The scuttlebutt in the trade, even in the numbers released by USDA at its February Agricultural Outlook Forum, is that the economics will push farmers to plant a lot more corn acres this year.
Ag Economist Gary Schnitkey has updated budgets for corn and soybeans across the state. He knows USDA increased its expectation for corn acres around the nation by about 3 million acres but says he does not expect a big shift to corn in Illinois, “What we find is that corn is projected to be more profitable than soybeans. This is the first year in a while that has happened. However, our budgets do not suggest shifting to more corn production. Particularly corn-after-corn is less profitable than soybeans. So, it is status quo for the central Illinois area with a 50/50 corn/soybean rotation being more profitable for 2019.”
This holds for northern and central Illinois. Southern Illinois still has a regionalized economic bias to plant soybeans. Soybeans make more money there says Schnitkey, “However, the big thing right now is the upcoming USDA Prospective Plantings report and whether we will see shifts from soybean to corn which some people are expecting. These budgets would say in the heart of the corn belt, or in the corn belt in general, that you won’t see shifts from soybeans to corn. So, you have to see those shifts from someplace else and there are limited opportunities there.”
USDA in its February Outlook meeting projected U.S. farmers would plant about three percent more corn acres this season than last and almost five percent fewer soybean acres. The agency will release an official estimate of acreage March 29th.
The agricultural sector is caught up in a storm of change. Political and economic forces have been squeezing trade on the global front and U.S. farmers have been leaning into the winds. We take up a few of these topics in this edition of the WILLAg Newsletter.
Trade with China
Profile of USTR Lighthizer
USDA Ag Outlook Forum
Corn Acreage in 2019
Expected Corn vs Soybean Returns
2018 Ethanol Plant Losses
We’ll also explore these topics, marketing prospects, the price of farmland, and the weather during our March 5 All Day Ag Outlook. Hopefully, you can join us at the Beef House in Covington, Indiana. The cost is just $30 and includes Beef House coffee and rolls in the morning and Beef House lunch at the noon hour.
Tickets are available online or by calling 800–898–1065.
Hope to See You There!
Todd E. Gleason, Farm Broadcaster
University of Illinois Extension | WILLAg.org
Trade with China Friday the Chinese trade delegation gathered in the Oval Office with President Trump. A letter from President Xi was read out loud. It urged a continued push toward a final trade deal. The only firm detail to come out of the week’s worth of talks in Washington was a commitment to purchase 10mmt of soybeans. USDA issued an official release on the announcement. It did not include a timeline for the purchases. CNBC reported the Chinese had offered to guarantee purchases of $1.2 trillion dollars of U.S. goods. Again, there was no timeline issued and this point has not been confirmed by any other outlet, the White House, or the Chinese.
During the week the trade discussions in Washington, D.C. pointed to five MOU’s. These Memorandums of Understanding included one on agriculture and were how U.S. Trade Representative Robert Lighthizer had decided to break down the issues in order to tackle them; agriculture, non-tariff barriers, services, technology transfer & intellectual property.
President Trump during the Oval Office meeting Friday pushed aside the MOU’s. He interrupted Trade Representative Lighthizer in front of the Chinese. Lighthizer was trying to explain how the MOUs would build the foundation of a trade deal. Mr. Trump stopped him and said, “I disagree. I think that a memorandum of understanding is not a contract to the extent that we want.” Lighthizer agreed that the term MOU would not be used again.
The important point in this exchange is likely not the MOU discussion. The President interrupted and corrected his lead trade negotiator in front of the Chinese delegation. Clearly, if a trade deal is to be struck it can only be done one-on-one between Presidents Trump and Xi. They may meet next month at Mar-A-Lago.
Mr. Trump has long focused on closing the trade gap with China. The other issues have not been of very much importance to him although he does mention China stealing and intellectual property rights. A trade deal with China is one of the President’s campaign promises. The dazzling $1.2 trillion number CNBC reported might be very enticing to a man who has had a habit of fulfilling his campaign promises.
If it is completed in this fashion, without enforcement mechanisms or real intellectual property rights protections, then as President Trump has said recently Democrats won’t go along. Republicans are likely to stay mum as the deal sets idle in Congress and simply becomes a presidential election year rallying cry. Presidents negotiate trade deals. Congress approves them.
Profile of USTR Lighthizer
NPR profiled Trade Representative Lighthizer this week. Please take six minutes to listen. It’ll be worth your while to know a whole lot more about the man leading the trade negotiations with China.
USDA Ag Outlook Forum This week USDA put on its 95th Annual Agricultural Outlook Forum. It provides some initial numbers the trade uses to project the 2019 growing season into the markets until official USDA reports are issued. The first supply and demand report for the 2019/20 growing season will be issued in May. The March 29 Prospective Plantings report will provide survey results of what farmers think their acreage mix will look like this year. Here you will find some of the powerpoint slides U.S.D.A. Chief Economist Robert Johansson presented in the opening session and the full supply and demand tables presented Friday morning.
You may watch the full opening session of the 2019 USDA Agricultural Outlook Forum. It took place in Washington, D.C. February 21 and 22.
The number of acres of corn planted this spring will be a key factor in determining where the price of corn goes. University of Illinois Agricultural Economist Todd Hubbs took up the issue in this week’s farmdocDaily article.
He starts with a historical graph. It shows the principal crop acres in the United States and how those have changed since 1997. Both corn and soybean acreage have increased. Combined they’re up about 10 percent over the past two decades.
Illinois’ Todd Hubbs uses that history to help put the number or corn and soybeans acres into perspective, “When we look at the harvest month corn to soybean futures price ratio this year it has been about 2.37. There is a definite signal in this graph from about 2006 to 2018 that if you are above 2.4 in that ratio, there will be less corn acreage. If you are below 2.3 there will be more corn acreage. We are, today, sitting right in between those. We’ve seen problems with field work in large parts of the corn belt. We’ve seen fertilizer and other input costs go up on corn. So, the idea that we are going to see a massive increase in corn acreage could happen, but under the current price structure we might not see the kind of corn acreage we think we are going to see.”
Hubbs says he used the 2019–20 futures prices to forward calculate a seasons average cash price for new crop corn. His calculation points to $3.81 per bushel. He then figured a stocks to use ratio that would fit that number, “I think an 11% stocks to use ratio in 2019–2020 would give us $3.81. If consumption is constant at 14.8 billion bushels from this marketing year to the next, that would put corn acreage around 91.7 million at a national trend line yield of 174.6 bushels to the acre.”
Finally, Hubbs says there isn’t a lot of weather premium priced into new crop corn futures. He also says there isn’t much of premium built in for a possible trade deal with China. Hubbs thinks that may be just as bullish for corn as it is for soybeans. Right now he thinks the 2.37 soybean/corn ratio feels high if the expectation is for a substantial increase in corn acreage.
Two factors have changed between the planning periods in 2018 and 2019. First, expected soybeans prices are lower in 2019 as compared to 2018. A reasonable way of forming expectations of cash prices at harvest is to use current bid prices for fall delivery of grain. In 2018, fall delivery prices for soybeans in the month of February averaged about $9.80 in East-Central Illinois. In 2019, fall delivery prices are roughly $.75 per bushel less at $9.05 (see Table 1). At the same time, fall delivery prices for corn are roughly the same at $3.70 per bushel. An $.75 decline in soybean price reduces expected soybean returns by $45 per acre given a soybean yield of 60 bushels per acre ($45 = .75 lower price x 60 bushels yield).
Second, costs have increased, with a primary contributor being increases in nitrogen fertilizer prices. Throughout much of 2018, anhydrous ammonia prices were in the low $500 per ton range (see Table 2). So far in 2019, anhydrous ammonia prices have averaged $607 per ton in January and $613 in February (see Table 2). Fall applications of nitrogen were limited in 2018 due to wet soil conditions, leading many farmers to have to price nitrogen in 2019. These farmers likely will pay around $100 per ton more for anhydrous ammonia in 2019 as compared to 2018. If 220 pounds of anhydrous ammonia are applied per acre, leading to an application of 180 pounds of elemental N (180 = 220 pounds x .82 N analysis of anhydrous ammonia), nitrogen fertilizer costs would increase in 2019 over 2018 levels by $11 per acre ($100 price increase per ton x 220 pounds of anhydrous ammonia per acre / 2000 pounds per ton).
The decrease in soybean price increases the relative profitability of corn. The increase in nitrogen fertilizer price decreases the relative profitability of corn, partially offsetting the impacts if the soybean price increase.
2019 Corn and Soybean Budgets
Table 3 shows 2019 corn and soybean budgets for high-productivity farmland in central Illinois (see farmdoc for 2019 Crop Budgets). These budgets incorporate price and cost changes between 2018 and 2019. Two notes about these budgets:
Yields are 213 bushels per acre for corn-after-corn and 63 bushels per acre for soybeans-after-corn. These are trend yields. In recent years, yields in Illinois have been above trend. Corn yields averaged 20 bushels above trend from 2014 to 2018 (farmdoc daily, January 3, 2018) while soybean yields have averaged 6.5 bushels above trend (farmdoc daily, December 11, 2018).
Prices used in budgets are $3.60 per bushel for corn and $8.50 per bushel for soybeans. The corn price is near fall delivery bids while the budgeted soybean price is about $.55 per bushel below the fall delivery bid. The lower budgeted soybean price reflects a general pessimism about soybean prices resulting from expected large supplies relative to demand (see farmdoc daily, January 28, 2019). This lower soybean price will decrease soybean profitability relative to corn, suggesting more of a shift to corn than a higher soybean price.
Operator and land returns are $188 per acre for corn and $180 per acre for soybeans, suggesting that corn will be more profitable than soybeans. However, this difference in profitability does not suggest a large shift in acres to corn. Most farms in central Illinois have a corn-soybean rotation, necessitating a move to corn-after-corn to grow more corn. Corn-after-corn returns are projected at $137 per acre, which are less than the $180 per acre soybean-after-corn return. These lower corn-after-corn returns suggest maintaining a corn-soybean rotation.
Other Budget Values Operator and land returns shown in Table 3 were recalculated for two different scenarios. First, a $9.00 soybean price was used to calculate soybean returns. The $9.00 price is close to fall bids. Given that corn prices do not change, operator and land returns for corn remain the same as those shown in Table 3:
corn-after-soybeans: $188 per acre, and
corn-after-corn: $137 per acre,
while soybean returns increase to:
soybeans-after-corn: $211 per acre, and
soybeans-after-two-years-corn: $229 per acre.
As would be expected, this price scenario increases soybean profitability relative to corn. Current forward bids do not suggest a shift to corn from a profitability standpoint.
The second scenario maintains the corn and soybean prices at $3.60 and $8.50, respectively, but increases corn yields by 20 bushels per acre and soybean yields by 6 bushels per acre. This scenario reflects a situation where budgets are more optimistic than trend yields due to high yields in recent years. In this case, operator and land returns are:
corn-after-soybeans (233 bushels per acre): $260 per acre
corn-after-corn (223 bushels per acre): $209 per acre
soybeans-after-corn (69 bushels per acre): $231 per acre
soybeans-after-two-years-corn (71 bushels per acre):$248 per acre
Higher yields increase returns and also increase the relative profitability of corn. However, corn-after-scorn is less profitable than soybeans-after-corn. These projections do not suggest that growing more corn would be more profitable than maintaining soybean acres given that both crops have above trend yields at 2013–2018 levels.
Summary and Conclusions
Current fall delivery prices do not suggest that switching to more corn away from soybeans will result in higher profitability on high-productivity farmland in central Illinois. Due to high relatively corn yields, central Illinois is one of the most profitable areas to grow corn relative to soybeans, If central Illinois budgets do not suggest a switch to corn, budgets in less productive areas likely will not suggest a shift from soybeans to corn.
University of Illinois Agricultural Economist and noted ethanol industry specialist Scott Irwin wrote an article detailing the financial losses the industry experienced last year. Use the link above to read the full article. Here’s the paragraph Irwin penned on the potential implications for ethanol going forward.
“The ethanol industry in 2018 experienced its first losing year since 2012, thereby ending a run of five consecutive years of positive returns. The estimated loss for a representative Iowa ethanol plant in 2018 was -$2.2 million. While large, the 2018 loss was still far less than the -$6.7 million loss in 2012. The evidence points to overproduction as the driving force behind the low prices and financial losses experienced by ethanol producers during 2018. The fortunes of the U.S. ethanol industry are unlikely to improve until production and use are better balanced. This will require shuttering some production capacity, additional demand, or some combination of the two. The most optimistic scenario is additional demand for U.S. ethanol exports as part of a trade deal with China.” - Scott Irwin, University of Illinois
Q How confident are you that it will be finished by March 1? Or are you considering extending that deadline?
THE PRESIDENT: Well, they are very complex talks. They’re going very well. We’re asking for everything that anybody has ever even suggested. These are not just, you know, “let’s sell corn or let’s do this.” It’s going to be selling corn but a lot of it – a lot more than anyone thought possible. And I think the talks are going very well – with China, you’re referring to?
Q Yes.
THE PRESIDENT: And the talks are going very well.
Our group just came back and now they’re coming here. I can’t tell you exactly about timing, but the date is not a magical date. A lot of things can happen.
The real question will be: Will we raise the tariffs? Because they automatically kick in to 25 percent as of – on $200 billion worth of goods that they send. So I know that China would like not for that to happen. So I think they’re trying to move fast so that doesn’t happen. But it’s – we’ll see what happens.
I can only say that the talks with China on trade have gone very, very well. In the meantime, our economy is very strong. We’re doing well.
I don’t know if you noticed, but deficits seem to be coming down. And last month it was reported, and everybody was surprised, but I wasn’t surprised. We’re taking in a lot of money coming into our Treasury from tariffs and various things, including the steel dumping. And our steel companies are doing really well. Aluminum companies also. So we’re very happy about that.
I think that it’s – they’ll be coming very shortly. They’re going to have very detailed discussions on subjects that have never really been even discussed by people that sat in this chair and they should have been. Very important subjects. And I think we’re doing very well. Okay?
The number of acres of corn planted this spring will be a key factor in determining where the price of corn goes. University of Illinois Agricultural Economist Todd Hubbs took up the issue in this week’s farmdocDaily article.
He starts with a historical graph. It shows the principal crop acres in the United States and how those have changed since 1997. Both corn and soybean acreage have increased. Combined they’re up about 10 percent over the past two decades.
Illinois’ Todd Hubbs uses that history to help put the number or corn and soybeans acres into perspective, “When we look at the harvest month corn to soybean futures price ratio this year it has been about 2.37. There is a definite signal in this graph from about 2006 to 2018 that if you are above 2.4 in that ratio, there will be less corn acreage. If you are below 2.3 there will be more corn acreage. We are today sitting right in between those. We’ve seen problems with fieldwork in large parts of the corn belt. We’ve seen fertilizer and other input costs go up on corn. So, the idea that we are going to see a massive increase in corn acreage could happen, but under the current price structure we might not see the kind of corn acreage we think we are going to see.”
Hubbs says he used the 2019–20 futures prices to forward calculate a seasons average cash price for new crop corn. His calculation points to $3.81 per bushel. He then figured a stocks-to-use ratio that would fit that number, “I think an 11% stocks to use ratio in 2019–2020 would give us $3.81. If consumption is constant at 14.8 billion bushels from this marketing year to the next, that would put corn acreage around 91.7 million at a national trend line yield of 174.6 bushels to the acre.”
Finally, Hubbs says there isn’t a lot of weather premium priced into new crop corn futures. He also says there isn’t much of premium built in for a possible trade deal with China. Hubbs thinks that may be just as bullish for corn as it is for soybeans. Right now he thinks the 2.37 soybean/corn ratio feels high if the expectation is for a substantial increase in corn acreage.
Rivian Automotive LLC expects to build an electric plug-in pickup truck and SUV starting in 2020. Todd Gleason talks with Michael McHale about the startup company and its plans to produce the vehicles in Normal, Illinois. They also take up the impact electric vehicles are having on the automotive industry and potentially ethanol made from corn.
Supplemental Coverage Option (SCO) was introduced in the 2014 Farm Bill but was limited to acres where Price Loss Coverage (PLC) was the commodity title program choice. More farmers likely will be choosing PLC for the 2019 and 2020 marketing years, leading to more acres being eligible for SCO. SCO may be attractive to those farmers who find the costs of Revenue Protection (RP) at an 85% coverage level too high. Farmers interested in SCO should discuss eligibility options with crop insurance agents.
by Gary Schnitkey SCO Background
SCO is available to farmers who choose PLC for receiving commodity title payments. SCO is not available when Agricultural Risk Coverage (ARC) is chosen (farmdoc daily, June 16, 2015). ARC was selected on over 90% of the base acres in corn and soybeans under the 2014 Farm Bill. As a result, SCO was not an option for most Midwest farmers. Similar to the 2014 Farm Bill, the 2018 Farm Bill again gives a choice between PLC and ARC. More farmers likely will choose PLC for 2019 and 2020, increasing the acres eligible for SCO.
SCO provides protection in a band from 86% down to the coverage level of an underlying COMBO product. If, for example, a farmer selects a 75% Revenue Protection (RP) product, SCO could be purchased from 86% to the 75% RP coverage level (see farmdoc daily, December 17, 2014; April 24, 2014).
The SCO band of coverage is based on county revenue given that the underlying Combo product is RP. That is, county revenue must fall below 86% of expected revenue before SCO makes a payment. As a result, the RP-SCO combination provides mixed coverage: Farm-level coverage is provided from the RP coverage level downward while county-level coverage is provided between 86% to the coverage level of the RP product.
The primary disadvantage of the RP-SCO combination is that the county-level coverage may not match losses on a farm. Sometimes a farm may have a loss while SCO will not trigger a payment. Conversely, it is possible for the farm not have a loss while the county-based SCO product triggers a payment. Premiums under RP-SCO Combinations
The primary advantage of using SCO is lower farmer-paid premium. The costs of a RP-SCO combination usually will be lower than an 85% RP product when RP is purchased at less than 85% in the RP-SCO combination. Compared to RP 85%, the RP-SCO premium usually is lower for two reasons. First, county yields typically are less variable than farm yields, resulting in fewer payments for a county product than for a farm-level product at the same coverage level. Lower payments then result in a lower premium. Second, the premium assistance under SCO often is higher than for RP. SCO has a subsidy rate of 65%. For a product with an expected payment of \(1, the SCO farmer-paid premium will be about $.35 (\).35 = $1 expected payment x (1 – .65 subsidy rate)). The 65% subsidy rate is higher than all subsidy levels for basic and optional units when the coverage level is above 50% (see Table 1). The 65% SCO subsidy level also is higher than the subsidy level at an 85% coverage level given enterprise units.
Table 2 shows examples of RP-SCO combinations for Sangamon and Saline Counties in Illinois. Sangamon County is a relatively low risk county while Saline County has higher risk. Premiums are shown for corn (Panels A and B) and soybeans (Panels C and D). Relationships of premiums are the same for both counties and crops.
Take corn in Sangamon County as an example. An RP 85% product has a farmer-paid premium of $21.35 per acre (see Panel A of Table 2). SCO for an RP with an 85% coverage level has a $.79 premium. For an 85% RP coverage level, the RP-SCO combination has a $22.14 per acre premium. An RP-SCO combination with an 80% RP coverage leave has a $14.02 per acre premium, with $11.03 premium from RP 80% and $2.99 from SCO from 86% to 80%. RP-SCO combinations have lower farmer-paid premium as the RP coverage level is decreased. A $22.14 combined premium result for an 85% coverage level, $14.02 premium results for an 80% coverage level, a $9.43 premium results for a 75% coverage level, and so on.
Who Should Consider SCO Farmers purchasing RP at 85% coverage levels likely will not find SCO an attractive alternative. The SCO band from 86% to 85% coverage will provide little additional coverage. Any reduction of RP coverage level with an SCO band results in a crop insurance payment structure that is less correlated with losses on the insurance unit.
Farmers purchasing lower coverage levels could find SCO useful, particularly if the lower coverage level is selected so as to result in a lower farmer-paid premium. The farmer-paid premium for RP approximately doubles from the 75% coverage level to 80% coverage level. For example, soybean RP premium in Sangamon County goes from $2.93 per acre at a 75% coverage level to $5.78 at an 80% coverage level. Premiums again double from the 80% coverage level to the 85% coverage level. For soybeans in Sangamon County, RP premiums increase from $5.78 at an 80% coverage level to $11.68 at an 85% coverage level. A farmer currently at a 75% coverage level could include SCO for $2.53 additional premium, with the $5.46 premium for the RP-SCO combination being less than for a stand-alone RP 80% premium ($5.78) and RP 85% premium ($11.68). The addition of SCO to a RP 75% coverage level would improve coverage, providing county-level coverage above the 75% coverage level of the RP.
The USDA finally released a set of highly anticipated reports on Friday. The results projected lower ending stocks for corn and soybeans during this marketing year. Despite lower ending stock forecasts, the results disappointed and produced a somewhat bearish outlook. The following discussion recaps developments in corn and soybean crop fundamentals coming out of the reports and price implications moving forward.
Corn ending stock projections for the 2018–19 marketing year came in at 1.735 billion bushels, down 46 million bushels from the December forecast. Reduced corn production in 2018 drove ending stocks lower despite a 165 million bushel reduction in total use during the marketing year. Corn production is down 1.4 percent from the November forecast at 14.4 billion bushels. The harvested acreage estimate of 81.7 million acres is down from the November forecast of 81.8 million acres. Average corn yield of 176.4 bushels per acre is 2.5 bushels lower than the November forecast. December 1 corn stocks came in at 11.952 billion bushels. Total disappearance came in near 4.62 billion bushels during the first quarter of the marketing year, up from last year’s first quarter use by approximately 280 million bushels. Despite the lower domestic supply numbers and stronger first quarter use, lower consumption forecasts in key categories provide little support for corn prices.
The WASDE report forecast for U.S. corn during 2018–19 lowered corn use projections for feed and residual use, ethanol crush, and other food and industrial uses. At 5.375 billion bushels, the projection for corn feed use and residual moved lower by 125 million bushels. The ethanol use forecast decreased by 25 million bushels to 5.575 billion bushels. The lower ethanol use reflected the slowing ethanol production levels over the last month. Food, seed, and industrial use other than ethanol saw the consumption forecast lowered 15 million bushels on reduced corn use for high fructose corn syrup, glucose, and dextrose. Corn export forecasts maintained the 2.45 billion bushels forecast in December. The potential for increased corn usage seems increasingly dependent on continued economic growth and the resolution of the current trade impasse.
World ending stocks for corn increased by almost 40 million bushels from December forecasts. The increase focused on stronger production in key growing areas. In particular, Argentine corn production forecasts totaled 1.81 billion bushels, up from last year’s 1.26 billion bushels. Brazil’s corn production forecast stayed at 3.72 billion bushels this year. In total, Brazil and Argentina production forecasts exceed 2017–18 production estimates by 1.04 billion bushels. Projections of corn exports from Argentina and Brazil sit at an additional 492 million bushels each above last marketing year. Given the increase in South American production, the evolution of crop conditions in the region bears monitoring as we move into 2019.
The forecast for soybean ending stocks fell to 910 million bushels. Despite the 45 million bushel reduction to ending stocks, the current projection remains record high. Soybean production came in 56 million bushels lower than the November forecast at 4.54 billion. The harvested acreage estimate of 88.1 million acres is down from the November forecast of 88.3 million acres. Average soybean yield of 51.6 bushels per acre is 0.5 bushels lower than the November forecast. While the expected reduction in soybean production materialized, consumption continues to exhibit strong crush levels and weak exports this marketing year.
The WASDE report increased the soybean crush forecast by 10 million bushels to 2.09 billion bushels. The change in the crush projection reflects strong crush numbers through January. Soybean exports saw the forecast lowered by 25 million bushels to 1.875 billion bushels. Considerable uncertainty remains in export potential in 2019 as the sporadic nature of trade talks with China unfold. Total use fell by 15 million bushels on weaker export projections to 4.092 billion bushels. The consumption for this marketing year holds the potential for deterioration if the trade war escalates and increased competition out of South America materializes.
World production forecasts for the marketing year decreased by 301million bushels to 13.26 billion bushels on the smaller U.S. and Brazilian crops. The Brazilian soybean production forecast decreased by 183.72 million bushels over the December forecast to 4.3 billion bushels. Reports out of Brazil indicate this number may fall further before the final crop estimate is complete. The Argentinian soybean production forecast fell slightly to 2.02 billion bushels on reduced acreage. The Brazilian soybean export forecast dropped by 55 million bushels reflecting the decreased crop production levels. Forecasts for Brazil and Argentina soybean exports sit at 3.15 billion bushels over the marketing year, up from last marketing year’s estimate of 2.88 billion bushels.
While the ending stock projections for both crops fell, the USDA maintained price projections for the marketing year at the December mid-point ranges for corn and soybeans at $3.60 and $8.60 respectively. Barring a resolution to the trade issues with China or a significant deterioration in the South American crop, soybean prices are untenable at current levels. Corn prices appear set to remain flat and range bound until the March Prospective Planting reports provide an initial indication of crop acreage in 2019.