Corn Outlook December, 2017
Corn Outlook December, 2017 Historical Price Reference Fundamental Backdrop Seasonal Tendency Summary Commodity & Ingredient Hedging 2
Historical Price Reference Where are Corn Prices Currently, And Where are they Historically? Commodity & Ingredient Hedging 3
Historical Price Reference Commodity & Ingredient Hedging 4
Historical Price Reference Commodity & Ingredient Hedging 5
Historical Price Reference Insert Comparative CK Chart from Website Commodity & Ingredient Hedging 6
USDA Supply/Demand Report : December 12, 2017 7
Fundamental Backdrop U.S. Corn Balance Sheet in Million Bushels Crop Year 2016/2017 2017/2018 November December Change November December Change Area (Million Acres) Planted 94 94 0 90.4 90.4 0 Harvested 86.7 86.7 0 83.1 83.1 0 Yield (Bushels/Acre) 174.6 174.6 0 175.4 175.4 0 Beginning Stocks 1737 1737 0 2295 2295 0 Production 15148 15148 0 14578 14578 0 Imports 57 57 0 50 50 0 Supply, Total 16942 16942 0 16922 16922 0 Feed & Residual 5463 5463 0 5575 5575 0 Food, Seed & Industrial 6891 6891 0 6935 6985 50 Ethanol for Fuel 5439 5439 0 5475 5525 50 Domestic Total 12354 12354 0 12510 12560 50 Total Exports 2293 2293 0 1925 1925 0 Use, Total 14647 14647 0 14435 14485 50 Ending Stocks 2295 2295 0 2487 2437-50 Stocks/Usage Ratio 15.67% 15.67% 0.00% 17.23% 16.82% -0.40% Commodity & Ingredient Hedging 8
Actual USDA vs. Estimates 2017/18 Ending Stocks Estimates December November 2016-17 USDA Average Range USDA USDA Corn 2.437 2.477 2.363-2.519 2.487 2.295 Soybeans 0.445 0.445 0.425-0.491 0.425 0.301 Wheat 0.960 0.941 0.925-0.987 0.935 1.181 Commodity & Ingredient Hedging 9
Domestic Supply/Demand Fundamentals? 10
1,000 Metric Tons U.S. Corn Ending Stocks (Updated December 12, 2017) 140,000 Source: USDA Foreign Agricultural Service 120,000 100,000 80,000 60,000 40,000 20,000 0 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Commodity & Ingredient Hedging 11
70% U.S. Corn Stocks/Use Ratio (Updated December 12, 2017) 60% 50% 40% 30% 20% 10% Source: USDA Foreign Agricultural Service 0% 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Commodity & Ingredient Hedging 12
Bushels Per Acre U.S. Corn Trendline Yield (Updated December 12, 2017) 200 Source: USDA Economic Research Service 180 160 140 120 100 80 Source: USDA World Agricultural Outlook Board 60 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Commodity & Ingredient Hedging 13
100,000 Bushels Total U.S. Domestic Corn Use (Updated December 12, 2017) 14000 Source: USDA World Agricultural Outlook Board & Economic Research Service 12000 10000 Ethanol & by-products Other Food, Seed & Industrial Feed and Residual 8000 6000 4000 2000 0 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Commodity & Ingredient Hedging 14
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 5000 4000 3000 2000 1000 0 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Commodity & Ingredient Hedging 15
100,000 Bushels U.S. Corn Consumption for Ethanol (Updated December 12, 2017) 6000 Source: USDA Economic Research Service 5000 4000 3000 2000 1000 0 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Commodity & Ingredient Hedging 16
The following tables outline changes to the Global balance sheet for 2016/17 crop year & 2017/18 crop year 17
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 0.48 0.79-0.6-0.18 0.47 0.76 0.06% United States 0 0 0 0 0 0 Major Exporters -0.01 0 0.29 0 0 0.3 Argentina 0 0-0.01 0 0-0.01 South Africa 0 0 0 0 0 0 Major Importers 0.06 0.35 0.32 0.1 0.41 0.13 Egypt 0 0-0.23 0 0-0.22 EU-27 0.03 0.35 0.45 0.1 0.17 0.46 Japan 0 0 0 0 0 0 Mexico 0 0 0.07 0 0.24-0.17 Southeast Asia 0.03 0 0.07 0 0 0.1 South Korea 0 0 0 0 0 0 Selected Other Brazil 0 0 0.3 0 0 0.3 Canada -0.03-0.01 0 0 0-0.04 China 0 0 0 0 0 0 FSU-12 0 0-0.02-0.1 0.12-0.03 Ukraine 0 0-0.02 0 0.03-0.06 Commodity & Ingredient Hedging 18
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 0.76 0.85-0.1-0.13 0 0.22 0.00% United States 0 0 0 0 0-1.27 Major Exporters 0.3 0 0 0 0 0.29 Argentina -0.01 0 0 0 0 0 South Africa 0 0 0 0 0 0 Major Importers 0.13 0.51 0 0 0.5 0.04 Egypt -0.22 0 0 0 0-0.22 EU-27 0.46 0.5 0 0 0.5 0.37 Japan 0 0 0 0 0 0 Mexico -0.17 0 0 0 0-0.17 Southeast Asia 0.1 0 0 0 0 0.1 South Korea 0 0 0 0 0 0 Selected Other Brazil 0.3 0 0 0 0 0.3 Canada -0.04 0 0 0 0-0.04 China 0 0.89 0 0 0 0.89 FSU-12-0.03-1 0-0.5-0.5-0.04 Ukraine -0.06 0 0 0 0-0.05 Commodity & Ingredient Hedging 19
What About Global Supply/Demand Fundamentals? 20
1,000 Metric Tons World Corn Ending Stocks (Updated December 12, 2017) 250,000 Source: USDA Foreign Agricultural Service 200,000 150,000 100,000 50,000 0 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Commodity & Ingredient Hedging 21
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% 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Commodity & Ingredient Hedging 22
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% 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Commodity & Ingredient Hedging 23
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 300,000 200,000 100,000 0 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Commodity & Ingredient Hedging 24
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 20,000 0 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Commodity & Ingredient Hedging 25
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 20,000 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Commodity & Ingredient Hedging 26
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 5,000 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Commodity & Ingredient Hedging 27
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 5,000 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Commodity & Ingredient Hedging 28
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 5,000 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Commodity & Ingredient Hedging 29
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 10,000 0 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Commodity & Ingredient Hedging 30
Seasonal Tendency Commodity & Ingredient Hedging 31
Implied Volatility Commodity & Ingredient Hedging 32
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 204.08 MMT. Commodity & Ingredient Hedging 33
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