1. 2017-18 Soybean Outlook and Risk Management Update
Alternate Title: Is Dr. “Doom and Gloom” Becoming an Optimist?
Southern Extension Outlook Conference
Atlanta, GA
September 27, 2017
Todd D. Davis
Assistant Extension Professor
University of Kentucky

2. Outline Market Fundamentals Update
Crop progress and condition
Growing season weather
September WASDE Update
Projected RP Insurance Harvest Price and Crop Insurance Update
Balance Sheets Sensitivity Analysis
2017 Projected storage costs and projected return to storage

3. November Soybean / December Corn Futures Monthly Average 2017 vs
November Soybean / December Corn Futures Monthly Average 2017 vs. Previous Years

5. 25% of expansion from the Dakotas
30% from the Top-5 States (IA, IL, MN, NE, IN)

13. Change in Percent Good + Excellent by week for 2017 and 2016 Soybeans
Negative means 2016 had more G&E than 2017
Change in Percent Good + Excellent by week for 2017 and 2016 Soybeans

14. Change in Percent Very Poor + Poor by week for 2017 and 2016 Soybeans
Positive means 2017 had more VP&P than 2016
Change in Percent Very Poor + Poor by week for 2017 and 2016 Soybeans

17. Analysts’s surveyed expected yields in the September report to be lowered 0.6 bpa. USDA increased 0.5 bpa
Trend is 0.48 bu/acre/year

24. USA vs. Argentina / Brazil Soybean Production (MMT)

25. US and South American Soybean Export Share
Source: USDA-FAS

26. China’s Soybean Domestic Consumption and Imports (all sources) (MMT)
Since 2008 (10/years): China’s soybean consumption has increased 110% and imports have increased about 130% (from all sources). Soybean meal consumption increased 127% while oil increased 80%

27. U.S. Acres to Meet Ethanol and Corn and Soybean Exports (2005-2020)

28. U.S. and World Soybean Stocks

29. Projected RP Harvest Price for Soybeans Using November 2017 Futures Contract Average Price (25th, 50th, 75th Percentiles)

30. Projected Indemnities for RP Insurance at the 85% Coverage Level

31. Issue #1 – 2016-17 Ending Stocks
Credit to Darin Newsom (DTN) who writes how USDA projections miss exports from Aug (t-1) to Aug (t)

33. Issue #2 – Adjusting Implied Pod Weight
What if the implied pod weight is lowered in future reports?
Pulling numbers out of my hat. Not Agronomic Based
IF implied pod weight is reduced, holding pods / 18 ft sq constant,
48.1 bushel yield if weight is same as 2016
46.5 bushel yield if weight is same as 2014

34. 2017-18 US Soybean Balance Sheet Sensitivity Analysis

35. Summary and Conclusions
October report might be the last, best hope for those bulls looking for lower production and reduced stocks
Soybean market has little cushion if projections reverse course and are trimmed
A weather scare in South America would be helpful…

36. Storage decision
The elevator I use for commercial storage examples is charging a $0.35/bushel flat fee from Oct 1, 2017 to Sep 30, 2018.
worth budgeting commercial storage costs vs. expected basis appreciation and futures carry to pencil a return to commercial storage.
Cash flow and tax management may drive this timing decision
Basis may not appreciate as vigorously as in the time-frame. Earlier years rewarded storage until May (or later)

37. Thank you!
Todd D. Davis, Ph.D. Assistant Extension Professor University of Kentucky