2018-2020: Pressure on Grain and Farm Supply Sectors to Persist

November 2017

Key Points

  • Grain handlers will benefit most from persistent large grain supplies and good carry.
  • Trade agreement renegotiations will cast a shadow of uncertainty over U.S. grain exports.
  • Growth in U.S. corn demand will slow. Domestic livestock and broiler expansions will lose steam and export competition will limit global market share.
  • Russia will exert increasing influence on the world wheat market. A weak currency, expanding acreage, improving yields and infrastructure, and proximity to key markets will solidify Russia’s lead position in wheat exports. Opportunities for the U.S. are in Southeast Asia and Latin America.
  • Powered by a currency advantage, Brazil will expand its soybean acreage by 2-3 percent annually through 2020. Concerns about its transportation infrastructure are subsiding.
  • Brazil’s expansion in corn ethanol production and its tariff on U.S. ethanol will also hurt U.S. ethanol margins.
  • Excess fertilizer warehouse capacity will pressure input retailers as they compete for market share in an increasingly competitive market amid a consolidating customer base.

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