Latest in Marketing & Outlook
The recent history of the US-Brazil-China soybean trade triangle points to a trade-off between resiliency and growth in commodity marketing. The U.S. has managed to diversify its soybean use which may make markets for U.S. soybeans more resilient in the face of future shocks. However, it has failed to capture the growth in global soybean demand due to Chinese imports which has mainly gone to Brazil.
Post-harvest grain marketing is a big deal for Illinois grain farms. As part of a series of articles on the post-harvest marketing challenge, this article provides evidence that realized returns to post-harvest corn and soybean sales vary substantially across marketing years but are correlated with seasonal cash price appreciation. This implies farms may not be fully realizing the benefits of forward contract both before and after harvest.
Post-harvest grain marketing is a big deal for Illinois grain farms. As part of a series of articles on the post-harvest marketing challenge, I show realized returns to post-harvest grain marketing for Illinois grain farms are positive and roughly equal to seasonal appreciation in cash prices. However, these returns are subject to considerable risk. Many farms earn negative returns from post-harvest marketing relative to their own near-to-harvest sales.
In this farmdoc daily article, we describe differences in post-harvest marketing across farms, finding that there is a large group of Illinois grain farms that have book inventories equal or greater than calendar year production on Dec. 31, shortly following harvest. These farms tend to be the same ones year after year. Book inventories are negatively related to marketing activity, suggesting farms with large inventories as a share to production retain substantial price risk after harvest.
Post-harvest grain marketing is a big deal for Illinois grain farms. In the first of a series of articles on post-harvest marketing challenge, I show that in aggregate, around 60% of Illinois corn and soybean production remains unsold after harvest. The analysis emphasizes the importance of understanding the risk-reward tradeoff in choosing whether to sell or store grain after harvest and how these tradeoffs may differ across farms.
In the past two decades, US milk production has increased as both the number of dairy cows and the milk yield per cow in the US has grown. We show markedly different growth strategies across regions: some states have increased cow numbers while others have focused on yield growth. We consider what these regional growth trends mean for future dairy production decisions.
The USDA World Agricultural Supply and Demand Estimates (WASDE) and Crop Production reports lowered projected US corn and soybean yield. Prices for both crops increased, but the soybean price reaction was comparably larger than that for corn. The report reaction shows market conditions differ by crop: the corn market is adequately supplied while the soybean market remains tight.
We estimate total CO2 production of U.S. ethanol plants over 2015 through 2023 and find that it varies from a low of 42.4 million tons to a high of 48.9 million tons. Given the large CO2 production of ethanol plants, it is not surprising that the maximum possible benefit from tax credits for sequestration in the IRA is also large. We estimate the maximum potential revenue to be $3.75 billion per year, which would more than likely double the after-tax income of the U.S. ethanol industry.
The U.S. ethanol industry entered 2023 on an uncertain note, with weekly profits teetering around the breakeven level. Like all other facets of the commodity business, the ethanol industry was…
The operational efficiency of any industry is key to long-term profitability, no less so for the U.S. ethanol industry. Fortunately, the USDA began publishing the Grain Crushings and Co-Products Production…
There has been a huge increase in biomass-based diesel feedstock usage because of the renewable diesel boom. Usage more than tripled between 2011 through 2022, growing from 7.8 to 25.0 billion pounds. Soybean oil is the largest biomass-based diesel feedstock by volume every year. The biggest gainers in terms of biomass-based diesel feedstock shares were yellow grease and corn oil. The biggest loser in terms of market share for biomass-based diesel was tallow.
There has been a huge increase in feedstock usage because of the renewable diesel boom. As recently as 2017, total feedstock usage for renewable diesel was a little over 2 billion pounds. This surged to nearly 13 billion pounds in 2022, a six-fold increase. Total feedstock usage grew over five billion pounds in 2022 alone. In terms of individual feedstocks, soybean oil has clearly been the biggest winner so far during the renewable diesel boom.
Revised profitability estimates show that FAME biodiesel producers in the U.S. have weathered the renewable diesel boom that started in 2021 much better than many expected. The outlook is not entirely rosy, however. Robust FAME production, in combination with surging renewable diesel production, may lead to more D4 RINs being generated than is needed for compliance with RFS mandates. This could lead to D4 RIN prices going even further “off the cliff” than they have in recent months.
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The Marketing and Outlook Research Reports (MORR) were published between 2008 and 2014. The reports are archived for interested researchers and public use.
The Marketing and Outlook Briefs (MOBR) were published between 2007 and 2011. The articles are archived for interested researchers and public use.