Fall 2017 Crop Outlook Webinar Chris Hurt, Professor & Extension Ag. Economist James Mintert, Professor & Director, Center for Commercial Agriculture Fall 2017 Crop Outlook Webinar October 13, 2017
50% 40% U.S. Ending Stocks to Use % Corn, Soybeans, Wheat: October 2017 Wheat Corn Soybeans 30% 20% 16.4% 10% 0% 9.9% 90 91 92 93 94 95 96 97 98 99 0 1 4.4% 2 3 4 5 6 7 8 2.6% 9 10 11 12 13 14 15 16 17
38% 36% 34% 32% 30% 28% 26% 24% 22% 20% 18% 16% 14% 12% 10% World Stocks to Use %: USDA October 2017 Wheat Soybeans Corn 28.6% 30.8% 27.8% 33.9% 34.7% 36.3% 28.7% 27.9% 22.1%21.4% 2000/01 2002/03 2004/05 2006/07 2008/09 2010/11 2012/13 2014/15 2016/17 18.9%
180 170 160 150 140 130 120 110 100 y = 2.0068x + 112.83 R² = 0.70068 Corn Yield: 1990-2017 164.7 171 174.6 171.8 + 1.9 bu. from Sept 90 92 94 96 98 00 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Billions 15 14 13 12 11 10 9 8 7 Corn Production 13.8 14.2 13.6 13.1 13.1 11.8 12.1 12.412.4 11.1 10.5 10.8 9.9 10.1 9.5 9.0 15.1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 14.3
Corn: USDA 10/12/17 14/15 15/16 16/17 17/18 Carry in 1,232 1,731 1,736 2,295 (-55) Production 14,216 13,601 15,148 14,280 (+96) Total Supply 15,479 15,400 16,942 16,625 (+40) Feed & Residual 5,317 5,120 5,464 (+39) 5,500 (+25) FSI Non-Fuel 1,359 1,422 1,452 (+17) 1,460 (+10) FSI Fuel (Ethanol) 5,207 5,224 5,438 (+3) 5,475 Export 1,865 1,898 2,293 (-2) 1,850 Total Use 13,748 13,664 14,647 (+57) 14,250 (+35) Ending Stocks 1,731 1,736 2,295 (-55) 2,340 (+5) US Farm Price $3.70 $3.61 $3.36 $3.20 $2.80 - $3.60
$4.00 $3.80 $3.60 $3.40 $3.20 2017/18 Hypothetical Seasonal Price Pattern: based on most recent 10 year price pattern with 2012 crop excluded and $3.45 Indiana Season Average Price $3.18 $3.46 $3.62 $3.77 $3.78 $3.00 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
$/Bu. 4.30 4.20 4.10 4.00 3.90 3.80 3.70 3.60 3.50 3.40 3.30 3.20 3.10 3.00 2.90 2.80 Cash Corn Price 14, 15,16, 17 Crops: Central Indiana 2014 2015 2016 2017 1 2 3 4 1 2 3 4 1 2 3 4 5 1 2 3 4 1 2 3 4 5 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 5 1 2 3 4 1 2 3 4 Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug
Corn Futures: July 18 December 17 $.30 Premium of July 18 over Dec. 17 has been increasing $.20 July 2017
Expected Corn Storage Returns On-Farm Nov Dec Jan Feb Mar Apr May June July Futures 3.49 3.49 3.63 3.63 3.63 3.71 3.71 3.79 3.79 Basis -.25 -.20 -.12-10 -.08 -.12 -.10 -.10 -.08 Cash 3.24 3.29 3.51 3.53 3.55 3.59 3.61 3.69 3.71 Carry.05.27.29.31.35.37.45.47 - Interest -.03 -.04 -.05 -.06 -.07 -.08 -.09 -.10 -.11 Return.01.22.23.24.27.28.35.36 Commercial -.15 -.18 -.21 -.24 -.27 -.30 -.33 -.36 -.39 Commercial Storage: No expected positive return to storage -Sell cash at harvest and replace with futures or call options +$0.30 +$0.17 +$0.47
$3.60
With On-Farm Corn Storage A. Take the Carry At Harvest -Sell July futures at harvest -Sell Hedge-to-Arrive futures at your Buyer Position: Both price the futures, but leave the basis unpriced Advantage on Hedge-To-Arrive is Buyer pays margin calls Advantage for doing your own futures hedge: More flexible-lower costs? B. Store Unpriced- Wait for a Rally-Then sell Summer Futures or Hedge-to-Arrive
52 50 48 46 44 42 40 38 36 34 32 30 34.134.2 37.6 32.6 41.4 35.3 U.S. Bean Yield 1990-2016 37.6 38.938.9 39.6 38.1 38.0 36.6 33.9 y = 0.4966x + 33.389 R² = 0.71006 42.2 43.0 42.7 41.7 39.744 43.5 41.9 40 44 47.5 48 52 -.4bu. From Sept 90919293949596979899 0 1 2 3 4 5 6 7 8 9 1011 121314151617 49.5
4.5 4.0 Soybean Production 3.93 3.93 4.30 4.43 Billions 3.5 3.0 2.5 3.33 2.76 2.89 3.12 3.06 3.19 3.36 3.09 2.973.51 3.03 2.76 2.68 2.45 2.0 1.5 1.0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Soybeans USDA 10/12/17 14/15 15/16 16/17 17/18 Carry in 92 191 197 301 (-44) Production 3,927 3,926 4,296 (-11) 4,431 Total Supply 4,052 4,140 4,518 (-13) 4,758 (-44) Seed & Residual 143 121 141 (+21) 136 Crush 1,875 1,886 1,899 (+4) 1,940 Exports 1,843 1,936 2,174 (+4) 2,250 Total Use 3,861 3,943 4,214 (+31) 4,326 Ending Stock 191 197 301 (-44) 430 (-45) Farm Price $10.10 $8.95 $9.47 (-.03) $9.20 $8.35-$10.05
2017/18 Hypothetical Seasonal Price Pattern: based on most recent 8 year price pattern with 2012 crop excluded and $9.50 Indiana Season Average Price$10.30 $10.43 $10.50 $10.00 $9.62 $9.50 $9.00 $9.08 $8.50 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
$12.00 $11.50 $11.00 $10.50 $10.00 $9.50 $9.00 $8.50 $8.00 Central Indiana Cash Soybean Price Pattern: 14. 15. 16. 17 Crops 2014 2015 2016 2017 1 2 3 4 1 2 3 4 1 2 3 4 5 1 2 3 4 1 2 3 4 5 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 5 1 2 3 4 1 2 3 4 5 Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug
Soybean Futures: July 18 November 17 $.38 Premium of July 18 over Nov. 17 has been increasing $.20 July 2017
Expected Soybean Storage Returns On-Farm Nov Dec Jan Feb Mar Apr May June July Futures 9.92 10.03 10.03 10.12 10.12 10.22 10.22 10.30 10.30 Basis -.30 -.25 -.17-15 -.12 -.17 -.15 -.15 -.13 Cash 9.62 9.78 9.86 9.97 10.00 10.05 10.07 10.15 10.17 Carry.16.24.35.38.43.45.53.55 - Interest -.03 -.06 -.09 -.12 -.15 -.18 -.21 -.24 -.27 Return.10.15.23.23.25.24.29.28 Commercial -.15 -.18 -.21 -.24 -.27 -.30 -.33 -.36 -.39 +$0.38 +$0.17 +$0.55 Commercial Storage: No expected positive return to storage -Sell cash at harvest and replace with futures or call options
With On-Farm Soybean Storage A. Take the Carry At Harvest -Sell July futures at harvest -Sell Hedge-to-Arrive futures at your Buyer Position: Both price the futures, but leave the basis unpriced Advantage on Hedge-To-Arrive is Buyer pays margin calls Advantage for doing your own futures hedge: More flexible-lower costs? B. Store Unpriced-Wait for a Rally-Then sell Summer Futures or Hedge-to- Arrive
MYA Farm Price: PAST and FUTURE 2012 2013 2014 2015 2016 USDA 2017 USDA 2018 Futr MYA 2019 Futr MYA 2020 Futr MYA Corn $6.89 $4.46 $3.70 $3.60 $3.35 $3.20 $3.85 $4.00 $4.05 Soybeans $14.40 $13.00 $10.10 $8.95 $9.50 $9.20 $9.75 $9.70 $9.60 Wheat $7.77 $6.87 $5.99 $4.89 $3.89 $4.60 $4.25 $5.00 $5.15 Low
$/Bu. $2.50 Estimated Rotation Corn Costs in Indiana Avg. Productivity Soils, $/bushel, 2007-2018 Fertilizer Seed Pesticides Cash Rent $2.00 $1.50 $1.00 $0.50 $0.00 07 08 09 10 11 12 13 14 15 16 17 18 Year Source: Purdue Crop Budgets, Various Years
$/bu. $7.00 $6.00 Estimated Rotation Corn Costs in Indiana Avg. Productivity Soils, $/Bushel, 2007-2018 Variable Cost Overhead Cost Gross Revenue $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 07 08 09 10 11 12 13 14 15 16 17 18 Year Source: Purdue Crop Budgets, Various Years
$/bu. $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 Estimated Rotation Soybean Costs in Indiana Avg. Productivity Soils, $/bu., 2007-2017 Fertilizer Seed Pesticides Cash Rent 07 08 09 10 11 12 13 14 15 16 17 18 Year Source: Purdue Crop Budgets, Various Years
$/bu. $16.00 $14.00 Estimated Rotation Soybean Costs in Indiana Avg. Productivity Soils, $/bu. 2007-2018 Variable Cost Overhead Cost Gross Revenue $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 07 08 09 10 11 12 13 14 15 16 17 18 Year Source: Purdue Crop Budgets, Various Years
Upcoming Webinars: Ag Economy Barometer, Nov. 9, 2017 Ag Business Climate Outlook, Jan. 5, 2018 Purdue Top Farmer Conference: January 9, 2018 Pre-Conference: January 8, 2018 Location: Beck Ag Center, West Lafayette, IN Fall 2017 Crop Outlook Webinar October 13, 2017
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