Corn Outlook. December, 2017

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1 Corn Outlook December, 2017

2 Corn Outlook December, 2017 Historical Price Reference Fundamental Backdrop Seasonal Tendency Summary Commodity & Ingredient Hedging 2

3 Historical Price Reference Where are Corn Prices Currently, And Where are they Historically? Commodity & Ingredient Hedging 3

4 Historical Price Reference Commodity & Ingredient Hedging 4

5 Historical Price Reference Commodity & Ingredient Hedging 5

6 Historical Price Reference Insert Comparative CK Chart from Website Commodity & Ingredient Hedging 6

7 USDA Supply/Demand Report : December 12,

8 Fundamental Backdrop U.S. Corn Balance Sheet in Million Bushels Crop Year 2016/ /2018 November December Change November December Change Area (Million Acres) Planted Harvested Yield (Bushels/Acre) Beginning Stocks Production Imports Supply, Total Feed & Residual Food, Seed & Industrial Ethanol for Fuel Domestic Total Total Exports Use, Total Ending Stocks Stocks/Usage Ratio 15.67% 15.67% 0.00% 17.23% 16.82% -0.40% Commodity & Ingredient Hedging 8

9 Actual USDA vs. Estimates 2017/18 Ending Stocks Estimates December November USDA Average Range USDA USDA Corn Soybeans Wheat Commodity & Ingredient Hedging 9

10 Domestic Supply/Demand Fundamentals? 10

11 1,000 Metric Tons U.S. Corn Ending Stocks (Updated December 12, 2017) 140,000 Source: USDA Foreign Agricultural Service 120, ,000 80,000 60,000 40,000 20, Commodity & Ingredient Hedging 11

12 70% U.S. Corn Stocks/Use Ratio (Updated December 12, 2017) 60% 50% 40% 30% 20% 10% Source: USDA Foreign Agricultural Service 0% Commodity & Ingredient Hedging 12

13 Bushels Per Acre U.S. Corn Trendline Yield (Updated December 12, 2017) 200 Source: USDA Economic Research Service Source: USDA World Agricultural Outlook Board Commodity & Ingredient Hedging 13

14 100,000 Bushels Total U.S. Domestic Corn Use (Updated December 12, 2017) Source: USDA World Agricultural Outlook Board & Economic Research Service Ethanol & by-products Other Food, Seed & Industrial Feed and Residual Commodity & Ingredient Hedging 14

15 100,000 Bushels U.S. Feed and Residual Corn Use (Updated December 12, 2017) 7000 Source: USDA World Agricultural Outlook Board & Economic Research Service 6000 Feed and Residual Commodity & Ingredient Hedging 15

16 100,000 Bushels U.S. Corn Consumption for Ethanol (Updated December 12, 2017) 6000 Source: USDA Economic Research Service Commodity & Ingredient Hedging 16

17 The following tables outline changes to the Global balance sheet for 2016/17 crop year & 2017/18 crop year 17

18 World Corn Balance Sheet in Million Metric Tons Fundamental Backdrop Crop Year 2016/2017 December, 2017 Supply Use Region Beginning Stocks Production Imports Feed Exports Ending Stocks Stocks/Use World % United States Major Exporters Argentina South Africa Major Importers Egypt EU Japan Mexico Southeast Asia South Korea Selected Other Brazil Canada China FSU Ukraine Commodity & Ingredient Hedging 18

19 World Corn Balance Sheet in Million Metric Tons Fundamental Backdrop Crop Year 2017/2018 December, 2017 Supply Use Region Beginning Stocks Production Imports Feed Exports Ending Stocks Stocks/Use World % United States Major Exporters Argentina South Africa Major Importers Egypt EU Japan Mexico Southeast Asia South Korea Selected Other Brazil Canada China FSU Ukraine Commodity & Ingredient Hedging 19

20 What About Global Supply/Demand Fundamentals? 20

21 1,000 Metric Tons World Corn Ending Stocks (Updated December 12, 2017) 250,000 Source: USDA Foreign Agricultural Service 200, , ,000 50, Commodity & Ingredient Hedging 21

22 World Corn Stocks/Use Ratio (Updated December 12, 2017) 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% Source: USDA Foreign Agricultural Service 0% Commodity & Ingredient Hedging 22

23 70% World vs U.S. Corn Stocks/Use Ratio (Updated December 12, 2017) 60% 50% World U.S. 40% 30% 20% 10% Source: USDA Foreign Agricultural Service 0% Commodity & Ingredient Hedging 23

24 1,000 Metric Tons Major Foreign Corn Producers (Updated December 12, 2017) 600,000 Source: USDA Foreign Agricultural Service 500,000 Southeast Asia Mexico Argentina 400,000 Brazil E.U. China 300, , , Commodity & Ingredient Hedging 24

25 1,000 Metric Tons Major Foreign Corn Exporters (Updated December 12, 2017) 120,000 Source: USDA Foreign Agricultural Service 100,000 80,000 Ukraine FSU-12 Argentina Brazil 60,000 40,000 20, Commodity & Ingredient Hedging 25

26 1,000 Metric Tons Brazil Corn Production (Updated December 12, 2017) 120,000 Source: USDA Foreign Agricultural Service 100,000 80,000 60,000 40,000 20, Commodity & Ingredient Hedging 26

27 1,000 Metric Tons Argentina Corn Production 45,000 (Updated December 12, 2017) Source: USDA Foreign Agricultural Service 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, Commodity & Ingredient Hedging 27

28 1,000 Metric Tons Brazil Corn Exports (Updated December 12, 2017) 40,000 Source: USDA Foreign Agricultural Service 35,000 30,000 25,000 20,000 15,000 10,000 5, Commodity & Ingredient Hedging 28

29 1,000 Metric Tons Argentina Corn Exports (Updated December 12, 2017) 35,000 Source: USDA Foreign Agricultural Service 30,000 25,000 20,000 15,000 10,000 5, Commodity & Ingredient Hedging 29

30 1,000 Metric Tons 90,000 80,000 E.U. Egypt Southeast Asia Major Corn Importers (Updated December 12, 2017) Source: USDA Foreign Agricultural Service 70,000 South Korea Mexico Japan 60,000 50,000 40,000 30,000 20,000 10, Commodity & Ingredient Hedging 30

31 Seasonal Tendency Commodity & Ingredient Hedging 31

32 Implied Volatility Commodity & Ingredient Hedging 32

33 Summary The December WASDE Report offered only demand adjustments to the balance sheet, deferring supply changes to the final 2017/18 crop estimates until the mid-january Crop Summary report. Corn exports were left unchanged, while the ethanol expectation was upped on large weekly production numbers, leaving the carryover lower by 50 million bushels to end at 2,437 million. The USDA offered minimal adjustments to the global corn balance sheet which led to just a 0.22 MMT gain to stocks, leaving the total at MMT. Commodity & Ingredient Hedging 33

34 Commodity & Ingredient Hedging, LLC 120 South LaSalle Street, Suite 2200 Chicago, IL fax internet site: There is a risk of loss in futures trading. The information contained in this publication is taken from sources believed to be reliable, but is not guaranteed by Commodity & Ingredient Hedging, LLC as to accuracy or completeness, and is intended for purposes of information and education only. Nothing therein should be considered as a trading recommendation by Commodity & Ingredient Hedging, LLC. The rules and regulations of the individual exchanges should be consulted as the authoritative source on all contract specifications and regulations. There is a risk of loss in all futures and options trading. Copyright 2017 Commodity & Ingredient Hedging, LLC. All rights reserved. Commodity & Ingredient Hedging

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