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September 13, 2018
Fall Crop Outlook Webinar
Chris Hurt, Professor, Department of Agricultural Economics
Michael Langemeier, Associate Director, Center for Commercial Agriculture
James Mintert, Director, Center for Commercial Agriculture
Fall Crop Outlook Webinar, September 13, 2018
In Spring 2018 Optimism Returned – “Ag Was Turning the Corner”
Reasons for optimism in Spring 2018
1. Declining grain inventories
2. Strong U.S. & world economic growth
3. Result: Strong new crop cash bids: $10 soybeans and $4 corn
Summer & Fall 2018 perfect weather, high yields & tariffs
Spring 2018: Ag Emerging from Financial Darkness
Fall Crop Outlook Webinar, September 13, 2018
164.4
171174.6
176.6181.3
100
110
120
130
140
150
160
170
180
90 92 94 96 98 00 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Bu./Acre U.S. Corn Yield: 1990-2018
+2.9 bpa vs. Aug. estimate & nearly 4 bpa above pre-release est.
Fall Crop Outlook Webinar, September 13, 2018
9.99.5
9.0
10.1
11.811.1
10.5
13.1
12.1
13.112.412.4
10.8
13.8 14.213.6
15.114.614.8
7
9
11
13
15
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Billion Bu.
Year
U.S. Corn Production
Fall Crop Outlook Webinar, September 13, 2018
Corn
USDA181.3 bu.+2.9 bu.
9/12/18 USDA16/17 17/18 18/19
Carry In 1,737 2,293 2,002 Production 15,148 14,604 14,827 (+241)Total Supply 16,942 16,937 16,879Feed & Residual 5,467 5,450 5,575 (+50)FSI Non-Fuel 1,450 1,460 1,480FSI Fuel (Ethanol) 5,439 5,600 5,650 (+25) Export 2,293 2,425 (+25) 2,400 (+50)Total Use 14,649 14,935 15,105Ending Stocks 2,293 2,002 (-25) 1,774 (+90)US Farm Price $3.36 $3.40 $3.50 (-.10)
$3.35-$3.45 $3.00-$4.00
Fall Crop Outlook Webinar, September 13, 2018
42.9%
9.2%
13.4%
11.7%
9.1%
19.8%
0%
10%
20%
30%
40%
50%
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18Year
U.S. Ending Stocks to Use: Corn & Soybeans
Wheat
Corn
Soybeans
Fall Crop Outlook Webinar, September 13, 2018
0.35 0.370.45 0.47 0.53 0.51
0.45
0.11 0.14
-$0.30-$0.20-$0.10$0.00$0.10$0.20$0.30$0.40$0.50$0.60
O N D J F M A M J J A
Estimated Net Corn Storage Returns:
On-FarmStorage
Futures $3.53 to $3.80 = +$.27Basis $ -.35 to $ .00 = +$.35Cash $3.18 to $3.84 = +$.62
Speculation???? +$.25 to $.75
Commercial storage costs = $0.18/bu.thru end of Nov., then =$.03/month after
Fall Crop Outlook Webinar, September 13, 2018
34.134.2
37.6
32.6
41.4
35.3
37.638.938.9
36.638.1
39.638.0
33.9
42.243.042.741.7
39.7
4443.541.9
40
44
47.548
52
49.1
52.8
y = 0.5286x + 33.068R² = 0.7348
303234363840424446485052
90 92 94 96 98 0 2 4 6 8 10 12 14 16 18
Bu/Acre U.S. Bean Yield 1990-2018+1.2 bpa vs. Aug. estimate & 0.3 bpa above pre-release est.
Fall Crop Outlook Webinar, September 13, 2018
2.8 2.9 2.82.5
3.1 3.1 3.2
2.73.0
3.53.3
3.1 3.03.4
3.9 3.94.3 4.4
4.7
1.01.52.02.53.03.54.04.5
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Billion Bu.
Year
U.S. Soybean Production
Fall Crop Outlook Webinar, September 13, 2018
Soybeans
USDA 52.8 bu.+1.2 bu.
9/12/18 USDA16/17 17/18 18/19
Carry in 197 302 395Production 4,296 4,392 4,693 (+107)
Total Supply 4,515 4,715 5,113Seed & Residual 140 136 136Crush 1,899 2,055 (+15) 2,070 (+10)Exports 2,174 2,130 (+20) 2,060Total Use 4,213 4,321 4,268Ending Stock 302 395 (-35) 845 (+60)
Farm Price $9.47 $9.35 $8.60 (-.30)
$7.35-$9.85
Fall Crop Outlook Webinar, September 13, 2018
050
100150200250300350
Sept O N D Jan F M A M J J A
16/17
'17/18
U.S. missing key months to export soybeans to China
U.S. Soybean Exports to China: Million Bushels
Fall Crop Outlook Webinar, September 13, 2018
-$1.66-$2.00-$1.75-$1.50-$1.25-$1.00-$0.75-$0.50-$0.25$0.00$0.25$0.50
1/3/18 2/3/18 3/3/18 4/3/18 5/3/18 6/3/18 7/3/18 8/3/18 9/3/18 10/3/18
Soybean Prices: U.S. Gulf Minus Brazil Port Price
Fall Crop Outlook Webinar, September 13, 2018
0.00 -0.03
0.29 0.340.41
0.48
0.63 0.630.71 0.68
0.30 0.32
-$0.20-$0.10$0.00$0.10$0.20$0.30$0.40$0.50$0.60$0.70$0.80$0.90
O N D J F M A M J J A
Estimated Net Soybean Storage Returns: On-Farm Storage
Commercial Storage
Futures $8.40 to $8.89 = +$.49Basis $ -.65 to -$.15 = +$.50Cash $7.75 to $8.74 = +$.99Speculation: Settle tariffs? +$.50 to $1.25??
Commercial storage costs = $0.18/bu.thru end of Nov., then =$.03/month after
Fall Crop Outlook Webinar, September 13, 2018
Market Facilitation Payments: USDA: August 27
Initial Payment Pay On USDA % of
Initial MFP Payment/Ac
Rate % Pmnt M$ Payments U.S. INDSoybeans $1.65 per bu 50% $3,630 77.3% $43.56 $49.50 Pork $8.00 per head 50% $290 6.2%Cotton $0.06 per pound 50% $277 5.9%Sorghum $0.86 per bu 50% $157 3.3% $30.57 Dairy $0.12 per cwt 50% $127 2.7%Wheat $0.14 per bu 50% $119 2.5% $3.35 $4.97 Corn $0.01 per bu 50% $96 2.0% $0.91 $0.96
$4,696 100.0%
Fall Crop Outlook Webinar, September 13, 2018
Corn MFP Beans MFP
$0.005 $0.825
2017 2018 2018 2017 2018 2018
Yield 180 192 192 54 60 60
Price $3.55 $3.65 $3.655 $9.55 $8.80 $9.625
Revenue $639 $701 $702 $516 $528 $578
18 vs. 17 $62 $63 $12 $62
Indiana: Higher Revenues and Returns than Last Year
Fall Crop Outlook Webinar, September 13, 2018
Crop Marketing Strategies
1) Avoid pricing at harvest: Weak Futures & Weak Basis
2) Strong price premiums for late-spring or early-summer
3) Price speculation possibilities:-Corn 25 to 50 cents -Soybeans 50 cents to $1.25 if tariffs are settled
4) Use Market Facilitation Payment & FSA Loans to help cash flow
Fall Crop Outlook Webinar, September 13, 2018
Purdue.edu/commercialag
Fall Crop Outlook Webinar, September 13, 2018
Purdue Crop Basis Tool
Fall Crop Outlook Webinar, September 13, 2018
Purdue Crop Basis Tool
Fall Crop Outlook Webinar, September 13, 2018
Change in Production Costs from 2013 to 2019Source: Purdue Crop Budgets, High Productivity Soils
Crop $ per Acre $ per Bushel
Corn -$29 -$0.41
Soybeans -$14 -$0.22
Wheat -$20 -$0.86
Fall Crop Outlook Webinar, September 13, 2018
Corn Prices Required to Produce Per Acre Returns Equivalent to SoybeansSoybean Price Low Productivity
(C=131; SB=43)Avg. Productivity
(C=164; SB=54)High Productivity
(C=196; SB=65)
$7.50 $3.86 $3.77 $3.65
$8.00 $4.02 $3.94 $3.82
$8.50 $4.19 $4.10 $3.98
$9.00 $4.35 $4.27 $4.15
$9.50 $4.52 $4.43 $4.31
$10.00 $4.68 $4.60 $4.48
Current Prices Favor Rotation Soybeans Over Continuous Corn
Fall Crop Outlook Webinar, September 13, 2018
Corn Prices Required to Produce Per Acre Returns Equivalent to SoybeansSoybean Price Low Productivity
(C=139; SB=43)Avg. Productivity
(C=174; SB=54)High Productivity
(C=209; SB=65)
$7.50 $3.51 $3.45 $3.32
$8.00 $3.66 $3.60 $3.47
$8.50 $3.82 $3.76 $3.63
$9.00 $3.97 $3.91 $3.78
$9.50 $4.13 $4.07 $3.94
$10.00 $4.28 $4.22 $4.10
Continuous Soybeans and Rotation Corn Comparison
September 13, 2018
Next Webinar:2019 Ag Outlook
December 19, 2018
Register for email notification at Purdue.edu/commercialag