Grain Market Outlook For 2017
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Grain Market Outlook For 2017 Bryce Knorr Senior Market Analyst
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
• • • • • •
Key Questions For 2017
Trumponomics? Trade wars? Currency battles? What will farmers plant? Who will buy it? How bad is farm economy?
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Crop Corn Soybeans Soft Red Winter Wheat Hard Red Winter Wheat White Winter Wheat All Winter Wheat Spring Wheat Durum All Wheat Sorghum Cotton * vs USDA 2016 estimates
2017 Planting Intentions Acreage Change* 90.49 million -3.7% 90.52 million 8.5% 5.7 million -5.6% 23.3 million -12.4% 3.4 million -4.6% 32.4 million -10.4% 11 million -5.1% 2.3 million -5.1% 45.68 million -4.1% 5.63 million -15.8% 11.45 million 13.7%
Mostly Bullish
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Corn Production Soybean Production
USDA Farm USDA Final Trade Futures November 15.148 15.199 15.05 15.226 4.307 4.374 4.365 4.361
Corn Yield Soybean Yield
174.6 52.1
U.S. Ending Stocks Wheat Corn Soybeans
175.1 52.7
176 52.4
175.3 52.5
USDA
Trade
Farm USDA Futures Dec
1.186 2.355 420
1.146 2.390 473
1.143 2.399 450
1.143 2.403 480
Record Yields
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Average U.S yields per bushel 180
55
170
50
160 150
45
140 40
130 120 110
Corn
Soybeans
100
Wheat
35 30
Source: USDA ERS
Shifts Reflect Belt Tightening
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Net Farm Income billions of dollars
$140
$114
$120
$96
$100 $80 $60
$124
$57
$70
$79
$93
$77 $57
$40 $20 $0
Source: USDA ERS, *Farm Futures
$81
$67 $50
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Worse Than 80s
Profit Margin
45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: USDA ERS
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
30-Year Lows
Return on Equity 12% 10% 8% 6% 4% 2% 0% 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: USDA ERS
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Slowly Rising
Debt to Assets Ratio 25
p e 20 r 15 c 10 e n 5 t 0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: USDA ERS
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Mild Pullback So Far
Year-to-Year Change in Indiana Land Values 30 20
per cent
10 0
-10 -20 -30
Source: Chicago Federal Reserve
Lower Returns
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Average Cropland Cash Rents Indiana
$200
Ohio
$180 $160 $140 $120 $100 $80 $60 1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Across The Board
Treasury yield curve 3
per cent
2.5 2 1.5 1 0.5
1/24/15 1/24/16 1/23/17
0
Interest rate on Treasury securities at various maturity
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
More Pressure
Inflation Play
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Crude Oil Futures and Options net position long/short
Managed Money
Crude Oil Futures
400000
$120
350000
$100
300000 $80
250000
$60
200000 150000
$40
100000 $20
50000 0
1/1/2014
$0
6/1/2014
11/1/2014
4/1/2015
9/1/2015
Source: CFTC, NYME
2/1/2016
7/1/2016
12/1/2016
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Hedge Funds
Rebalancing Over
Tracking the funds net position, ag contracts
Index Funds
1,000,000
1,200,000
800,000
1,150,000
600,000
1,100,000
400,000
1,050,000
200,000
1,000,000
-
950,000
(200,000) (400,000)
900,000
(600,000)
850,000
(800,000) 1/15
800,000 4/15
7/15 10/15 1/16
4/16
7/16 10/16 1/17
Source: CFTC Hedge Funds
Index Funds
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Small Bullish Bet
250000
$12.00
200000
$11.50
150000
$11.00
100000
$10.50
50000
$10.00
0
$9.50
-50000 -100000
$9.00
-150000
$8.50
-200000 1/15 4/15
$8.00 7/15 10/15 1/16
4/16
7/16 10/16 1/17
Source: CFTC Index funds
Hedge funds
Futures
nearby futures
net position in contracts
Commitment of Traders - Soybeans
Still Bearish
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Commitment of Traders - Corn $5.00
400000
$4.50
200000 100000
$4.00 0 -100000
$3.50
-200000 -300000 1/15
$3.00 4/15
7/15 10/15 1/16
4/16
7/16 10/16 1/17
Source: CFTC Index funds
Hedge funds
Futures
nearby futures
net position in contracts
300000
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Another Impact Of Higher Rates
Dollar Follow Rates Long-Term 160 140 120 100
25
Dollar
Prime
20 15
80 60 40 20 0
10 5 0
Real Dollar
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Federal Reserve vs ICE Dollars 130
130
125
125
120
120
115
115
110
ICE Index
Fed Index
110
105
105
100
100
95
95
90
90
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Emerging Pains
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Soybeans Off Record
More Acres
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Harvested Acreage 40000
1000s hectaires
35000 30000 25000 20000 15000 10000 5000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 U.S.
Brazil
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
More Exports Total Exports
70000
1000s metric tons
60000 50000 40000 30000 20000 10000 0 U.S.
Brazil
Second Fiddle
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
4%
World Soybean Export Market Share 1977 9% US Brazil Argentina
85%
World Soybean Export Market Share 2016 6% 40% 43%
US Brazil Argentina
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
80%
2 Out Of 3 Bushels
China's Share Of World Soybean Trade
70%
stocks to use
60% 50% 40% 30% 20% 10% 0% 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
MMT 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 -
Still Rising
Chinese soybean imports
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
MMT 100,000
Hand In Hand
Chinese soybean imports vs GDP
90,000
GDP ¥80,000 ¥70,000
80,000 ¥60,000 70,000 60,000
¥50,000
50,000
¥40,000
40,000
¥30,000
30,000 ¥20,000 20,000 ¥10,000
10,000
¥0
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Imports
GDP
Record Pace
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Total Soybean Sales & Shipments (Year to Date) 2000 1800 1600 1400 1200 1000 800 600 400 200 0
Million Bushels
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Total Commitments
% of USDA Forecast
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Slowing Seasonal
Thousand Bushels
Soybean export inspections 120,000 110,000 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 S
O
N
2015-16
D
J
F
M
2016-17
A
M
J
J
5-Yr. Avg.
A
Starting To Slow
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Monthly NOPA Crush in thousand bushels, crop year 170,000 160,000 150,000 140,000 130,000 120,000 110,000 100,000 90,000 S
O
N
D
2014
J
F
2015
M
A
M
2016
J
J
A
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Plenty
U.S. Soybeans Stocks/Use 30%
25%
stocks/use
20%
15%
10%
5%
0%
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Deja’ Vu?
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Good And Bad
Possibly hurts Canada wheat yields Hurts FSU coarse grain yields
Hurts U.S. corn and soybean yields; may help wheat
Hurts EU wheat yields
Hurts Argentina coarse grain and soybean yields
Helps Australia coarse grain yields, may help wheat yields if lasts entire growing season
Weak La Nina
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Odds 'La Nina' Will Persist 50% 40% 30% 20% 10% 0% DJF 2017
JFM 2017
FMA 2017
MAM 2017
AMJ 2017
MJJ 2017
Source: NOAA
JJA 2017
JAS 2017
ASO 2017
Soybean Supply/Demand BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
2016 2017 Yield 52.1 47.3 Production 4,307 4,239 Use, total 4,154 4,220 Ending stocks 380 434 Ave. cash price $9.39 $9.33 Top Third $10.05 to $9.98 to *Achieved $10.91 $10.83
Bullish Move
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
July Soybean Futures Seasonal Trends 1,150
700 690
1,100
680
1,050 670
1,000
660
950
650 640
900 630
850
620
800
610
7/30
8/30
9/30
10/31 11/30 12/31
Bull market year
1/31
2/29
July 2017
3/31
4/30
5/31
Normal year
6/30
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
$11.025
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
More Soybeans East
Strong Hands?
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Toledo Soybean Basis 30 20 10 0 (10) (20) (30) (40) (50) (60) 9/6
11/6 Average
1/6
3/6 2015-2016
5/6
7/6
2016-2017
Profitable Price
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Toledo Soybeans $12.00
8.600
$11.00
8.400
$10.00
8.200 8.000
$9.00
7.800
$8.00
7.600
$7.00
7.400
$6.00
7.200
$5.00
7.000
9/6
11/6
1/6 2015-2016
3/6
5/6
2016-2017
7/6 Average
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
What Are You Waiting For?
Soybean Supply/Demand BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
2016 2017 Yield 52.1 47.3 Production 4,307 4,239 Use, total 4,154 4,220 Ending stocks 380 434 Ave. cash price $9.39 $9.33 Top Third $10.05 to $9.98 to *Achieved $10.91 $10.83
Five In A Row?
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Above Normal Soybean Yields Lasted bu/acre More Than Three Years Only Once 55
Actual
50
Trend
45 40 35 30 25
Source: USDA
2016
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
20
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Soybean Costs - 47.3
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Don’t Sell Cheap
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Year Yield 2015 45 2016 47
What About ARC? Price Revenue $11.87 $528 $10.87 $435
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
$10.43 High $10.81 Next
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Holding On
November Soybean Futures Seasonal Trends 740
1,050
720
1,000
700 950
680 660
900
640
850
620 800
600 580
750
Bull Years
Nov. 2017
Non-Bull Years
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Do Nothing
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
85% @ $10.20 SX
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
85% @ $10.65 SX
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
How To Sell
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Nine-Year Highs
Total Corn Sales & Shipments (Year to Date) 80%
2000 1800 1600 1400 1200 1000 800 600 400 200 0
70% 60% 50% 40% 30% 20% 10% 0%
Total Commitments
% of USDA Forecast
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Better Shipments
Weekly Corn Export Inspections 80,000
Thousand Bushels
70,000 60,000 50,000 40,000 30,000 20,000 10,000 0
5-Yr. Avg.
2016-17
2015-16
Share Drops In Half
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
World Coarse Grain Export Market Share -- 1977
5%
5%
1%
US
Argentina
2%
Australia Brazil
13%
Canada
66%
EU FSU
World Coarse Grain Export Market Share -- 2016 US
18% 5% 2%
Argentina
34%
Australia Brazil Canada
15% 4%
15%
EU FSU
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Ukraine Gains
Spot Corn Delivered To Japan Gulf $6.00 $5.80 $5.60 $5.40 $5.20 $5.00 $4.80 $4.60 $4.40 $4.20 $4.00
Brazil
Argentina
Ukraine
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Record Production
thousand barrels
Stocks 24000
Production 1100
23000
1050
22000
1000
21000
950
20000
900
19000 18000
850
17000 9/1/14
800 2/1/15
7/1/15
Ending stocks
12/1/15
5/1/16
10/1/16
Daily Production
thousand barrels/day
Weekly Ethanol Production and Stocks
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
In The Red
Average Corn Belt Ethanol Plant Margins $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 -$0.50 -$1.00
China Ban?
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Ethanol Exports China Share
50%
mil gallons
Total Exports
150 130
40%
110 90
30%
70 20%
50 30
10%
10
0%
(10) 2014
2015
2016
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
metric tons
1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0
Bleak Future
U.S. DDGS Exports to China
2016 2015 2014
No Sale
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Chinese Corn Imports, Sep-Nov (million bushels)
Ukraine
250
U.S.
Total
200 150 100 50 0
2012
2013
2014
2015
2016
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Copyright China Photos, Getty Images
China’s Corn Mountain
2016 Highest In Decade
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
U.S. Corn Stocks/Use 70 60 50
30 20 10
15
12
09
06
03
00
97
94
91
88
85
82
79
76
73
0
70
stocks/use
40
Bull Or Bear?
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
July Corn Bull vs Bear Years 300
550
295 500
290 285
450
280 275
400
270 265
350
260 255
300 Aug
Sep
Oct
Nov
Dec
Jan
Bull Market Years
Feb
Mar
Apr
July 2017
May
Jun
Jul
Normal Year
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Corn Is Trying
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Tighter East
Storage Pays
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Toledo Corn $4.40 $4.20 $4.00 $3.80 $3.60 $3.40 $3.20 $3.00 9/6
11/6
1/6
Average
3/6 2016-2017
5/6
7/6
2015-2016
Average Returns
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Toledo Corn Basis 20 15 10 5 0 (5) (10) (15) (20) (25) (30) 9/6
11/6 Average
1/6
3/6 2016-2017
5/6
7/6
2015-2016
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Profitable, With ARC
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Favors Soybeans
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
bu/acre
Five Not Impossible
Corn Yields Had Two Long Runs
180
Actual
160
Trend
140 120 100 80
Source: USDA
2016
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
60
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
2017 Could See Shift
World coarse grain stocks to use 40% 35% 30% 25% 20% 15% 10% 5% 0%
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Rally To Buy Acres
December Corn Bull vs Bear Years 320 440 310 420 300
400
290
380
280
360 340
270
320
260
300
250
11/1
1/1
3/1
5/1
7/1
Bull Market
Dec-16
17-Dec
9/1 Normal Year
11/1
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Trading Range
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Corn Costs – 170 bpa
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Not There Yet
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Year 2016 2017
What About ARC?
Yield 158 166
Price Revenue $4.79 $757 $3.92 $652
Do Nothing BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Sell 85% @ $4.25 CZ
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Sell 85% @ $4.50 CZ
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
How To Sell
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Hedge Basis/Poor Man’s Put
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Beware This Trend!
World Wheat Export Market Share -1977 12% 1% US
11%
46%
Canada Argentina EU
3%
24%
FSU Australia
World Wheat Export Market Share -2016 14% US
15%
Canada Argentina
12%
30%
EU
5% 14%
FSU Australia
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Plenty Of Surplus
Total World Wheat Ending Stocks Without China 160000 140000 120000 100000 80000 60000 40000 20000 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Too Much
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
World Wheat Supply and Demand 800000
1000s metric tons
750000 700000 650000 600000 550000 500000 450000 400000 1980
1985
1990
1995
Production
2000
2005
2010
Consumption
2015
Meh
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Weekly Wheat Export Inspections 35,000
Thousand bushels
30,000 25,000 20,000 15,000 10,000 5,000 2016-17
0 J
J
A
S
2015-2016 O
N
D
J
5-Yr. Avg. F
M
A
M
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Mixed Picture
Wheat Supply/Demand BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Wheat Supply and Demand Estimates Yield Production Use, total Ending stocks Ave. cash price Top Third of Price Range Chicago Kansas City Hard Red Minneapolis
2016-17 52.6 2,310 2,227 1,189 $3.90
2017-18 48.1 1,882 2,149 1,055 $4.40
2016 $4.18 to $4.57 $4.30 to $4.68 $4.51 to $4.89
2017 $4.82 to $5.21 $4.84 to $5.29 $5.40 to $5.87
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Long-Term Bottom?
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Bullish Move
Kansas City July Futures 420 585 565
400
545
380
525 360
505 485
340
465
320
445 425
300 8/1
10/1
Bull Years
12/1
2/1
July 2017
4/1
6/1
Non-Bull Years
Trying To Turn
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Chicago July Futures 600 550 500 450 400 350 300 5/25
7/25
Bull
9/25
11/25
1/25
Non-Bull
3/25
5/25
Jul-17
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
cost/acre
$800
Crop Costs Firm
Average U.S. cost of production
$700
Corn
$600
Soybeans
$500
Wheat
$400 $300 $200 $100 $0 Source: USDA ERS *Farm Futures estimate for 2016-2017
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Higher Costs/Bu.
Average U.S. cost of production per bushel $12 $10
Corn
Soybeans
Wheat
$8 $6 $4 $2 $0
Source: USDA ERS *Farm Futures estimate for 2016-2017
More To Go
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Urea
Retail $550 $500 $450 $400 $350 $300 $250 $200 $150
Gulf
Lock It In
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Ammonia Retail
$775 $675 $575 $475 $375 $275 $175
Gulf
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
More Hikes Ahead UAN
Retail 28% $375 $325 $275 $225 $175 $125
Gulf 32%
Still Cheap
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
DAP
Retail $600 $550 $500 $450 $400 $350 $300 $250
Gulf
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Slow Increases Potash
Retail $560 $510 $460 $410 $360 $310 $260 $210
Midwest Terminal
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
What’s Next?
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Farmer Demand
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Wait For Summer
Seasonal propane prices (Conway, Kansas) Average 2017
Average (left axis)
2017
2016
75
2016 80 70
70
60 50
65
40 60
30 20
55
10 50
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
In The Red
Average U.S. Profit/Loss Per Acre
$300
Assumes average cash prices and costs, 2017 trend yield
$250
Corn
$200
Soybeans
$150
Wheat
$100 $50 $0 -$50 -$100 -$150
Source: USDA, *Farm Futures Projections
Grain Market Outlook For 2017 Bryce Knorr Senior Market Analyst
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
• • • • • •
Key Questions For 2017
Trumponomics? Trade wars? Currency battles? What will farmers plant? Who will buy it? How bad is farm economy?
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Crop Corn Soybeans Soft Red Winter Wheat Hard Red Winter Wheat White Winter Wheat All Winter Wheat Spring Wheat Durum All Wheat Sorghum Cotton * vs USDA 2016 estimates
2017 Planting Intentions Acreage Change* 90.49 million -3.7% 90.52 million 8.5% 5.7 million -5.6% 23.3 million -12.4% 3.4 million -4.6% 32.4 million -10.4% 11 million -5.1% 2.3 million -5.1% 45.68 million -4.1% 5.63 million -15.8% 11.45 million 13.7%
Mostly Bullish
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Corn Production Soybean Production
USDA Farm USDA Final Trade Futures November 15.148 15.199 15.05 15.226 4.307 4.374 4.365 4.361
Corn Yield Soybean Yield
174.6 52.1
U.S. Ending Stocks Wheat Corn Soybeans
175.1 52.7
176 52.4
175.3 52.5
USDA
Trade
Farm USDA Futures Dec
1.186 2.355 420
1.146 2.390 473
1.143 2.399 450
1.143 2.403 480
Record Yields
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Average U.S yields per bushel 180
55
170
50
160 150
45
140 40
130 120 110
Corn
Soybeans
100
Wheat
35 30
Source: USDA ERS
Shifts Reflect Belt Tightening
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Net Farm Income billions of dollars
$140
$114
$120
$96
$100 $80 $60
$124
$57
$70
$79
$93
$77 $57
$40 $20 $0
Source: USDA ERS, *Farm Futures
$81
$67 $50
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Worse Than 80s
Profit Margin
45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: USDA ERS
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
30-Year Lows
Return on Equity 12% 10% 8% 6% 4% 2% 0% 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: USDA ERS
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Slowly Rising
Debt to Assets Ratio 25
p e 20 r 15 c 10 e n 5 t 0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: USDA ERS
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Mild Pullback So Far
Year-to-Year Change in Indiana Land Values 30 20
per cent
10 0
-10 -20 -30
Source: Chicago Federal Reserve
Lower Returns
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Average Cropland Cash Rents Indiana
$200
Ohio
$180 $160 $140 $120 $100 $80 $60 1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Across The Board
Treasury yield curve 3
per cent
2.5 2 1.5 1 0.5
1/24/15 1/24/16 1/23/17
0
Interest rate on Treasury securities at various maturity
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
More Pressure
Inflation Play
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Crude Oil Futures and Options net position long/short
Managed Money
Crude Oil Futures
400000
$120
350000
$100
300000 $80
250000
$60
200000 150000
$40
100000 $20
50000 0
1/1/2014
$0
6/1/2014
11/1/2014
4/1/2015
9/1/2015
Source: CFTC, NYME
2/1/2016
7/1/2016
12/1/2016
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Hedge Funds
Rebalancing Over
Tracking the funds net position, ag contracts
Index Funds
1,000,000
1,200,000
800,000
1,150,000
600,000
1,100,000
400,000
1,050,000
200,000
1,000,000
-
950,000
(200,000) (400,000)
900,000
(600,000)
850,000
(800,000) 1/15
800,000 4/15
7/15 10/15 1/16
4/16
7/16 10/16 1/17
Source: CFTC Hedge Funds
Index Funds
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Small Bullish Bet
250000
$12.00
200000
$11.50
150000
$11.00
100000
$10.50
50000
$10.00
0
$9.50
-50000 -100000
$9.00
-150000
$8.50
-200000 1/15 4/15
$8.00 7/15 10/15 1/16
4/16
7/16 10/16 1/17
Source: CFTC Index funds
Hedge funds
Futures
nearby futures
net position in contracts
Commitment of Traders - Soybeans
Still Bearish
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Commitment of Traders - Corn $5.00
400000
$4.50
200000 100000
$4.00 0 -100000
$3.50
-200000 -300000 1/15
$3.00 4/15
7/15 10/15 1/16
4/16
7/16 10/16 1/17
Source: CFTC Index funds
Hedge funds
Futures
nearby futures
net position in contracts
300000
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Another Impact Of Higher Rates
Dollar Follow Rates Long-Term 160 140 120 100
25
Dollar
Prime
20 15
80 60 40 20 0
10 5 0
Real Dollar
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Federal Reserve vs ICE Dollars 130
130
125
125
120
120
115
115
110
ICE Index
Fed Index
110
105
105
100
100
95
95
90
90
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Emerging Pains
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Soybeans Off Record
More Acres
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Harvested Acreage 40000
1000s hectaires
35000 30000 25000 20000 15000 10000 5000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 U.S.
Brazil
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
More Exports Total Exports
70000
1000s metric tons
60000 50000 40000 30000 20000 10000 0 U.S.
Brazil
Second Fiddle
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
4%
World Soybean Export Market Share 1977 9% US Brazil Argentina
85%
World Soybean Export Market Share 2016 6% 40% 43%
US Brazil Argentina
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
80%
2 Out Of 3 Bushels
China's Share Of World Soybean Trade
70%
stocks to use
60% 50% 40% 30% 20% 10% 0% 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
MMT 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 -
Still Rising
Chinese soybean imports
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
MMT 100,000
Hand In Hand
Chinese soybean imports vs GDP
90,000
GDP ¥80,000 ¥70,000
80,000 ¥60,000 70,000 60,000
¥50,000
50,000
¥40,000
40,000
¥30,000
30,000 ¥20,000 20,000 ¥10,000
10,000
¥0
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Imports
GDP
Record Pace
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Total Soybean Sales & Shipments (Year to Date) 2000 1800 1600 1400 1200 1000 800 600 400 200 0
Million Bushels
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Total Commitments
% of USDA Forecast
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Slowing Seasonal
Thousand Bushels
Soybean export inspections 120,000 110,000 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 S
O
N
2015-16
D
J
F
M
2016-17
A
M
J
J
5-Yr. Avg.
A
Starting To Slow
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Monthly NOPA Crush in thousand bushels, crop year 170,000 160,000 150,000 140,000 130,000 120,000 110,000 100,000 90,000 S
O
N
D
2014
J
F
2015
M
A
M
2016
J
J
A
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Plenty
U.S. Soybeans Stocks/Use 30%
25%
stocks/use
20%
15%
10%
5%
0%
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Deja’ Vu?
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Good And Bad
Possibly hurts Canada wheat yields Hurts FSU coarse grain yields
Hurts U.S. corn and soybean yields; may help wheat
Hurts EU wheat yields
Hurts Argentina coarse grain and soybean yields
Helps Australia coarse grain yields, may help wheat yields if lasts entire growing season
Weak La Nina
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Odds 'La Nina' Will Persist 50% 40% 30% 20% 10% 0% DJF 2017
JFM 2017
FMA 2017
MAM 2017
AMJ 2017
MJJ 2017
Source: NOAA
JJA 2017
JAS 2017
ASO 2017
Soybean Supply/Demand BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
2016 2017 Yield 52.1 47.3 Production 4,307 4,239 Use, total 4,154 4,220 Ending stocks 380 434 Ave. cash price $9.39 $9.33 Top Third $10.05 to $9.98 to *Achieved $10.91 $10.83
Bullish Move
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
July Soybean Futures Seasonal Trends 1,150
700 690
1,100
680
1,050 670
1,000
660
950
650 640
900 630
850
620
800
610
7/30
8/30
9/30
10/31 11/30 12/31
Bull market year
1/31
2/29
July 2017
3/31
4/30
5/31
Normal year
6/30
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
$11.025
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
More Soybeans East
Strong Hands?
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Toledo Soybean Basis 30 20 10 0 (10) (20) (30) (40) (50) (60) 9/6
11/6 Average
1/6
3/6 2015-2016
5/6
7/6
2016-2017
Profitable Price
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Toledo Soybeans $12.00
8.600
$11.00
8.400
$10.00
8.200 8.000
$9.00
7.800
$8.00
7.600
$7.00
7.400
$6.00
7.200
$5.00
7.000
9/6
11/6
1/6 2015-2016
3/6
5/6
2016-2017
7/6 Average
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
What Are You Waiting For?
Soybean Supply/Demand BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
2016 2017 Yield 52.1 47.3 Production 4,307 4,239 Use, total 4,154 4,220 Ending stocks 380 434 Ave. cash price $9.39 $9.33 Top Third $10.05 to $9.98 to *Achieved $10.91 $10.83
Five In A Row?
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Above Normal Soybean Yields Lasted bu/acre More Than Three Years Only Once 55
Actual
50
Trend
45 40 35 30 25
Source: USDA
2016
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
20
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Soybean Costs - 47.3
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Don’t Sell Cheap
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Year Yield 2015 45 2016 47
What About ARC? Price Revenue $11.87 $528 $10.87 $435
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
$10.43 High $10.81 Next
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Holding On
November Soybean Futures Seasonal Trends 740
1,050
720
1,000
700 950
680 660
900
640
850
620 800
600 580
750
Bull Years
Nov. 2017
Non-Bull Years
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Do Nothing
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
85% @ $10.20 SX
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
85% @ $10.65 SX
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
How To Sell
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Nine-Year Highs
Total Corn Sales & Shipments (Year to Date) 80%
2000 1800 1600 1400 1200 1000 800 600 400 200 0
70% 60% 50% 40% 30% 20% 10% 0%
Total Commitments
% of USDA Forecast
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Better Shipments
Weekly Corn Export Inspections 80,000
Thousand Bushels
70,000 60,000 50,000 40,000 30,000 20,000 10,000 0
5-Yr. Avg.
2016-17
2015-16
Share Drops In Half
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
World Coarse Grain Export Market Share -- 1977
5%
5%
1%
US
Argentina
2%
Australia Brazil
13%
Canada
66%
EU FSU
World Coarse Grain Export Market Share -- 2016 US
18% 5% 2%
Argentina
34%
Australia Brazil Canada
15% 4%
15%
EU FSU
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Ukraine Gains
Spot Corn Delivered To Japan Gulf $6.00 $5.80 $5.60 $5.40 $5.20 $5.00 $4.80 $4.60 $4.40 $4.20 $4.00
Brazil
Argentina
Ukraine
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Record Production
thousand barrels
Stocks 24000
Production 1100
23000
1050
22000
1000
21000
950
20000
900
19000 18000
850
17000 9/1/14
800 2/1/15
7/1/15
Ending stocks
12/1/15
5/1/16
10/1/16
Daily Production
thousand barrels/day
Weekly Ethanol Production and Stocks
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
In The Red
Average Corn Belt Ethanol Plant Margins $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 -$0.50 -$1.00
China Ban?
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Ethanol Exports China Share
50%
mil gallons
Total Exports
150 130
40%
110 90
30%
70 20%
50 30
10%
10
0%
(10) 2014
2015
2016
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
metric tons
1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0
Bleak Future
U.S. DDGS Exports to China
2016 2015 2014
No Sale
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Chinese Corn Imports, Sep-Nov (million bushels)
Ukraine
250
U.S.
Total
200 150 100 50 0
2012
2013
2014
2015
2016
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Copyright China Photos, Getty Images
China’s Corn Mountain
2016 Highest In Decade
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
U.S. Corn Stocks/Use 70 60 50
30 20 10
15
12
09
06
03
00
97
94
91
88
85
82
79
76
73
0
70
stocks/use
40
Bull Or Bear?
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
July Corn Bull vs Bear Years 300
550
295 500
290 285
450
280 275
400
270 265
350
260 255
300 Aug
Sep
Oct
Nov
Dec
Jan
Bull Market Years
Feb
Mar
Apr
July 2017
May
Jun
Jul
Normal Year
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Corn Is Trying
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Tighter East
Storage Pays
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Toledo Corn $4.40 $4.20 $4.00 $3.80 $3.60 $3.40 $3.20 $3.00 9/6
11/6
1/6
Average
3/6 2016-2017
5/6
7/6
2015-2016
Average Returns
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Toledo Corn Basis 20 15 10 5 0 (5) (10) (15) (20) (25) (30) 9/6
11/6 Average
1/6
3/6 2016-2017
5/6
7/6
2015-2016
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Profitable, With ARC
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Favors Soybeans
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
bu/acre
Five Not Impossible
Corn Yields Had Two Long Runs
180
Actual
160
Trend
140 120 100 80
Source: USDA
2016
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
60
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
2017 Could See Shift
World coarse grain stocks to use 40% 35% 30% 25% 20% 15% 10% 5% 0%
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Rally To Buy Acres
December Corn Bull vs Bear Years 320 440 310 420 300
400
290
380
280
360 340
270
320
260
300
250
11/1
1/1
3/1
5/1
7/1
Bull Market
Dec-16
17-Dec
9/1 Normal Year
11/1
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Trading Range
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Corn Costs – 170 bpa
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Not There Yet
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Year 2016 2017
What About ARC?
Yield 158 166
Price Revenue $4.79 $757 $3.92 $652
Do Nothing BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Sell 85% @ $4.25 CZ
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Sell 85% @ $4.50 CZ
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
How To Sell
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Hedge Basis/Poor Man’s Put
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Beware This Trend!
World Wheat Export Market Share -1977 12% 1% US
11%
46%
Canada Argentina EU
3%
24%
FSU Australia
World Wheat Export Market Share -2016 14% US
15%
Canada Argentina
12%
30%
EU
5% 14%
FSU Australia
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Plenty Of Surplus
Total World Wheat Ending Stocks Without China 160000 140000 120000 100000 80000 60000 40000 20000 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Too Much
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
World Wheat Supply and Demand 800000
1000s metric tons
750000 700000 650000 600000 550000 500000 450000 400000 1980
1985
1990
1995
Production
2000
2005
2010
Consumption
2015
Meh
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Weekly Wheat Export Inspections 35,000
Thousand bushels
30,000 25,000 20,000 15,000 10,000 5,000 2016-17
0 J
J
A
S
2015-2016 O
N
D
J
5-Yr. Avg. F
M
A
M
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Mixed Picture
Wheat Supply/Demand BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Wheat Supply and Demand Estimates Yield Production Use, total Ending stocks Ave. cash price Top Third of Price Range Chicago Kansas City Hard Red Minneapolis
2016-17 52.6 2,310 2,227 1,189 $3.90
2017-18 48.1 1,882 2,149 1,055 $4.40
2016 $4.18 to $4.57 $4.30 to $4.68 $4.51 to $4.89
2017 $4.82 to $5.21 $4.84 to $5.29 $5.40 to $5.87
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Long-Term Bottom?
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Bullish Move
Kansas City July Futures 420 585 565
400
545
380
525 360
505 485
340
465
320
445 425
300 8/1
10/1
Bull Years
12/1
2/1
July 2017
4/1
6/1
Non-Bull Years
Trying To Turn
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Chicago July Futures 600 550 500 450 400 350 300 5/25
7/25
Bull
9/25
11/25
1/25
Non-Bull
3/25
5/25
Jul-17
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
cost/acre
$800
Crop Costs Firm
Average U.S. cost of production
$700
Corn
$600
Soybeans
$500
Wheat
$400 $300 $200 $100 $0 Source: USDA ERS *Farm Futures estimate for 2016-2017
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Higher Costs/Bu.
Average U.S. cost of production per bushel $12 $10
Corn
Soybeans
Wheat
$8 $6 $4 $2 $0
Source: USDA ERS *Farm Futures estimate for 2016-2017
More To Go
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Urea
Retail $550 $500 $450 $400 $350 $300 $250 $200 $150
Gulf
Lock It In
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Ammonia Retail
$775 $675 $575 $475 $375 $275 $175
Gulf
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
More Hikes Ahead UAN
Retail 28% $375 $325 $275 $225 $175 $125
Gulf 32%
Still Cheap
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
DAP
Retail $600 $550 $500 $450 $400 $350 $300 $250
Gulf
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Slow Increases Potash
Retail $560 $510 $460 $410 $360 $310 $260 $210
Midwest Terminal
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
What’s Next?
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Farmer Demand
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
Wait For Summer
Seasonal propane prices (Conway, Kansas) Average 2017
Average (left axis)
2017
2016
75
2016 80 70
70
60 50
65
40 60
30 20
55
10 50
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
BUSINESS AND MARKETING TOOLS FOR PROFITABLE FARMING
In The Red
Average U.S. Profit/Loss Per Acre
$300
Assumes average cash prices and costs, 2017 trend yield
$250
Corn
$200
Soybeans
$150
Wheat
$100 $50 $0 -$50 -$100 -$150
Source: USDA, *Farm Futures Projections
