Strategies for Putting the Marketing Puzzle Together · • 10 Year Average 09/10-18/19: (1,597...
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Strategies for Puttingthe Marketing Puzzle Together
Food and Agricultural Policy Research Institute (FAPRI)Division of Applied Social Sciences
University of Missouri www.fapri.missouri.edu
September 12, 2019
Melvin Brees, Abner Womack,Daniel Jaegers, Mekinsey Marchbanks
Emily Scully
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U.S. corn supply and use2018/19(USDASep 12)
2019/20(USDASep 12)
2018/19(FAPRI Aug
2019)
2019/20(FAPRI Aug
2019)
Area planted (mil. acres) 89.1 90.0 89.1 90.0
Yield (bu./harvested acre) 176.4 168.2 176.4 169.5
Production (mil. bu.) 14,420 13,799 14,420 13,901
Feed and residual use (mil. bu.) 5,275 5,175 5,275 5,189
Ethanol and coproduct use 5,375 5,450 5,425 5,458
Other domestic use 1,430 1,430 1,430 1,436
Exports 2,060 2,050 2,100 2,050
Ending stocks 2,445 2,190 2,360 2,178
Marketing yr. avg. price ($/bu.) 3.60 3.60 3.60 3.59
Source: USDA WASDE, September 2019.
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WASDE USDA Corn Summary Sept. 12, 20191) U.S. Average Farm Price – Unchanged
• 2019-20 USDA: $3.60 • 2018-19 USDA: $3.60 • 2017-18 USDA: $3.36• 2016-17 USDA: $3.36
2) U.S. Ending Stocks- Significantly above 10 and 20 year Average• 2019-20 USDA: (2,190 Million Bushels)• 2018-19 USDA: (2,445 Million Bushels)• 2017-18 USDA: (2,140 Million Bushels)• 10 Year Average 09/10-18/19: (1,597 Million Bushels)• 20 Year Average 99/00-18/19: (1,595 Million Bushels)
3) World Ending Corn Stocks – High level relative to 10 year average• 2019-20 World: (308 Million Metric Tons)• 2018-19 World: (329 Million Metric Tons)• 2017-18 World: (339 Million Metric Tons)• 10 Year Average 09/10-18/19: (241 Million Metric Tons)
4) U.S. Export – Moderate decline since 2017-18• 2019- 20 USDA: (2,050 Million Bushels)• 2018- 19 USDA: (2,060 Million Bushels)• 2017- 18 USDA: (2,438 Million Bushels)
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10-YrAVG
Domestic and Global corn ending stocks declining.
10-YrAVG
0.000
0.500
1.000
1.500
2.000
2.500
3.000
07-08 09-10 11-12 13-14 15-16 17-18 19-20
End
Stoc
ks (b
il bu
)
Year
Corn: U.S. End Stocks
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10-YrAVG
Corn use steady, but ending stocks/use ratiodeclining slightly.
0.0
5.0
10.0
15.0
20.0
25.0
98-99 01-02 04-05 07-08 10-11 13-14 16-17 19-20
S/U
Rat
io (%
)
Crop Year
Corn: End Stocks/Use Ratio
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Global corn and coarse grain use expectedto exceed World production for third straight year!
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Old Crop – (18-19) Corn FAPRI Baseline Ranges August 2019
August 2019 FAPRI Price: Adjusted for $0.30 basis• Futures Price Equivalent of 2018- 2019 Projected Farm Price: $3.90• Futures Price Equivalent of FAPRI Range: $3.36 – $4.41 @ 80 Percentile • Futures Price Equivalent of 9/12/19 USDA Avg Price: $3.90
Futures Market Planning Range for old Crop Corn Adjusted for -30 cent basis
$4.78
$3.14
$3.90
$4.41
$3.36
80th
Percentile
20th
Percentile
90th
Percentile
10th
Percentile
$4.19
$3.50
70th
Percentile
30th
Percentile Sep 19 Futures on 9/13/2019
$3.58
$4.48
$4.11
$3.89
$3.60
$3.20
$3.06
$2.84
FarmPrice
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New Crop – (19-20) Corn FAPRI Baseline Ranges August 2019
August 2019 FAPRI Projected Farm Price: Adjusted for $0.20 basis• Futures Price Equivalent of 2018- 2019 Projected Farm Price: $3.79• Futures Price Equivalent of FAPRI Range: $3.22 - $4.33 @ 80 Percentile
Futures Market Planning Range for New Crop Corn Adjusted for -20 cent basis
$4.71
$2.99
$3.79
$4.33
$3.22
80th
Percentile
20th
Percentile
90th
Percentile
10th
Percentile
$4.10
$3.37
70th
Percentile
30th
Percentile
DEC 19 Futures on 9/13/2019
$3.69
$4.51
$4.13
$3.90
$3.59
$3.17
$3.02
$2.79
FarmPrice
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U.S. soybean supply and use2018/19(USDA Sep 12)
2019/20(USDA Sep 12)
2018/19(FAPRI
Aug 2019
2019/20(FAPRI Aug
2019)
Area planted (mil. acres) 89.2 76.7 89.2 76.7
Yield (bu./harvested acre) 51.6 47.9 51.6 48.5
Production (mil. bu.) 4,544 3,633 4,544 3,680
Crush (mil. bu.) 2,085 2,115 2,065 2,106
Other domestic use 164 128 164 129
Exports 1,745 1,775 1,700 1,778
Ending stocks 1,005 640 1,070 757
Marketing yr. avg. price ($/bu.) 8.50 8.50 8.50 8.43
Sources: USDA WASDE, September 2019.
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WASDE-USDA Soybean Summary Sep 12, 20191) U.S. Average Farm Price- Slight decline since 2017-18
• 2019-20 USDA: $8.50• 2018-19 USDA: $8.50• 2017-18 USDA: $9.33
2) U.S. Ending Stocks- Significantly above 20 Year Average• 2019-20 USDA: (640 Million Bushels)• 2018- 19 USDA: (1,005 Million Bushels)• 2017- 18 USDA: (438 Million Bushels)• 10 Year Average 09/10-18/19: (297 Million Bushels)• 20 Year Average 99/00-18/19: (281 Million Bushels)
3) World Ending Soybean Stocks- Significantly above 10 Year average• 2019- 20 World: (102 Million Metric Tons)• 2018- 19 World: (112 Million Metric Tons)• 2017- 18 World: (99 Million Metric Ton)• 10 Year Average 09/10-18/19: (77 Million Metric Tons)• 20 Year Average 99/00-18/19: (60 Million Metric Tons)
4) U.S. Export – Slight Increase over year earlier• 2019- 20 USDA: (1,775 Million Bushels)• 2018- 19 USDA: (1,745 Million Bushels)• 2017- 18 USDA: (2,134 Million Bushels)
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10-YrAVG
Domestic ending stocks remain at very high levels!
10-YrAVG
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Total soybean use rebounding some, ending stocks/useratio remains very large.
10-YrAVG
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Although stocks are large, global use may exceed 2019-20 production!
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Old Crop – (18-19) Soybean FAPRI Baseline Ranges August 2019
August 2019 FAPRI Price: Adjusted for $0.60 basis• Futures Price Equivalent of 2018- 2019 Projected Farm Price: $9.10• Futures Price Equivalent of FAPRI Range: $7.53 - $10.76 @ 80 Percentile • Futures Price Equivalent of 7/18/19 USDA Price: Avg $9.10
Futures Market Planning Range for Old Crop Soybeans Adjusted for -60 cent basis
$11.81
$6.83
$9.10
$10.76
$7.53
80th
Percentile
20th
Percentile
90th
Percentile
10th
Percentile
$9.89
$8.05
70th
Percentile
30th
Percentile
Sep 19 Futures on 9/13/2019
$8.88
$11.21
$10.16
$9.29
$8.50
$7.45
$6.93
$6.23
FarmPrice
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New Crop – (19-20) Soybean FAPRI Baseline Ranges August 2019
August 2019 FAPRI Price: Adjusted for $0.50 basis• Futures Price Equivalent of 2018- 2019 Projected Farm Price: $8.93• Futures Price Equivalent of FAPRI Range: $7.52 - $10.23 @ 80 Percentile
Futures Market Planning Range for New Crop Soybeans Adjusted for -50 cent basis
$11.11
$7.01
$8.93
$10.23
$7.52
80th
Percentile
20th
Percentile
90th
Percentile
10th
Percentile
$9.68
$7.94
70th
Percentile
30th
Percentile
Nov 19 FuturesOn 9/13/2019
$8.98
$10.61
$9.73
$9.18
$8.43
$7.44
$7.02
$6.51
FarmPrice
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10-YRAVG
10-YrAVG
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Global wheat production expected to exceed world use.