Fundamental OutlookFrayne Olson, PhD

Crop Economist/Marketing SpecialistDirector – Burdick Center for Cooperatives

frayne.olson@ndsu.edu 701-231-7377 (o) 701-715-3673 (c)

NDSU Extension ServiceND Agricultural Experiment Station

Dept. of Agribusiness & Applied Economics

U.S. Soybean Supply & Demand TableU.S. Soybean 2019/2020 (Est.) 2020/2021 (Est.) 2021/2022 (Jul)

Planted A. 76.1 Mill. A. 83.1 Mill. A. 87.6 Mill. A.Harvested A. 74.9 Mill. A. 82.3 Mill. A. 86.7 Mill. A.Yield/Harvest A. 47.4 bu. 50.2 bu. 50.8 bu.Beginning Stocks 909 Mill. Bu. 525 Mill. Bu. 135 Mill. Bu.Production 3,552 Mill. Bu. 4,135 Mill. Bu. 4,405 Mill. Bu.Imports 15 Mill. Bu. 20 Mill. Bu. 35 Mill. Bu.

Total Supply 4,476 Mill. Bu. 4,680 Mill. Bu. 4,575 Mill. Bu.Crushings 2,165 Mill. Bu. 2,170 Mill. Bu. 2,225 Mill. Bu.Exports 1,679 Mill. Bu. 2,270 Mill. Bu. 2,075 Mill. Bu.Seed 96 Mill. Bu. 102 Mill. Bu. 104 Mill. Bu.Residual 12 Mill. Bu. 4 Mill. Bu. 15 Mill. Bu.

Total Use 3,952 Mill. Bu. 4,545 Mill. Bu. 4,420 Mill. Bu.Ending Stocks 525 Mill. Bu. 135 Mill. Bu. 155 Mill. Bu.

July12, 2021 WASDE

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Average Yield Outlook Trend Line

What is U.S. trend line yield for soybean?(1991 – 2020)

Oilseeds Data Base Table 1 – July 12, 2021 WASDE

U.S. Soybean – Total Prod. & Use(Billion Bushels)

July 12, 2021 WASDE Report & Oil Crops Yearbook Table 3

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U.S. Soybean Use

July 12, 2021 WASDE Report & Oil Yearbook Table 3

USDA – Agriculture In Drought

USDA – Crop Progress – 07- 12- 21

Crop Progress – Soybean Condition

USDA – Crop Progress – 07- 12- 21

Crop Progress – Soybean Condition

USDA Office of the Chief Economist – USDA Lockup Briefing – July 12, 2021

Estimated Soil Moisture(5 cm depth)

USDA Crop Condition and Soil Moisture Analytics (CASMA) – July 11, 2021

Estimated Soil Moisture(1 meter depth)

USDA Crop Condition and Soil Moisture Analytics (CASMA) – July 11, 2021

Projected 5-Day Precipitation Forecast

National Weather Service – Weather Prediction Center – 07-14-21

U.S. Corn Supply & Demand TableU.S. Corn 2019/2020 (Est.) 2020/2021 (Est.) 2021/2022 (Jul)

Planted A. 89.7 Mill. A. 90.8 Mill. A. 92.7 Mill. A.Harvested A. 81.3 Mill. A. 82.5 Mill. A. 84.5 Mill. A.Yield/Harvest A. 167.5 bu. 172.0 bu. 179.5 bu.Beginning Stocks 2,221 Mill. Bu. 1,919 Mill. Bu. 1,082 Mill. Bu.Production 13,620 Mill. Bu. 14,182 Mill. Bu. 15,165 Mill. Bu.Imports 42 Mill. Bu. 25 Mill. Bu. 25 Mill. Bu.

Total Supply 15,883 Mill. Bu. 16,127 Mill. Bu. 16,272 Mill. Bu.Feed & Residual 5,898 Mill. Bu. 5,725 Mill. Bu. 5,725 Mill. Bu.Food, Seed, Ind. 6,288 Mill. Bu. 6,470 Mill. Bu. 6,615 Mill. Bu.

Ethanol 4,857 Mill. Bu. 5,050 Mill. Bu. 5,200 Mill. Bu.

Exports 1,777 Mill. Bu. 2,850 Mill. Bu. 2,500 Mill. Bu.Total Use 13,963 Mill. Bu. 15,045 Mill. Bu. 14,840 Mill. Bu.

Ending Stocks 1,919 Mill. Bu. 1,082 Mill. Bu. 1,432 Mill. Bu.

July 12, 2021 WASDE

What is U.S. trend line yield for corn?(1991 – 2020)

Feed Grains Data Base Table 1 – July 12, 2021 WASDE

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Average Yield Outlook Trend Line

U.S. Corn – Total Prod. & Use(Billion Bushels)

July 12, 2021 WASDE Report & Feed Grains Database Table 4

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Feed & Residual Ethanol Exports Non-Ethanol Food, Seed & Industrial

July 12, 2021 WASDE Report & USDA – Feed Grains Data Base Table 4

USDA – Agriculture In Drought

USDA – Crop Progress – 07- 12- 21

Crop Progress – Corn Condition

USDA – Crop Progress – 07- 12- 21

Crop Progress – Corn Condition

USDA Office of the Chief Economist – USDA Lockup Briefing – July 12, 2021

Continuous Nearby CBOT Soybean Futures Prices

DTN ProphetX – 07/14/2021 pm

Nov. CBOT Soybean Contract Highs

• Nov. 2008 contract: Jul. 3, 2008 at $16.37• Nov. 2011 contract: Aug. 31, 2011 at $14.65• Nov. 2012 contract: Sep. 4, 2012 at $17.89• Nov. 2013 contract: Jun. 12, 2013 at $15.59• Nov. 2014 contract: May 22, 2014 at $15.37

Continuous Nearby CBOT Corn Futures Prices

DTN ProphetX – 07/14/2021 pm

Dec. CBOT Corn Contract Highs

• Dec. 2008 contract: Jun. 27, 2008 at $7.99• Dec. 2011 contract: Jun. 10, 2011 at $8.00• Dec. 2012 contract: Aug. 10, 2012 at $8.49• Dec. 2013 contract: Jan. 31, 2013 at $7.44• Dec. 2014 contract: May 9, 2014 at $5.23

Mid-Summer Marketing Plan:My Opinion

• What is your risk tolerance?• Avoid cash market based forward contracts

that require delivery.• Focus on selling futures contracts at targeted

price points.– Can be quickly off-set of production levels are

lower than expected.• Purchase Put Options.

– Premiums will be high due to price volatility.

Mid-Summer Marketing Plan:Example

• Assume:– Soybean APH is 40 bu./a. and 1,000 acres– Have cash forward contracted 10 bu./a. (10,000

bu.)

• Current yield estimate is 30 bu./a.• Price an additional 10 bu./a. using futures

contracts– Sell two Nov. CBOT contracts (10,000 bu.)

Mid-Summer Marketing Plan:Example

• If harvested yield is 25 bu./a., sell remaining 5 bu./a. after harvest.– Off-set futures position when soybeans are sold at

harvest.• If weather remains hot and dry, can off-set

(repurchase) one contract (5,000 bu.) at any time.– 5,000 bu. remain hedged.– No delivery is required– May be gain or loss on repurchase.– Must work with registered broker and there is

exposure to margin calls.

Questions?

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