Commodity Outlook 2019: Corn and Soybeans Struggle to Find … · 2019-02-07 · 1 Quarter (Sep-Nov) 4 Quarter (Jun-Aug) Corn Feed Use: Disappointing 4th Quarter Data: USDA‐ERS,

1/27/2019

1

Commodity Outlook 2019: Corn and Soybeans

Struggle to Find Strength

Wayne County 2019 Agricultural OutlookBen Brown

January 30, 2019

2018: A Tale of Two Halves

Source: USDA-Agricultural Marketing Service Daily Prices for Cincinnati, Ohio

January-May $4.00 corn and

$10.50 soybean cash prices

Strong world economic growth

Shrinking world stocks

June-October Escalating trade

tensions

Large Supplies

$7.00

$7.50

$8.00

$8.50

$9.00

$9.50

$10.00

$10.50

$11.00

$2.80

$3.00

$3.20

$3.40

$3.60

$3.80

$4.00

$4.20

Soy

bean

Pri

ce (

$/B

ushe

l)

Cor

n P

rice

($/

Bus

hel)

2018 Corn and Soybean Prices through Dec. 14

Corn Soybean

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2

Trade barriers continue- 90 day trade truce with China

South America Production- Looks good right now, but things can change quickly

U.S. Production- acreage decisions this spring and weather this summer

Government Shutdown delaying key USDA Reports

2019 Prices: Highly variable Outlook

“is pleasant as well as challenging; for I know the joys and discomforts of Agriculture life.”- FFA Creed

2018 U.S. Corn Yield: Another Record

Source: USDA- NASS

New Record 3 Straight Years

6 Straight years of Above Trend Yields 2013 was at the time

Reasons? Weather Genetics Management

10% 8%

-30%

-20%

-10%

0%

10%

20%

1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018

Change in U.S. Trend Adjusted Yields: Base = 2001

171174.6

176.6178.9

80

100

120

140

160

180

Bus

hels

/ Acr

e

U.S. Corn Yield: 1985-2018

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3

2018 Ohio Corn Yield: How’d we compare?

Record Yields Across Corn Belt Ohio 16 bu./acre above

previous record (2017)

Ohio outperformed the country in deviation from trend The country had a good

year, Ohio just had a better one!

2018 Corn Yield by StateBushels per Acre

Source: USDA- NASSNovember Crop Production

12%

-31%

12%

-22%

15%

-40%

-20%

0%

20%

1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018

Change in Ohio Trend Adjusted Yields: Base = 2001

U.S. Corn Production: Up Slightly from 2017

97

88

94

90 89

70

80

90

100

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Mil

lion

Acr

es

U.S. Planted Acres

U.S. Production is up slightly from 2017 on higher yields.

Not a record due to fewer acres.

Only 3 major corn producing states up in acreage from 2017. Missouri, Nebraska

and Ohio

Second Largest Ohio corn crop.

9.99.5

9.0

10.1

11.811.1

10.5

13.0

12.0

13.112.4 12.3

10.8

13.814.2

13.6

15.114.614.6

7

8

9

10

11

12

13

14

15

16

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Bil

lion

Bus

hels

U.S Corn Production

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4

Jan. Production Report: Good News???

-3

-2

-1

0

1

2

3

4

Bus

hels

Per

Acr

e C

hang

eCorn Yield Changes between Prod. Reports

Nov-Oct Jan - Nov

Source: USDA- NASSCrop Production Reports

Do Big Crops really get bigger?

Reduction from Oct.-Nov. happened 8 times. 7 out of 8 saw

drops in January.

Average drop of 7 years was 1 bu./acre

Difficult harvest in Western Corn Belt, a drop in yield could be expected.

U.S. Corn Demand: Projected Strong 2015/16 2016/17 2017/18 2018/19 Δ 2017/18

Area Planted (Mil. Acres) 88.0 94.0 90.2 89.1 -1%

Yield (Bu./acre) 168.4 174.6 176.6 178.9 1%

Production (Mil. Bu.) 13,602 15,148 14,604 14,626 0%

Beg. Stocks (Mil. Bu.) 1,731 1,737 2,293 2,140 -7%

Imports (Mil. Bu.) 67 57 36 45 25%

Total Supply (Mil. Bu.) 15,401 16,942 16,934 16,811 0%

Feed & Residual (Mil. Bu.) 5,120 5,470 5,302 5,550 5%

Food, Seed, & Other (Mil. Bu.) 1,422 1,453 1,453 1,480 1%

Ethanol (Mil. Bu.) 5,224 5,432 5,605 5,600 0%

Exports (Mil. Bu.) 1,898 2,294 2,438 2,450 0%

Total Use (Mil. Bu.) 13,664 14,649 14,793 15,030 2%

Ending Stocks (Mil. Bu.) 1,737 2,293 2,140 1,781 -17%

Season Av Price ($/bu.) $3.61 $3.36 $3.36 $3.60 + $0.24

Same Production and Lower Beg. Stocks Roughly same Total Supply as 2017/18

Source: Dec. USDA-WAOB

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5

Cattle on Feed is up 5% from 2017, new recordSeptember placements were lower than 2017

Source: USDA-WAOB

Corn Feed Use: Livestock up but use down??2015/16 2016/17 2017/18 2018/19 Δ 2017/18


Yield (Bu./acre) 168.4 174.6 176.6 178.9 1%


Beg. Stocks (Mil. Bu.) 1,731 1,737 2,293 2,140 -7%

Imports (Mil. Bu.) 67 57 36 45 25%




Ethanol (Mil. Bu.) 5,224 5,432 5,605 5,600 0%

Exports (Mil. Bu.) 1,898 2,294 2,438 2,450 0%

Total Use (Mil. Bu.) 13,664 14,649 14,793 15,030 2%



Corn Feed Use: Livestock Up but Use Down??

5,819

5,845

5,545

5,778

6,1326,111

5,535

5,853

5,1285,096

4,770

4,5124,309

5,002

5,2865,118

5,4705,298

5,500

80

85

90

95

100

105

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

An

imal

Un

its

(Mil

lion

s)

Bus

hels

(M

illi

ons)

Feed Use to Grain Consuming Animals

Feed and Residual Use Grain Consuming Animal Units

Source: USDA-NASS

1/27/2019

6

2,230

2,159

2,387

1,930

1,9902,047

1,782

2,060

2,3122,225

2,178

2,2772,248

2,365

0

500

1,000

1,500

2,000

2,500

3,000

Mil

lion

Bus

hels

Marketing Year

First and Fourth Quarter Feed Usage

1 Quarter (Sep-Nov) 4 Quarter (Jun-Aug)

Corn Feed Use: Disappointing 4th Quarter

Data: USDA‐ERS, Feed‐Grain Report

Needed to reach USDA 5,500

First Quarter feed usage makes up roughly 43% of total MY feed use.

To reach 5,500 the first quarter would need 2,365 mil. bu.

Given low performance of 2017/18 forth quarter, first quarter could look more like 2,200 mil. bu.

2017/18 feed use decline 250 mil. bu. from Oct- Finish

5,150- (350)

U.S. Corn Demand: Ethanol Strong in 2017/18

Source: USDA-WAOB

2015/16 2016/17 2017/18 2018/19 Δ 2017/18


Yield (Bu./acre) 168.4 174.6 176.6 178.9 1%


Beg. Stocks (Mil. Bu.) 1,731 1,737 2,293 2,140 -7%

Imports (Mil. Bu.) 67 57 36 45 25%




Ethanol (Mil. Bu.) 5,224 5,432 5,605 5,600 0%

Exports (Mil. Bu.) 1,898 2,294 2,438 2,450 0%

Total Use (Mil. Bu.) 13,664 14,649 14,793 15,030 2%



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U.S. Corn Use: Expanded E-15, Little Change

Ethanol Production 2015 2016 2017 2018 2019

Mill. Barrels per Day 0.966 1.003 1.04 1.048 1.011

Percent Growth 4% 4% 1% -4%

Data Source: U.S. Energy Information Administration Short Term Energy Outlook December

Oct 9, Trump proposes E-15 Reid Vapor Pressure waivers. EPA needs to offer rule and then lawsuits likely.

RIN’s are cheap not making up for lower mpg

The RFS is the rule of the land and so is the Clean Air Act. Any change to RVP waivers will likely require changes to policy.

Oil and Gasoline Prices are forecasted down in 2019.

Low Profit Margins by Ethanol Manufactures expected at breakeven for 4th

year. Lower daily production.

$2.72$2.49

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

Pri

ce (

$/ga

l.)

Crude Oil and Gasoline Prices

Monthly Retail gasoline Annual Average Gasoline

Monthly Brent crude oil Annual Average Brent

2019 Forecast

U.S. Corn Use: Ethanol Exports

0

1,000

2,000

3,000

4,000

5,000

6,000

Bar

rels

(1,

000)

U.S. Exports of Fuel Ethanol-Through Aug. Ethanol Exports were record strong in 2017/18 at almost 1.62 billion gallons.

U.S. Ethanol Exports to Brazil accounted for 34% of total 2017/18 exports.

Brazil’s Ethanol stocks are up 29% over last year. Sugar refineries

2018/2019 corn use for ethanol numbers are more likely to be similar to 2017/18 at 5.6 bil. Bu.

Top U.S Ethanol MarketsBrazil 33%Canada 24%India 13%Philippines 5%

Data Source: U.S.-EIA

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8

U.S. Corn Demand: Exports Finish Strong

Source: USDA-WAOB

2015/16 2016/17 2017/18 2018/19 Δ 2017/18


Yield (Bu./acre) 168.4 174.6 176.6 178.9 1%


Beg. Stocks (Mil. Bu.) 1,731 1,737 2,293 2,140 -7%

Imports (Mil. Bu.) 67 57 36 45 25%




Ethanol (Mil. Bu.) 5,224 5,432 5,605 5,600 0%

Exports (Mil. Bu.) 1,898 2,294 2,438 2,450 0%

Total Use (Mil. Bu.) 13,664 14,649 14,793 15,030 2%



U.S. Corn Use: Low Price Spurs Exports

Strong corn sales through the first 4 months of the marketing year.

2018/19 corn sales came in 38% higher first week of Dec. compared to year ago.

Total export inspections sit 94% above a year ago.

Large supply and relatively low prices suggest strength in exports.

Status of Emerging and Existing Markets

Country Percent Change Absolute Change Million Bushels

Vietnam 632% 63Mexico 11% 56EU-27 114% 40Israel 847% 23Columbia 12% 21

Japan -6% -29

Data: USDA-FAS

0

500

1,000

1,500

2,000

2,500

Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug

Bus

hels

(M

illi

ons)

Accumulative U.S. Corn Exports

2015/16 2016/17 2017/18 2018/19

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U.S. Corn: Balance SheetDec

WASDEBen’s January

Forecast DifferenceSupply Harvested Acres (Millions) 81.8 81.8 -Yield (Bushels/ Acre) 178.9 177.9 (1)Total Production (Million Bushels) 14,626 14,544 (82)Beginning Stocks (Million Bushels) 2,140 2,140 -Imports (Million Bushels) 45 45 -

Total Supply 16,811 16,729 (82)

DemandFeed and Residual (Million bushels) 5,500 5,350 (150)Food, Seed and Industry (Million bushels) 7,080 7,090 + 10

Ethanol 5,600 5,610 + 10Exports (Million Bushels) 2,450 2,500 + 50

Total Demand 15,030 14,940 (90)

Ending Stocks 1,781 1,789 + 8Ending Stocks as a Percentage of Use 12% 12% 0%

Average MY Price 2018/19 ($/Bushel) $3.60 $3.70 + .10

2018/19 World Corn Production: UpMillion Metric Tons 2017/18 2018/19 Percent Change

World 1,076 1,099 2.1%

United States 371 372 0.2%Foreign 705 728 3.3%

Argentina 32 41 28.1%Brazil 82 94.5 15.2%South Africa 13.5 13 -3.7%Egypt 6.4 6.8 6.2%

European Union 62.3 61 -2.1%Mexico 27.5 26 -5.5%Canada 14.1 14.5 2.8%China 215.9 225 4.2%Ukraine 24.1 31 28.6%

Data Source: USDA- WAOB

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10

Stocks to Use: Tighter World and U.S. Stocks

14%11%

13%11%

0%

5%

10%

15%

20%

25%S

tock

s to

Use

Rat

ioWorld and U.S. Corn Stocks to Use

World U.S.

2018/19

y = 0.2039e-0.148x

0%2%4%6%8%

10%12%14%16%18%

$0.00 $2.00 $4.00 $6.00 $8.00

Sto

cks

to U

se R

atio

Dollars per Bushel

Price vs Stocks to Use Ratio

Even with increasing production world use of corn has increased, lowering both U.S. and World Stocks to Use Ratios. 2018 projected at 11.2%

Tight stocks to use would suggest that any sudden positive change in world supply or use would sharply increase price.

Source: USDA-FAS & WAOB

U.S. Soy Yield: 4 out of 5 Years of New Records

4 out of last 5 years have been new records. Ohio -59 bu./acre

Nov. WASDE -1.0 from Oct. Estimate.

Ohio’s performance in yield was strongest in last 33 years.

24%

-30%-20%-10%

0%10%20%30%

Change in Ohio Trend Adjusted Soybean Yields: Base-2001

Source: USDA-NASS

47.548

52

49.3

52.1

25

30

35

40

45

50

55

Bus

hels

/ Acr

e

U.S. Soybean Yield 1985-2018

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11

U.S. Soy Production: New Record, Bad Time Record Yield as of Now

But still record acreageso record production.

Second time in history more soybean acres then corn acres.

Projected soybean returns early in the year suggested the market favored soybeans to corn.

Large increases in demand last eight years.

Source: USDA-NASS

2.82.9

2.8

2.5

3.13.13.2

2.7

3.0

3.43.3

3.13.0

3.4

3.93.9

4.34.4

4.6

2

2.5

3

3.5

4

4.5

5B

illi

on B

ushe

ls

Marketing Year

U.S. Soybean Production

U.S. Soybeans: Story is really all about Exports2015/16 2016/17 2017/18 2018/19 Δ 2017/18


Yield (Bu./acre) 48.0 52.0 49.3 52.1 6%


Beg.Stocks (Mil. Bu.) 191 197 302 438 45%

Imports (Mil. Bu.) 24 22 22 25 14%


Crushing (Mil. Bu.) 1,886 1,901 2,055 2,080 1%

Exports (Mil. Bu.) 1,942 2,166 2,129 1,900 -11%

Seed and Residual (Mil. Bu.) 115 146 112 128 14%

Total Use (Mil. Bu.) 3,944 4,214 4,296 4,107 -4%

Ending Stocks (Mil. Bu.) 197 302 438 955 118%

Season Average Price ($/bu.) $8.95 $9.47 $9.33 $8.60 -$0.73

Source: USDA-WAOB

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12

Soybean Price: Large Supplies Counter Exports

1964-2013

20152017

2018

20162014

y = 2.5505e0.001x

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

- 500 1,000 1,500 2,000 2,500

Pri

ce (

$/bu

.)

Pri

ce (

$/bu

.)

Soybean Exports (Million Bushels)

U.S. Soybean Exports vs Price Received

Data Source: USDA- NASS

2018/19 originally forecasted as largest year for U.S. Soybean exports at 2,290 mil. bu. (Currently 3rd)

Increased U.S. and world production have weighed on price even with expanded exports

Total Soy Exports: Lagging in 2018/19 Cheap soybeans encouraged

exports in end of 2017/18.

Exports have been extremely week to start 2018/19. 33% behind average pace

and forward sales are 16% below last year.

1st Quarter historically represents 42% of total sales.

Simply the smaller markets are NOT making up the loss from China.

Brazil’s new crop will soon be on the market.

Data Source: USDA-FAS

Status of Emerging and Existing Markets

Country % Change Absolute Change Metric TonEU-27 210% 1,094,487Egypt 1,968% 411,176Iran 733% 294,417Netherlands 106% 203,681

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Met

ric

Tons

Total U.S. Soybean Exports (Weekly)

2014/15 2015/16 2016/17 2017/18 2018/19

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Timing: World Soybean Exports

0

50

100

150

200

250

300

350

400

450

500

Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Bus

hels

(M

illi

ons)

U.S. and Brazil Soybean Exports

U.S. 5-Year Avg. U.S. 2017-18 U.S. 2018-19

Brazil 5-Year Avg. Brazil 2017-18 Brazil 2018-19

Data Source: U.S. Commerce Department

Soybean Price: Difference in U.S & Brazil

Data Source: USDA‐AMS and Cepea (BR)

Brazil and U.S. soybean prices have historically tracked each other with occasional difference.

There is a noticeable break starting in June between the two prices.

Brazil producers got the signal to expand production.

$9.20

$9.29

$7.00

$8.00

$9.00

$10.00

$11.00

$12.00

$13.00

$14.00

US

D/b

ush

el

Soybean Export Spot Prices- Jan 23

Paranagua (BR) Price U.S. Gulf Price

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14

-From South China Morning Post

-From CGTN While the production and import changes from 2017 are small, what is the potential in future years?

Will China continue to change their production policies? Away from subsidies

for corn and wheat to soybean production.

Chinese Soybean Behavior(Million Metric Tons)

2017/18 2018/19 % Δ

Production 15.2 16 5%

Imports 94.0 90.0 -4%

Ending Stocks 23.5 19.84 -16%

Data Source: WASDE Dec. Update

China Consumption Behavior: Changing

Chinese Consumption: Reversing Trend

487382

787622

948

1,0401,055

1,3891,510

1,8501,923

2,1762,200

2,5852,879

3,0583,435

3,458

3,307

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Bus

hels

(M

illi

ons)

Chinese Imports

Data Source: USDA- FAS

1/27/2019

15

U.S. Soy: Balance sheet, looking for positivesDec.

WASDEBen’s Jan. Forecast DifferenceSupply

Harvested Acres (Millions) 88.3 88.3 -Yield (Bushels/ Acre) 52.1 51.9 0.2Total Production (Million Bushels) 4,600 4,583 17Beginning Stocks (Million Bushels) 438 438 -Imports (Million Bushels) 25 25 -

Total Supply 5,063 5,046 17

DemandCrushing (Million Bushels) 2,080 2,090 + 10Exports (Million Bushels) 1,900 1,850 (50)Seed and Residual (Million Bushels) 128 128 -

Total Demand 4,107 4,068 (39)

Ending Stocks 955 978 118Ending Stocks as a Percentage of Use 23% 24% + 1%

Average MY Price 2018/19 ($/Bushel) $8.60 $8.30 ($0.30)

Soybean Stocks to Use: Double 2017/18

Data Source: USDA-FAS & WAOB

Large supply and reduced exports result in more production and less consumption for 2018/19

Stocks to use forecasted double 2017/18.

Largest since 1985/86

Why does this matter? Soybean price and

stocks-to-use are negatively correlated.

29.9%

22.5%

19.6%

23.3%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Sto

cks-

to-U

se R

atio

s

Con

sum

ptio

n an

d P

rodu

ctio

n (B

illi

on B

ushe

ls)

U.S. Soybean- Stocks to Use, Production & Consumption

Stocks to Use Production Consumption

1/27/2019

16

Soybean Price Potential: Struggling

Source: USDA-FAS & WAOB

Outside a resolution in trade with China or a production shortfall in one of the major producing countries, the current 995 Mil. Bu. might still be low.

Recent price rallies appear linked to the market over projecting yield or under projecting failed acreage early on.

Price prospects look to have limited upside potential.

y = 4.0883x-0.323

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

Dol

lars

per

Bus

hel

Percent Stocks-to-Use

Soybean Price & Stocks-to-Use

South America Acreage: UP in 2018/19

Brazil: Five year average in corn/ soybean acreage= 4.5% increase2017 to 2018= 6.8% increase

Argentina: Slightly up, but projected larger yield compared to drought of 2017/18

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Mil

lion

Acr

es

Brazil and Argentina Planted Acreage

Brazil Soybean Brazil Corn Argentina Soybeans Argentina Corn

Source: USDA-PSD data

1/27/2019

17

Price Relationship: Corn to Soybeans

Rule of Thumb is a corn to soybean price ratio of 1 to 2.35

$2.38

$2.10

$2.20

$2.30

$2.40

$2.50

$2.60

Daily Futures Price

New Soybean (Nov. 19)/ New Corn (Dec. 19)

2.50 or Higher Add Soybean Acres

2.25 or Lower Add Corn Acres

South America Production: Brazil 30% of Brazils production is

produced in Mato Grosso.

Average field farm size in MatoGrosso is 3,200 acres.

Cost of Production is Comparable. Infrastructure is improving Yields increased 23% in 16

years

1/27/2019

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South America Production: Brazil Weather

Source: Latin American Flood and Drought Monitor-Jan 7, 2019

December WASDE had production at Brazil- 122 Million Metric Tons Argentina- 55.5 Million Metric Tons

Estimate about 119 MMT

South America Production: Brazil Weather

Source: Latin American Flood and Drought Monitor-Jan 10, 2019

1/27/2019

19

Marketing: Fundamental vs Technical

“So Ben, this was all great and dandy, but what does it mean for my operation?”

The Greed-Hope-Fear School of Marketing

Timing: Could we do better?

Data: Author Calculation using USDA-Agricultural Marketing Service

29%

$10.02

$9.40

$9.60

$9.80

$10.00

$10.20

$10.40

$10.60

$10.80

$11.00

$11.20

0%

5%

10%

15%

20%

25%

30%

35%


Dol

lars

/Bus

hel

Per

cent

of

Tota

l

Percent of Ohio Soybean Sales by Month

Average Soybean Sales 2013-2017 Average Soybean Price 2013-2017

1/27/2019

20

Timing: Maybe we did better with Corn

$3.00

$3.20

$3.40

$3.60

$3.80

$4.00

$4.20

0%

2%

4%

6%

8%

10%

12%

14%

16%

Dol

lars

/ Bus

hel

Per

cent

of

Tota

l

Percent of Ohio Corn Sales by Month

Average Corn Sales 2013-2017 Average Corn Price 2013-2017

Lowest Sales

Data: USDA-AMS

Highest Price

Timing: Seasonality

Year May 15 Oct 15 Change

2007 $3.77 $3.54 $0.23

2008 $5.90 $3.73 $2.17

2009 $4.16 $3.68 $0.48

2010 $3.56 $5.38 $(1.82)

2011 $6.88 $6.44 $0.44

2012 $6.37 $7.57 $(1.20)

2013 $7.05 $4.51 $2.54

2014 $4.86 $3.43 $1.43

2015 $3.69 $3.85 $(0.16)

2016 $3.95 $3.45 $0.50

2017 $3.66 $3.31 $0.35

2018 $3.95 $3.58 $0.37

Data: Barchart Nearby Futures

Since 2000, 14 out of 19 years have had a higher futures price on May 15 than Oct. 15. That’s 74%!!

The average increase was $0.73.

5 our of 19 years had a higher futures price on Oct. 15 than May 15 or 26% of the time.

The average decrease was $0.83.

If done every year you would have netted, a positive $0.32/bu.

1/27/2019

21

I didn’t sell enough, what do I do?? Look for Carry in the Market.

Typically a large crop will have large carry because the market is trying to incentivize you to keep you grain and deliver at a later date

Basis Appreciation Basis usually strengthens post harvest. However, keeping an eye on historical basis as a

benchmark is important.

Use your on-farm storage like the elevators do and take advantage of both carry and basis appreciation.

1-Nov 1-Aug Change

Futures $8.33 $9.00 $0.67

Basis -$0.75 -$0.50 $0.25

Cash $7.58 $8.50 $0.92

Example from Nov. 2018

Soybean Basis: Still Weak Comparably

Data Source: Author Calculation using DTN data

Basis is local, large differences across state

To start 2018/19 marketing year, on average $0.20 below 3-year average

Lowest at harvest, then increasing I’m not sure we can expect basis to increase as much later in the year given

PNW basis conditions.

-$0.56-$0.73

-$1.10

-$0.90

-$0.70

-$0.50

-$0.30

-$0.10

$0.10

Set OCT Nov Dec Jan Feb Mar Apr May Jun Jul Aug

$/B

ushe

l

Nearby Soybean Basis in Northeast Ohio

3 Year Average (2015-2018) 2018-2019

Nov Futures Jan Futures Mar Futures May Futures Jul FuturesAug Fut.

Sep Fut.

1/27/2019

22

Corn Basis: Strengthened last two months Basis is local, has strengthened against historical average since start of November.

To start 2018/19 marketing year Ohio was on average $0.10 below 5-year average

Lowest at harvest, then increasing My expectation is for corn to follow this pattern slowly getting back to

average.

Data Source: Author Calculation using DTN data

-$0.25

-$0.28

-$0.60

-$0.40

-$0.20

$0.00


$/bu

shel

Nearby Corn Basis for Northeast Ohio

5 yr average (2013-2018) 2018-2019

Dec Futures Mar Futures May Futures Jul Futures Sept Futures

Key Takeaways: The 2 minute Rundown Grain Markets

The release of the January Commodity Reports could be positive to corn and soybeans on lower yield and acres.

Corn shows some positive characteristics, but feed use remains a question. Soybeans prices to me still look a little strong in relation to stocks and use.

Trade Relations with China are affecting prices differently around the world. Changing prices will influence producer/consumer choices

Based on today’s markets- I’m not expecting big swifts in acreage from soybeans to corn, but maybe a total reduction of corn and soybean acres.

Marketing plans can take the emotion out of grain marketing, and it can increase your bottom line over time. Know what you are going to do Pre and Post Harvest.

1/27/2019

23

Until we meet agrain… (or oilseeds)

Picture of soybean pile in North Dakota-October 20th

Ben Brown

Program Manager: Ohio Farm Management Program

College of Food, Agriculture, and Environmental SciencesDepartment of Agriculture, Environmental, and Development Economics

Agriculture Administration Building, Room 2352120 Fyffe Road

Columbus, OH 43201-1067

660-492-7574- Mobile [email protected] Phone [email protected]

Documents

Commodity Outlook 2019: Corn and Soybeans Struggle to Find … · 2019-02-07 · 1 Quarter (Sep-Nov) 4 Quarter (Jun-Aug) Corn Feed Use: Disappointing 4th Quarter Data: USDA‐ERS,