Agriculture and Policy Outlook Conference Ben Brown November 2 2018 The Early Years A photographic 12 months 2018 A Tale of Two Halves Source USDAAgricultural Marketing Service Daily Prices for Cincinnati Ohio ID: 727397
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Slide1
Commodity Outlook: Corn and Soybeans Struggle to Find Strength
Agriculture and Policy Outlook Conference
Ben Brown
November 2, 2018Slide2
The Early Years-
A photographic 12 monthsSlide3
2018: A Tale of Two Halves
Source: USDA-Agricultural Marketing Service Daily Prices for Cincinnati, Ohio
January-May
$4.00 corn and $10.50 soybean cash prices
Strong world economic growth
Shrinking world stocks
June-October
Escalating trade tensions
Large SuppliesSlide4
Location, Location, Location
South America Drought: Spring 2018
Source: Latin American Flood
and Drought Monitor at Princeton
Drought in South America Reduced World Ending Stocks even with large U.S. corn stocks
Corn: -
2
%
Soybeans: -1%
Absolute changes in Brazil helped counter losses in Argentina
Source: USDA-FASSlide5
U.S. Corn Yield: Another Record
Source: USDA- NASS
New Record 3 Straight Years
6 Straight years of Above Trend Yields
2013 was at the time
Reasons?
Weather
Genetics
ManagementSlide6
Ohio Corn Yield: How’d we compare?
Record Yields Across Corn Belt
Ohio 13 bu./acre above previous record (2017)
Ohio outperformed the country in deviation from trend
The country had a good year, we just had a better one!
2018 Corn Yield by State
Bushels per Acre
Source: USDA- NASS
October Crop ProductionSlide7
U.S. Corn Production: Up from 2017
U.S. Production is up from 2017 on higher yields.
Not a record due to fewer acres.
Only 3 major corn producing states up in acreage from 2017.
Missouri, Nebraska and Ohio
Second Largest Ohio corn
c
rop.Slide8
U.S. Corn Demand: Continues Strong
2015/16
2016/17
2017/18
2018/19
Δ 2017/18
Area Planted
(Mil. Acres)
88.0
94.0
90.2
89.1
-1%
Yield
(Bu./acre)
168.4
174.6
176.6
180.7
2%
Production
(Mil. Bu.)
13,602
15,148
14,604
14,778
1%
Beg
. Stocks
(Mil. Bu.)
1,731 1,737 2,293 2,140 -7%Imports(Mil. Bu.) 67 57 36 50 39%Total Supply(Mil. Bu.) 15,401 16,942 16,934 16,968 0%Feed & Residual(Mil. Bu.) 5,120 5,470 5,302 5,550 5%Food, Seed, & Other(Mil. Bu.) 1,422 1,453 1,453 1,480 1%Ethanol(Mil. Bu.) 5,224 5,432 5,601 5,650 1%Exports(Mil. Bu.) 1,898 2,294 2,438 2,475 2%Total Use(Mil. Bu.) 13,664 14,649 14,793 15,155 2%Ending Stocks(Mil. Bu.) 1,737 2,293 2,140 1,813 -15%Season Av Price($/bu.)$3.61$3.36$3.36$3.50+ $0.14
Higher Production and Lower Beg. Stocks Roughly same Total Supply as 2017/18
Source: USDA-WAOBSlide9
2015/16
2016/17
2017/18
2018/19
Δ 2017/18
Area Planted
(Mil. Acres)
88.0
94.0
90.2
89.1
-1%
Yield
(Bu./acre)
168.4
174.6
176.6
180.7
2%
Production
(Mil. Bu.)
13,602
5,148
14,604
14,778
1%
Beg
. Stocks
(Mil. Bu.)
1,731 1,737 2,293 2,140 -7%Imports(Mil. Bu.) 67 57 36 50 39%Total Supply(Mil. Bu.) 15,401 16,942 16,934 16,968 0%Feed & Residual(Mil. Bu.) 5,120 5,470 5,302 5,550 5%Food, Seed, & Other(Mil. Bu.) 1,422 1,453 1,453 1,480 2%Ethanol(Mil. Bu.) 5,224 5,432 5,601 5,650 1%Exports(Mil. Bu.) 1,898 2,294 2,438 2,475 2%Total Use(Mil. Bu.) 13,664 14,649 14,793 15,155 2%Ending Stocks(Mil. Bu.) 1,737 2,293 2,140 1,813 -15%Season Av Price($/bu.)$3.61$3.36$3.36$3.50+ $0.14
Cattle on Feed is up 5% from 2017, new recordSeptember placements were lower than 2017Source: USDA-WAOB
Corn Feed Use:
Livestock up but use down??Slide10
Corn Feed Use: Disappointing 4th Quarter
Data: USDA-ERS, Feed-Grain Report
Needed to reach USDA 5,550
First Quarter feed usage makes up roughly 43% of total MY feed use.
To reach 5,550 the first quarter would need 2,385 mil. bu.
Given low performance of 2017/18 forth quarter, first quarter could look more like 2,200 mil. bu.
2017/18 feed use decline 250 mil. bu. from Oct- Finish
5,150- (350)Slide11
U.S. Corn Demand: Ethanol Strong in 2017/18
2015/16
2016/17
2017/18
2018/19
Δ 2017/18
Area Planted
(Mil. Acres)
88.0
94.0
90.2
89.1
-1%
Yield
(Bu./acre)
168.4
174.6
176.6
180.7
2%
Production
(Mil. Bu.)
13,602
5,148
14,604
14,778
1%
Beg
. Stocks
(Mil. Bu.)
1,731 1,737 2,293 2,140 -7%Imports(Mil. Bu.) 67 57 36 50 39%Total Supply(Mil. Bu.) 15,401 16,942 16,934 16,968 0%Feed & Residual(Mil. Bu.) 5,120 5,470 5,302 5,550 5%Food, Seed, & Other(Mil. Bu.) 1,422 1,453 1,453 1,480 1%Ethanol(Mil. Bu.) 5,224 5,432 5,601 5,650 1%Exports(Mil. Bu.) 1,898 2,294 2,438 2,475 2%Total Use(Mil. Bu.) 13,664 14,649 14,793 15,155 2%Ending Stocks(Mil. Bu.) 1,737 2,293 2,140 1,813 -15%Season Av Price($/bu.)$3.61$3.36$3.36$3.50+ $0.14
Higher Production and Lower Beg. Stocks Roughly same Total Supply as 2017/18
Source: USDA-WAOBSlide12
U.S. Corn Use:
Expanded E-15, Little Change
Ethanol
Production
2015
2016
2017
2018
2019
Mill.
Barrels per Day
0.966
1.003
1.04
1.048
1.033
Percent Growth
4%
4%
1%
-1%
Data Source: U.S. Energy Information Administration Short Term Energy Outlook
Oct 9, Trump proposes E-15 Reid Vapor Pressure waivers. EPA needs to offer rule and then lawsuits likely.
RIN’s are cheap not making up for lower mpg
The RFS is the rule of the land and so is the Clean Air Act. Any change to RVP waivers will likely require changes to policy.
Oil and Gasoline Prices are forecasted slightly up in 2019 with little to no increases in consumption.
Low Profit Margins by Ethanol Manufactures expected at breakeven for 4
th
year. Lower daily production.Slide13
U.S. Corn Use: Ethanol Exports
Ethanol Exports were record strong in 2017/18 at almost 1.62 billion gallons.
U.S. Ethanol Exports to Brazil accounted for 34% of total 2017/18 exports.
Brazil’s Ethanol stocks are up 29% over last year.
Sugar refineries
2018/2019 corn use for ethanol numbers are more likely to be similar to 2017/18 at 5.6
bil
. Bu., than current projections of 5.65
bil
.
B
u.
Top U.S Ethanol Markets
Brazil
33%
Canada
24%
India
13%
Philippines
5%
Data Source: U.S.-EIASlide14
U.S. Corn Demand: Exports Finish Strong
2015/16
2016/17
2017/18
2018/19
Δ 2017/18
Area Planted
(Mil. Acres)
88.0
94.0
90.2
89.1
-1%
Yield
(Bu./acre)
168.4
174.6
176.6
180.7
2%
Production
(Mil. Bu.)
13,602
15,148
14,604
14,778
1%
Beg
. Stocks
(Mil. Bu.)
1,731 1,737 2,293 2,140 -7%Imports(Mil. Bu.) 67 57 36 50 39%Total Supply(Mil. Bu.) 15,401 16,942 16,934 16,968 0%Feed & Residual(Mil. Bu.) 5,120 5,470 5,302 5,550 5%Food, Seed, & Other(Mil. Bu.) 1,422 1,453 1,453 1,480 1%Ethanol(Mil. Bu.) 5,224 5,432 5,601 5,650 1%Exports(Mil. Bu.) 1,898 2,294 2,438 2,475 2%Total Use(Mil. Bu.) 13,664 14,649 14,793 15,155 2%Ending Stocks(Mil. Bu.) 1,737 2,293 2,140 1,813 -15%Season Av Price($/bu.)$3.61$3.36$3.36$3.50+ $0.14
Higher Production and Lower Beg. Stocks Roughly same Total Supply as 2017/18
Source: USDA-WAOBSlide15
U.S. Corn Use: Low Price Spurs Exports
S
trong corn sales through the first 8 weeks of the marketing year.
2018/19 corn sales came in 30% higher last week than a year ago.
Export inspections through the first 8 weeks sit 70% above a year ago.
Large supply and relatively low prices suggest strength in exports.
Statu
s of
Emerging
and Existing Markets
Country
Percent Change
Absolute Change Million Bushels
Vietnam
632%
63
Mexico
11%
56
EU-27
114%
40
Israel
847%
23
Columbia
12%
21
Japan
-
6%
-29
Data: USDA-FAS
755,000Slide16
U.S. Corn: Balance Sheet
Oct
WASDE
Ag
Policy and Outlook Forecast
Difference
Supply
Harvested Acres (Millions)
81.8
81.8
-
Yield (Bushels/ Acre)
180.7
180.7
-
Total Production (Million Bushels)
14,778
14,778
-
Beginning Stocks (Million Bushels)
2,140
2,140
-
Imports (Million Bushels)
50
50
-
Total Supply
16,968
16,968
-
Demand
Feed and Residual (Million bushels)
5,550
5,250(300)Food, Seed and Industry (Million bushels)7,1307,090(40) Ethanol5,6505,610(40)Exports (Million Bushels)2,4752,500+ 25Total Demand15,15514,840(315)Ending Stocks1,8132,128 180Ending Stocks as a Percentage of Use
11%
12%
1%
Average
MY Price 2018/19 ($/
Bushel)
$
3.50
$
3.50
No
ChangeSlide17
Corn Basis:
Weak
Dec Futures
Mar Futures
May Futures
Sept Futures
Basis is local, but weak across the state
To start 2018/19 marketing year Ohio is on average $0.20 below 5-year average
Lowest at harvest, then increasing
My expectation is for corn to follow this pattern increasing $0.10 by May unless tariffs are lifted.
Data Source: Author Calculation using DTN dataSlide18
Corn Marketing: Return to Storage Positive
Source: Author Calculations using CME Futures Prices
1-Nov
1-Aug
Change
Futures
$3.64
$3.99
$0.35
Basis
-$0.44
-$0.25
$0.19
Cash
$3.20
$3.74
$0.54
On farm storage shows positive returns.
Does not include bin cost.
U
nusual to see positive commercial storage returns.
Chance for
speculative returns
from storing.
If there is a chance that prices could go up there is also a chance they go down.
Cautions
to this: Basis may not increase $0.19 and storage charges might be more than $0.046. Slide19
2018/19 World Corn Production: Up
Million Metric Tons
2017/18
2018/19
Percent Change
World
1,034.20
1,068.3
3.3%
United States
371
375.4
1.2%
Foreign
663.3
692.9
4.5%
Argentina
32
41
28.1%
Brazil
82
94.5
15.2%
South Africa
13.5
13
-3.7%
Egypt
6.4
6.8
6.2%
European
Union
62.3
61
-2.1%
Mexico
27.526-5.5% Canada14.114.52.8% China215.92254.2% Ukraine24.13128.6%Data Source: USDA- WAOBSlide20
Stocks to Use: Tighter World and U.S. Stocks
Even with increasing production world use of corn has increased, lowering both U.S. and World Stocks to Use Ratios.
2018 projected at 11%
Tight stocks to use would suggest that any sudden positive change in world supply or use would sharply increase price.
Source: USDA-FAS & WAOBSlide21
U.S. Soy Yield: 4 out of 5 Years of New Records
4 out of last 5 years have been new records.
Ohio -60 bu./acre
Oct. WASDE + 0.3 from Sep. Estimate.
Ohio’s performance in yield was strongest in last 33 years.
Source: USDA-NASSSlide22
U.S. Soy Production: New Record, Bad Time
Acreage was down 534,000 acres in the Oct. WASDE, cutting total production.
But still record acreage.
Second
time in
history more soybean acres then corn acres.
Projected soybean returns early in the year suggested the market favored soybeans to corn.
Large increases in demand last eight years.
Source: USDA-NASSSlide23
U.S. Soybeans: Story is really all about Exports
2015/16
2016/17
2017/18
2018/19
Δ 2017/18
Area Planted
(Mil. Acres)
82.7
83.4
90.1
89.1
-1%
Yield
(Bu./acre)
48.0
52.0
49.3
53.1
8%
Production
(Mil. Bu.)
3,926
4,296
4,411
4,690
6%
Beg.Stocks
(Mil. Bu.)
191
197 302 438 45%Imports(Mil. Bu.) 24 22 22 25 14%Total Supply(Mil. Bu.) 4,140 4,515 4,734 5,153 9%Crushing(Mil. Bu.) 1,886 1,901 2,055 2,070 1%Exports(Mil. Bu.) 1,942 2,166 2,129 2,060 -3%Seed and Residual(Mil. Bu.) 115 146 112 137 22%Total Use(Mil. Bu.) 3,944 4,214 4,296 4,268 -1%Ending Stocks(Mil. Bu.) 197 302 438 885 102%Season Average Price($/bu.)$8.95$9.47$9.33$8.60-$0.73Source: USDA-WAOBSlide24
Soybean Price: Large S
upplies Counter Exports
Data Source: USDA- NASS
2018/19 originally forecasted as largest year for U.S. Soybean exports at 2,290 mil. bu. (Currently 3
rd
)
Increased U.S. and world production have weighed on price even with expanded exportsSlide25
Total Soy Exports: Lagging in 2018/19
Cheap soybeans encouraged exports in end of 2017/18.
Exports have been extremely week to start 2018/19.
33% behind average pace and forward sales are 16% below last year.
1
st
Quarter historically represents 42% of total sales.
Simply the smaller markets are
NOT
making up the loss from China.
Brazil’s new crop will soon be on the market.
Data Source: USDA-FAS
Statu
s of
Emerging
and Existing Markets
Country
%
Change
Absolute Change
Metric Ton
EU
-27
210%
1,094,487
Egypt
1,968%
411,176
Iran
733%
294,417
Netherlands
106%
203,681Slide26
How dependent is the U.S.?: Soybeans
Data Source: Author calculation using USDA-FAS dataSlide27
How Dependent is the U.S.?: Soybeans
Data: USDA- FSA; Calculated by Author
The U.S. soybean market has become more demand concentrated than corn and pork.
Did market concentration expose the U.S. soybean industry?
We can assume that the trade war will diversify U.S. soybean exports.
Some will argue for government regulation to prevent disruption again in the future. Slide28
U.S. Soybeans: Exports to China Not There
Data Source: USDA-FAS
Chinese Sales are currently 320 million bushels from a year ago.
The China National Grain and Oilseed Center has China soybean imports projected another 300 million bushels below current USDA projections at 3.45 bi. Bu. (10% reduction)Slide29
Soybean Price: Difference in U.S & Brazil
Data Source: USDA-AMS and
Cepea
(BR)
Brazil and U.S. soybean prices have historically tracked each other with occasional difference.
There is a noticeable break starting in June between the two prices.
Brazil Producers are getting the signal to expand production.
U.S Producers will get the signal to contract production. Slide30
-From South China Morning Post
-From CGTN
While the production and import changes from 2017 are small, what is the potential in future years?
Will China continue to change
their production policies?
Away from subsidies for corn and wheat to soybean
production.
Chinese
Soybean Behavior
(Million Metric Tons)
2017/18
2018/19
%
Δ
Production
14.2
15
6%
Imports
96.0
94.0
-2%
Ending Stocks
23.5
20.76
-12%
Data Source: WASDE Oct. Update
China Consumption Behavior:
ChangingSlide31
Source: USDA- Oilseeds: World Markets and Trade
China Oilseeds Supply
Distribution
(Million Metric Tons)
Domestic
Use
2014/15
2015/16
2016/17
2017/18
2018/19 Jun
2018/19
Palm Oil
5.7
4.8
4.8
5.1
4.9
5.4
Peanut Oil
2.8
2.9
3.0
3.1
3.2
3.1 Rapeseed Oil 4.0 4.1 4.1 4.3 4.6 5.1 Soybean Oil 14.2 15.4 16.4 16.9 18.5 17.3 Sunflower Oil 1.0 1.4 1.3 1.4 1.6 1.6 Other 2.1 1.8 1.9 2.1 2.1 2.2 Total 29.8 30.4 31.5 32.8 34.8 34.7 Substitution: Other Protein Sources for ChinaSlide32
U.S. Soybeans: Story is really all about Exports
2015/16
2016/17
2017/18
2018/19
Δ 2017/18
Area Planted
(Mil. Acres)
82.7
83.4
90.1
89.1
-1%
Yield
(Bu./acre)
48.0
52.0
49.3
53.1
8%
Production
(Mil. Bu.)
3,926
4,296
4,411
4,690
6%
Beg.Stocks
(Mil. Bu.)
191
197 302 438 45%Imports(Mil. Bu.) 24 22 22 25 14%Total Supply(Mil. Bu.) 4,140 4,515 4,734 5,153 9%Crushing(Mil. Bu.) 1,886 1,901 2,055 2,070 1%Exports(Mil. Bu.) 1,942 2,166 2,129 2,060 -3%Seed and Residual(Mil. Bu.) 115 146 112 137 22%Total Use(Mil. Bu.) 3,944 4,214 4,296 4,268 -1%Ending Stocks(Mil. Bu.) 197 302 438 885 102%Season Average Price($/bu.)$8.95$9.47$9.33$8.60-$0.73Source: USDA-WAOBSlide33
Soybean Crush: Shifts by Country
1,00
0 Metric Tons
2014/15
2015/16
2016/17
2017/18
2018/19
Jun
2018/19
Oct
China
74,500
81,500
88,000
90,000
102,000
93,500
United States
50,975
51,335
51,742
55,926
54,431
56,336
Argentina
40,235
43,267
43,303
37,500
44,000
43,000
Brazil
40,435
39,747
40,411
43,600
43,200
42,700
European Union14,45014,95014,40015,00014,90016,600India7,7005,5009,0007,6009,1009,000ROW36,51538,72540,49044,51345,84247,065Total264,810275,024287,346294,139313,473308,201International and Domestic Prices in relation to soybean meal and soybean oil influence quantity of soybean crush Source: USDA- Oilseeds: World Markets and TradeSlide34
U.S. Soy: Balance s
heet, looking for positives
Oct
WASDE
Ag
Policy and Outlook Forecast
Difference
Supply
Harvested Acres (Millions)
88.3
88.3
-
Yield (Bushels/ Acre)
53.1
53.1
-
Total Production (Million Bushels)
4,690
4,690
-
Beginning Stocks (Million Bushels)
438
438
-
Imports (Million Bushels)
25
25
-
Total Supply
5,153
5,153
-
Demand
Crushings
(Million Bushels)2,0702,080+ 10Exports (Million Bushels)2,0601,960(100)Seed and Residual (Million Bushels)137150+ 13Total Demand4,2684,190(78)Ending Stocks845963 118Ending Stocks as a Percentage of Use20%23%+ 3%
Average
MY Price 2018/19 ($/
Bushel)
$8.60
$8.30
($0.30)Slide35
Soybean Basis:
Weak
Data Source: Author Calculation using DTN data
Nov Futures
Jan Futures
Mar Futures
Aug Fut.
Basis is local,
large
differences across state
To start 2018/19 marketing year Ohio is on average $
0.36
below
3-year
average
Lowest at harvest, then increasing
I’m not sure we can expect basis to increase as much later in the year given PNW basis conditions.
May Futures
Jul Futures
Sep Fut.Slide36
Soybeans: Return to Storage Positive
On-Farm Storage does not include bin cost.
These estimates use future basis prices. Should we expect basis to strengthen?
Similar to corn, there is an opportunity for
price speculation
.
What if the trade negotiations are resolved?
Source: Author Calculations using CME Futures Prices
1-Nov
1-Aug
Change
Futures
$8.33
$9.00
$0.67
Basis
-$0.75
-$0.50
$0.25
Cash
$7.58
$8.50
$0.92
Cautions
to this: Basis may not increase $0.19 and storage charges might be more than $0.046. Slide37
Soybean Stocks to Use: Double 2017/18
Data Source: USDA-FAS & WAOB
Large supply and reduced exports result in more production and less consumption for 2018/19
Stocks to use forecasted double 2017/18.
Largest since 1985/86
Why does this matter?
Soybean price and stocks-to-use are negatively correlated. Slide38
Soybean Price Potential: Struggling
Source: USDA-FAS & WAOB
Outside a resolution in trade with China or a production shortfall in one of the major producing countries, the current 885 Mil. Bu. might be low.
Recent price rallies appear linked to the market over projecting yield or under projecting failed acreage early on.
Price prospects look to have limited upside potential. Slide39
Cash Flow:
2018 ARC-CO PMTS
2018 Ohio ARC Corn Payments
2018 Ohio ARC Soybean Payments
Corn: 2017 vs 2018
Smaller Payments ($57-$9)
Fewer Counties (87-16)
Soybeans: 2018 vs 2017
Larger Payments ($18-$19)
More Counties (34- 56)Slide40
USDA: Market Facilitation Program
Initial Payment Rate
Effective Payment Rate
Units
U.S. Expected Payment ($1,000)
% MFP Program
Payment $/Acre
U.S.
Ohio
Soybeans
$1.65
$0.825
per bushel
$3,629,700
75%
$43.81
$49.50
Pork
$8.00
$4.00
per head
$290,300
6%
Cotton
$0.06
$0.03
per pound
$276,900
6%
$27.03
Sorghum
$0.86
$0.43
per bushel
$156,800
3%
$32.25
Dairy
$0.12
$0.06 per cwt$127,400 3%Wheat$0.14 $0.07 per bushel$119,200 2%$3.33 $5.25 Corn$0.01 $0.005 per bushel$96,000 2%$0.90 $0.95 Fresh Cherries$0.16 $0.08 per pound$79,400 2%Shelled Almonds$0.03 $0.015 per pound$33,075 1%Total$4,808,775 100%Initial Payment Rate published by USDA, Expected payments and per acre payments are the authors calculation based on the USDA- NASS Oct Crop Production ReportApplications: www.farmers.gov/MFPSlide41
Soy Revenue: Large Crop and Aid Help in 2018
Crop Year
2016
2017
2018
Cash Price ($/bu.)
$9.66
$9.62
$8.40
Yield
(Bu./ Acre)
54.5*
49.5
60**
ARC-CO
PMT ($/Arce)
$36.93
$7.08
$12.53
MFP (2018 Only)
$49.50
Gross
Revenue/ acre
$563
$483
$566
* Current Record
** USDA October Forecast
*** Estimate for Cash Price
Working Capital is forecasted stronger in 2018
Large Yields and government assistance
Smart to save for 2019
Avg. Yields,
f
ew counties expected ARC Pmts., No MFPSlide42
Corn Revenue: Down from 2017
Crop Year
2016
2017
2018
Cash Price ($/bu.)
$3.61**
$3.55**
$3.60***
Yield
(Bu./ Acre)
159
177*
190
ARC-CO
PMT ($/Acre)
$65.01
$55.94
$1.57
MFP (2018 Only) ($/Acre)
$0.95
Gross
Revenue/ acre
$639
$684
$715
* Current Record
** Ohio MYA Price- NASS
***Estimate of Ohio MYA Price
Stronger price, weaker basis
Not all counties trigger ARC Pmt., but $2.50 in gov. assistance
2018 average variable costs plus land charge= $600Slide43
What could change this Analysis?
Production volumes of corn and soybeans in Brazil and Argentina
Resolution to trade disputes with China
U.S. Planting of Corn and Soybean reported in profit summaries of major seed companies and the USDA March Prospective Planting ReportSlide44
Soybean Production: Comparative Advantage?
Assuming same quality of soybean, the total U.S. comparative advantage over Brazil in soybean production is shrinking.
Transportation remains a nontrivial factor for the Mato Grosso State.
Chinese infrastructure investment in Brazil will be impactful to U.S. future competitiveness, all else equal.
Data Collected in Partnership with U.S. Federal Reserve BankSlide45
South America Acreage: UP in 2018/19
Brazil: Five year average in corn/ soybean acreage=
4.5% increase
2017 to 2018=
6.8% increaseArgentina: Slightly up, but projected larger yield compared to drought of 2017/18
Source: USDA-PSD dataSlide46
U.S. Acreage: Reduction in Soy, Increase in Corn
Given Current commodity prices, it is possible to see a reduction in corn and soybean combined acres.
177 million acres- 91 corn and 86 soybeans
Western Corn Belt states (Kansas, Oklahoma, Nebraska) more wheat, sorghum and cotton
Source: USDA-NASSSlide47
Key Takeaways: The 2 minute Rundown
Gr
ain Marketing
Weak Futures &
Weak Basis
Grain Elevator forward cash bids suggest that there could be improvement to basis for both corn and soybean.
Strong premiums for spring and early summer 2019
Today’s
f
uture price show
p
ositive return to storage for both on-farm and commercial storage.
Large supplies and lower use will continue to weigh on soybean prices.
Changing prices will influence producer/consumer choices
Market Facilitation Payments, ARC-CO soybean PMTs & FSA loans can help with cash flow this winter.
Not expecting the same cash flows in 2019. Slide48
Until we meet agrain… (or oilseeds)
Picture of soybean pile in North Dakota-October 20thSlide49
Ben BrownProgram Manager: Ohio Farm Management Program
College of Food, Agriculture, and Environmental Sciences
Department of Agriculture, Environmental, and Development Economics
Agriculture Administration Building, Room 235
2120 Fyffe Road Columbus, OH 43201-1067
660-492-7574- Mobile
brown.6888@osu.edu 614-688-8686- Phone aede@osu.edu