Corn Outlook Presentation · $632 $594 $615 $538 $458 $457 0 20 40 60 80 100 120 140 160 0 100 200...
Transcript of Corn Outlook Presentation · $632 $594 $615 $538 $458 $457 0 20 40 60 80 100 120 140 160 0 100 200...
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2017/18 Corn Outlook 2017 Ag Econ In‐service Training
Dr. S. Aaron Smith, Assistant Professor,
Department of Agricultural and Resource Economics,
University of Tennessee
https://ag.tennessee.edu/arec/Pages/cropeconomics.aspx
Overview
• Domestic (U.S.) Supply and Demand• Tennessee
• Global Supply and Demand
• Price, Commodity Program Payments, and Crop Insurance
• 2018 Price Outlook
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U.S. SupplyReduced acreage
Five years of above trend line yield
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Acres (milions)
U.S. Planted and Harvested Corn Acres, 1926‐2017
Planted Harvested
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1926
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Harvested
‐to‐planted Ratio
U.S. Corn Harvested‐toPlanted Ratio, 1926‐2017
Max 92.5%Min 60.9%Average 87.3%
StDev 4.5%
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U.S. Yield = 1.7396x + 3.4695R² = 0.95
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Yield (bu/acre)
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?
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$32
$55$49
$47
$65
$77$74
$62
$53$49
$52
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Billions of Bushels
Billions of Dollar
U.S. Corn Production, 2006‐2017
Value Bushels
Increasing production and declining revenue!
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1.90
1.60
1.090.96
2.111.97
1.30
1.62 1.67 1.71
1.130.99
0.82
1.23
1.73 1.74
2.29 2.34
0.0
0.5
1.0
1.5
2.0
2.5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Billions of Bushels
U.S. Corn Marketing Year (September 1 to August 31) Ending Stocks, 2000‐2017
TennesseeAcres Down
Record Yield!
Production Flat
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0%
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Harvested
‐to‐Planted Ratio (%)
Acres
Tennessee Corn Acres Planted and Harvested, 1980‐2017
Planted Harvested H/P
Corn Acres Planted In Tennessee, 2017 (FSA Certified)
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Tennessee Top 5 Planted Acres of Corn, 2017 (FSA Certified)
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TN Yield = 1.5217x ‐ 2.6559R² = 0.88
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Yield (bu/acre)
Tennessee Corn Yields, 1926‐2017
TN Linear (TN)
$183
$318$337
$319$355
$632$594
$615
$538
$458 $457
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Millions of Bushels
Millions of Dollars
Tennessee Corn Production, 2006‐2017
$ BU
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U.S. DemandStable – Will there be a new “ethanol”?
3.554.45 5.03
5.97 6.43 6.43 6.04 6.53 6.60 6.65 6.89 6.93
5.54
5.85 5.135.10 4.77 4.51
4.315.00 5.28 5.11
5.46 5.502.13
2.441.85
1.98 1.831.54
0.73
1.92 1.87 1.902.29 1.85
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Billions of Bushels
U.S. Corn Use, 2006‐2017
FSI Consumption Feed Dom. Consumption Exports
5.475 billion bushels of corn projected to be used in ethanol production this
marketing year.
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Ethanol Facilities
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1200
Jun 04, 2
010
Oct 04, 2
010
Feb 04, 2011
Jun 04, 2
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Oct 04, 2
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Feb 04, 2012
Jun 04, 2
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Oct 04, 2
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Feb 04, 2013
Jun 04, 2
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Oct 04, 2
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Feb 04, 2014
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Oct 04, 2
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Feb 04, 2015
Jun 04, 2
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Oct 04, 2
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Feb 04, 2016
Jun 04, 2
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Oct 04, 2
016
Feb 04, 2017
Jun 04, 2
017
Oct 04, 2
017
Thousands of Barrels per Day
U.S. Weekly Ethanol Production (Thousand Barrels per Day)
Average Weekly Production
Year-over-Year Growth
2011 899 -2012 859 -4%2013 855 -1%2014 925 8%2015 960 4%2016 992 3%
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Source: Dr. Robert Wisner, biofuels economist ‐https://www.extension.iastate.edu/agdm/crops/outlook/dgsbalancesheet.pdf
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2013 2014 2015 2016 2017
Million M
T
US Corn and Byproduct Exports, 2013‐2016
Corn DDGS Corn Gluten Feed/Meal
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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 60
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U.S. Corn Days on Hand [Ending Stocks/(Use/365)], 2006‐2017
Corn Domestic Balance Sheet, USDA‐WASDE
2013/14 2014/15 2015/162016/17
Est.
2017/18 Projected
September
2017/18 Projected October
Change From
Previous Month
Change 2016/17 to
2017/18Planted and Harvested Acres & Yield
Planted (Million Acres) 95.4 90.6 88 94 90.9 90.4 -0.5 -3.6Harvested (Million Acres) 87.5 83.1 80.8 86.7 83.5 83.1 -0.4 -3.6U.S. Yield (Bu/Acre) 158.1 171.0 168.4 174.6 169.9 171.8 1.9 -2.8
Supply (Million Bushels)Beg. Stocks 821 1,232 1,731 1,737 2,350 2,295 -55 558Production 13,829 14,216 13,602 15,148 14,184 14,280 96 -868Imports 36 32 68 57 50 50 0 -7Total Supply 14,686 15,479 15,401 16,942 16,585 16,625 40 -317
Use & Ending Stocks (Million Bushels)Feed and Residual 5,040 5,280 5,114 5,464 5,475 5,500 25 36Ethanol 5,124 5,200 5,224 5,438 5,475 5,475 0 37Food, Seed & Industrial 1,369 1,401 1,424 1,452 1,450 1,460 10 8Exports 1,920 1,867 1,901 2,293 1,850 1,850 0 -443Total Use 13,454 13,748 13,664 14,647 14,250 14,285 35 -362U.S. Ending Stocks 1,232 1,731 1,737 2,295 2,335 2,340 5 45Foreign Stocks 5,653 6,529 6,687 6,641 5,636 5,571 -65 -1,070
Price and Stocks to Use Ratio
U.S. Avg. Price ($/Bu) $4.46 $3.70 $3.61 $3.36 $2.80-$3.60 $2.80-$3.60 $0.00 -$0.15
U.S. Stocks/Use 9.16% 12.59% 12.71% 15.67% 16.39% 16.38% 0.0% 0.71%
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Global Supply & DemandThe US is still the dominant producer of corn but a much more diversified production base than soybeans
525 536 554 558 536 546 534 543 548 553 549 543
370 396 391 388 405 427 444 452 450 447 459 457
382 383 392 385 391 395 394 400 398 394 397 400
139 138 136 134 116 122 124 125 122 124 119 118105 109 110 100 101 102 96 105 109 108 104 10429 29 28 25 22 24 23 24 24 24 23 23
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
MILLIONS OF ACRES
WORLD ACRES HARVESTED FOR SPECIFIED CROPS, 2006‐2017
Wheat Corn Rice, Milled Barley Sorghum Oats
Since 2006 the world has added 87 million acres of corn or an area roughly equal to the US
Since 2006 the world has added 100.2 million acres
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0
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5001960
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Acres Harvested
(millions)
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 Yield2017/18 Yield
Difference from 10 YearAverage
Argentina 88 119 129 9.7Brazil 40 76 86 9.6China 79 91 98 5.9European Union 102 110 110 ‐0.6Ukraine 40 90 96 5.9United States 134 158 172 13.3World 70 85 90 4.6
• U.S. has a major yield advantage over other corn producers.• Will US yields plateau?• Will/when world yields catch up?
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Source: Global Agricultural Monitoring ‐ https://cropmonitor.org/
Source: Global Agricultural Monitoring ‐ https://cropmonitor.org/
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9.4 9.9 9.5 9.0 10.1 11.8 11.1 10.513.0 12.0 13.1 12.4 12.3 10.8
13.8 14.2 13.6 15.1 14.3
5.1 4.8 5.2 5.25.6
6.0 5.9 6.3
6.9 7.3 7.0 7.5 7.98.1
8.8 9.0 8.89.5 9.4
5.0 4.2 4.5 4.84.6
5.1 5.5 6.0
6.0 6.5 6.5 7.0 7.6 8.1
8.6 8.5 8.88.6
8.5
1.2 1.6 1.4 1.81.7
1.4 1.6 2.0
2.3 2.0 2.2 2.32.9 3.2
3.1 3.3 2.63.9
3.7
0.0
5.0
10.0
15.0
20.0
25.0
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35.0
40.0
45.0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Billions of Bushels
World Corn Production by Country, 1999‐2017
United States ROW China Brazil European Union Argentina Ukraine
US share of world corn production has
decreased from 39% in 1999 to 35% in 2017.
4.3 5.0 5.6 5.5 4.8 5.0 5.26.9
8.2 8.4 8.9 7.9
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Billions of Bushels
Global Corn Production, Consumption, and Ending Stocks, 2006‐2017
Ending Stocks Production Domestic Consumption
If global stocks due drop by 1 billion bushels this year, there is the
potential for price improvements.
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61960
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bu/person/year
Global Corn Consumption Per Capita, 1960‐2017
1960:2.5
bu/person/year
2003:4.0
bu/person/year
2017:5.5
bu/person/year
Trade, ethanol, and increased demand for proteins from
emerging markets.
11%
11%
10%
7%
7%
54%
Top 5 Corn Importersby Country, 2017/18 Marketing Year
European Union
Mexico
Japan
Korea, South
Egypt
ROW
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31%
23%
19%
14%
4%
9%
TOP 5 EXPORTERS OF CORN 2017/18 MARKETING YEAR
United States Brazil Argentina Ukraine Russia ROW
55
60
6763
52 54 56
67
79 79 80
69
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Days on Han
d
Global Days on Hand [Ending Stocks/(Consumption/365)], 2006‐2017
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World Corn Supply and Use (Million Bushels) 2017/18 (October)
Country / RegionBeginning
Stocks Production ImportsDomestic
FeedDomestic
Total Exports Ending Stocks
World 8,936 40,895 5,740 25,608 41,920 5,933 7,911
US 2,295 14,280 50 5,500 12,435 1,850 2,340
Foreign 6,641 26,615 5,690 20,108 29,485 4,083 5,571
Argentina 219 1,653 0 335 492 1,142 239
Brazil 365 3,740 12 2,047 2,421 1,339 357
South Africa 118 492 4 228 461 67 87
Egypt 83 236 394 528 626 0 87
EU 279 2,338 630 2,205 2,941 59 247
Japan 49 0 591 453 594 0 45
Mexico 220 1,031 610 913 1,622 51 188
Southeast Asia 130 1,189 555 1,421 1,728 28 118
South Korea 72 3 402 315 405 0 71
Canada 86 555 31 323 543 51 78
China 3,986 8,464 118 6,535 9,448 2 3,118
Ukraine 61 1,063 1 177 232 846 46
ROW 973 5,850 2,342 4,628 7,971 498 891
Price, Commodity Program Payments, and Crop InsuranceLow price environment is likely to continue into 2018
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$6.89
$3.20
0
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2
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8
1919
1922
1925
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1934
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2015
Price (S/bu)
U.S. Average Farm Corn Price, 1919‐2017
1943‐1972: Average = $1.27; Range: $1.00‐$2.16;
Duration: 30 years.1919‐1942: Average = $0.69; Range: $0.29‐
$1.44; Duration: 24 years.
1973‐2005: Average = $2.36; Range: $1.50‐$3.24;
Duration: 33 years.
1973‐2005: Average = $4.29; Range: $3.04‐$6.89;
Duration: 12+.
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300
350
400
450
500
1‐Dec 31‐Dec 30‐Jan 1‐Mar 31‐Mar 30‐Apr 30‐May 29‐Jun 29‐Jul 28‐Aug 27‐Sep 27‐Oct 26‐Nov
Cents/B
ushel
December Corn Futures
2017 2016 2015
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‐0.40
‐0.30
‐0.20
‐0.10
0.00
0.10
0.20
0.30
0.40
0.50
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecPrice ($/bu)
Tennessee Monthly Average Corn Basis, 2013‐2016
Northwest Upper‐Mid Lower‐Mid Northwest Barge Points Memphis TN (Corn)
‐0.30
‐0.20
‐0.10
0.00
0.10
0.20
0.30
0.40
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Basis ($/bu)
Tennessee Corn Basis Five Region Average, 2013‐15 & 2017
2017
2013‐2016
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Commodity Program Payments (Corn)
• ARC‐CO Payments• 2014: 17 Counties; payment rate $0‐$68.77 per base acre• 2015: 49 Counties; payment rate $0‐$84.64 per base acre• 2016: 92 Counties; payment rate $0‐$82.87 per base acre• Payments will decline in 2017 and substantially decline in 2018
• PLC Payments (Reference Price = $3.70)• 2014: $0 – $3.70 MYA• 2015: $0.09/bu – $3.61 MYA• 2016: $0.34/bu ‐ $3.36 MYA• 2017: $0.50/bu ‐ $3.20 MYA
****Payments are delayed one year… 2016 payments were received beginning Oct 1, 2017****
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
Acres
TennesseeBase, Planted, and Insured Acres
Base Acres FSA Planted ('14‐'16) NASS Planted ('14‐'16) RMA Insured ('14‐'16)
2014: 144,428 acres of corn planted on generic base2015: 125,747 acres of corn planted on generic base
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Tennessee Corn – Crop Insurance Summary
2018 Price OutlookWhen supply exceeds demand prices……..
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Tennessee Considerations for 2018
• Old crop (2017)• National prices will improve late 2017 to early 2018 as the typical post harvest price trend should emerge.
• Tennessee basis is likely to remain weak
• South American weather, macro economic conditions, and trade will dictate any major price changes.
• New crop (2018)• Domestic carry over will continue to weigh on prices however a glimmer of hope may occur if global stocks decline as projected by the USDA
• Planted acreage will be dictated by relative prices (soybeans and cotton), crop insurance prices, and South American crop progress.
2006
20072008
2009
2010
2011
2012
2013
2014 20152016
20002001
20022003
20042005
Price = ‐4.27ln(Stocks‐to‐Use) ‐ 4.9975R² = 0.7632
0
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3
4
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7
8
0% 5% 10% 15% 20% 25%
Price ($/bu)
Stocks‐to‐Use
U.S. Corn Stocks‐to‐Use to Price Relationship, 2000‐2016
2017: 16.4% =$2.72
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2006
2007
20082009
2010
2011
2012
2013
2014
2015
2016
y = ‐4.329ln(x) ‐ 3.1607R² = 0.3272
0
1
2
3
4
5
6
7
8
0% 5% 10% 15% 20% 25%
Price ($/bu)
Stocks‐to‐Use Ratio
Global Corn Stocks‐to‐Use to Price Relationship, 2006‐2017
2017: 19%=$4.04/bu
2018 Price Projections
Source 2018 Price
CBOT $3.96
CBO $3.59
FAPRI $3.64
WASDE $2.80‐$3.60
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‐$0.09
$0.04$0.08
$0.26
$0.19
$0.27
$0.48
‐$0.07
‐$0.40‐$0.36
‐$0.22‐$0.18
‐0.5
‐0.4
‐0.3
‐0.2
‐0.1
0
0.1
0.2
0.3
0.4
0.5
0.6
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DECPrice ($/bu)
Average Monthly Deviation from the Marketing Year Average Corn Price in Tennessee, 2007‐2016
Corn - Net Return Table ($/acre)Assumed Cost of Production $491/acre
Yield (bu/acre)
100 110 120 130 140 150 160 170 180 190 200
2.00 (291) (271) (251) (231) (211) (191) (171) (151) (131) (111) (91)
2.25 (266) (244) (221) (199) (176) (154) (131) (109) (86) (64) (41)
2.50 (241) (216) (191) (166) (141) (116) (91) (66) (41) (16) 9
2.75 (216) (189) (161) (134) (106) (79) (51) (24) 4 31 59
3.00 (191) (161) (131) (101) (71) (41) (11) 19 49 79 109
3.25 (166) (134) (101) (69) (36) (4) 29 61 94 126 159
3.50 (141) (106) (71) (36) (1) 34 69 104 139 174 209
Price 3.75 (116) (79) (41) (4) 34 71 109 146 184 221 259
($/bu) 4.00 (91) (51) (11) 29 69 109 149 189 229 269 309
4.25 (66) (24) 19 61 104 146 189 231 274 316 359
4.50 (41) 4 49 94 139 184 229 274 319 364 409
4.75 (16) 31 79 126 174 221 269 316 364 411 459
5.00 9 59 109 159 209 259 309 359 409 459 509
5.25 34 86 139 191 244 296 349 401 454 506 559
5.50 59 114 169 224 279 334 389 444 499 554 609
5.75 84 141 199 256 314 371 429 486 544 601 659
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0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Cotton/Corn and Cotton/Soyb
ean Price Ratio
Soyb
ean/Corn (s/c) Price Ratio
Monthly U.S. Price Ratios Corn, Soybeans, and Upland Cotton, 2000‐2017
s/c ct/c ct/s
2.55
0.18
0.07
Price ratio is one out of three relative ratios to consider (price,
yield, & cost)
Key Issues for 2018
• Global supply of grains remains record large
• Trade • Competition for exports from South America
• Huge unknown in trade policy/bilateral/multilateral trade agreements
• U.S. 2018 acres planted?
• Macro economic conditions and domestic policy
• Look for continued low prices $3.00‐$4.00 per bushel with the possibility of improved new crop price prospects
• Take advantage of marketing opportunities when they are presented
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Resources
• Crop Economics Webpage• https://ag.tennessee.edu/arec/Pages/cropeconomics.aspx
• Market highlights• https://ag.tennessee.edu/arec/Pages/tnmkthighlights.aspx
• Crop Budgets• https://ag.tennessee.edu/arec/Pages/budgets.aspx
• UT Crop Blog• http://news.utcrops.com/
• Quarterly Market Zoom Meeting (next one Nov 8)
Thank you Questions?