Market Outlook David Reinbott Agriculture Business Specialist P.O. Box 187 Benton, MO 63736 (573) 545-3516 http://extension.missouri.edu/scott/agriculture.aspx reinbottd@missouri.edu
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 $
Trending Issues Jan 12 Report bigger crop World Production Increasing World Demand Steady World Ending Stocks - Increasing
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
Increase in China s consumption from 1991-2015: 49 mmt Total U.S. consumption in 2015: 36 mmt Source: USDA s PSD Online, November 2015
Source: USDA s PSD Online, November 2015
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 2015 2016 As announced: Total RFS 16.93 18.11 Advanced 2.88 3.61 Biodiesel 1.73 1.90 Cellulosic 0.12 0.23 Conventional 14.05 14.50 May proposal Total RFS 16.30 17.40 Advanced 2.90 3.40 Biodiesel 1.70 1.80 Cellulosic 0.11 0.21 Conventional 13.40 14.00
U.S. Dollar Index - Monthly
Brazilian Real - Monthly
David Reinbott November 23, 2015
Monthly Corn Futures $3.18
March 2016 Corn Futures $4.12 $3.65
Nov. WASDE 2014/15 Nov. WASDE 2015/16 Nov. FAPRI 2015/16 Nov. FAPRI 2016/17 Area planted (mil. a.) 90.6 88.4 88.4 89.5 Area harvested (mil. a.) 83.1 80.7 80.7 81.5 Yield (bu./a.) 171.0 169.3 169.3 166.9 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
U.S. New Crop Balance Sheets - Corn Balance Sheet U.S. Corn: Supply & Use New Crop New Crop New Crop 2016/17 2016/17 2016/17 Planted Acres 90.1 90.1 90.1 Harvested Acres 82.2 82.2 82.2 Yield 170 165 162 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
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 2016/17 2016/17 Planted Acres 89.1 89.1 89.1 Harvested Acres 81.3 81.3 81.3 Yield 170 165 162 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
Source: USDA PSD Online, November 2015
David Reinbott November 23, 2015
Source: USDA s PSD Online, Nov. 2015
Source: USDA PSD Online, November 2015
Nov. WASDE 2014/15 Nov. WASDE 2015/16 Nov. FAPRI 2015/16 Nov. FAPRI 2016/17 Area planted (mil. a.) 83.3 83.2 83.2 82.4 Area harvested (mil. a.) 82.6 82.4 82.4 81.7 Yield (bu./a.) 47.5 48.3 48.3 44.9 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 145 133 143 139 Exports 1,843 1,715 1,730 1,736 Ending stocks 191 465 442 385 Price per bushel $10.10 $8.15-9.65 $8.86 $8.87
U.S. Soybean: Supply & Use New Crop New Crop New Crop 2016/17 2016/17 2016/17 Planted Acres 85.3 85.3 85.3 Harvested Acres 84.1 84.1 84.1 Yield 47.5 45.0 42.0 Total use 3,797 3,797 3,797 Ending Stocks 689 479 227 Stocks/Use 18.2% 12.6% 6.0% Ave Farm Price $8.00 $8.50 $10.00
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 2016/17 2016/17 Planted Acres 86.3 86.3 86.3 Harvested Acres 85.1 85.1 85.1 Yield 47.5 45.0 42.0 Total use 3,797 3,797 3,797 Ending Stocks 736 523 268 Stocks/Use 19.4% 13.8% 7.1% Ave Farm Price $7.50 $8.25 $9.50
March 2016 Soybean Futures $9.22 $8.55
Source: FAPRI-MU collaborators at the University of Nevada, Reno, November 2015
+17% vs. 2013-34% vs. 2013 Source: USDA s Foreign Agricultural Service Oilseeds: World Markets and Trade, various issues and author calculations using monthly exchange rates reported by www.x-rates.com
David Reinbott November 23, 2015
Monthly Wheat Futures
Nov. WASDE 2014/15 Nov. WASDE 2015/16 Nov. FAPRI 2015/16 Nov. FAPRI 2016/17 Area planted (mil. a.) 56.8 54.6 54.6 53.6 Area harvested (mil. a.) 46.4 47.1 47.1 45.1 Yield (bu./a.) 43.7 43.6 43.6 45.7 Supply & use (mil. bu.) Production 2,026 2,052 2,052 2,063 Feed & residual use 120 180 196 207 Food use 958 967 969 977 Exports 854 800 803 914 Ending stocks 753 911 888 903 Price per bushel $5.99 $4.80-$5.20 $4.98 $4.96
David Reinbott November 23, 2015
$4.50 Dec 2016 Corn Futures $4.20 $3.85
$9.85 Nov 2016 Soybean Futures $9.20 $8.60
$6.28 July 2016 Wheat Futures $5.40
Projection for USDA FAPRI-MU Futures Next year 12.5% 15.0% 19.0% 2 years ahead 17.7% 20.4% 25.1% 3 years ahead 22.9% 22.3% 23.6% 4 years ahead 26.2% 26.1% 24.2% 5 years ahead 29.7% 28.9% 26.9% Average of above 21.8% 22.5% 23.8% Sources: USDA and Futures estimates by Scott Irwin and Darrell Good in a FarmDoc piece posted Feb. 4 (http://farmdocdaily.illinois.edu/2015/02/long-term-forecasts-and-farm-billprogram-choice.html). FAPRI-MU estimates compiled by FAPRI-MU and reported in a FarmDoc piece by Pat Westhoff on Feb. 12 (http://farmdocdaily.illinois.edu/2015/02/price-projections-and-farm-bill-programchoices.html).
David Reinbott November 23, 2015
David Reinbott November 23, 2015
Revenue Southeast Missouri Non-Irrigation Crop Budgets 2016 Corn GMO Soybean Roundup Ready D. C. Grain Sorghum Cotton Wheat Soybean R.R. Estimated Yield (Bu/Acre) A 150 47 110 850 60 40 Estimated Price ($/Bushel) B $3.65 $8.90 $3.60 $0.59 $5.00 $8.90 Estimated Gross Revenue ($/Acre) $547.50 $418.30 $396.00 $501.50 $300.00 $356.00 Total Variable Cost $ 437.24 $ 265.33 $ 324.09 $ 469.42 $ 249.41 $ 254.00 Fixed Costs Fixed Machinery Cost 52.00 34.00 48.00 107.00 33.00 25.00 Fixed Buildings & Bins Cost 18.00 7.00 17.00 3.00 4.00 7.00 Total Costs (Excluding Land) $ 507.24 $ 306.33 $ 389.09 $ 579.42 $ 286.41 $ 286.00 Land Real Estate Taxes 12.60 12.60 12.60 12.60 6.30 6.30 Land Interest 157.50 157.50 157.50 157.50 78.75 78.75 Total Cost $ 677.34 $ 476.43 $ 559.19 $ 749.52 $ 371.46 $ 371.05 Estimated Returns Returns Above Variable Costs $110.27 $152.97 $71.91 $32.08 $50.59 $102.00 Returns Above Mach & Buildings $40.27 $111.97 $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 $9.28
Revenue Corn GMO Soybean Roundup Ready Grain Sorghum Pop Corn Cotton Rice Convent. Wheat D. C. Soybean R.R. Estimated Yield (Bu/Acre) A 190 57 140 5000 1200 150 60 50 Estimated Price ($/Bushel) B $3.65 $8.90 $3.60 $0.11 $0.59 $5.40 $5.00 $8.90 Estimated Gross Revenue ($/Acre) $693.50 $507.30 $504.00 $550.00 $708.00 $810.00 $300.00 $445.00 Total Variable Cost $ 562.38 $ 311.83 $ 387.74 $ 433.37 $ 515.26 $ 512.12 $ 249.41 $ 296.18 Fixed Costs Fixed Machinery Cost 52.00 34.00 47.00 52.00 107.00 64.00 33.00 25.00 Fixed Buildings & Bins Cost 23.00 8.00 18.00 3.00 3.00 15.00 4.00 7.00 Fixed Irrigation Cost 77.00 77.00 77.00 77.00 77.00 67.00 0.00 77.00 Total Costs (Excluding Land) $ 714.38 $ 430.83 $ 529.74 $ 565.37 $ 702.26 $ 658.12 $ 286.41 $ 405.18 Land Real Estate Taxes 12.60 12.60 12.60 12.60 12.60 12.60 6.30 6.30 Land Interest 157.50 157.50 157.50 157.50 157.50 157.50 78.75 78.75 Total Cost $ 884.48 $ 600.93 $ 699.84 $ 735.47 $ 872.36 $ 828.22 $ 371.46 $ 490.23 Estimated Returns University of Missouri Extension Southeast Missouri Irrigation Crop Budgets 2016 Returns Above Variable Costs $131.12 $195.47 $116.26 $116.63 $192.74 $297.88 $50.59 $148.82 Returns Above Mach & Buildings ($20.88) $76.47 ($25.74) ($15.37) $5.74 $151.88 $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
David Reinbott November 23, 2015
Source: USDA Economic Research Service, November 2015 and unpublished FAPRI-MU projections
Family Living Exp. - NE