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TRANSCRIPT
Soybean, Corn, & Wheat Outlook
Middle Tennessee Grain Conference
S. Aaron Smith, Crop Marketing Specialist,
Assistant Professor, Department of Agricultural and Resource Economics, University of Tennessee Extension
https://ag.tennessee.edu/arec/Pages/cropeconomics.aspx
Overview
• Corn, Soybeans, and Wheat
– Supply
– Demand
– Stocks
– 2018 Price Outlook
WHEAT
Supply, Demand, Stocks, and Price Outlook
Wheat
• Production continues to exceed production
– Total Global Production 27.815 Billion Bushels
– Total Consumption 27.253 Billion Bushels
• Demand is Flat
• Stocks are record large
– Projected Ending Stocks 9.891 Billion Bushels
• Prices will continue to struggle to get above $5.00.
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bu
/per
son
/yea
rGlobal Soybean, Corn, and Wheat Consumption per Capita, 1960-2017
Wheat Corn Soybeans
Corn:
2000-17: 42%
Soybeans:
2000-17: 64%
Wheat:
2000-17: 3%
7.6 7.56.2
5.0 5.7 5.6 4.9 4.76.2
7.5 7.3 7.3 6.5 7.2 8.0 8.9 9.4 9.9
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Bill
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Global Wheat Production, Consumption, and Ending Stocks, 2000-2017
Ending Stocks Production Domestic Consumption
129 126
102
8594 91
79 76
97
114 111105
94103
113
124 127133
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Da
ys
on
Ha
nd
Global Days on Hand [Ending Stocks/(Consumption/365)], 2000-2017
CORN
Supply, Demand, Stocks, and Price Outlook
Corn Supply
• Global
– Increased acres
– Multiple production regions
• United States
– 2017 acreage down; record yield
– 2018 acreage flat?
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Acre
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World Corn Harvested Acres, 1960-2017
+81 Million
Acres (9 yrs)
+78 Million Acres
(36 yrs)
World Corn Yields by Country (bu/acre)
Country 1999 Yield10 Year
Average
Yield
2017/18 Yield
Difference
from 10 Year
Average
Argentina 88 116 129 13Brazil 40 74 86 12China 79 90 97 7European Union 102 108 113 5Ukraine 40 86 89 2United States 134 156 177 20World 70 84 90 6• U.S. has a major yield advantage over other corn producers.
• Will US yields plateau?
• Will/when world yields catch up?
U.S. Yield = 1.7429x + 3.3652R² = 0.95
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Yiel
d (
bu
/acr
e)U.S. Corn Yields, 1926-2017
US Linear (US)
Yields increasing at a rate of 1.7 bu/acre year. Will
this level out or accelerate?
Record Yield 176.6 bu/acre
August 10, 2017 = 169.5 bpa
September 12, 2017 = 169.9 bpa
October 12, 2017 = 171.8 bpa
November 9, 2017 = 175.4 bpa
December 12, 2017 = 175.4 bpa
January 12, 2018 = 176.6 bpa
Corn: U.S. Average Yield – USDA WASDE Projected
Yield revisions added
500-600 million bushels
to U.S. production
Corn Demand and Stocks• Global
– Global corn stocks estimated to shrink but still near record large (build up of stocks in the U.S.).
– Demand increasing - Continued economic growth is important.
• United States
– Domestic carryover continues to be problematic.
– 13% of production goes to exports.
– Trade / exports are crucial to reducing domestics stocks.• NAFTA and Bi-lateral trade agreements are imperative.
• Competition for exports from South America and other exporting countries.
4.28 5.03 5.64 5.55 4.83 5.05 5.236.86
8.25 8.46 9.01 8.13
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
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Global Corn Production, Consumption, and Ending Stocks, 2006-2017
Ending Stocks Production Domestic Consumption
5560
6763
52 54 56
67
79 81 79
71
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Day
s o
n H
and
Global Days on Hand [Ending Stocks/(Consumption/365)], 2006-2017
Corn
Supply
and
Demand
2016 2017 January Change 16 to 17
Planted and Harvested Acres (million) & Yield
Acres Planted 94 90.2 -3.8
Acres Harvested 86.7 82.7 -4.0
U.S. Yield (bpa) 174.6 176.6 2.0
Supply (Million Bushels)
Production 15,148 14,604 -544
Total Supply 16,942 16,947 5
Use & Ending Stocks (Million Bushels)
Feed and Residual 5,467 5,550 83
Ethanol 5,439 5,525 86
Food, Seed & Industrial 1,450 1,470 20
Exports 2,293 1,925 -368
Total Use 14,649 14,470 -179
U.S. Ending Stocks 2,293 2,477 184
Foreign Stocks 6,712 5,655 -1,057
Price and Stocks to Use Ratio
U.S. Avg. Price ($/bu) $3.36 $2.95-$3.55 -$0.10
U.S. Stocks/Use 15.65% 17.12% 1.47%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Days on Hand 42 47 51 48 32 29 27 33 46 46 57 63
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U.S. Corn Days on Hand [Ending Stocks/(Use/365)], 2006-2017
Corn Prices
• Range bound prices
• Old Crop– Look for deferred futures contract opportunities to secure price on
stored corn.
– Look for basis improvements.
• New Crop– Start sales with December 2018 corn futures above $3.90.
– Fix additional production in 5-10 cent increments.
– For example, $3.90 = 10% of production; $4.00 = 20%.
– Look for basis opportunities.
2006
2007
20082009
2010
2011
2012
20132014
2015
2016
2017* Projected $3.95
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10% 12% 14% 16% 18% 20% 22% 24%
Pri
ce (
$/b
u)
Stocks-to-Use Ratio
Global Corn Stocks-to-Use to Price Relationship, 2006-2017
2006
20072008 2009
2010
2011
2012
2013
2014
2015
20162017* Projected
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Pri
ce (
$/b
u)
U.S. Stocks-to-Use to Price Relationship, 2000-2016
Corn Markets: What I’m Watching in Early 2018
• Old Crop and New Crop
– NAFTA
– Exports sales pace (55% compared to 5-yr Avg of 59% of MY
total)
– Planting Intentions (crop insurance price determination period)
– South American second crop corn plantings
– Global Economic Growth (Positive, but is it Stable?)
– U.S. Dollar
SOYBEANS
Supply, Demand, Stocks, and Price Outlook
Soybean Supply
• Global
– South American Growth
– Long Term Growth Prospects in China and India
• United States
– 2017 acreage up; 2nd highest yield
– 2018 acreage flat?
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Acre
s H
arv
este
d (
mill
ion
s)
World Soybean Harvested Acres, 1960-2017
+91 Million
Acres (31 yrs)
+161 Million
Acres (23 yrs)
World Soybean Yields by Country (bu/acre)
Country 1999 Yield10 Year
Average
Yield
2017/18 Yield
Difference
from 10 Year
Average
Argentina 37 40 45 4Brazil 38 44 47 3China 27 26 27 1United States 37 44 49 5World 33 38 41 4
• U.S. and South American yields are very similar, unlike corn.
• China has the potential to increase soybean yield and acres (over the long
term)
U.S. Soybean Yield = 0.3641x + 11.149R² = 0.94
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ld (
bu
/acre
)U.S. Average Soybean Yield, 1926-2017
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Acr
es (
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ion
s)U.S. Planted and Harvested Soybean Acres, 1926-2017
Harvested Planted
Relative prices and lower
input costs continue to
make soybeans attractive
to plant.
Soybean Demand and Stocks• Global
– Global soybean stocks are growing (build up of stocks in the U.S.).
– Demand increasing - continued economic growth is important.
• United States
– Strong domestic crush – increases year-over-year.
– Almost 50/50 domestic use and exports.
– Trade / exports are crucial to reducing domestics stocks.
• Bi-lateral trade agreements are imperative.
• Competition for exports from South America and other exporting countries.
2.31 1.94 1.582.23 2.59
1.96 2.03 2.262.85 2.87
3.55 3.62
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Bu
shel
sGlobal Soybean Production, Consumption, and Ending Stocks, 2006-2017
Ending Stocks Production Domestic Consumption
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Meal 18 18 12 15 19 21 20 21 25 22 20 19
Oil 42 39 36 35 39 37 36 32 32 25 22 20
Soybean 102 84 70 93 102 75 77 81 94 91 107 104
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# o
f D
ays
Global Soybean Days on Hand [Ending Stocks/(Consumption/365)], 2006-2017
Meal Oil Soybean
Soybean
Supply
and
Demand
2013 2014 2015 2016 2017 January Change 16 to 17
Planted and Harvested Acres (millions) & Yield
Acres Planted 76.8 83.3 82.7 83.4 90.1 6.7
Acres Harvested 76.3 82.6 81.7 82.7 89.5 6.8
U.S. Yield (bpa) 44.0 47.5 48 52 49.1 -2.9
Supply (Million Bushels)
Production 3,358 3,927 3,926 4,296 4,392 96
Total Supply 3,570 4,052 4,140 4,515 4,718 203
Use & Ending Stocks (Million Bushels)
Crushing 1,734 1,873 1,886 1,899 1,950 51
Exports 1,638 1,842 1,942 2,174 2,160 -14
Total Use 3,478 3,862 3,944 4,213 4,248 35
U.S. Ending Stocks 92 191 197 302 470 168
Foreign Stocks 2,211 2,658 2,670 3,244 3,152 -92
Price and Stocks to Use Ratio
U.S. Price ($/bu) $13.00 $10.10 $8.95 $9.47 $8.80-$9.80 -$0.17
U.S. Stocks/Use 2.65% 4.95% 4.99% 7.17% 11.06% 3.90%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Meal 3 3 2 3 3 3 3 2 2 2 3 2
Oil 55 43 57 65 49 47 29 20 32 28 28 24
Soybean 68 24 17 16 24 20 16 10 18 18 26 40
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U.S. Soybean, Soybean Oil, and Soybean Meal Days on Hand [(Ending Stocks/(Use/365)], 2006-2017
Meal Oil Soybean
Past Revisions to USDA Ending Stocks (Will they continue….)
2013/14 2014/15 2015/16 2016/17 2017/18
August 220 430 470 330 460
December 150 410 465 480 445
July 140 255 350 410 -
Final/Current 92 191 197 302 470
1.13 1.031.21 1.15
1.371.18
0.41 0.510.42
0.35
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0.41
1.761.64
1.831.94
2.17 2.16
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5 Year Average1/
2013/2014 2014/2015 2015/2016 2016/2017 2017/2018
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Soybean Exports as of Week Ending 01/18/2018 (20 Weeks)
Accumulated Exports to Date Outstanding Sales MY Export Target
Soybean Pricing
• Old Crop
– Hopefully not much left to price.
– Basis opportunities are likely muted compared to previous
years.
• New Crop
– $10.00 on the November start selling production in increments
– Secure a basis / cash price when favorable basis is presented.
Nearby Close
(0.60)
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Mar
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July
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Jan
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No
vem
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Lower-Middle Tennessee Soybeans Basis, 2013-2017
Soybean Markets: What I’m Watching in Early
2018
• Old Crop and New Crop
– Trade with China
– Exports (Sales Pace and Shipments vs. Sales)
– South American Production (Brazil Up? Argentina Down?)
– Global Economic Growth (Positive, but is it Stable?)
– USD/Brazilian Real/Argentinian Peso/Chinese Yuan (Weaker
USD = More U.S. Exports)
THANK YOU!
Questions?