The Big Picture: Agriculture Looks Ahead to 2018 Matthew C. - - PowerPoint PPT Presentation

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The Big Picture: Agriculture Looks Ahead to 2018 Matthew C. Roberts, PhD | www.kernmantlegroup.com 9 January 2018 2 So its all good news, right? No. There are some major challenges, too. Policy: Trade (NAFTA, WTO, KORUS) Farm

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The Big Picture:

Agriculture Looks Ahead to 2018

Matthew C. Roberts, PhD | www.kernmantlegroup.com 9 January 2018

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So its all good news, right? No.

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There are some major challenges, too.

Policy:
Trade (NAFTA, WTO, KORUS)
Farm Bill
Infrastructure
Ethanol
Macro
It’s time for a recession
Commodity Cycle
Crops are still weak
Rents are still high
Export Competition is high
What Fad will strike next?

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I must study politics and war that my sons may have liberty to study mathematics and philosophy. My sons ought to study mathematics, philosophy, […] commerce, and agriculture, in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry, and porcelain.

-John Adams, 1780

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My father studied politics and war so that I may have liberty to study mathematics and philosophy. I studied mathematics, […] commerce, and agriculture, in order to give my children the right to create hashtags such as #Resist and #OccupyWallStreet, spend thousands on tattoos and piercings and organize anti-globalist protests at Starbucks on their MacBooks.

-Matt Roberts (2017)

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The Commodity Cycle: Crops

We remain 2-3 years out until profits in the crop

sector normalize.

Normalize means $50-$75/acre to management.
Rents must continue to decline
Prices will strengthen some
Acres will shift to soy away from corn and wheat

due to higher demand.

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Soy Exports Shine

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Cash Rents are Finally Weakening

MN IA NE IN

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Livestock Cycle

Livestock sector responsible for increased profits

2017 vs. 2016

Hog demand remains incredible
Lots of new grow & slaughter capacity coming online
Market is contingent on continued strong exports
2018 should be similar to 2017
Beef demand is solid
Later in the cycle, though
Calf prices have remained firm
Feeders have been profitable.

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Put it all together…

All forces still point forward for Ag.
Crops are still consolidating
Livestock is profitable
Trade is the biggest worry
There will be a recession

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What should you be doing?

Becoming a better manager.
Be financially conservative.
Go long & fix on borrowing.
Look for opportunities.

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Questions?

Matthew C. Roberts, PhD | www.kernmantlegroup.com | @YourEconProf