March 25, 2017 • Vol. 45, No. 12

United We Stand

Grain and soybean futures extend price pullbacks — Corn and soybean futures faced fresh selling last week as massive South American crops weighed on the markets. With South American crop estimates continuing to rise, there is concern export demand for U.S. supplies will dry up, though there hasn’t been proof of that yet. The wheat market was also weaker on pressure from rains that moved into the Southern Plains late last week and are expected to continue this week. Funds were active sellers of corn, soybeans and wheat last week. Live cattle futures posted strong weekly gains on support from surging cash cattle prices. The Brazilian meat scandal (see News page 3) also provided support, as traders sense the U.S. could get some of the export business Brazil loses. After modest corrective gains the previous week, price pressure resumed in the hog market. Lean hog futures were pressured by weakness in the cash hog market as market-ready supplies remain hefty.profarmer.com

Visit your Member website www.profarmer.com

for additional perspective and breaking news.

EPA: glyphosate not carcinogenic.The Science Advisory Panel determined there is no reliable link between glypho-sate and cancer, according to a final report released by the U.S. Environmental Protection Agency (EPA). However, the group could not reach a consensus regarding whether the popular weed killing agent is linked to non-Hodg-kins lymphoma.

Top Illinois farmland drops as much as 13%.The average price of excellent-quality crop-land in Illinois fell 7% to 13% last year to a range of $11,000 to $11,600, says the Illinois Society of Professional Farm Managers and Rural Appraisers. The aver-age Illinois farmland price fell 12% last year to $7,200 an acre.

Market-moving numbers coming March 31USDA’s March 31 Prospective Plantings Report is expected to confirm what traders have suspected for months — producers plan to actively switch acres from corn to soybeans this year. As we highlighted last week, our survey projected corn acres will fall roughly 3.1 million acres to 90.9 million acres and soybean plantings will rise 5.9 mil-lion acres to 89.3 million acres. That’s about what traders have built in for corn acres, but our soybean plantings figure would be high-er than the trade currently anticipates.

Don’t forget about March 1 stocksWe expect March 1 stocks at 8.395 billion

bu. for corn, 1.675 billion bu. for soybeans and 1.618 billion bu. for wheat. Those esti-mates would equate to record second-quar-ter use for corn and soybeans.

Investigation sought on biodiesel importsThe National Biodiesel Board filed a petition with the Commerce Department and the U.S. International Trade Commission to investi-gate imports of biodiesel from Argentina and Indonesia. The group says biodiesel imports from the two countries, which rose 464% from 2014 to 2016, are flooding the U.S. mar-ket and violate trade laws.

JBS to slash Brazilian beef productionJBS SA, the world’s largest meat processor, shuttered 33 of its 36 Brazilian beef slaughter plants March 23-25 due to fallout from the Brazilian meat scandal (see News page 3 for more). The company plans to resume opera-tions this week, though at a 35% reduction for an unspecified period of time.

While the Brazilian meat fiasco is supportive for cattle futures, it’s a potential negative for corn. Reduced domestic corn use would push more Brazilian corn onto the world market.

Perdue breezes through ag panel hearingKey budget, farm and trade policy issues were addressed by Sonny Perdue, President Donald Trump’s nominee to lead USDA, during his confirmation hearing before the Senate Ag Committee last week. Perdue...: • Promised “open, honest and efficient communication” on policy issues as the panel works on a 2018 Farm Bill. • “Didn’t like” Trump’s proposed deep budget cuts for USDA, but would “manage to it” if they are approved. • Vowed to be “a strong and tenacious advocate” for agriculture. Perdue wants to “get under the boards ... and work for agri-culture producers and consumers.” • Will begin working on immigration issues “post haste” if confirmed. He would advocate for changes to the H-2A visa pro-gram for temporary agricultural workers. • Plans to be “intimately involved” in trade deal negotiations and would work alongside the U.S. Trade Representative to be sure ag interests are represented in any future talks. • Urged lawmakers to ease restrictions on financing purchases of U.S. goods by Cuba. • Is committed to looking at more risk-management tools for dairy producers ahead of the 2018 Farm Bill.

After the hearing, Perdue got support from Senate Ag Committee Chair Pat Roberts (R-Kan.), and ranking member Debbie Stabenow (D-Mich.) says barring any glitch-es, she will vote for him. The full Senate is not expected to vote on Perdue until after its two-week Easter recess, which ends April 21.

Keystone XL pipeline gets green lightThe U.S. State Department Friday issued a presidential permit Friday to construct the Keystone XL pipeline. However, the matter still must go through Nebraska courts, which could take months.

News this week...Page 2: South American crops getting bigger.Page 3: Brazil uncovers meat scandal.Page 4: Spring/summer weather outlooks.

March 25, 2017 / News page 2

Follow your Pro Farmer editors

on Twitter:Search for

#pfnews.@ChipFlory

@BGrete@JuliJohnston

@MeghanVick@WalstenM

@DavisMichaelsen@DoaneAg_Vaught

Crop Comments from Twitter and

AgWeb.com.

Greene Co.,(SW) Illinois:

“#plant17 notes: There’s more resi-

due than usual. We didn’t have one substantial

snow or long freeze all winter.”

Greene Co.,(SW) Illinois:

“We’re planting corn and kicking

up dust.”

Gallatin Co.,(S) Illinois:

“Some are start-ing to plant corn.”

Custer Co.,(C) Nebraska:

“Ground is in good shape on

top, but it’s fairly dry six inches

down in spots.”

Hall Co.,(NE) Nebraska:

“Spring fieldwork is underway. Ground is in

good shape.”

Boone Co.,(NE) Nebraska:“NH3 application

is ongoing. Ground is working up well with good

moisture.”

Otoe Co.,(SE) Nebraska:“Ground is work-

ing up well, but it’s on the dry side.”

Saline Co.,(SE) Nebraska:

“Anhydrous application going well. Ground is in

good shape.”

Brazil asked to reinstate ethanol import tariffBrazil’s government is consider-ing a request by the nation’s sugar and ethanol industry to reinstate a 20% tax on ethanol imports, stated Blairo Maggi, the country’s ag minister. Ethanol producers in northeastern Brazil say rising imports of the biofuel from the U.S. are hurting their operations.

U.S. ethanol exports to Brazil surged after the country elimi-nated its tax on ethanol imports in 2010 as a “goodwill” gesture to encourage larger global trade of the biofuel. U.S. ethanol exports to Brazil totaled 5.761 million barrels last year, up from just 538,000 barrels in 2010, but down from the peak of 9.420 million barrels in 2011, the year after the import tax was lifted.

Relief on the way for dry Southern PlainsWinter wheat crop ratings con-tinue to decline in the Southern Plains amid warm, dry and windy conditions. State statisti-cians in Kansas and Oklahoma lowered the portion of the crop rated “good” to “excellent” to 38% and 40%, respectively, down two points from the pre-vious week. The Texas wheat crop dropped one point in the top two categories to 34%.

The U.S. Drought Monitor showed only 3.0% of Kansas and 7.2% of Oklahoma were free of dryness as of March 21. Less than half of Texas was cov-ered by some form of dryness, though that was 11.7 points less than the previous week. Most of the dryness is limited for now to “abnormally dry” and “mod-erate drought.”

The market isn’t concerned with the dryness and declining crop ratings, as the forecast is wetter. Rains moved into the Southern Plains late last week and are expected to continue through April 2. The best chance for widespread, soaking rains is March 28-30, according to World Weather Inc.

Chinese ethanol, DDG imports plunge; sorghum risesChina imported just 9 cubic meters of ethanol last month. The country exported nearly 400 times more ethanol than it brought in during February, as a hike in the import tax on sup-plies of the biofuel from the U.S. and Brazil ground pur-chases to a near halt.

China’s imports of dried dis-tillers grains (DDGs) plunged 61.9% to 68,860 MT. Anti-dumping and anti-subsidy tar-iffs on U.S. DDGs have dramati-cally slowed purchases.

Meanwhile, Chinese imports of sorghum increased nearly 30% during February to 735,252 metric tons, with nearly all of that supply from the United States. Given concerns with the quality of last year’s Chinese corn crop we highlighted on the front page of your March 18 newsletter, importers are seek-ing alternative supplies, includ-ing more sorghum.

U.S. supplies bulk of Chinese bean buys in FebruaryChina imported 5.538 MMT of soybeans in February, a nearly 23% increase from last year. The U.S. supplied 80% of that total. U.S. soybean shipments to China continue, but with new-crop Brazilian supplies flowing out of ports, the U.S. portion of Chinese soybean imports will decline over the second half of the mar-keting year, as is typical.

The U.S. ag attaché in Beijing forecasts Chinese soybean imports will rise to 86 MMT in 2016-17, with the U.S. expected to get 30 MMT of that business.

Attaché: Mexican purchases of U.S. corn to hold steadyMexico’s corn imports are likely to hold steady at 13.4 MMT in 2017-18, according to the ag atta-ché in the country. Despite uncer-tainty regarding the future of U.S.-Mexico trade relations, the attaché expects the U.S. to supply 13.2 MMT of the business.

Brazilian soybean crop estimates continue to riseBrazilian-based consulting firm AgroConsult hiked its soybean crop estimate by 3.2 million met-ric tons (MMT) from last month to 111.0 MMT. Abiove, the coun-try’s soy processing association, upped its estimate by 2.7 MMT from its February peg to 107.3 MMT. Pro Farmer South American Consultant Dr. Michael Cordonnier increased his esti-mate by 1 MMT for a third week in a row to 108 MMT. Cordonnier says the two remaining question marks — Rio Grande do Sul in southern Brazil and northeastern production areas — have seen beneficial late-season weather.

Bottom line: Brazil’s soybean crop is record-large and getting bigger, unlike last year. That means the Brazilian soybean export season will have a long tail. Cordonnier says that may create some port logjams, but that’s not likely until corn exports ramp up in late summer/early fall, if there is still a large volume of soybeans to export at that time.

Brazil corn crop upped, tooCordonnier acknowledges he has been on the low end of Brazilian corn crop estimates, as he wanted to see how much soil moisture would be available for the safrinha (second) corn crop at the start of pollination. Recent rains across Mato Grosso mean moisture will be plentiful, and more rain is expected through month’s end. Therefore, he raised his Brazilian corn crop estimate by 2 MMT to 88 MMT.

Strong yields in ArgentinaVery early corn and soybean yields have been even stronger than expected in Argentina. Cordonnier left his Argentine soybean and corn crop pegs at 55 MMT and 37 MMT, respec-tively, but he has a slightly high-er bias toward both crops. Also, the Buenos Aires Grain Exchange upped its Argentine bean crop peg by 1.7 MMT to 56.5 MMT.

March 25, 2017 / News page 3

Webster Co.,(C) Iowa:“We started apply-ing anhydrous last week. Soil conditions are great and mois-ture is good.”

Mississippi:“Soil temps are plenty warm for corn planting. Available soil mois-ture is the primary factor that may limit success.”

Monroe Co.,(SE) Michigan:“Wheat is top dressed. The crop looks good minus a few drown-outs in the low pock-ets. We probably won’t have the yield this year as last year’s record on our farm.”

Phillips Co.,(NC) Kansas:“Wheat is showing stress. You need to dig down six inches to find moisture.”

Thomas Co.,(NW) Kansas:“Wheat is holding on, but needs rain soon.”

Cowley Co.,(SC) Kansas:“Wheat is six to eight inches tall and needs mois-ture soon.”

Cloud Co.,(NC) Kansas:“Oats that we seed-ed two weeks ago have yet to emerge. Wheat is holding on for now despite the dryness.”

Gage Co.,(SE) Nebraska:“Ground is in good shape, but dry as we prepare for the start of corn planting.”

Atchison Co.,(NW) Missouri:“Finished NH3 application. Soil is dry on top.”

COOL on Trump’s ‘model trade pact list’The Trump administration has created a list of 24 foreign trade practices it would like to address in a renegotiation of the North American Free Trade Agreement and in any bilateral trade deal it might pursue. Included on that list is country of origin labeling (COOL). Senate Ag Chairman Pat Roberts (R-Kan.) was not happy to see COOL, which sparked a meat trade dispute with Mexico and Canada, on the list. “We fixed the issue of COOL in 2015,” Roberts said. “We don’t need to go down that road again. We narrowly escaped about $4 billion — somewhere between $2.5 billion and $4 billion — in retaliatory tariffs against the U.S.”

USDA announces wildfire relief fundingUSDA will provide more than $6 million in funding to help farmers, ranchers and forest landowners affected by the dev-astating wildfires that tore across Kansas, Oklahoma and Texas. The funding will be made available through the Environmental Quality Incentives Program (EQIP).

There’s still no word on wheth-er USDA will allow temporary emergency grazing of Conservation Reserve Program (CRP) land to aid those impact-ed by the wildfires, as requested by the states’ governors.

Bird flu spreads to KentuckyA case of low-pathogenic bird flu was confirmed at a commer-cial poultry farm in Kentucky last week. Between confirma-tions of prior suspected discov-eries of the virus and new find-ings, the number of low-patho-genic bird flu cases in Alabama has expanded to six. The bird flu virus has been found in four states — Alabama, Kentucky, Tennessee and Wisconsin — this year; most have been low-pathogenic strains.

Stocks favorable for beef demand, negative for porkBeef demand last month was stronger than anticipated, but pork demand lagged based on USDA’s Cold Storage Report.

Beef stocks at 502.4 million lbs. were 19.3 million lbs. less than expected. Beef stocks dropped 35.5 million lbs. (6.6%) from January as production increased, signaling strong demand, led by robust exports.

Pork stocks at 572.0 million lbs. were 26.1 million lbs. more than anticipated. Pork stocks rose 45.0 million lbs. (8.6%) from January, slightly greater than the normal February increase.

Chicken stocks were up 11.9 mil-lion lbs. (1.5%) from January versus the normal monthly drawdown.

Drop in placements expectedAfter three months of placements running sharply above year-ago, traders expect USDA’s Cattle on Feed Report to show the category down from last year in February.

March 24 Cattle on Feed Report Average Estimate estimate range (percent of year-ago)

On Feed Mar. 1 100.1% 99.1%-100.8%Placed in Feb. 98.9% 94.0%-103.5%Mkted in Feb. 103.3% 102.5%-104.0%

Check www.profarmer.com for our reaction to Friday’s report.

Jan

Feb

Mar

Apr

May Jun

Jul

Aug

Sep

Oct

Nov

Dec

425

450

475

500

525

550

5752016 2017 five-yr. avg.

Frozen Beef Stocks

Million lbs.

Jan

Feb

Mar

Apr

May Jun

Jul

Aug

Sep

Oct

Nov

Dec

450

500

550

600

650

7002016 2017 five-yr. avg.

Frozen Pork Stocks

Million lbs.

Brazilian meat scandal opens door for U.S. exportsBrazilian officials raided some of the country’s meat process-ing plants March 17 amid accu-sations the companies paid bribes to federal meat inspec-tors to allow tainted meats to be sold domestically and exported. The two-year investigation found corrupt activities among 21 processing plants and 33 fed-eral inspectors. While the 21 plants represent only a small fraction of the country’s rough-ly 4,800 meat processing facili-ties, the corruption has shaken confidence in Brazilian meat supplies. Brazilian meat exports fell from a daily average of around $63 million prior to the scandal to just $74,000 on March 21, according to Maggi. Though he is trying to downplay the event, Maggi fears the scandal could wipe out more than 10% of Brazil’s global market share.

China, Hong Kong, Chile, Japan, Mexico, South Africa and the European Union are among the key countries that have fully or partially suspend-ed Brazilian meat shipments. The U.S. will test all shipments of raw beef and ready-to-eat products from Brazil.

Most of Brazil’s beef comes from grass-fed cattle, so Australia and Argentina are more likely than the U.S. to see a pick up in near-term export business. However, there is an opportuni-ty to expose some of the tradi-tional Brazilian markets and others to high-quality U.S. corn-fed beef if the scandal leads to lengthy suspensions of buys. Australia, China near beef deal

Chinese Premier Li Keqiang visited Australia last week in hope of signing a new bilateral trade agreement that would include beef. Australia wants to capitalize on China’s temporary suspension of Brazilian beef imports. China/Hong Kong was the largest market for Brazilian beef in 2016, accounting for 34% of its revenue.

March 25, 2017 / News page 4

News alert and analysis exclusively for Members of Professional Farmers of America® 6612 Chancellor Dr. Ste. 300, Cedar Falls, Iowa 50613-9985Sr. Vice President, Chuck Roth • Publisher/Editorial Director, Chip Flory • Editor, Brian Grete • Editor Emeritus, Jerry Carlson

Sr. Economist, Dan Vaught • Sr. Economist, Bill Nelson • Sr. Economist, Marty Foreman • Sr. Economist, Gaogao YuDigital Managing Editor, Julianne Johnston • News Editor, Meghan Vick • Inputs Monitor Editor, Davis Michaelsen

Member Relations Manager, Shelley Eilderts • Washington Consultants, Jim Wiesemeyer and Roger Bernard, Informa Economics IEGSubscription Services: 1-800-772-0023 • Editorial: 319-277-1278 • To record your news alert for PF editors: 1-800-PFA-NEWS (1-800-732-6397)

©2017 Professional Farmers of America, Inc. • E-mail address: editors@profarmer.comCEO, Andrew Weber • President, Kris Carlson

Neutral state of ENSO raises weather uncertaintyby Digital Managing Editor Julianne Johnston

Four meteorologists and four different forecasts. The common denominator — all are watching the

El Niño-Southern Oscillation (ENSO) closely.

Lerner: Arrival of El Niño by summer still questionableWhether El Niño arrives in time to impact the weath-

er across the Corn Belt this summer is still up for debate, says Meteorologist Drew Lerner of World Weather Inc. He doesn’t expect El Niño to have an influence on the weather this spring, but it could by summer.

Lerner says with or without El Niño, he looks for some areas of the Corn Belt to have a drier tendency. “I don’t expect a full-blown El Niño event this summer, but I do expect some influence from El Niño-like condi-tions,” he says. “As a result, I’ve added some moisture to the summer forecast.”

But if there is little to no El Niño influence by July, Lerner says a larger area of the Midwest would trend dri-er-than-normal, although he cautions he’s not looking for a 2012-style drought. “I think we’ll have pockets of dryness that impact the crops this summer, but nothing that slash-es yield,” he says, noting that good areas will make up at least some of the yield reduction in the drier areas.

He favors a corn yield close to trendline to “a tiny bit” below and expects a greater-than-normal amount of yield variability. “The heart of the Corn Belt will do relatively well this spring. I expect some planting disruptions, but nothing too wet,” he adds.

Anderson: Trendline yields in playWith El Niño getting established in the Pacific Ocean,

the summer temp pattern looks fairly normal to a little below-normal later in the season, accompanied by peri-ods of moisture during grain fill. DTN Senior Ag Meteorologist Bryce Anderson says that’s a recipe for yields near trendline, as he doesn’t expect any real impediments to drag yields lower this growing season.

“Right now it doesn’t look like there will be a big issue getting the crop planted. There might be a holdup in the northern Corn Belt because part of that country is wet right now,” says Anderson. “The precip outlook for spring is looking active, although not as active as in recent years that resulted in prolonged delays.”

Anderson doesn’t see any change in the trend toward a weak El Niño event. “There is a substantial amount of warmer water in the eastern Pacific. There is still an area around the International Date Line where the water temps are holding a little bit below average, but that is eroding as well,” he explains. “I believe we’ll be in an El Niño weather pattern by mid-summer that will impact the rest of the growing season. The features are starting to show more momentum.”

With rain in the near-term forecast, Anderson believes areas of the southern Corn Belt that have trended drier

recently will see improvement. “The circumstances are far different than they were five years ago when we were coming out of a strong La Niña,” he says.

Tapley: El Niño not a major factor in forecast The Pacific Decadal Oscillation (PDO) will be a more

dominant weather-driving factor this year than ENSO, says Meteorologist Kyle Tapley of MDA Weather Services. He says the PDO isn’t as positive as it has been the past couple of years, which could lead to some drier weather — but not drought — across the Corn Belt.

“El Niño doesn’t play a huge role in our forecast ... I’m not sure it will develop in time to impact spring or sum-mer weather,” says Tapley. As a result, he says temps in April and May should trend warmer, especially across the southern Corn Belt. Some periods of above-normal precip are expected over most of the eastern Corn Belt, with normal precip during April in the western areas. May should feature normal rains across the Midwest, with a drier bias across the southern Midwest. He says the warm weather should also aid germination.

“During the summer months, we are looking for warmer-than-normal temps along with normal precip,” says Tapley, noting his confidence in the forecast is lower than normal due to the lack of strong weather-driving influences. “The forecast isn’t as wet as last summer, but I don’t see anything in the forecast that indicates any big crop problems are ahead.”

Tapley sees potential for a national average corn yield of 170.9 bu. per acre, with soybeans at 49 bu. per acre.

Clark: Conflicting forecasts; planting delaysThree conflicting indicators that could drive weather

this growing season are being watched by Michael Clark, meteorologist in charge with Bamwx.com. First, he says the current neutral state of ENSO increases the risk of hot and dry conditions this summer and he doesn’t see strong movement toward El Niño. Second, he says the Indian Ocean Dipole (IOD) is trending toward a positive phase that increases the risk of a drier growing season. Third is the risk of exceptionally wet conditions follow-ing the mending of California’s drought.

“I feel confident we’ll have a wet spring across the Midwest and relatively confident there will be prob-lems getting the crop in on time,” says Clark. “There could be widespread delays, as the next four weeks are very wet, making it hard to come by a window to get planting off to a strong start.”

With conflicting summer-weather signals, Clark says he’s most concerned how the factors will come into play during pollination and beyond. “If the IOD spikes, you could be looking at shutting the water off and turn-ing dry. But if El Niño develops quickly, we have risk of a cooler and wetter summer,” he says.

Game plan:All risk is carried in the cash mar-kets. With cash prices leading futures sharply higher, we are watching closely and plan to hedge when the advance shows signs of slowing.

Corn I’17 0% II’17 0% III’17 0% IV’17 0%Meal I’17 0% II’17 0% III’17 0% IV’17 0%

Analysis page 1

March 25, 2017

HOGS

CATTLE

FEEDFeed Monitor

Game plan:Given recent cat-tle gains and the hog market’s his-tory of second-quarter strength, we currently carry all risk in the cash market. We expect much better hedging oppor-tunities during spring and summer.

Position Monitor Lean Hogs

I’17 0% II’17 0% III’17 0% IV’17 0%

Corn game plan: You should have all corn-for-feed needs covered in the cash market through the end of April. We’ll reevaluate the need to extend coverage after USDA’s March 31 reports. Meal game plan: You should have all meal needs covered in the cash market through the end of April. We’ll reevaluate coverage needs after USDA’s March 31 reports.

Fundamental analysisThe CME Lean Hog Index has con-tinued to slip lately, which has inspired little confidence among traders. The summer contracts fell approximately $2.00 below the February index peak at $77.73 on March 22, implying cash prices have already posted their 2017 high. Such events are very rare, happening twice in the 1980s and again in 1994. The February peak topped the June high during the Great Recession in 2009, but the market moved higher in August. Anticipation of cyclically rising supplies and depressed consumer demand remains a source of con-cern and price pressure. We are more optimistic, as we believe grilling demand will surge and offset weak bacon usage.

Feds Feeders I’17 0% 0%

II’17 0% 0%III’17 0% 0%IV’17 0% 0%

CME Feeder Cattle Index

CME Lean Hog Indexg

Daily April Live CattleTrend is higher.

Daily April Lean HogsTrend is choppy. Initial resistance remains at

the 40-day moving average (green line) around $69.20.

The July 18 low of $66.82 1/2 is initial support. A close below that level would have bears targeting the July 28 low of $63.92 1/2.

The Jan. 19 high at $120.32 1/2 is now initial support. Stronger support persists at the June 8 high of $117.55.

Fundamental analysisPersistent beef gains, tight market-ready cattle supplies and talk of strong forward bookings by retail-ers continue to support the cattle market. Bulls were encouraged by news of widening blockades of Brazilian meat by global importers amidst that country’s tainted meat scandal, as it suggests those buy-ers could be looking to the U.S. to supply at least a portion of their needs. Meanwhile, after persis-tently lagging fed cattle values for months due to the ongoing U.S. cattle herd expansion, feeder futures have easily outperformed their fed cattle counterparts this month. Conversely, the CME Feeder Index remains below its January highs. That seems likely to change as temps warm.

Initial resistance is the expired February contract’s closing high at $127.12 1/2.

$66.82 1/2

Daily May MealTrend is choppy.

The Aug. 2 low of $311.10 is initial support.

Initial resistance is now the April 21 high of $322.30.

Position Monitor

$322.30

$72.70

$70.50

$300.60

$117.55

$333.90

$63.92 1/2

$311.10

$114.97 1/2

$120.32 1/2

Position Monitor — All Wheat ’16 crop ’17 cropCash-only: 70% 20% Hedgers (cash sales): 70% 20% Futures/Options 0% 0%

Game plan: We are still targeting the $4.55 to $4.65 range in May SRW futures and $4.65 to $4.75 level in July SRW futures for additional sales.

March 25, 2017 / Analysis page 2

CORN

Jan

Feb

Mar

Apr

May

Jun Jul

Aug

Sept Oct

Nov

Dec-0.30

-0.25

-0.20

-0.15

-0.10

-0.05

0.00

0.05

3-year avg. 2017

Daily December Corn

Jul

Aug

Sep

tO

ctN

ovD

ec Jan

Feb

Mar

Apr

May

June Ju

lA

ug

5152535455565

'16-17 '15-16 USDA

Total Corn Export Bookings

Average Corn Basis

Short-term trend is lower.Daily SRW May Wheat

Daily May CornShort-term trend is lower.

Short-term trend is lower.

Position Monitor ’16 crop ’17 cropCash-only: 50% 10% Hedgers (cash sales): 50% 10% Futures/Options 0% 0%

WHEAT

Fundamental analysisRecent rains over Brazil’s safrinha corn growing region are improving prospects for that country’s crop, but its scandal over tainted meat production and exports may cause cutbacks in feed usage. That would leave more grain and soybeans available for export. These factors, along with spillover soybean weak-ness, continued to weigh on corn futures last week. Conversely, recent price losses appear to be spurring export demand, as indi-cated by old-crop sales of 1.347 mil-lion metric tons (MMT) for the week ended March 16, which was at the top end of pre-report forecasts. We believe price weakness is overdone, especially when viewed in the con-text of recent U.S. dollar losses. We are biding our time in looking for a short-term rebound and better hedging and sales opportunities.

Fundamental analysis

SRW: Forecasts for widespread early spring rains over winter wheat areas depressed wheat prices last week. SRW prices remain well above early-winter lows, but they could keep slid-ing if spring weather remains gener-ally favorable. Seasonal patterns also point prices lower.

Game plan: We continue to think the market will provide better marketing opportunities sometime during spring, although we recent-ly lowered our targets for 2016- and 2017-crop sales. We are cur-rently targeting the $3.75 area in May corn futures and the $3.90 to $3.95 level in December futures to increase old- and new-crop sales. Wait to catch up on cash sales.

Basis May futures

Position Monitor

Million metric tons

$3.63 1/4

$3.86

The July 5 low of $3.63 1/4 is now initial resistance. Tougher resistance persists at the 40-day moving

average (green line) around $3.71.

Initial support is now at the July 22 low at $3.49. Stronger support is at the Aug. 31 low of $3.32 1/2.

Initial resistance is now at the June 29 low of $3.86. Tougher

resistance is at the 40-day moving average (green line) around $3.92.

The Sept. 1 low of $4.25 3/4 is now initial resistance. Tougher resistance

persists at the Feb. 27 low of $4.38.

Initial support is at the Nov. 30 low of $4.15. Contract-low support remains at $4.06.

$3.49

$3.95 3/4

$4.38

The July 7 low of $3.75 is initial support. A close below that level would have bears targeting the July 29 low of $3.66.

$3.75

$4.65 3/4

$4.25 3/4

$4.02 1/2

$3.87 1/4

$4.15$4.06

$3.66

$3.32 1/2

Game plan: Violation of important support levels late last week trig-gered advice March 24 for hedgers to hedge the remaining 25% of unpriced 2016-crop production in July futures at $9.91 1/2 and 30% of expected new-crop production in November futures at $9.82 1/4. This gets you to 100% covered on old-crop and 50% covered on expected new-crop production.

March 25, 2017 / Analysis page 3

Daily November SoybeansShort-term trend is lower.

Jan

Feb

Mar

Apr

May Jun

Jul

Aug

Sept

Oct

Nov

Dec

-0.40-0.200.000.200.400.600.801.00

3-year avg. 2017

Average Soybean Basis

Position Monitor ’16 crop ’17 cropCash-only: 65% 20% Hedgers (cash sales): 75% 20% Futures/Options 25% 30%

Fundamental analysisRecent U.S. dollar losses should have limited pressure on the soybean market last week, as it has main-tained a solid demand base for U.S. soybean exports at a time when can-cellations are typically prevalent. But upward revisions to Brazil’s soybean harvest continued last week, keeping bears clearly in control. Traders expect the record-shattering crop to have a long export tail — potentially overlapping into the fall, when U.S. supplies become available. This week, more attention will be on pre-paring for USDA’s Prospective Plantings Report, which is widely expected to reveal a huge jump in 2017 U.S. plantings. Due to last week’s technical breakdown, we fear there is more near-term downside risk than previously thought, trigger-ing advice to increase old- and new-crop protection via hedges.

SOYBEANS

Jul

Aug

Sept

Oct

Nov

Dec Jan

Feb

Mar

Apr

May Jun

Jul

Aug10

20

30

40

50

60

'16-17 '15-16 USDA

Total Soybean Export Bookings

Jan

Fe

b

Ma

r

Ap

r

Ma

y

Jun

e

July

Au

g

Se

pt

Oct

No

v

De

c

-1.20

-1.00

-0.80

-0.60

-0.40

-0.20

0.002017 SRW

2017 HRW

3-yearSRW avg.

3-yearHRW avg.

Average Wheat Basis

Total Wheat Export Bookings

HRW: The Central and Southern Plains should benefit greatly from forecast rains, which explains the recent drop in futures. But if rains aren’t as widespread as forecast, traders could build some weather premium back into prices given the fact the latest Drought Monitor reflected widespread drought.

HRS: Spring wheat prices have held up a bit better than winter wheat quotes lately, which reflects the developing winter wheat crop and forecast cutbacks in spring plantings. Having December HRS quotes recently gain about five cents on July also reflects expectations for declin-ing supplies.

Daily HRW May Wheat

Daily HRS May Wheat

Basis May futures

Basis May futures

Million metric tons

$12.42 1/2

Short-term trend is lower.Daily May Soybeans

Bears’ next target is the mid-October low of $9.59 3/4, with key support at the

August low of $9.37 1/4.

The Aug. 31 low at $4.22 is solid support.

Initial support is at the July 5 low of $5.34 1/4.

Initial resistance is at the July 5 low of $4.52 1/4.

Million metric tons

Resistance is layered from old support at $9.91 1/2 to $10.17, with tougher resistance at the 40-day

moving average (green line) near $10.30.

The October high of $10.09 1/4 is inititial resistance, along with the 40-day moving average (green line).

May Jun

Jul

Aug

Sep

tO

ct

Nov

Dec Jan

Feb

Mar

Apr

May

0

5

10

15

20

25

30

'15-16 '16-17 USDA$5.21 1/4

The June 29 low of $5.46 is now initial resistance.

$9.56 3/4

$9.91 1/2

$4.52 1/4

$9.75 1/2

$4.22

$5.34 1/4

$10.09 1/4

$4.84

$5.46

$5.11 1/4

$10.28

Violation of the mid-November low of $9.75 1/2 would have bears targeting

the August high of $9.56 3/4.

$5.59

$9.59 3/4

$9.37 1/4

$10.17

$10.42 1/2

March 25, 2017 / Analysis page 4

FROM THE BULLPEN

Average Cotton Basis

COTTONPosition Monitor ’16 crop ’17 cropCash-only: 80% 25% Hedgers (cash sales): 80% 25% Futures/Options 0% 0%

Fundamental analysisCotton exports have proven extremely strong in early 2017, pro-viding support for U.S. prices. Old-crop futures recently have been stagnant despite weakness in the U.S. dollar, while new-crop futures made new highs. Falling global stocks are also supportive.

Total Cotton Export Bookings

GENERAL OUTLOOK

Game plan: We are still targeting the 80.00¢ level in May futures and the 78.00¢ level in December futures to increase old- and new-crop sales.

by Senior Economist Dan Vaught

Read Pro Farmer on Friday!Put the news and analysis of Pro Farmer newsletter to work for

you as early as Friday afternoon — before it hits the mail. Get Pro Farmer newsletter via e-mail.

Call 1-800-772-0023 for details!

Recent developments in the livestock mar-kets have been quite remarkable, but those have done more to muddy rather than clarify the mid-2017 price outlook.

Cash cattle prices plunged from around $172 in November 2014 to the $98 area last fall. The subsequent rebound has also prov-en very impressive, with the rise to last week’s quotes around $133 marking the largest seasonal rally of the past 20 years.

History suggests spot quotes will peak in the next few weeks, then suffer a substan-tial seasonal setback, which explains the huge discounts built into summer live cattle futures. Conversely, those discounts will also encourage cattlemen to continue mar-keting their cattle very aggressively, poten-tially limiting market-ready supplies and supporting prices surprisingly well.

Meanwhile, after cash hog prices vaulted 64% from the fall low to the $77.73 February high, hog futures are trading weakly, espe-cially relative to cattle. The April contract implies seasonal weakness, but having the summer contracts recently trade below the winter high indicates extreme industry pes-simism. Summer prices have failed to top the February peak just three times since 1980.

Given the huge gains posted by the cat-tle market, the hog bearishness is truly extraordinary. It reflects industry concerns about a major supply surge this spring. But recent events suggest greatly elevated beef prices will make pork look cheap and spur demand for the various grilling cuts. Ultimately, we suspect cash cattle and hog prices will exceed industry expectations during the spring and summer.

on corruption charges. That move prompted the currency’s big 2014 to 2016 breakdown versus the dollar. Last year’s resolution of the politi-cal situation accompanied the real’s comeback.

This is good news for U.S. ag pro-ducers and exporters, since the real advance raises the cost of Brazilian soybeans, grains and meat versus U.S. products. Brazil’s current meat scandal may change things, but real strength is helping U.S. exports now.

Currencies: We have previously examined the U.S. dollar’s early winter push to a 14-year high and more recently its setback below the 100.00 level.

One of the more surprising recent developments was the Brazilian real’s mid-March push to its highest level versus the green-back since May 2015.

In one sense, the real’s gain is understandable in light of the removal of the country’s president

Daily May CottonTrend is higher.

May Jun Jul

Aug

Sept Oct

Nov

Dec

Jan

Feb

Mar Apr

May Jun Jul1000

3000

5000

7000

9000

11000

13000

15000'15-16 '16-17 USDA

’000 running bales

Get Regular Land Value UpdatesLandOwner newsletter provides insights on key trends that drive

farmland prices, cash rents and ownership transfers — and it’s included in the VIP package.

To upgrade your Membership, call 1-800-772-0023.

Key Market Items on My ‘To Watch’ List

1) USDA Export Sales Report — Thursday, March 30, 7:30 a.m. CT Corn sales have been strong lately.

2) USDA Hogs & Pigs Report — Thursday, March 30, 2:00 p.m. CT How robust is U.S. hog herd expansion?

3) USDA Prospective Plantings — Friday, March 31, 11:00 a.m. CT Focus will be on corn and soybeans.

4) USDA Grain Stocks Report— Friday, March 31, 11:00 a.m. CT The report has been a major market-mover in the past.

Weekly Brazilian Real

Initial resistance remains at the March 6 high of 79.46¢.

The Aug. 5 high of 77.28¢ is still acting as initial support. Additional support is provided by the

40-day moving average (green line) around 77.00¢

The long-term downtrend is still intact.

Jan

Feb

Mar Apr

May Jun Jul

Aug

Sept Oct

Nov

Dec-450.00

-400.00-350.00-300.00-250.00-200.00-150.00-100.00-50.00

3-year avg. 2017

Basis May futures

The real has rallied about 36% from the September 2015 low of 0.23455.

72.52¢

74.23¢77.28¢

79.46¢

0.23455