Market Outlook. David Reinbott.

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1 Market Outlook David Reinbott Agriculture Business Specialist P.O. Box 187 Benton, MO (573)

2 Trending Issues Pre-2007 Marketing trends Big Crops in the U.S. and World U.S and World Growing Ending Stocks Ethanol Growth Corn and Soybean Exports Slow Smaller South American Corn and Soybean crops in 2017 Strong Dollar

3 Trending Issues Volatile World Trade Agreements Chinese Economic Growth China corn stocks and ethanol Weather La Nina Weather Threat

4 Trending Issues January Report bigger crop? World Production Increasing? World Demand Steady? World Ending Stocks Increasing? Quarterly Stocks Feed?

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19 Million bushels Calendar year 2016 data U.S. corn exports to Mexico mil. bu U.S. corn exports 2,204 Mexico imports as share of total U.S. corn exports 25% U.S. corn production 15,148 Mexico imports as share of total U.S. corn production Source: USDA FAS GATS database 3.6%

20 Million metric tons Feed Other use Production China s corn use and production of corn have both increased sharply Uncertainties include Livestock sector growth Ethanol expansion (10% blends by 2020?) Production Stock policy (now trying to reduce large stocks) Source: USDA FAS PSD Online, Nov. 2017

21 2016/17 (USDA Nov.) 2017/18 (USDA Nov.) 2017/18 (FAPRI Nov.) 2018/19 (FAPRI, Nov.) Area planted (mil. acres) Yield (bu./harvested acre) Production (mil. bu.) 15,148 14,578 14,578 14,244 Feed and residual use (mil. bu.) 5,463 5,575 5,623 5,492 Ethanol and coproduct use 5,439 5,475 5,470 5,490 Other domestic use 1,452 1,460 1,468 1,485 Exports 2,293 1,925 1,939 2,121 Ending stocks 2,295 2,487 2,422 2,128 Marketing yr. avg. price ($/bu.) Sources: USDA WASDE, November 2017 and FAPRI-MU baseline, November 2017.

22 Dollars per bushel /15 15/16 16/17 17/18 18/19 19/20 20/21 Farm price: FAPRI-MU Farm price: USDA December futures Sources: FAPRI-MU, November 2017; USDA WASDE, November 2017; December CME futures contracts, November 17, 2017

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24 March 2018 Corn Futures

25 December 2018 Corn Futures

26 Weekly Corn Futures

27 Corn - New Crop Historical Basis Cash Hist Return Return Futures Month Price Futures Basis Basis Storage Storage Spread Nov $3.43 $3.43 $0.00 $0.10 Dec $3.51 $3.55 -$0.04 $0.07 $0.04 $0.15 $0.12 Jan $3.61 $3.55 $0.06 $0.15 $0.11 $0.20 $0.12 Feb $3.60 $3.55 $0.05 $0.21 $0.06 $0.23 $0.12 Mar $3.61 $3.64 -$0.03 $0.12 $0.04 $0.19 $0.21 April $3.58 $3.64 -$0.06 $0.11 -$0.02 $0.15 $0.21 May $3.67 $3.71 -$0.04 $0.12 $0.03 $0.19 $0.28 Aug $3.54 $3.79 -$0.25 $0.07 -$0.21 $0.12 $0.36 Sept $3.59 $3.87 -$0.28 -$0.14 -$0.19 -$0.05 $0.44 Dec $3.75 $3.96 -$0.21 $0.07 -$0.14 $0.15 $0.53

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42 Million bushels Calendar year 2016 data U.S. soybean exports to China mil. bu. 1, U.S. soybean exports 2,118 China imports as share of total U.S. soybean exports 62% U.S. soybean production 4,307 China imports as share of total U.S. soybean production Source: USDA FAS GATS database 31%

43 2016/17 (USDA Nov.) 2017/18 (USDA Nov.) 2017/18 (FAPRI Nov.) 2018/19 (FAPRI Nov.) Area planted (mil. acres) Yield (bu./harvested acre) Production (mil. bu.) 4,296 4,425 4,425 4,228 Crush (mil. bu.) 1,899 1,940 1,952 1,957 Other domestic use Exports 2,174 2,250 2,267 2,213 Ending stocks Marketing yr. avg. price ($/bu.) Sources: USDA WASDE, November 2017 and FAPRI-MU baseline, November 2017.

44 Dollars per bushel /15 15/16 16/17 17/18 18/19 19/20 20/21 Farm price: FAPRI Farm price: USDA November futures Sources: FAPRI-MU, November 2017; USDA WASDE, November 2017; November CME futures contracts, November 17, 2017

45 January 2018 Soybean Futures

46 November 2018 Soybean Futures

47 Weekly Soybean Futures

48 Soybeans - New Crop Historical Basis Cash Hist Return Return Futures Month Price Futures Basis Basis Storage Storage Spread Nov $9.83 $9.91 -$0.08 $0.08 Dec $9.96 $9.91 $0.05 $0.16 $0.08 $0.11 $0.00 Jan $9.99 $ $0.03 $0.23 $0.06 $0.25 $0.11 Feb $9.97 $ $0.05 $0.20 -$0.01 $0.27 $0.11 Mar $10.00 $ $0.11 $0.11 -$0.03 $0.28 $0.20 April $10.11 $10.11 $0.00 $0.06 $0.03 $0.14 $0.20 May $10.11 $ $0.09 $0.14 -$0.02 $0.13 $0.29 Jul $10.20 $10.20 $0.00 $0.22 -$0.03 $0.13 $0.29 Sept $9.91 $ $0.16 $0.19 -$0.42 $0.05 $0.16 Oct $9.94 $ $0.13 $0.10 -$0.44 -$0.12 $0.16

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50 2016/17 (USDA Nov.) 2017/18 (USDA Nov.) 2017/18 (FAPRI Nov.) 2018/19 (FAPRI Nov.) Area planted (mil. acres) Yield (bu./harvested acre) Production (mil. bu.) 2,309 1,741 1,741 1,879 Feed and residual (mil. bu.) Food and other domestic use 1,010 1,016 1,015 1,021 Exports 1,055 1, Ending stocks 1, Marketing yr. avg. price ($/bu.) Sources: USDA WASDE, November 2017 and FAPRI-MU baseline, November 2017.

51 Million metric tons Production Beg. Stocks Use Source: USDA FAS PSD Online, Nov World wheat production has exceeded use 5 straight years Stocks have built: 256 million metric tons at start of this year, up from under 200 mt in % of expected use, up from 28% in 2014

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54 July 2018 Wheat Futures

55 Weekly Wheat Futures

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62 2016/17 (USDA Sep.) 2017/18 (USDA Nov.) 2017/18 (FAPRI Nov.) 2017/18 (USDA Nov.) Area planted (mil. acres) Yield (lbs./harvested acre) Production (mil. bales) Domestic mill use Exports Ending stocks Marketing year average price (cents/lb.) Sources: USDA WASDE, November 2017 and FAPRI-MU, November 2017

63 Cents per pound /15 15/16 16/17 17/18 18/19 19/20 20/21 Farm price: FAPRI Dec. futures USDA Sources: FAPRI-MU baseline, November 2017; USDA WASDE, November 2017; December futures contracts, November 17, 2017.

64 March 2018 Cotton Futures

65 December 2018 Cotton Futures

66 Weekly Cotton Futures

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70 2016/17 (USDA Nov.) (USDA Nov.) 2017/18 (FAPRI Nov.) 2018/19 (USDA Nov.) Area planted (mil. acres) Yield (lbs./harvested acre) 7,237 7,461 7,461 7,760 Production (mil. cwt) Domestic use, residual Exports Ending stocks All rice MYA price ($/cwt) Long grain MYA price ($/cwt) Sources: USDA WASDE, Nov and FAPRI-MU, Nov. 2017

71 Dollars per cwt /15 15/16 16/17 17/18 18/19 19/20 20/21 All rice Long grain Jan. futures Sources: FAPRI-MU baseline, Nov. 2017; Jan. rough rice futures contracts, Nov. 17, 2017.

72 January 2018 Rice Futures

73 Weekly Rice Futures

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75 Revenue University of Missouri Extension Southeast Missouri Non-Irrigation Crop Budgets 2018 Corn GMO Soybean Roundup Ready 2 Xtend Soybean Liberty Link Cotton Wheat D. C. Soybean L.L. Estimated Yield (Bu/Acre) A Estimated Price ($/Bushel) B $3.55 $9.56 $9.56 $0.710 $4.87 $9.56 Estimated Gross Revenue ($/Acre) $ $ $ $ $ $ Total Variable Cost $ $ $ $ $ $ Total Costs (Excluding Land) $ $ $ $ $ $ Total Cost (Including Land or Rent) $ $ $ $ $ $ Estimated Returns Returns Above Variable Costs $ $ $ $ $ $ Returns Above Mach & Buildings $91.58 $ $ $37.87 $74.63 $ Returns Above Total Costs ($70.42) ($12.82) $5.21 ($124.13) ($6.37) $38.66 Breakeven Price $3.99 $9.83 $9.45 $0.86 $4.96 $8.59 Breakeven Yield ,

76 Revenue Corn GMO Soybean Roundup Ready 2 Xtend Soybean Liberty Link Cotton Rice Convent. Wheat D. C. Soybean L.L. Estimated Yield (Bu/Acre) A Estimated Price ($/Bushel) B $3.55 $9.56 $9.56 $0.710 $4.88 $4.80 $9.56 Estimated Gross Revenue ($/Acre) $ $ $ $ $ $ $ Total Variable Cost $ $ $ $ $ $ $ Total Costs (Excluding Land) $ $ $ $ $ $ $ Total Cost (Including Land or Rent) $ $ $ $ $ $ $ Estimated Returns University of Missouri Extension Southeast Missouri Irrigation Crop Budgets 2018 Returns Above Variable Costs $ $ $ $ $ $ $ Returns Above Mach & Buildings $82.35 $ $ $ $ $93.73 $98.45 Returns Above Total Costs ($79.65) $43.15 $61.18 $3.29 $90.13 $12.73 $17.45 Breakeven Price $3.93 $8.90 $8.62 $0.71 $4.38 $4.63 $9.21 Breakeven Yield ,

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78 Questions? Comments? David Reinbott (573)