Ohio Soybean Council- June 9, 2020 Photo Credit- Corey Hillebro - PowerPoint PPT Presentation

Ohio Soybean Council- June 9, 2020 Photo Credit- Corey Hillebro

The outlook might be grim, but this helped me to remember the positives- “it is without a doubt, the most fertile country, with the most varied soil, the best watered, and that which offers to agriculture and commerce, the most abundant and easy resources, of all those which the Europeans have ever discovered…” - St. John de Crevecoeur

Today’s Agenda 1. Marketing opportunities for soybeans and corn 2. Federal aid and policy expectations 3. Evaluating future budgets and working capital Photo Credits: Easy Stock Market, Pinnacle Agriculture, and American Soybean Association

Market Outlook: Soybean Fundamentals Bullish ---> Global Growth US China Fund Dollar Trade Positions Meat US <--- Bearish Demand Acreage Increase African South Growing Swine Amer. Stocks Fever Acres Credit to INTL FCStone for concept Long Term---> <--- Short Term

Market Outlook: Global Soybean Picture Global Soybean Production 400 New Record at ~363 Rest of World 350 East Asia 300 Million Metric Tons US South America 250 200 150 100 50 0 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Source: USDA FAS

Market Outlook: Incentive to Produce Soybeans Soybean Prices in to US and Brazilian Producers in Domestic Currency $18.00 55 50 $16.00 Brazilian Real/Bushel 45 $14.00 USD/ Bushel 40 $12.00 35 30 $10.00 25 $8.00 20 $6.00 15 4/5/2013 4/5/2014 4/5/2015 4/5/2016 4/5/2017 4/5/2018 4/5/2019 4/5/2020 Author Calculation using CEPEA and USDA AMS Data

Market Outlook: US Soybean Production Change in US Soybean Production from Previous Year 800 670 571 568 600 394 370 400 315 290 133 128 200 115 Million Bushels 17 0 -1 -30 -55 -55 -200 -135 -234 -302 -400 -520 -600 -800 -872 -1000 Data Source: Author Calculation using USDA FAS Data

Market Outlook: Domestic Soybean Crush NOPA Soybean Monthly Crush Reports Daily Soybean Crush Margin 190 250 180 171.754 170 200 160 160 Million Bushels 150 Cents per Pound 150 140 100 130 120 50 NOPA Represents 95% of US Soybean Crush 110 0 100 Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Previous 5-Yr Range 5-yr average 2018/19 2019/20 Data Source: DTN Prophet X Data Source: National Oilseed Processors

Market Outlook: Domestic Soybean Crush Implied 2019/20 Marketing Year Soybean Crush- by Month 2,220 2,194 2,200 2,180 2,160 Million Bushels 2,146 2,144 2,140 2,140 2,127 2,115 2,120 2,100 USDA May Estimate- 2,125 2,098 2,100 2,080 2,060 2,040 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Author Calculation using NOPA and USDA- NASS Data

Coronavirus Impact: Pork Industry ❖ Another 1.9 million people US Federally Inspected Hog Slaughter- 6 Day Moving Average filed for unemployment for the 500,000 first time last week. ❖ Roughly 39 million people 450,000 have been laid off, furloughed, or temporarily released their job in just 10 weeks. 400,000 Weekly Hog Slaughter ❖ Official unemployment rate is 350,000 16.3% for May- down from 19.7% in April. 300,000 ❖ Roughly 40% of total people either working or looking for 2019 work (workforce) were not 2020 250,000 receiving pay. – benefits? 43% Drop 5-Year Average ❖ What type of income effects 200,000 will we see later in 2020? Source: Author Calculation using USDA Agricultural Marketing Service Data

Market Outlook: African Swine Fever Number of Reported Cases in China of African Swine Fever 30 27 26 25 21 20 Reported Cases 20 15 10 8 8 7 7 7 6 6 ❖ Cases have started to rise in China 5 5 5 4 again. 3 2 2 2 2 ❖ Outbreaks in Poland and Eastern 0 European countries. Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr ❖ China announced ban of pork from 2018 2019 20 India. – May 28, 2020 Data Source: Chinese Ag Ministry

Biofuel Use: How Much Gas are We Consuming?? Weekly Demand of Finished Motor Gasoline ❖ Consumption of motor gasoline is increasing from a low of almost 213 450 million gallons/ day or a 46% 396.5 407.2 reduction from expected. 400 ❖ Likely will not return to pre-COVID 390.0 fuel use in 2020. Million Gallons per Day ❖ 11% decline in annual fuel 350 demand . ❖ Assumes no flare-up later in 300 2020. 5-Year Average 317.1 ❖ Forecasted gasoline demand in 2021 2019 250 and how the EPA sets the 2020 Renewable Volume Obligation (RVO) are going to be important for all 2020 Forecast 200 biofuels in marketing year 20/21. 212.7 ❖ Low oil prices have two effects- 150 ❖ Increase gasoline use Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ❖ Decrease short-term biofuel Data Sources: Historical- U.S. Energy Information Agency, Forecast- Author calculation using estimates for competitiveness (~$0.02/gal.) percentage declines in month gasoline consumption reported by US gasoline retailors to historical use.

Poll Question #1: Driving in my community is back to what percent of pre-COVID levels? 55%-65% 65%-75% 75%-85% 85%-95% 95%-100% Unsure

Market Outlook: Prospects for Soybean Exports United States Soybean Commitments September thru May 70 5956 60 Million Metric Tons Rest of the World China 5048 47 50 45 43 39 42 3737 40 293034 29 2527 29 28 30 24 24 20 10 0 Source: Intl FCStone Data Source: USDA FAS

Market Outlook: Prospects for Soybean Exports Projected Change in Brazilian Land Use and Cropland in Response to a 25% Increase in Tariffs on US Soybean Exports to China Cycle Broken ASF Credit: Karen Braun Richards, P, F. Taheripour, E. Arima, and W.E.Tyner. 2020. “Tariffs on American Soybeans and their Impact on Land Use Change and Greenhouse Gas Emissions in South Africa. “Choices. Quarter. 2.

Market Outlook: Prospects for Soybean Exports Carry Out (Million Metric Tons) Data Source: USDA FAS 10 20 30 40 50 60 70 0 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 South America Carryout and Stocks to Use Ratio 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 0% 5% 10% 15% 20% 25% 30% Stocks to Use Ratio

Market Outlook: Impact of Phase 1 Deal Impact on Total US Soybean Exports 2,500 1,988 1,957 1,913 1,892 2,000 427 423 Million Bushels 1,500 1,423 1,402 1,000 1,561 1,534 500 490 490 0 No Deal Phase 1 No Deal Deal 2020/21 2021/22 Source: FAPRI-MU; U.S. Agricultural Market Outlook; Trade Friction Baseline and a Phase 1 Scenario. FAPRI-MU Report #01-20. March 2020.

Poll Question #2: Will China meet their Phase 1 import commitments for US ag and related products in 2020? Yes No, but more than 2017 baseline No, and less than 2017 baseline Unsure

Market Outlook: Impact of Phase 1 Deal US Ag Sales to China- Fiscal Year 2,500 Key Reminders ❖ USDA lowered 2020 2,252 2,000 Fiscal Year exports to China to $13 billion as result of COVID. Million Dollars 1,500 1,583 ❖ Phase 1 is on a 1,358 1,194 calendar year not 1,126 1,000 1,054 fiscal year. 823 786 789 774 717 651 ❖ Phase 1 for 2020 is 500 610 523 493 12.5 billion more than 414 388 2017 baseline of $19.5 0 billion. Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Actual Sales Sales Needed Seasonal Forecast Data Source: USDA FSA, Concept Credit: John Newton AFBF

Ben’s USDA- May USDA-May New Crop Estimates 6.7.2020 Soy Balance 2019-20 2020-21 Sheet 2019-20 2020-21 Bearish Bullish Planted Acres 76.1 76.1 83.5 83.5 85.5 84.0 82.8 Harvested Acres 75.0 75.0 82.5 84.5 83.0 Yield 47.4 47.4 49.8 50.5 50.5 51 Beginning Stocks 909 909 580 595 670 570 Production 3,557 3,558 4,125 4,166 4,310 4,192 Imports 15 15 15 15 20 20 Total Supply 4,481 4,482 4,776 5,000 4,782 4,720 Crushing 2,125 2,135 (+10) 2,130 2,135 2,135 2,135 Seed 97 97 100 90 90 90 Residual 4 5 35 20 20 20 Total Domestic 2,226 2,237 2,265 2,245 2,245 2,245 Exports 1,950 1,675 (-100) 1,650 (-25) 2,050 1,800 2,100 Total Use 3,901 3,912 4,315 4,195 4,045 4,345 Ending Stocks 581 955 437 580 (+100) 595 405 Stocks to Use 14.9% 14.6% 9.4% 13.8% 24% 10.1% Farm Cash Price $8.50 $8.55 $8.45 $7.75 $9.05 $8.20

Ben’s USDA-May USDA-May New Crop Estimates 6.7.2020 Corn Balance Sheet 2019-20 2019-20 2020-21 2020-21 Bearish Bullish 97.0 Planted Acres 89.7 89.7 95.1 97.0 94.5 89.6 87.2 89.0 86.2 Harvested Acres 81.4 (-0.1) 81.3 (-0.1) 178.5 Yield 167.8 (-0.2) 168 178.5 180.0 170.0 2,098 2,234 2,234 2,234 Beginning Stocks 2,221 2,221 15,995 Production 13,663 13,658 15,565 16,020 14,654 25 50 50 50 Imports 45 45 18,118 Total Supply 15,928 15,924 17,849 18,304 16,938 6,050 5,625 Feed Use and Res. 5,700 (+25) 5,750 (+50) 5,625 5,675 6,600 Food, Seed, Ind. 6,355 6,215 6,515 6,515 6,865 Ethanol 5,200 5,100 5,100 5,400 4,950 (-100) 4,800 (-150) 12,650 12,140 12,140 12,490 Total Domestic 12,140 11,965 2,150 Exports 1,725 2,200 2,000 2,575 1,725 (+50) 13,690 14,800 14,340 14,140 15,115 Total Use 13,830 (-35) 3,318 Ending Stocks 2,098 (+6) 2,234 3,509 4,164 1,823 Stocks to Use 15.1% 16.3% 22.4% 24.5% 29.4% 12.1% $3.20 Farm Cash Price $3.60 $3.60 $2.90 $2.50 $4.10