1. Livestock feed markets Trends & opportunities in feed markets
Ryan Koory, Sr. Economist

2. Today’s Presentation Introduction-- Who/What is Mercaris?
Big Picture: Canada & the Prairies
Canada & US Organic Acreage Outlook
Growth Prospects in Feed Demand
Trends and Opportunities in Trade
Organic Prices & Premiums

3. Market Data Service & Trading Platform
for organic, transitional organic, & non-GMO, crops.

4. Data & Analytics for Grains/Oilseeds
Volume weighted average prices
Spot & Forward
Food & Feed
US & Canadian Regional basis
IP vs. Conventional price tracking
Trade Volume reports

5. Mercaris Grain Facilities Map

6. Mercaris On-Line Trading Platform
The New Handshake

7. Features Brings buyers to you (new & existing)
Buyers compete for your grain
Ensures credit worthiness, timely payment
Low transaction costs

8. Canada & US Big picture
1. Feed leads (it’s a big category and growing)
2. Its an international market—your neighbor to the South loves eggs, dairy and and meat.
3. Given this, Canada has both Strengths & Challenges
Small grains!
Plant-based proteins (not feed)

9. Acreage Outlook

10. Organic Farm Land (Acres)
How did 2015/16 look?
On par for field crops
CA: 830,263 acres
US: 807,490 acres
US sticks to Corn/Soy
US: 38% of acres
CA: Less than 15%
Likely near-even for wheat
CA: > 229,374 acres
US: 301,950 acres

11. Canadian flax acres play a major role in organic production
Organic Oilseed Acres
Canadian flax acres play a major role in organic production

12. Organic Farm Land (Acres)
Since 2015/16?
US field crop acres up MORE THAN DOUBLED!
Major feed crops (corn, soy) were 31% of growth
But...CA data ends in 2015/16
What about Canada?
Corn/soy, likely still small
Probably a lot of wheat growth
??????? ?

13. Livestock Market Growth & Feed Demand

14. Meat Production Growth Remains Robust
2015 data shows 618 certified organic CA livestock producers
About 1/5 the size of the US
About 1/5 were located in the prairie region (mostly cattle producers)
Like US, CA broilers and egg production leads feed demand
We don’t have data to see CA growth
But, if it’s anything like the US, then CA poultry production growth has been swift!

15. Feed demand follows
Broiler meat is the BIGGEST driver of US feed demand growth
Higher protein feed needs pushes feed meal growth faster that grain
Though we don’t have exact CA livestock numbers, we can guess it’s under the same pressure
Growing poultry production escalates meal demand FASTER than grain
Upside side for feed producers, trade opportunities can come be found in the US due to this growth

16. Organic Exports Opportunities for Canada
A lot of those opportunities are with the US Canada viewed as more trustworthy than other countries of origin Currency strength matters’ A lot US Imports are corn/soybeans, not huge crops in the prairies, so develop focus on small grains for rations --Alternatives to meat—means demand for yellow peas, lentil oats.

17. US Corn Supply Outlook What role will imports play over 17/18? ?
16/17 ended down 6% y/y at 19 million bu, but production up 38% y/y
So far, 17/18 imports are down 64% y/y Sep-Nov 2017 at 2 million bu
Imports from Turkey down a massive 3.3 million bu Sep-Nov 2017
Mercaris estimates 2017/18 production at 43 million bu, up 35% y/y
But, GCAU grew 39% from , and wont likely see a slowdown
*Trade statistics sourced from USDA GATS

18. US Soybean Supply Outlook?
Production posts large gains, but import still dominate supplies
2017/18 US production estimated at 7.1 million bu, up an impressive 38% y/y
Imports likely to dominate supplies again in 2017/18 though
Imports accounted for 74% of US supplies in 2016/17
So far, 2017/18 imports are up 15% y/y Sep-Nov 2017
2017/18 may see imports fall as a share of domestic supplies, but are likely to remain dominant
*Trade statistics sourced from USDA GATS

19. Vegetable protein markets abound
*Trade statistics sourced from USDA GATS

20. Opportunities in Trade
*Trade statistics sourced from Stats Canada & USDA GATS

21. Prices

22. Organic Feed Corn Prices
Positive start to 17/18
Corn lost $2 per bu. over 15/16
2016/17 price remain near $8.70/bu, and trading in a tighter range
Since the close of 16/17, corn prices have steadily gained $1.00, with Dec 2017 averaging $9.63/bu

23. Organic Feed Corn Prices
Corn maintains a strong price premium
$4-6/bu premium over conventional
Down from $6-9/bu seen in 2016
*Prices received for conventionally produced commodities

24. Organic Feed Wheat Prices
Feed grade wheat is a tale of two prices
Wester wheat caries a $2-3/bu premium over conventional
Easter CA wheat caries $5-7/bu premium
Wester CA discount due to transportation
CA poultry markets located in ON & BC
US import demand pulls from Vancouver and across the Great Lakes
*Prices received for conventionally produced commodities

25. Organic Feed Oats & Barley Prices
Organic Feed Barley
*Prices received for conventionally produced commodities
Oats carry smaller Western discount, and a smaller premium overall, $1-2/bu
Barley looks like wheat/corn
Western premium $3/bu
Eastern $6/bu

26. Organic Feed Soybean Prices
Price holds trend, but volatility picks up
Beans lost $2.50 per bu over 15/16
2016/17 price dipped over Q2 – Q3 but recovered to $20.20/bu by September
Since the close of 16/17, bean prices have remained near $19.25/bu, but trading on a wider range
So far, 2017/18 price range is running near $4.70/bu, up from $3.40/bu in 2016/17

27. Organic Feed Soybeans Prices
Soybean prices hold $6-12 over conventional
FOB holds bigger premium ($15/bu+)
Likely reflects more food grade exports
US also holds a robust and growing market for plant based proteins
*Prices received for conventionally produced commodities

28. At the end of the day...
Canada likely has equal potential to the US for organic row crops, but….
The composition of what Canada grows (particularly the Prairies) is very different
For feed markets, invest in research and marketing activities that promote small grains & legumes
Consider that food markets for alternative animal proteins are growing now: yellow peas, lentils, oats

29. Further Resources
Mercaris: Join our free market information service for growers!
Farmer’s Guide to Organic Contracts
National Center for Appropriate Technology-Marketing Organic Grains

30. Contact:
Alex Heilman
(347)

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