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Craighead/Poinsett County Production Meeting

2024 Corn and Cotton Market Outlook

Food Bank of Northeast Arkansas

February 12, 2024

Ryan Loy, Ph.D.

Assistant Professor and Extension Agricultural Economist

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Weekly North America Fertilizer Price Index

All fertilizer prices reported to Bloomberg are down ~36% since February 2022

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Key Fertilizer Price Update

Nutrient	February 2022 Price ($/lb)	February 2023 Price ($/lb)	February 2024 Price ($/lb)	Price Change Over 2022
Urea (46-0-0)	$0.35	$0.21	$0.20	-$0.15
MAP (11-52-0)	$0.39	$0.33	$0.33	-$0.07
DAP (18-46-0)	$0.38	$0.35	$0.33	-$0.05
Potash (0-0-60)	$0.36	$0.23	$0.19	-$0.17

Source: Bloomberg Green Markets

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2024 Corn Market Outlook

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Corn: Too Much Supply and Too Little Demand

Record Production Year in 2023
Falling Exports

China
Brazil

How do we make up the difference in 2024?

Less corn acreage
Increase exports
Ethanol?

Source: USDA Feed Grains Yearbook and Dr. Grant Gardner, UK

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Soybean/Corn Ratio is neutral

Operating Cost/Revenue ratio

Soybeans (53 bpa): 77%

Corn (180 bpa): 87%

Long-run average

soy/corn ratio: 2.53

FAVORS SOYBEANS

FAVORS CORN

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Corn P/L Scenarios (Total Expenses: $880.91)�

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Corn P/L Scenarios (Total Expenses: $880.91+ 25% crop share)�

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2024 Cotton Market Outlook

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Cotton #2 Oct’24 (CTV24)

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Source: USDA-ERS Cottonseed Outlook Tables (2024)

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Cotton P/L Scenarios (Total Expenses: $1,107.14)�

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Cotton P/L Scenarios (Total Expenses: $1,107.14+ 25% crop share)�

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Macroeconomic Influences

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Domestic Natural Gas Price

Source: U.S. Energy Information Administration, 2024

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Crude Oil Spot Prices

Source: U.S. Energy Information Administration, 2024

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River Levels and Barge Freight Rate

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Grains Trade and Key Shipping Routes

Panama Canal:

24 ships/day until April
Drought has rerouted shipping to the Suez Canal.

Missile and drone strikes forced shipping companies to halt using Suez Canal.

Baltic Dry Index

February 7: $1,502 (~Average)

Source: Center for Strategic and International Studies

Panama Canal has also been at historic lows. Slowing shipping traffic for the western hemisphere.
The response to rising costs and wait times at the Panama canal, ships have rerouted to use the suez canal instead.
1/3 of all shipping traffic flows through the Suez Canal.
Recall that the Suez Canal was where the grounded shipping container halted global trade (2021).
Suez Canal passages are at 63 percent compared to the previous year, while Cape of Good Hope passages are up 70 percent.
The increase in ship diversions increases fuel and labor costs while decreasing the average amount of cargo traffic reaching its destination.
The Baltic Dry Index, which tracks the cost of transporting various raw materials provides insight into the macroeconomic impact of shipping delays. While the index spiked to above $3,000 in early to mid-December, the cost of shipping has dropped to $1,503 as of January 22, which is an approximately normal level.
The Baltic Dry Index (BDI) is an index of average prices paid for the transport of dry bulk materials across more than 20 routes
Members contact dry bulk shippers worldwide to gather their prices and they then calculate an average.1 The Baltic Exchange issues the BDI daily.
Insurance premiums for shipping has skyrocketed since Nov 2023. (0.5% - 0.7% of the total value of the ship).
ships with low cargo value, and a higher tolerance for risk, have deemed the trip worth making.
36 ships a day is a regular amount for Panama. Water saving measures have allowed for reduced restrictions. If rains come in May, they will shoot for 36 but if not then back to reduction (proposed was 18 ships a day).

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Thank You!! Questions?

Dr. Ryan Loy

Email: rloy@uada.edu

Phone: (214) 642-9066

FarmEconAR.com

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