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 Volatile World Uncertain Chinese Growth Rattled Emerging Markets Burdensome Crop Supplies Weakening Livestock Markets El Nino Weather Threat Lower Incomes Funds Existing Ag Markets Strong U.S. Dollar $

3 Trending Issues Jan 12 Report bigger crop World Production Increasing World Demand Steady World Ending Stocks - Increasing

4 U.S., world economic growth expected to continue Lower energy prices provide a boost to consumer spending, reduce production costs Strong dollar has affected agricultural trade Interest rates likely to increase

5 Increase in China s consumption from : 49 mmt Total U.S. consumption in 2015: 36 mmt Source: USDA s PSD Online, November 2015

6 Source: USDA s PSD Online, November 2015

7 Final EPA rule requires more biofuel use than earlier proposal Possible impacts A little more production and use in 2016 Slightly higher corn and bean prices, all else equal Pattern for future? Court action likely New Administration??? Bllion gallons As announced: Total RFS Advanced Biodiesel Cellulosic Conventional May proposal Total RFS Advanced Biodiesel Cellulosic Conventional

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9 U.S. Dollar Index - Monthly

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11 Brazilian Real - Monthly

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17 Monthly Corn Futures $3.18

18 March 2016 Corn Futures $4.12 $3.65

19 Nov. WASDE 2014/15 Nov. WASDE 2015/16 Nov. FAPRI 2015/16 Nov. FAPRI 2016/17 Area planted (mil. a.) Area harvested (mil. a.) Yield (bu./a.) Supply & use (mil. bu.) Production 14,216 13,654 13,654 13,595 Feed & residual use 5,315 5,300 5,329 5,339 Ethanol & coproducts 5,209 5,175 5,187 5,212 Other domestic use 1,359 1,380 1,374 1,369 Exports 1,864 1,800 1,784 1,776 Ending stocks 1,731 1,760 1,742 1,670 Price per bushel $3.70 $3.35-$3.95 $3.64 $3.75

20 U.S. New Crop Balance Sheets - Corn Balance Sheet U.S. Corn: Supply & Use New Crop New Crop New Crop 2016/ / /17 Planted Acres Harvested Acres Yield Ending Stocks 1,994 1,577 1,329 Stocks/Use 14.5% 11.4% 9.6% Ave Farm Price $3.50 $4.00 $4.25

21 U.S. New Crop Balance Sheets - 1 Million 1 Million 1 Million Corn Balance Sheet less acres less acres less acres U.S. Corn: Supply & Use New Crop New Crop New Crop 2016/ / /17 Planted Acres Harvested Acres Yield Ending Stocks 1,831 1,423 1,179 Stocks/Use 13.3% 10.3% 8.6% Ave Farm Price $3.65 $4.20 $4.65

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23 Source: USDA PSD Online, November 2015

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34 Source: USDA s PSD Online, Nov. 2015

35 Source: USDA PSD Online, November 2015

36 Nov. WASDE 2014/15 Nov. WASDE 2015/16 Nov. FAPRI 2015/16 Nov. FAPRI 2016/17 Area planted (mil. a.) Area harvested (mil. a.) Yield (bu./a.) Supply & use (mil. bu.) Production 3,927 3,981 3,981 3,669 Crush 1,873 1,890 1,891 1,884 Other domestic use Exports 1,843 1,715 1,730 1,736 Ending stocks Price per bushel $10.10 $ $8.86 $8.87

37 U.S. Soybean: Supply & Use New Crop New Crop New Crop 2016/ / /17 Planted Acres Harvested Acres Yield Total use 3,797 3,797 3,797 Ending Stocks Stocks/Use 18.2% 12.6% 6.0% Ave Farm Price $8.00 $8.50 $10.00

38 Soybean Balance Sheet 1 Million U.S. Soybean: Supply & Umore acres 1 Million more acres 1 Million more acres New Crop New Crop New Crop 2016/ / /17 Planted Acres Harvested Acres Yield Total use 3,797 3,797 3,797 Ending Stocks Stocks/Use 19.4% 13.8% 7.1% Ave Farm Price $7.50 $8.25 $9.50

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42 March 2016 Soybean Futures $9.22 $8.55

43 Source: FAPRI-MU collaborators at the University of Nevada, Reno, November 2015

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50 +17% vs % vs Source: USDA s Foreign Agricultural Service Oilseeds: World Markets and Trade, various issues and author calculations using monthly exchange rates reported by

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59 Monthly Wheat Futures

60 Nov. WASDE 2014/15 Nov. WASDE 2015/16 Nov. FAPRI 2015/16 Nov. FAPRI 2016/17 Area planted (mil. a.) Area harvested (mil. a.) Yield (bu./a.) Supply & use (mil. bu.) Production 2,026 2,052 2,052 2,063 Feed & residual use Food use Exports Ending stocks Price per bushel $5.99 $4.80-$5.20 $4.98 $4.96

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64 $4.50 Dec 2016 Corn Futures $4.20 $3.85

65 $9.85 Nov 2016 Soybean Futures $9.20 $8.60

66 $6.28 July 2016 Wheat Futures $5.40

67 Projection for USDA FAPRI-MU Futures Next year 12.5% 15.0% 19.0% 2 years ahead 17.7% 20.4% 25.1% 3 years ahead 22.9% 22.3% 23.6% 4 years ahead 26.2% 26.1% 24.2% 5 years ahead 29.7% 28.9% 26.9% Average of above 21.8% 22.5% 23.8% Sources: USDA and Futures estimates by Scott Irwin and Darrell Good in a FarmDoc piece posted Feb. 4 ( FAPRI-MU estimates compiled by FAPRI-MU and reported in a FarmDoc piece by Pat Westhoff on Feb. 12 (

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72 Revenue Southeast Missouri Non-Irrigation Crop Budgets 2016 Corn GMO Soybean Roundup Ready D. C. Grain Sorghum Cotton Wheat Soybean R.R. Estimated Yield (Bu/Acre) A Estimated Price ($/Bushel) B $3.65 $8.90 $3.60 $0.59 $5.00 $8.90 Estimated Gross Revenue ($/Acre) $ $ $ $ $ $ Total Variable Cost $ $ $ $ $ $ Fixed Costs Fixed Machinery Cost Fixed Buildings & Bins Cost Total Costs (Excluding Land) $ $ $ $ $ $ Land Real Estate Taxes Land Interest Total Cost $ $ $ $ $ $ Estimated Returns Returns Above Variable Costs $ $ $71.91 $32.08 $50.59 $ Returns Above Mach & Buildings $40.27 $ $6.91 ($77.92) $13.59 $70.00 Returns Above Total Costs ($129.84) ($58.13) ($163.19) ($248.02) ($71.46) ($15.05) Breakeven Price $4.52 $10.14 $5.08 $0.88 $6.19 $9.28

73 Revenue Corn GMO Soybean Roundup Ready Grain Sorghum Pop Corn Cotton Rice Convent. Wheat D. C. Soybean R.R. Estimated Yield (Bu/Acre) A Estimated Price ($/Bushel) B $3.65 $8.90 $3.60 $0.11 $0.59 $5.40 $5.00 $8.90 Estimated Gross Revenue ($/Acre) $ $ $ $ $ $ $ $ Total Variable Cost $ $ $ $ $ $ $ $ Fixed Costs Fixed Machinery Cost Fixed Buildings & Bins Cost Fixed Irrigation Cost Total Costs (Excluding Land) $ $ $ $ $ $ $ $ Land Real Estate Taxes Land Interest Total Cost $ $ $ $ $ $ $ $ Estimated Returns University of Missouri Extension Southeast Missouri Irrigation Crop Budgets 2016 Returns Above Variable Costs $ $ $ $ $ $ $50.59 $ Returns Above Mach & Buildings ($20.88) $76.47 ($25.74) ($15.37) $5.74 $ $13.59 $39.82 Returns Above Total Costs ($190.98) ($93.63) ($195.84) ($185.47) ($164.36) ($18.22) ($71.46) ($45.23) Breakeven Price $4.66 $10.54 $5.00 $0.15 $0.73 $5.52 $6.19 $9.80

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75 Source: USDA Economic Research Service, November 2015 and unpublished FAPRI-MU projections

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77 Family Living Exp. - NE