1
118%
EXPORT SALES - 48.7 TW, 79.6 LW; 58.1 LY; 37-55 Expected; 10.2 Needed. YTD: 1,253 TY; 1,184 LY.
O/S: 977 TY; 929 LY.
Weekly Fundamental Review – November 3, 2014
20
0.42
0.08
0.07
0.15
0.14
0.07
0.10
0.31
0.15
0.06
0.21
3.98
China accounted for nearly 80% of this week’s net sales total at 38.6 million. Portugal was the 2nd
largest buyer at 2.6. Egypt bought 2.4 and Japan, 1.7. Mexico secured another 1.6 million and Tunisia,
Taiwan and Canada were each in for an average of 1 million each. Additional sales to Indonesia,
Colombia, Costa Rica, Vietnam, Thailand and Spain totaled 9.1 million. Unknown cancelled 2.2 million.
Unshipped Soybean Sales (mbu)
09/10 10/11 11/12 12/13 13/14 14/15 Change
EUR
18
3
5
8
12
28
+16
FSU
0
0
0
0
13
1
-12
Far East
74
83
48
54
77
105
+28
China
415
464
369
388
562
569
-+7
Africa
4
19
4
4
10
12
-2
W Hemi
26
23
28
23
29
39
+10
Unknown
160
174
66
173
224
223
-1
Total
697
766
521
650
929
977
+48
SON Exports 536
622
425
618
677
708
+31
Soybean Week # 8
OILSEED Complex
SBM/SBO Week # 4
TY
LY
YTD
USDA
USDA
O/S
O/S
O/S
YTD
YTD
Change
14/15
13/14
BOY/w k BOY/w k
TY
LY
TY
LY
Change
O/S New crop
TY
LY
6%
1,700
1,645
10.2
10.5
976.7
929.1
5%
3.0
2.6
SALES
TW
LW
LY
SB mbu
48.7
79.6
174.2
1,253
1,184
SBM mmt 147.8
23.0
805
6,393
4,674
37%
10,886
10,139
93.6
113.9
6013
4128
46%
79.6
0.0
SBO mmt
10.6
14.5
238
79
200%
953
982
14.9
18.8
194.4
56
250%
0.0
0.0
15.8
Soybean Monthly Sales activity
140.0
120.0
Million bushels
100.0
80.0
60.0
40.0
20.0
0.0
-20.0
-40.0
Weekly Fundamental Review – November 3, 2014
EU
Japan
Taiwa
n
S
Korea
Other
Asia
China
Africa
W
Hemi
Canad
a
Mexic
o
13/14
13.0
6.7
7.4
1.9
20.0
77.6
4.7
14.1
1.6
10.4
Unkno
wn
20.2
14/15
14.3
5.2
7.0
2.3
4. 9
127. 2
3.5
8.8
2.2
5.3
-17.1
Average
9.1
4.4
5.7
0.2
10.3
64.6
1.9
9.3
0.7
7.4
5.7
21
BARGE MOVEMENT--Barge bean volume was up a little more than 2 ½ times this week to 11.3 million
for the total Mississippi River. Amounts through all three locks were at season highs. Volume through
Lock and Dam #27 rose 3.4 mb to 5.6; Ohio River movement increase close to a factor of 5, to 3.7 million
and Arkansas volume rose 38% to 2.1 million. Expect 40-50 week in soybean inspections via the
Mississippi River.
Barge Grain Movement: Soybeans (1,000 bu)
Miss River
Week Ending (9): Miss Lock 27
OH Lock 52
Ark Lock 1
Miss Total
Exports (4 wk)
10/24/09
4,919
3,068
420
8,407
17,850
10/23/10
10,460
4,312
1,320
16,092
30,228
10/22/11
8,224
2,811
1,027
12,061
23,877
10/27/12
13,800
2,902
1,167
17,868
34,052
10/26/13
12,301
5,328
1,540
19,169
33,234
9/27/14
153
175
1,390
1,719
25-30/33,442
10/04/14
2,167
767
1,493
4,427
25-35/32,902
11/11/14
5,570
3,690
2,067
11,327
30-40/38,461
11/18/14
6,420
4,083
1,167
11.670
30-40/42,040
11/25/14
14,207
2,202
1,467
17,875
35-45/63,561
Source: USDA AMS. Assumes 1 week delay between movement and inspections.
SOYBEAN MEAL SALES— 148 K MT TW; 23 LW; 268 K LY; 150 to 300 Expected; 92 Needed. YTD: 6.39
MMT TY; 4.67 LY. O/S: 6.0 MMT TY; 4.1 LY. It would have been a respectable week of sales had
Unknown (65.5 K) and Egypt (50.0 k) cancelled over 110,000 MT. On the plus side, Mexico came in at
162.8 K MT; Italy bought 45 K; Venezuela was in for 32 K and Canada, 17.9 K. Portugal, Colombia, El
Salvador, Jamaica and Peru together bought a total of 21.7 K.
SOYBEAN MEAL SHIPMENTS— 150 K TW; 143 LW; 177 LY; 200 Needed. YTD: 380 K MT TY; 546 K MT
LY. Exports remain a little sluggish. Destinations this week included Mexico (43.5 K); Canada (17.8);
Colombia (16.8); the Dominican Republic (15.0); El Salvador (14.1); Portugal (8.0); Panama (7.1) and
Honduras (5.9).
1st Quarter Crush and Use (mbu/K ST)
09/10 10/11 11/12 12/13 13/14 14/15
Crush
445
443
412
452
447
450
SBM Exports
2,556 2,251 2,045 3,047 2,774 2,850
Domestic SBM Use
7,663 8,106 7,731 7,460 7,425 7,500
YTD SBM Sales
4,159 3,382 3,001 3,960 5,152 7,047
YTD SBM Exp
391
603
500
697
602
419
Unshipped SBM Sales 3,768 2,779 2,501 3,263 4,550 6,628
SON Exports
536
622
425
618
677
708
Use for Crush/Exports 981 1,065 837 1,070 1,124 1,158
SOYBEAN OIL SALES— 15.8 K MT TW; 10.6 LW; 4.8 K LY; 10 to 30 Expected; 14.6 K Needed. YTD: 238
TY; 79 LY; O/S:194 TY, 56 LY. Buyers: Dominican Republic, 8.8 K; Colombia 4.6; Mexico, 2.5 and Peru,
1.8. 1,000 MT sold to Canada, Trinidad, the Philippines with smaller quantities to Canada, Trinidad, the
Philippines, Belgium and Panama.
Weekly Fundamental Review – November 3, 2014
22
SOYBEAN OIL SHIPMENTS— 13,300 TW; 24,400 LW; 7,600 LY. YTD: 44 K TY; 24 K. Destinations
included the Dominican Republic, 9.2 and Mexico 3.3 K. sub 500 MT amounts sold to Canada, Belgium,
Australia and the UAR.
BIODIESEL – Higher soybean oil prices trimmed margins. Estimated values for both RB and crude SBO
feedstocks fell 15 cents to (41) for the former and (21) for crude SBO. Choice white grease margins were
3 lower to $.36/gallon; stabilized poultry fat and yellow grease both gained 3 cents to $.32 and
$.31/gallon, respectively.
Upper Midwest Biodiesel Spot Margin
11/03/14 c/g
10/27/14 c/g
Methanol $/g
1.45
16.31
16.31
Operational Costs c/gal
fixed
28.8
28.8
Transportation
10.0
10.0
Variable Production Cost
45.1
45.1
SME Spot B100 Price c/gal
304
303
FAME+8 Spot B100 Price c/gal
293
290
Heating Oil c/g
251
247
European Gasoil c/g
251
246
Glycerin Credit @ c/lb
6.38
6.4
6.4
Input Feedstock (del'vd prices) Price Dlvd.
TW c/g
Margin
LW c/g
Margin
RB Soybean Oil c/lb@
40.05
297
(41)
281
(27)
Crude Soybean Oil c/lb@
37.30
277
(21)
261
(6)
Choice White Grease @
25.38
188
36
182
40
Bleachable Fancy Tallow @
29.00
215
10
208
14
Stabilized/Poultry Fat @
26.00
193
32
193
29
Yellow Grease @
23.50
193
31
193
28
Crude Corn Oil @
29.50
243
(8)
243
(11)
RB SBO Price to B/E
34.5
Change
0
0
0
1
3
LY c/g
20.2
28.8
10.0
49.0
418.0
395.3
0
Change
(15)
(15)
(3)
(4)
3
3
3
10.4
LY c/g
337
314
188
245
195
176
204
CASH CRUSH/CENSUS – Once again, meal led the soy complex higher as logistical issues remain
paramount. Board crush soared 69 cents to $1.89. Central and Eastern processors were able to raise
posted meal offers $15-$20 per ton. Oil out-gained soybeans as well, although the oil basis did back off
slightly. Decatur margins were pegged at a hefty $3.82 per bushel, up more than a dollar the past week.
Fostoria rose $.96 to an estimated $3.85/bushel and Lincoln gained $.68 to $3.40.
10-27
10-20
Change
Nearby Board Crush
$1.89
$1.20
+$.69
Decatur, IL
Beans
0 SX
5 SX
-5
Meal
65 SMZ
45 SMZ
+20
Oil
100 BOZ 112.5 BOZ -12.50
Hulls
$125.00
$122.5
+$2.50
Margin $/bu
$3.82
$2.70
+$1.12
Fostoria, OH
$3.85
$2.89
+$0.96
SB @
-25 SX
-25 SX
0
SBM @
+55 SMZ +40 SMZ
+15
Lincoln, NE
$3.40
$2.72
+$.68
SB@
-45 SX
-40 SX
-5SBM @
25 SMZ
25 SMZ
---Source: Trade sources, Dow Jones.
Weekly Fundamental Review – November 3, 2014
LY
$.75
+F SX
27 SMZ
-138 BOZ
$162.50
$1.63
$2.01
-5 SX
+40 SMZ
$1.64
-15 SF
13 SMZ
23
FOREIGN EXCHANGE— CIF bean values increased 21 cents (2%) from last week. Values in real are up
4%. Values in euro are up 3% and values in yen are 6% higher. In peso, values are up 1% from last week.
CIF bean values are down 15% from a year ago. Values for Brazil are down 7% from last year. Values for
Europe are down 9% from a year ago. Values for Japan are down 4%, and Mexican values are down 13%
from last year.
Cif Beans
Cif
Real
Euro
Yen
11/3/14
10/27/14
11/4/13
% LW
% LY
Mex.Peso
11.47
28.43
9.16
1288.40
11.26
27.36
8.89
1218.04
13.55
30.65
10.05
1337.76
102%
104%
103%
106%
85%
93%
91%
96%
(Units of foreign currency equivalent to one bushel, CIF US Gulf)
154.65
152.75
177.06
101%
87%
LOAN/LDP ACTIVITY— For the 2014 crop, 5.6 mbu of soybeans were placed under loan during the latest
week. This was up 1.4 mbu from the 4.2 mbu that entered the loan program the week before. Total
2014/15 soybeans currently reported under loan are 12.5 mbu. This is up 12.4 mbu from the 0.1 mbu
reported under loan at this time last year.
2014 crop
Daily loan
Total
10/27
2.0
6.9
10/28
1.3
8.2
10/29
1.0
9.2
10/30
1.2
10.4
10/31
1.0
11.4
11/3
1.1
12.5
Change
5.6
Maturity Dates For 2014 Soybeans Under Loan
Mbu Maturing
Jun.
0.1
Jul.
12.4
WORLD PRICES: Near-by FOB prices saw sizable gains this
week. U.S. Gulf soybeans rose $26 to $443 per MT; the PNW
was $24 higher to $458. Ukraine soybeans were quoted $25
higher at $415. Deferred values (Feb-Mar) for Brazil and
Argentina rose $12 and $21 to $470 and $410.
Vessel counts overseas had 3 loading soybeans at Brazil
ports, up from zero a week earlier. There was also limited
activity out of Argentina with the number of soybean vessels
loading declining from 2 LW, to 1 this week and versus 2 a
year ago. Argentine SBM volume continues to at a fairly
Weekly Fundamental Review – November 3, 2014
24
high level versus 2013 with 1.5 MMT reported this week, up from 1.0 LY but unchanged on the week.
Brazil SBM volume was up slightly from a week earlier, 338 K MT against 304 LW.
Unshipped Soybean Sales and Export Demand (Week #8)
09/10
10/11
11/12
12/13
13/14 14/15- Change
F
O/S TY
389
697
766
521
650
929
977
48
PRC O/S
191
415
464
369
388
562
569
7
Unknown
79
160
174
66
173
224
223
-1
Other
119
122
128
86
89
142
185
43
SON Exp-Ttl
536
622
425
618
661
677
708
23
SON Exp-PRC
301
394
274
406
465
485
500
15
Source: USDA FAS/ERS. #’s may not add due to rounding. Note Year 13/14 data unavailable for
Weeks #6-7 due to government closure.
08/09
SUPPLY/DEMAND UPDATE – The November WASDE/Production reports will be released next Monday.
Past analog years since 2000 which have seen increases in the yield estimate between Aug-Sep (1.20
bpa TY) and Sep-Oct (1/2 bpa TY) have generally been followed with a ¾ bpa increase in November (05,
06 and 09). This would suggest that another ½ bpa increase may be likely this year. With acreage
unchanged, this would add 42 million to production/supply. On the demand side, the slow start to meal
exports has YTD shipments at a 10-year low of 380 K MT 4 weeks into the 14/15 marketing year. Both
YTD and Outstanding sales are record large. September crush on a Census basis was likely 10 mbu
below a year ago. The combination of the smaller September crush and forecasts for a 1 million ton
increase in meal production suggests the USDA’s forecast for a 36 mbu increase in annual crush may be
a bit optimisti c. That along with recent talk of meal export cancellations could lead to the November
crush holding steady to 5-10 mbu lower. Exports are off to a tremendous start in terms of both sales
and shipments, a 25-50 million bushel in the forecast shouldn’t be a surprise. The net of the above
assuming crush is unchanged will likely leave carry-out little changed: +42 (prod) – 0 (crush) +25 exports
= +17, or 467 mbu versus 450 last month.
ATI BALANCE SHEET CHANGES—Production up 42 mbu, ½ bpa greater yield. Despite low September
crush and slow start to meal export program, $3+ margins provide incentive to produce meal; crush up
15; exports up 15; carry-out 12 higher at 430 mbu.
11/3/2014
SOYBEAN
Planted Acres
Harvested Acres
Abandonment
Yield
Beginning Stocks
Production
Imports
Total Supply & Impts
Seed/Residual
Crush
Domestic Use, Total
Exports
Total Use
SAM Production MMT (5)
U.S. Ending Stocks
World Ending Stocks MMT
U.S. Stocks/Use Ratio
Expected SX Range
Expected Avg Farm Price/Range
USDA2
2012/13
77.2
76.2
-1.3%
39.8
169
3,034
36
3,239
90
1,689
1,779
1,320
3,098
146
141
57
4.6%
NA
$14.40
USDA2
2013/14
76.8
76.3
-0.7%
44.0
141
3,358
72
3,572
98
1,734
1,832
1,647
3,478
155
92
67
2.6%
NA
$13.00
2013/14
USDAOct
2014/15
ATI
2014/15
Poor
Trend
High
76.8
84.2
84.8
84.2
84.8
76.3
83.4
84.1
83.4
84.1
-0.7%
-1.0%
-0.9%
-0.9%
-0.9%
44.0
47.1
46.2
47.7
48.2
146
92
92
92
92
3,358
3,927
3,883
3,978
4,053
72
15
15
15
15
3,576
4,034
3,990
4,085
4,160
98
114
110
120
130
1,734
1,770
1,760
1,785
1,795
1,832
1,884
1,870
1,905
1,925
1,647
1,700
1,725
1,750
1,745
3,478
3,584
3,595
3,655
3,670
155
163
163
163
163
96
450
395
430
491
67
90
85
90
92
2.8%
12.6%
11.0%
11.8%
13.4%
$8.75-12.75 $8.50-$12.75 $8.25-$12.75
NA
$13.00 $9.00-$11.00
$8.50
$8.56
$8.00
2015/16
Change
0.0
0.0
0.5
0
42
0
42
0
15
0
15
30
0
12
0
Trend
89.0
88.1
-1.0%
45.4
430
3,998
15
4,444
125
1,825
1,950
1,800
3,750
163
694
90
18.5%
$9.20-$12.75
$8.77
2 USDA Oct
Weekly Fundamental Review – November 3, 2014
25
SUMMARY—Few beans being loaded out of S AM; QI U.S. exports on a pace to hit 725 mbu; non-PRC
demand (sb sales) at a 10-year high, as are meal sales; stratospheric crush margins; S Am planting
behind average but weather looks favorable. Difficult to imagine global protein demand will be able to
keep up with supply, in the absence of additional price pressure.
Soybeans
US Gulf
LW
$417
TW
$445
Soybean Meal
LW
$469
TW
$512
Soybean Oil
LW
$789
TW
$853
Source: Agro-Chart; Trade Sources.
FOB Values ($/MT)
DAF Ukraine
$390
$415
FOB Paranagua
$458
$439
FOB Paranagua
$409
$455
FOB Paranagua
$749
$787
FOB Up River (Arg)
$389
$374
FOB Up River (Arg)
$438
$468
FOB Up River
$753
$800
SX-Recent Double-Digit Carry-Out Years & SX/SF (>=30% of Supply Used During SON)
Beg Stx
Prod
Imp
Supply
09
138
3,359
3
3,500
Analog SON Use Years
10
12
151
169
3,329
3,034
4
4
3,484
3,207
Crush
Exports
Residual
Total Use
Dec 1 Stx
445
536
181
1,162
2,339
443
622
141
1,206
2,278
452
618
171
1,241
1,966
447
677
159
1,283
2,154
450
708
150
1,308
2,717
Use/Supply
Sales/Supply
Sold vs Use
33.2%
44.0%
382
34.6%
49.0%
506
38.7%
42.7%
121
37.3%
49.0%
403
32.5%
33.1%
24
Weekly Fundamental Review – November 3, 2014
13
141
3,289
7
3,437
14-F
92
3,927
6
4,025
26
WHEAT
Ratio
MGE/KCBT SPREAD UPDATE— There has been a fair amount of volatility in the MGE/KCBT spread the
past few months. To gain some perspective, the chart below examines the historical relationship of the
MGE/KCBT spread utilizing the
MGE/KCBT Wheat Spread and Ratio of
December contract. The
HRS Stx/Use to HRW Stx/Use (omit 07 and 11)
independent variable (“Ratio”) is the
2.00
14E
ratio of the HRS stocks-to-use
1.80
percentage vs. the HRW stocks-to1.60
03
use percentage. For example, the
04
1.40
02
HRS stx/use ratio for the 10/11 crop
1.20
05
year was 28.6% while the ratio for
08
13
01
1.00
06
12
HRW was 37.9%. The ratio, then, of
09
00
0.80
HRS to HRW was 0.75 and the
10
0.60
MGE/KCBT spread on November 30,
0.40
2010 was $0.10. That’s depicted by
0.20
point “10” on the chart.
0.00
($0.30)
($0.20)
($0.10)
$0.00
$0.10
$0.20
$0.30
$0.40
At this point, it’s important to note
that the years highlighted by a much
MGE-KCBT December futures on Nov. 30
wider-than-normal spread on Nov.
30 (i.e. 2006, 2008 and 2013) were characterized by major changes in the respective balance sheets from
the fall to the following summer. For example, the final HRS percentage for 13/14 was 30.0% while the
final percentage for HRW was 27.0%, which generated a ratio of 1.11—significantly lower than the 1.69
projection seen in September, 2013 when the HRS percentage was 35.2% and HRW was 20.8%.
Essentially, the HRS balance sheet turned out to be tighter than expected while the HRW balance sheet
was not nearly as tight.
Sources: USDA, CME Group, MGEX, ATI
What about this year? The bumper U.S. HRS crop coupled with the second consecutive poor HRW crop
in the U.S. has seen KCBT gain on MGE. Utilizing the latest stx/use ratios for 14/15, the model is
forecasting a $0.285 premium for KCBT over MGE this fall. It appears that the potential exists once
again for some changes to the respective balance sheets before the crop year is complete. Please
discuss with your ATI broker.
87/88
88/89
89/90
90/91
91/92
92/93
93/94
94/95
95/96
96/97
97/98
98/99
99/00
00/01
01/02
02/03
03/04
04/05
05/06
06/07
07/08
08/09
09/10
10/11
11/12
12/13
13/14
14/15
Percent
WORLD CROP UPDATE— SRW export trends are featured. In its initial breakdown by class in July, the
USDA forecast annual SRW shipments at
SRW Wheat: Year-to-Date Sales as % of Annual Exports
140mbu, which was 51% below 13/14.
Week #21
What’s important to remember, however, is
100%
China was a major importer of U.S. SRW last
14/15: 66.5%
90%
25-year avg: 66.5%
year but is only projected to take minimal
80%
amounts in 14/15. There was no change to
70%
the forecast in August but a 5mbu increase to
60%
145 million was seen in September. Finally,
50%
exports were boosted another 10mbu in
40%
October to 155 million based on “higher30%
20%
than-expected” sales according to the USDA.
10%
Do recent trends support yet another
0%
increase in next week’s WASDE report, or is
an unchanged (or even lower total) in the
Sources: USDA and ATI
offing?
Weekly Fundamental Review – November 3, 2014
27
Unshipped SRW Export Sales
Non-FSU, China Destinations
1,800
1,600
Mini-uptick in sales is
worth monitoring but
still not indicative of a
demand surge. Bargain
buying, perhaps?
1,400
1,200
Mmt
After examining the first indicator— the year-to-date
export sales total as a percentage of annual
exports—one might conclude that the USDA is ‘spot
on’ with its forecast. Total sales as of Oct. 23 stood
at 103mbu, or 66.5% of the annual export forecast
of 155 million. That’s down from 80.8% from a year
ago when China was an aggressive buyer but is
sharply above the 40.9% level from two years ago.
Over the past 25 years, however, the average is
66.5%—right in line with this year.
1,000
800
600
400
10
09
The final indicator is export sales over the past four weeks. Total sales of 10mbu are tied for the 2nd
highest over the last 6 years and are 19% above the 10-year average. Keeping in mind that prices for
CBT futures were very near the contract lows at the beginning of this stretch lends further support to
the notion that at least some bargain buying has been taking place.
Past 4 Weeks SRW Wheat Sales Activity by Destination (mbu)
Regions
04/05
05/06
06/07
07/08
08/09
EU
0
0
0
0
0
Japan
0
0
0
0
0
Taiwan
0
0
0
0
0
S Korea
0
0
0
0
0
Othr Asia
0
0
0
1
1
China
1
0
0
0
0
FSU
0
0
0
0
0
Africa
0
2
4
2
10
W Hemis
4
2
4
11
7
Unkwn
0
0
(1)
1
1
Other
0
0
0
0
0
Total
5
5
7
15
18
09/10
0
0
0
0
0
0
0
1
4
1
0
6
10/11
0
0
0
0
0
0
0
7
2
(1)
(0)
8
11/12
0
0
0
0
0
0
0
1
8
1
0
10
12/13
0
0
0
0
0
0
0
0
4
2
0
6
13/14
0
0
0
0
0
(1)
0
2
3
0
0
5
14/15
0
0
0
0
0
0
0
1
6
3
0
10
10 YR AVG
0
0
0
0
0
0
0
3
5
0
0
8
There is fairly good agreement among the indicators that the USDA’s forecast of 155mbu is on target.
What will be important to see now is if buyers will add to their book at higher prices. If additional
buying surfaces over the next few weeks, another increase in the annual forecast may be warranted.
WORLD SUPPLY/DEMAND UPDATE— Ahead of next week’s WASDE report, the table below is their
latest look at the 14/15 with previous years included for comparison. A couple of points are worth
highlighting. After the surge to record high prices in early 2008, the world responded by increasing
harvested area. What’s interesting to note in recent years, however, has been the boost in yield. Does
this reflect better farming practices or is the world “due” for some major crop shortfalls? One area to
watch is Russia following a less-than-ideal start for the 15/16 winter crop. The other factor to note is
the boost in usage in recent years. Propelled in large part by a surge in feeding, consumption is now
over 700 MMT. In summary, large crops are now regularly needed to prevent a stocks draw-down.
Weekly Fundamental Review – November 3, 2014
28
5/7
5/21
4/9
3/26
3/12
2/26
2/12
1/29
1/1
11
1/15
12/4
12
12/18
11/6
13
11/20
10/9
14
Sources: USDA and ATI
10/23
9/25
9/11
8/28
8/14
7/31
7/3
7/17
6/5
6/19
0
The next indicator is the level of unshipped sales to
destinations other than China or the FSU. To date,
there has been more variability in this indicator for
SRW compared to HRW or HRS. That’s highlighted by the “spike” in sales that occurred this summer
when wet weather in the EU raised quality concerns. From mid-August to early October, buying
declined but it’s worth noting that there has been a mini-uptick in sales activity the past 3 weeks. This is
not unprecedented for this time of year as a similar pattern was also seen in 2010 and 2011. For the
time being, this year’s rebound is more likely a reflection of bargain buying as opposed to a demand
surge but it’s worth monitoring.
4/23
200
U.S. CROP PROGRESS/CONDITION – Winter wheat planting increased 6 points in the latest week to
90%. That equal to last year and a point above the 5-year avg. Despite making significant progress over
the past week, Illinois and Missouri remain 14 and 11 points behind their respective averages.
Nationwide emergence increased 10 points to 77%, which is a point above 2013 and 5 points above the
average. Good/Excellent crop ratings were stable at 59% (compared to 63% a year ago), although the
correlation between fall ratings and final yields is virtually non-existent. For example, last year’s G/E
rating for the Oklahoma crop at this time was 71% but the final 2014 yield was only 17.0 bpa.
2015 U.S. Winter Wheat Planting Progress
State
AR
CA
CO
ID
IL
IN
KS
MI
MO
MT
NE
NC
OH
OK
OR
SD
TX
WA
Nov 2
2014
70
45
100
100
69
82
93
91
56
100
100
37
90
95
96
99
86
100
Nov 2
2013
63
32
100
100
94
90
96
96
62
99
100
35
96
94
96
99
83
97
09-13
Avg
58
40
99
99
83
85
94
93
67
95
100
34
89
92
94
99
82
99
18 states
90
90
89
EXPORT SHIPMENTS – Very poor, again. 7.7mbu TW vs. 7.8 LW, 8.9 LY, 17.4 BOY and once again
sharply below trade range of 11-17. By class HRW 2.4 (vs. BOY of 7.0); SRW 1.4 (2.8); & HRS 1.4 (4.5).
Shipments Summary (Week #22)
TY
TY
TW
LW
All Wheat
7.7
7.8
HRW
2.4
1.7
SRW
1.4
1.0
HRS
1.4
3.8
LY
TW
8.9
3.2
1.0
2.4
Weekly Fundamental Review – November 3, 2014
TY
YTD
402.0
129.7
70.6
124.0
LY
YTD
600.4
239.4
178.7
97.4
# of
Weeks
30
30
30
30
BOY/wk
TY
17.4
7.0
2.8
4.5
BOY/wk
LY
19.2
6.9
3.5
5.0
29
PORT ACTIVITY- (000 bu) HRS: Duluth-Sup 822; Col Riv 497; and California 62. HRW: N TX 992; S TX 141;
Col Riv 371; and Interior 904. SRW: Chicago 99; S Atlantic 37; and Miss Riv 1272. White: Col Riv 1047;
and Puget Sound 53.
PRINCIPAL DESTINATIONS— Western Hemi 2.1mbu; Other Asia 2.1; Africa 968 K; and EU 822.
EXPORT SALES –––(NOTE: All year ago totals are estimated as weekly data from the USDA for 2013 was
unavailable due to the government shutdown) –Decent. Sales of 16.3mbu were up from last week’s
11.0, LY’s 15.5 and above the trade range of 11-14. After 21 weeks of the crop year, YTD sales were
925mbu vs. 1176 LY (-26%). Top buyers last week were Japan @ 3.2mbu, Mexico 2.1, Brazil 2.1, the
Philippines 2.0, Unknown 1.9 and Italy 1.6.
YTD
556
180
YTD
753
283
0.6
7.5
103
171
220
140
USDA
Change 14/15
74%
925
64%
340
47%
122%
155
260
Source: USDA Export Sales
While unshipped SRW
sales for 14/15 are
down 19% from last
year, that’s primarily
due to the absence of
China. In fact, the book
to destinations other
than China is a 6-year
high. Africa has resurfaced as a major
buyer with unshipped
sales more than 3X last
year and a 7-year high.
USDA
BOY/wk
BOY/wk
13/14
1,176
446
TY
11.9
5.1
LY
13.6
5.3
283
246
1.7
2.9
2.0
3.4
O/S
O/S
O/S
TY
LY % Chg LY
173 188
92%
57 60
96%
34
50
42
49
81%
102%
Unshipped SRW Sales by Destination
60
55
50
45
mbu
40
35
30
25
20
15
10
UNKNOWN
W HEMI
AFRICA
OTH ASIA
TAIWAN
PRC
JAPAN
USSR
E EUR
OWE
14/15
13/14
12/13
11/12
10/11
09/10
08/09
07/08
06/07
05/06
04/05
03/04
02/03
01/02
00/01
99/00
98/99
97/98
96/97
95/96
94/95
93/94
0
92/93
5
91/92
2.8
3.5
YTD
90/91
2.1
4.7
LY
89/90
HRS
TY
88/89
SRW
21
LY
15.5
7.0
87/88
Export Sales Week #
Million Bu TW
LW
All Wheat 16.3 11.0
HRW
6.6
3.0
EEC
Only 58mbu was added to the books the past 4 weeks, which is not only 19% below the long-term
average but also an 11-year low. This is in spite of the fact that purchases by Other Asia are at a 4-year
high and 10% above the average. Who’s buying less than normal? Pretty much everyone else, led by
Africa—where sales are 39% below the average—and Western Hemisphere destinations (23% below the
average). Although the EU is a much smaller buyer of U.S. origin at this time of year compared to these
destinations, their purchases are 51% below the average. Buying from the Far East is 2% below the
average and purchases by Unknown destinations are a 4-year low.
Past 4 Weeks All Wheat Sales Activity by Destination
Regions
03/04
04/05
05/06
EU
10
7
7
Japan
6
12
5
Taiwan
2
2
4
S Korea
4
4
3
Othr Asia
7
16
16
China
3
0
1
FSU
0
0
0
Africa
10
22
15
W Hemis
19
22
16
Unkwn
(6)
(4)
(4)
Other
(4)
(3)
(2)
Total
51
79
59
06/07
2
9
0
3
25
0
0
14
16
7
(4)
72
Weekly Fundamental Review – November 3, 2014
07/08
11
11
4
11
45
0
0
12
30
(14)
(11)
97
08/09
5
2
0
3
18
0
0
17
29
(5)
(2)
66
09/10
2
13
6
3
28
0
0
14
19
1
(3)
82
10/11
3
8
0
3
28
0
0
33
21
(6)
(4)
87
11/12
4
9
4
3
12
2
0
3
29
(1)
(4)
60
12/13
2
9
6
2
10
0
0
8
17
7
(2)
60
13/14
3
5
2
0
17
3
0
9
32
1
(0)
72
14/15
2
10
3
2
22
0
0
9
18
(5)
(2)
58
11Y AVE
5
8
3
4
20
1
0
14
23
(2)
(3)
71
30
Class Highlights: SRW was spotlighted in the WORLD CROP UPDATE section and merits some additional
discussion. There are typically 3 primary buyers of SRW at this time of year: Western Hemisphere, Africa
and Unknown. Purchases of 6mbu by Western Hemisphere destinations are 22% above the average and
a 3-year high. In contrast, buying from Africa has actually been sluggish with sales down 75% from the
long-term average. The real surprise has been interest from Unknown destinations: At 3mbu, purchases
are almost 7X the normal and the highest since at least the early 1990s.
After showing signs of life the previous week, the 4-week sales pace for HRW returned to being one of
the weakest in recent memory. Net sales of just 20mbu are not only 21% below the 10-year average but
they are also a 9-year low. Buying from Africa, which had emerged as a bit of a bright spot, slipped to
12% below the average. The top buyer of HRW at this time of year is usually Western Hemisphere
destinations, but this year’s purchases of only 9mbu are 22% below the average and a 5-year low.
Finally, although buying from Other Asia is a 3-year high, it’s still 72% below the average.
Last week, we noted that there were “mixed signals” being seen from HRS export indicators. A review
of sales activity the past 4 weeks appears to confirm a continuation of that trend. For example, the
16mbu added to the books of late is not only the 2nd lowest of the past 10 years, but it’s also 34% below
the long-term average. Purchases by Western Hemisphere have been notably weak at the 2nd lowest of
the past decade. However, it’s also worth noting that this year’s total is less than 10% below each of the
past two years. Plus, interest from Other Asia remains strong at 47% above the 10-year average.
ATI BALANCE SHEET CHANGES—November WASDE preview. Typically, the only changes to the U.S.
balance sheet that are seen in this report are in exports. While a case could be made for a small
decrease given the ongoing sluggish pace of sales and—in particular—the recent steep decline in
shipments but any reduction would likely be minor; i.e. 10-20mbu. ATI carryout remains at 675mbu.
A few significant changes may be seen in the world numbers. Production in Australia was pegged at
25.0 MMT in October but most estimates seem to have slid down to 22.0-23.0. The USDA typically takes
a conservative stance on reductions, however, unless a catastrophic situation in occurring. As a result, a
decrease of 1.0 MMT or perhaps 1.5 would not be surprising. An additional smaller reduction (200-300
MT) is also possible in Argentina vs. the USDA’s current estimate of 12.0 MMT.
SUPPLY/DEMAND UPDATE– HRW is featured this week. Beginning with the 14/15 balance sheet, there
continues to be a fair amount of uncertainty surrounding exports. The year-to-date export sales total as
a percentage of annual exports indicator would suggest that the USDA’s 340mbu forecast is too high.
For example, the latest estimate of 53.1% is not only sharply below the 25-year average of 60.7% but it’s
also the 3rd lowest of the past 22 years ahead of only 06/07 and 09/10. Basically, the USDA is indicating
that a stronger-than-expected export program is in the works for the final half of the crop year.
Briefly reviewing the other two times the indicator was lower than 14/15 doesn’t draw strong parallels
to 14/15. In 06/07, the WASDE forecast of the Australia crop plummeted from 19.5 MMT in September
to only 11.0 in October (final was 10.8). While there are growing indications that the 14/15 Australian
crop will fall short of the current 25.0 MMT forecast, losses do not appear near as catastrophic as 06/07.
There was no such distinctive feature during the 09/10 crop year when a stronger-than-expected export
program developed. As a result, we believe that the USDA forecast is too high and are maintaining a
slightly lower forecast of 330mbu. The result is that carryout remains at 207mbu.
Moving forward to the 15/16 crop year, it bears repeating that although it’s still very early there is the
possibility that ending stocks could increase significantly. As highlighted a few weeks ago, the core of
Weekly Fundamental Review – November 3, 2014
31
that belief rest with acreage, specifically harvested acreage. There are indications that plantings could
range from unchanged to up 3% compared to a year ago. Where the big change could occur, however,
is if abandonment is anywhere close to normal. In each of the past two years, the harvested percentage
has been well below normal due to drought. A return to a more normal level of abandonment in 15/16
could see harvested acreage jump nearly 14% or 3.0 million acres. With a trend yield of 40.0bpa,
production in 2015 would rise to just under 1.0Bbu with total supply up 24% to 1.224Bbu.
Demand forecasts reflect analog supply years for domestic use and long-trends for exports. Domestic
usage has tracked very near 450mbu for “normal” years so that estimates is utilized for the “Trend”
scenario. And without a supply ‘shock’ (e.g. short crop in FSU), exports have fairly consistently hovered
near 425-450mbu. This would generate ending stocks of 321mbu under the “Trend” scenario. As
always, there is room for a significant change from this projection depending most notably on (1) U.S.
weather; and (2) competitor production levels. The 15/16 crop in Russia is off to a less-than-ideal start
and bears monitoring moving forward.
USDA2
10/31/2014
HRW WHEAT
Planted Acres (myn a)
Harvested Acres
Abandonment
Yield
Beginning Stocks
Production
Imports
Total Supply
Food
Seed
Feed/Residual
Domestic Use, Total
Exports
Total Use
Ending Stocks
U.S. Stocks/Use Ratio
KC Ord HRW Price
1
2014/15 Scenarios1
Low
Avg
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
31.7
24.2
-23.7%
38.1
254
920
2
1,176
360
32
28
421
370
791
28.6
24.0
-15.8%
42.4
385
1,018
1
1,404
359
32
11
403
616
1,018
28.5
21.4
-24.7%
36.4
386
780
0
1,166
404
33
15
452
397
849
29.8
24.6
-17.5%
40.7
317
1,000
18
1,335
400
33
179
612
380
992
29.7
20.4
-31.3%
36.7
343
747
19
1,109
367
34
26
427
446
873
30.4
21.9
-27.9%
33.3
236
738
11
985
370
33
50
453
340
793
30.5
21.9
-28.1%
33.7
236
738
11
985
370
33
40
443
320
763
30.5
21.9
-28.1%
33.7
236
738
11
985
370
33
45
448
330
778
317
343
37.3%
34.6%
$7.81
$8.95
USDA October
236
27.0%
$8.34
192
24.2%
NA
222
29.1%
$6.10-7.10
207
26.6%
$6.60-7.60
385
386
48.7%
37.9%
$5.24
$7.55
ATI October
2
Weekly Fundamental Review – November 3, 2014
Change
High
ATI Estimate
2015/16 Scenarios1
Poor
Trend
High
30.5
21.9
-28.1%
33.7
236
738
11
985
370
33
50
453
345
798
31.2
21.9
-29.7%
37.5
207
821
20
1,048
370
33
30
433
425
858
31.2
24.9
-20.0%
40.0
207
997
20
1,224
370
33
50
453
450
903
31.2
24.9
-20.0%
42.5
207
1,059
20
1,286
370
33
65
468
450
918
187
23.4%
$7.25-8.25
190
22.2%
$7.50-8.50
321
35.5%
$4.80-5.80
368
40.1%
$4.20-5.20
32
WORLD WHEAT CASH PRICES -
Both US HRW FOB Gul and US SRW FOB Gulf were unchanged vs. the previous week at $287 and $249,
respectively. Up River FOB 11.5% in Argentina was also steady compared to last week, but Rouen FOB
10.5% in Europe was up $2 to $215. India FOB 11.5% was steady at $284 while Russia FOB 11.5% was
unchanged at $225. W. Australian APW was unchanged vs. last week at $273.
Regards,
Larry / Brian / Phil / Ben
Advance Trading Inc.
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Weekly Fundamental Review – November 3, 2014
33
Directors Corner
“Going Forward”: Strong Demand for U.S. Soybeans?
The graphs below shouldn’t be much of a surprise. The Brazilian soybean vessel line-up is winding down seasonally with
3 loading yesteday; 5 waiting to berth and 9 expected. The 17 vessel total has picked up in recent days but was as low as
8, the fewest since back in December, signalling there are likely limited supplies until February 2015, probably at the
earliest. A comparative history of CY 2013 and 2014 bean vessel volume for Argentina shows the same pattern with
considerably fewer in the line-up since early July. The last graph gives the U.S. unshipped soybean export sales situation
from Thursday’s USDA Export Sales summary. After a somewhat sluggish start, China/Unknown buying has come roaring
back and the unshipped sales total for that group has now surpassed the 13/14 figure (see shaded orange area, right axis
in the graph “Unshipped SB Sales: Selected Markets (10/23)”. Perhaps even more interesting, sales to all other
destinations are at a 13-year high. Europe is up considerably from recent years; W Hemi demand is also quite good and
the Far East, notably Indonesia, Vietnam, Thailand and Malaysia have been on a real buying spree of late. Last year
weekly bean exports averaged 73+ mbu per week from for November. This year should be just about as good, if not
better. With spot crushing margins in excess of $3.25/bushel ($1.50 LY) and an absolutely huge unshipped soybean meal
book, the market could have a real battle between domestic crushers and the export market for supplies.
Larry
Weekly Fundamental Review – November 3, 2014
34
Weekly Fundamental Review – November 3, 2014
35