Each year, Brian Basting from Advance Trading compiles a list of his Top Ten Ag Marketing Stories of the Year.  Since we are moving into the 2020’s, this year his list is the Top Ten Ag Marketing Stories of the Decade which we are posting for your reading enjoyment.

Information provided may include opinions of the author and is subject to disclosures found at the end of this document

Top Ten Agricultural Marketing Stories of the Decade

Summary: You’ve probably seen all types of “Top 10” lists for the past decade—2010-2019. Below is a list of some
of the top stories in agricultural markets. The items are in no particular order and in no way encompass all the
dynamics experienced over the course of the decade, so please feel free to add your own topics to the list.

1. African swine fever impacts ChinaA deadly outbreak of African swine fever (ASF) was reported in the
summer of 2018 in China, which is the largest pork producer and consumer in the world. This was also
the first reported case of ASF in East Asia. ASF subsequently impacted several different countries in the
region, however, resulting in culling of infected and affected pigs. There are many unknowns regarding
the impact the outbreak will have on China’s domestic pork production and import needs. For now, the
USDA is forecasting a 13% increase in U.S. pork exports for 2020. Prospects for increased U.S. exports of
pork to China will be tied to a trade agreement. This issue will be closely monitored in 2020.

2. Widespread drought in 2012 affects MidwestAny list must unfortunately include the widespread
drought in 2012 that impacted much of the Midwest. While spring planting proceeded at a rapid pace
and crop condition ratings were quite good in early June, a heat wave blanketed the Corn Belt the first
week of July. More than 3,000 high temperature records established. Dry weather persisted and the
Drought Monitor
revealed that drought encompassed more of the continuous United States than at any
other time since the report’s debut in January, 2000. Devastating losses to corn yields were seen with
soybeans also adversely affected.

3. China aggressively steps up imports of U.S. soybeans before tariff dispute halts shipmentsIn the early
2010s, China increased imports of U.S. soybeans in response to soaring domestic consumption of protein.
That peaked in the 2016/17 crop year when China imported a record 1.328 billion bushels of U.S. beans.
Everything changed in the spring of 2018, however, when the U.S. and China initiated a tariff battle. U.S.
soybean exports to China subsequently plummeted to just 491 mbu for the 2018/19 crop year. Market
Facilitation Program payments from the USDA did help cushion the steep decline in soybean prices to U.S.
producers. There is optimism that a trade agreement with China will spur more soybean sales in 2020.

4. Russia, Ukraine provide fierce competition in wheat and corn export marketsRussia emerged as the
world leader in wheat exports, while Ukraine in recent years has become a major exporter of corn. Russia
exported a record total of 1.522 bbu of wheat during the 2017/18 crop year and has remained a fierce
competitor in the world market over the past two years. Meanwhile, on the heels of back-to-back
bumper corn harvests in 2018 and 2019, Ukraine has boosted its corn exports to nearly 1.2 bbu. It
appears that competition from the Black Sea region is here to stay as the 2020s begin.

5. All-time high corn, soybean pricesA direct result of the aforementioned 2012 drought was historically
high corn and soybean prices. Carryout supplies for the 2011/12 marketing year for both crops were
already forecast to be tight prior to the onset of drought. Nearby corn futures posted an all-time high of
$8.43 ¾ on Aug. 10, 2012—the day the USDA released its first field survey estimates—while soybean
futures topped out at $17.94 ¾ on Sept. 4, 2012. That was the day after extensive weekend rainfall from
the remnants of Hurricane Isaac. History has shown, however, that “high prices cure high prices”. As the
decade comes to an end, nearby corn futures are below $4.00 while nearby beans are below $9.50.

6. Bird flu devastates Midwest layer and turkey productionThe poultry industry was devastated by
highly-pathogenic H5N2 avian influenza (“bird flu”) in the spring of 2015. Reports indicated that
nationally nearly 50 million birds were euthanized with the total economic impact surpassing $3.3 billion.
Reduced output of eggs and turkeys eventually translated into substantially higher prices; e.g. the USDA
pegged the average price for fourth-quarter 2015 Grade A eggs to be up 13% from 2014, while the price
of frozen whole turkey hens that fall was 17% above 2014. Fortunately, there have been no additional
reports of bird flu but the industry remains on full alert to do all it can to prevent it from returning.

7. U.S. corn, soybean yields reach record levelsThe growth in U.S. national average corn and soybean
yields during the decade was stellar. Improved farming practices, genetics and weather all played a role.
A case in point was 2016, when dry conditions initially developed during the spring. Corn and soybean
futures markets surged higher into mid-June before increased rainfall arrived just in time to support near
ideal conditions for corn pollination. Wetter weather then supported soybean development in July/August. While hopes were high for production potential, even the most optimistic were pleasantly
surprised by the final result: record national average yields of 174.6 bpa for corn and 51.9 for soybeans.

8. U.S. warehouse industry confirms its place as the premier grain handling system in the world
Throughout the decade, the U.S. warehouse industry proved it was well prepared to handle record U.S.
crops. The aforementioned 2016 crop was just one example when national yields far exceeded
preliminary forecasts. In spite of those types of surprises, the industry consistently identified ways to
successfully put the crops away; e.g. increased use of temporary storage. While each year certainly
provided its own unique set of challenges, the warehouse industry found ways to adapt and in so doing,
confirmed its place as the premier grain handling system in the world.

9. PEDv contributes to all-time high in lean hog futuresPrior to the arrival of porcine epidemic diarrhea
virus (or PEDv), hog producers had consistently increased the number of pigs saved per litter due to
improvements in genetics and management. That changed as PEDv spread; e.g. pigs saved per litter in
December 2013-February 2014 were down 5.5% from the prior year at 9.53. Declining pork production
helped push lean hog futures prices to all-time highs in mid-July of 2014 above $133. The impact of PEDv
on hog production was eventually managed and efficiency increased. For example, the recent USDA
Quarterly Hogs and Pigs report forecast pigs saved per litter in December 2019-February 2020 at 10.70.

10. Drought, trade uncertainty and record yields underscore need for disciplined risk managementThe
myriad of fundamental and trade factors seen during the past decade resulted in increased price volatility.
Whether it was a drought in the U.S. or South America, record yields, a surge in demand linked to
unprecedented soybean imports by China, or the subsequent trade dispute between the U.S. and China,
there was always something that seemed to take the market by surprise. What these unpredictable
market developments consistently underscored was the importance of working with a trusted risk
management consultant to executive a disciplined marketing program.

Happy New Year
Brian Basting

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