Doane Advisory Services

Commodity Digest Corn, Soy Complex and Wheat

Doane Advisory Services (Farm Journal Media) 4-3-2020

CORN—APRIL 3, 2020 Recommendations: Our goal is to advance third-quarter coverage. Catch up to advised coverage. Basis September futures, on a setback to $3.35, begin 25% of August. Bullish Factors:

• USDA announced on Friday daily export sales to China of 567,000 tonnes total, split between old and new-crop years • Optimism China’s purchases first of several to come in 2020 as prices are lower and China has its ag purchase obligations to fill. • The trade agreement with China stipulates 2020 purchases of $36.5 billion of ag products, the most ever. Corn grain should get a share. • Trade deal stipulates 2021 ag purchases of $43.5 billion. Underlines even larger potential for corn sales. • Quarterly stocks data confirmed our forecast that first half feed use has been much stronger than the USDA forecast • Export sales over the past four weeks have averaged over 50 million bushels per week. Normal only 32 million bushels. • Concerns that final South America production may fall short of earlier expectations, similar to what appears to be the case for soybeans. • Wet weather in the Delta and South has interfered with early corn planting progress • NWS updated April US forecast indicates highest odds for above average rainfall over most of central and eastern Corn Belt • Private weather forecasters that we contacted raised concerns spring/summer risk of dry weather in eastern Europe into Black Sea region • Distiller dried grain prices in Iowa have soared to over $190 per ton from $140 one month ago • In the monthly WASDE, foreign stocks ex-China at 50.2 mmt, their lowest in 7 years and stocks-to-use least since 1983/84 • Global stocks trending lower for the third year in a row. Only fourth time stocks are down three years in a row since 1961 • World corn imports remain in a strong multi-year uptrend. • March 1 hog inventory record large and up 4.0% from last year. Cattle on feed up 2.2% from year ago and most for March 1 since 2008. • Trading funds net Mar 31 negatively positioned (-100332). Potential buying on new bullish news.

Bearish Factors:

• USDA’s Prospective Plantings report finds farmers indicating intentions to plant 97.0 million acres, second highest of modern era • Planting intentions close to 3 million acres above trade average expectations. Potential for additional 500 million bushels of production • Based on planting intentions, USDA Outlook Forum forecast 20/21 ending stocks of 2.637 billion bu/S-U ratio 17.9%, would be revised up • 6-10 day forecast map for normal precip in the eastern Corn Belt • Latest weekly ethanol production 840,000 bpd and the least since September 2013 • Shelter in place orders argue for extended period of reduced ethanol production. We reduce ethanol demand another 100 million bushels • Global financial panic associated with COVID-19 with investors reducing positions in risk assets. • RBOB gasoline prices below ethanol prices. Negative margins signal ethanol refineries to reduce production. • Central Illinois corn basis losses of over 10 cents past month reflecting lessening ethanol crush demand. • Summer hog farrowing intentions down 4.3% and February cattle on feed placements off 7.9% YOY, suggesting less meat production ahead • In 20/21, USDA at Outlook Forum says it expects strong export competition from Arg, BZ, and Ukraine. • USDA forecasts a record yield of 178.5 bushels per acre in 2020 on normal weather assumptions • USDA export forecast at 1725 million bushels is a multi-year low. • Export sales and shipments still trailing well behind normal pace to USDA forecast. Need to well exceed normal in near term to reach forecast. • Not necessary that China buys only old crop corn. Purchases could be in the new-crop market with supplies much higher and prices lower • Brazilian real has weakened considerably against dollar. At all-time lows again this week and costing less than 19.0 cents

Swing Factors:

• Will wet spring forecast outlook verify • USDA and CONAB crop reports on April 9

Coverage and Insights:

Coverage is complete through June, and at 75% for July. On new price lows, coverage was advanced by 25% for both June and July. On the week, May futures plunged 15 ¼ cents. New-crop December dropped 13 ½ cents.

There was a lot of news for the corn market over the past week, but none bigger than the planting intentions report. It even eclipsed what was a very bullish stocks report that implied another quarter of very strong feed use (unless the 2019 crop harvest was much smaller than the USDA estimate). Following the planting setbacks of 2019, caused by the worst planting weather of the modern era of agriculture, farmers are indicating their intentions to strongly rebound with corn plantings. Farmers intend to plant 96.990 million acres of corn this year, up 7.290 million acres (8.1%) from 2019. Prospective corn plantings came in 2.737 million acres above the average of pre-report surveys projecting 94.253 million acres. We believe in light of the relative price trends for corn versus soybeans over the past month, which find soybean values gaining relative to corn values, that eventual corn plantings will be less than the USDA forecast by 1.2 million acres. Those acres aren’t lost from production but switch to other crops, especially soybeans. If corn acres had been close to trade expectations, the quarterly corn stocks report would have captured much bullish attention. Implied quarterly feed use exceeded last year by 200 million bushels and is up over 600 million for the first half of the crop year. Doane has been estimating feed use far above USDA, and now lifts it another 100 million to 5.8 billion. Doane’s ethanol forecast tumbles another 100 million bushels as the EIA finds ethanol production plunging 20% in this period of shelter in place. We expect greatly reduced ethanol production over the next three months at least. The balance table incorporates these impacts to old- and new-crop analysis. The bottom lines are much higher ending stocks forecasts, leading to lower price forecasts for both 2019/20 and 2020/21. Corn quarterly price forecast ranges are adjusted lower.

CORN (PAGE 2) APRIL 3, 2020

Nearby Corn Futures Price Ranges ($/bu)

Note: Green areas show Doane projections.

U.S. Corn Balance Sheet September/August Crop Year (million bushels)

2016/17 2017/18 2018/19 Mar USDA

2019/20 Doane

2019/20 Doane

2020/21 Planted Acres (mil) 94.0 90.2 88.9 89.7 89.7 95.8 Harvested Acres (mil) 86.7 82.7 81.3 81.5 81.5 88.3 Yield (bu/a) 174.6 176.6 176.4 168.0 168.0 177.0 Supply Beginning Stocks 9/1 1,737 2,293 2,140 2,221 2,221 1,885 Production 15,148 14,609 14,340 13,692 13,692 15,629 Imports 57 36 28 50 48 36 Total Supply 16,942 16,939 16,509 15,962 15,960 17,550 Disappearance Feed/Residual 5,470 5,304 5,430 5,525 5,800 5,850 Food/Seed/Industrial 6,885 7,056 6,793 6,820 6,575 6,900 Corn for Ethanol 5,432 5,605 5,378 5,425 5,200 5,500 Total Domestic 12,355 12,360 12,223 12,345 12,375 12,725 Exports 2,294 2,438 2,065 1,725 1,700 2,250 Total Disappearance 14,649 14,799 14,288 14,070 14,075 15,000 Ending Stocks 2,293 2,140 2,221 1,892 1,885 2,550 Stocks-to-Use 15.7% 14.5% 15.5% 13.4% 13.4% 17.0% Avg Farm Price ($/bu) $3.36 $3.36 $3.61 $3.80 $3.70 $3.25

Note: Corn market factors, forecasts and recommendations are as of April 3, 2020. For questions or further discussion, contact Bill Nelson, (224) 358-6994 or e-mail at bnelson@farmjournal.com.

Jan-Feb-Mar

Apr-May-Jun

Jul-Aug-Sept

Oct-Nov-Dec

2012 $5.93 - $6.76 $5.51 - $6.77 $6.86 -$8.49 $6.87 - $7.76

2013 $6.78 - $7.49 $6.26 - $7.23 $4.41 - $5.64 $4.17 - $4.50

2014 $4.06 - $5.04 $4.22 - $5.20 $3.20 - $4.24 $3.18 - $4.17

2015 $3.66 - $4.10 $3.47 - $4.15 $3.46 - $4.43 $3.56 - $4.00

2016 $3.47 - $3.74 $3.54 - $4.39 $3.01- $3.73 $3.31 - $3.63

2017 $3.51 - $3.80 $3.54 - $3.92 $3.28 - $3.95 $3.35 - $3.56

2018 $3.45 - $3.91 $3.39 - $4.12 $3.30 - $3.74 $3.55 - $3.86

2019 $3.53 - $3.85 $3.36 - $4.64 $3.30 - $4.60 $3.57 - $4.03

2020 $3.32 - $3.95 $3.00 - $3.90 $3.10 - $4.00 $3.00 - $3.90

2021 $3.15 - $3.95 $3.20 - $4.00 $3.30 - $4.10

SOYBEANS—APRIL 3, 2020Recommendations: Our focus remains to extend summer coverage. Target a pullback to $8.40 or better based corresponding futures contract to complete July needs. Issue new target to secure 25% of August needs at $8.41 or better based the corresponding contract. Patience is recommended for those needing to catchup on current coverage recommendations through June. Bullish Factors:

• USDA reported farmer intentions to plant 83.510 million acres of soybeans in 2020. This was below ave. expectations for 84.7M acres. • Summer crush margins rose early in the week to their highest level since June 2019. This should help to prop summer crushings. • Doane raised its old-crop crush forecast 5M bus. this week after Feb. industry crush data. Doane’s crush is now 15M bus. above USDA. • Private crop forecaster cut its Brazilian soybean crop estimate 4 mmt. to 120.1 mmt. this week. • The Buenos Aires Grain Exchange slashed its estimate of the Argentine soy crop 2.5 mmt. to 49.5 mmt. • Wet conditions paired with above-average precipitation for many key U.S. soybean growing areas could result in a shortfall in plantings. • USDA cut its crush forecast for Argentina 1 mmt. in the March WASDE. Better potential export opportunities for U.S. soybean meal. • This week Oil World again increased its U.S. crush forecast now to 2.142 billion bushels. • At its Ag Outlook conference, USDA projected U.S. soybean demand to increase 6.3% from 2019/20 projections to 4.314 billion bushels. • Increased demand was seen outpacing larger supplies to push ending stocks lower to 320M bushels for a snug stocks-to-use ratio of 7.4% • In the March WASDE, USDA maintained its 2019/20 export forecast of 1.825 billion bus. Ag Outlook sees 2020/21 exports of 2.050 billion. • China must ramp up purchases of U.S. soybeans in order to reach targets established in the Phase One trade agreement.

Bearish Factors:

• Doane’s analysis of USDA’s planting report suggests an increase of 1 million acres from USDA. We have raised our area to 84.5M. • March 1 soybean supplies at 2.253B bus. topped both Doane’s and the average of published trade expectations. • Implied Sep.-Feb residual of just 28.5M bus. is record-low and suggests that, barring revision, USDA may increase the 2019 soybean crop. • Doane has lowered our residual disappearance 6M bus. this week following larger-than-expected March 1 soybean stocks. • Demand destruction for the corn and cotton markets could prompt more farmers to favor soybean plantings this summer. • COVID-19 continues to rattle macro markets, suggesting global and/or U.S. economies may be heading towards recessions. • USDA lowered its 2019/20 farm price a nickel in the March WASDE to $8.70. Doane is now a match this week. • Cumulative Sep-Feb exports of 1.120B bus. represent just 61% of USDA’s export forecast of 1.825B bus. • While up slightly from last year, this year’s first half shipments are well below the previous 10-year average of 75% shipped. • Sluggish demand from China has again prompted Doane to shift our exports from old- to new-crop; FH exports now at 64% of the MY total. • Doane projects a higher trend-type yield of 50.5 bus./acre in 2020/21 compared with USDA’s forecast of 49.8. • Despite the lower projected ending stocks, USDA sees 2020/21 farm soybean prices rising just a dime to $8.80. Doane now at $8.75. • Potential for a third round of MFP payments is viewed as an apparent signal for increased 2020 U.S. crop acres.

Swing Factors:

• Chinese demand for U.S. soybeans • Availability of S. American soybeans • Global impact from COVID-19 outbreaks • April WASDE report – 4/9

Coverage and Insights: Coverage is complete in the soybean market through June while July coverage stands at 75%. We have coverage in place for 50% of August needs and have established initial ownership totaling 25% for September. That is unchanged this week. We have maintained our previous price target to finish July coverage. Renewed weakness this week has brought the market to within striking distance of our existing July price target. With USDA’s baseline acreage ideas known for 2020 soybean plantings, the market will likely begin to add soybean acres at the expense of both large corn and cotton planting ideas. This could result in additional short-term price weakness before the critical soybean planting window approaches later this spring. We have established new targets this week to capture additional downside out to August. Soybean futures came under heavy pressure this week despite mostly mixed fundamental inputs. The nearby May contract gave up 27 ¼ cents in the week to close Friday at $8.54 ¼. Losses in the deferred contracts were relatively lighter with the new-crop November contract losing 15 ¼ cents to settle at $8.61 ½. Likely dragging down soybean prices this week was the corn market, which made new contract-lows in the nearby May contract and whose chart appears to have opened up a run at the 2016-low of $3.00 per bushel, now just 30 cents away. Farmers indicated to USDA intentions to plant 83.510 million acres of soybeans in 2020. This represents an increase of 7.410 million acres from hindered efforts experienced in 2019. Doane’s pre-report, survey-based forecast was slightly above USDA’s figure at 83.750 million acres. On average, the trade was looking for larger soybean plantings near 84.7 million acres. Doane’s analysis of the 2020 U.S. acreage outlook sees soybean plantings at 84.5 million acres. March 1 soybean stocks were the second largest on record below last year at 2.253 billion bushels. Implied residual use of 28.5 million bushels is the lowest on record and suggests that an upward revision may be looming for the 2019 crop. Larger-than-expected stocks have prompted a slight reduction to Doane’s residual use forecast this week. Seed use was raised 1 million bushels while crush was increased 5 million bushels. This helped to partially offset another shift of 25 million bushels out of Doane’s old-crop export forecast. In our 2020/21 balance sheet, larger soybean plantings have increased our crop ideas along with the larger carryin. This has been partially offset by larger crush and export ideas. With our larger new-crop soybean supply ideas and lower corn prices come lower forward soybean price expectations. Next week’s WASDE is expected to show larger crush demand, but a needed reduction in USDA’s export forecast could boost forecast ending stocks.

SOYBEANS (PAGE 2)—APRIL 3, 2020

Nearby Soybeans Futures Price Ranges ($/bu)

Note: Green areas show Doane projections.

U.S. Soybean Balance Sheet September/August Crop Year (million bushels)

2016/17 2017/18 2018/19 Mar. USDA

2019/20 Doane

2019/20 Doane

2020/21 Planted Acres (mil) 83.5 90.2 89.2 76.1 76.1 84.5 Harvested Acres (mil) 82.7 89.5 87.6 75.0 75.0 83.6 Yield (bu/a) 51.9 49.3 50.6 47.4 47.4 50.5 Supply Beginning Stocks 9/1 197 302 438 909 909 490 Production 4296 4412 4428 3558 3558 4220 Imports 22 22 14 15 15 15 Total Supply 4515 4735 4880 4482 4482 4725 Disappearance Crush 1901 2055 2092 2105 2120 2140 Exports 2166 2134 1748 1825 1750 1975 Seed 105 104 89 96 98 99 Residual 41 4 43 31 24 36 Total Disappearance 4214 4297 3971 4057 3992 4250 Ending Stocks 302 438 909 425 490 475 Stocks-to-Use 7.2% 10.2% 22.9% 10.5% 12.3% 11.2% Avg Farm Price ($/bu) $9.47 $9.33 $8.48 $8.70 $8.70 $8.75

Note: Soybean market factors, forecasts and recommendations are as of April 3, 2020. For questions or further discussion, contact Rob Hatchett, (901) 570-2097 or e-mail at rhatchett@farmjournal.com.

Jan-Feb-Mar

Apr-May-Jun

Jul-Aug-Sept

Oct-Nov-Dec

2012 $11.50-$14.16 $13.18-$15.18 $15.22-$17.95 $13.72-$16.00

2013 $13.78-$15.18 $13.54-$15.74 $12.71-$16.30 $12.55-$13.54

2014 $12.60-$14.66 $13.73-$15.37 $9.05-$14.10 $9.04-$10.87

2015 $9.51-$10.52 $9.20-$10.59 $8.58-$10.60 $8.44-$9.20

2016 $8.49-$9.17 $9.01-$12.58 $9.34-$11.76 $9.37-$10.65

2017 $9.44-$10.80 $9.00-$9.81 $9.17-$10.27 $9.43-$10.15

2018 $9.37-$10.71 $8.41-$10.67 $8.10-$9.06 $8.32-$9.28

2019 $8.78-$9.31 $7.80-$9.22 $8.37-$9.18 $8.68-$9.46

2020 $8.21-$9.49 $8.30-$9.55 $8.45-$9.85 $8.35-$9.75

2021 $8.25-$9.65 $8.35-$9.70 $8.45-$9.60

SOY OIL—APRIL 3, 2020

Recommendations:

Maintain previous targets. Finish September coverage based the corresponding contract at 25.51 or better. Advance October coverage 25% at 25.76 or better. Recommend patience at current levels for those buyers considering catchup coverage through August. Bullish Factors:

• Feb. Census soyoil exports of 396 tmt topped Doane’s expectations based on weekly FAS export figures. Feb. imports fell short of expectations. • Another strong week of soyoil sales with the total of 59.5 tmt the third highest for the marketing year. • Export commitments for U.S. soyoil are now running 53.7% higher YOY vs. USDA’s forecast of +8.3% after adding 200M lbs. in March WASDE. • Doane added another 225M lbs. to our export forecast this week bringing our MY 19/20 total to 2.350B lbs. • Resumed canola seed shipments to China likely will reduce domestic crush. This may lower supplies of competing canola oil into the U.S. • More talk that China still intends to make good on Phase One agreement for larger purchases of U.S. agricultural products. • Ideas that U.S. soyoil has recently become more attractive at the expense of rising South American prices. • Trump Administration will not appeal the court decision that reversed prior exemptions for biofuel use. Supportive of forward biofuel demand. • Palm oil plantations are expected to experience reduced offtake through mid-April during COVID-19 quarantines. • USDA lowered Argentina crush 1 mmt. in the March WASDE, trimming soyoil supplies and exports each by 200 tmt. Less competition for U.S. • Local sources continue to reduce their forecasts for Argentina’s soybean crop. These decreases are contrary to increases in the March WASDE • Doane has recently lowered our soyoil yield forecast for 2019/20 to 11.47 lbs. per bushel following latest data vs. USDA at 11.54. • USDA’s initial 2020/21 balance sheet saw snug U.S. soyoil ending stocks at pipeline levels of 1.550 billion lbs.

Bearish Factors:

• Doane’s crush forecast was raised another 5M bus. to 2.120 billion. This has added 50M lbs. to our soyoil production forecast this week. • Monthly EIA feedstock data fell short of expectations in January at just 521M lbs. Off 20M lbs. from 541M in December. • Eroding energy prices and falling fuel demand are expected to curb demand for soyoil from the biodiesel sector. • Accordingly, Doane has lowered our MY 2019/20 soyoil for biodiesel forecast 300M lbs. this week. • The combination of lower usage and larger supplies raised our MY 2019/20 carryout forecast 60M lbs. this week to 1.935B. • Oil World lowered its global biodiesel forecast 3.9 mmt. this week lowering the demand for vegetable oil as energy feedstocks. • Reports that forward South American soyoil offers are at a discount to the U.S. Disappointing biofuel demand means more supplies for export. • Social restrictions extended through April in the U.S. Some cities and states are under tightened restrictions. Lowering restaurant demand. • Food service sector is taking the greatest hit as restaurants close or shift to takeout to avoid crowds. Last week Doane lowered food demand. • Reports of ethanol plants shuttering operations have supported domestic cash meal markets and help to improve nearby crush margins. • U.S. and global recessionary fears remain detrimental to commodity prices. Demand destruction has occurred from both energy and food. • China soyoil stocks have ballooned from the COVID-19 quarantines. This would limit import needs that could be met by U.S. soyoil. • Phase One of the U.S./China trade talks inclusion of greater U.S. livestock shipments would bolster crush rates via higher meal demand. • Additional crush capacity has helped to boost U.S. soybean processing capabilities in recent months.

Swing Factors:

• U.S. planting weather • Energy markets – can production cuts help reduce stocks? • Global demand destruction from COVID-19 • WASDE – 4/9

Coverage and Insights:

Coverage has been completed through August, while September coverage stands at 75% and initial coverage for Q4 stands at 25%. That remains unchanged again this week. We have maintained our previous targets to further extend coverage into October. We are concerned that macro markets may have not yet put in their respective lows as U.S. COVID-19 cases continue to rise. This opens the opportunity to retest recent lows in soyoil futures.

Soybean oil futures began Q2 2020 with modest losses and were unable to claw their way back out of the red this week. Palm oil prices also remained under pressure for the week. Sharp losses in the soybean meal market on Friday lent some support to soybean oil via spreading ahead of the weekend along with spillover support from energy markets. For the week, the nearby May contract slipped 42 points while the deferred contracts saw larger declines. Despite the weekly losses, soybean oil’s portion of the product share was able to rebound to mid-March levels back above 30% when measured by the respective May contracts. It may prove to see further advances without improving energy market fundamentals.

There was no shortage of inputs this week for the soybean complex with USDA providing quarterly soybean supply estimates along with annual planting intentions. For soybean oil, February crush data were released in error on Wednesday afternoon but were revised Friday morning. Crush was lowered in the correction to levels slightly above Doane’s pre-report guess of 175.0 million bushels. Soyoil stocks grew counter to the drop shown by monthly NOPA member data. Monthly EIA biodiesel feedstock data were released and proved disappointing. It has grown more likely that the COVID-19 impact on energy markets will spillover towards lowering biodiesel demand. Doane has highlighted several considerable changes to our U.S. soybean oil balance sheets in the Bullish and Bearish Factors listed above. The bottom line is for a more comfortable stock outlook into 2020/21, which is seen limiting the market’s upside into the next marketing year. USDA’s updated soyoil balances next week should include several changes including larger crush, lower biodiesel demand and greater projected exports. The market appears to be discounting larger soyoil stocks.

SOY OIL (PAGE 2)—APRIL 3, 2020

Nearby Soybean Oil Futures Price Ranges (cents/lb.)

Note: Green areas show Doane projections.

U.S. Soybean Oil Balance Sheet October/September Crop Year (million pounds)

2016/17 2017/18 2018/19 Mar. USDA

2019/20 Doane

2019/20 Doane

2020/21 Supply Beg. Stocks 10/1 1,687 1,711 1,995 1,775 1,775 1,935 Production 22,123 23,772 24,195 24,290 24,310 24,725 Imports 319 335 398 450 375 350 Total Supply 24,129 25,819 26,589 26,515 26,460 27,010 Disappearance Domestic use 19,862 21,380 22,872 22,900 22,175 23,000 For Biodiesel 6,200 7,134 7,863 8,000 7,800 8,600 All Other 13,662 14,247 15,009 14,900 14,375 14,400 Exports 2,556 2,443 1,941 2,100 2,350 2,050 Total Disappearance 22,418 23,823 24,813 25,000 24,525 25,050

Ending Stocks 1,711 1,995 1,775 1,515 1,935 1,960 Stocks-to-Use 7.6% 8.4% 7.2% 6.1% 7.9% 7.8% Crush* (mill. bus.) 1,908 2,079 2,085 2,105 2,120 2,140 SBO Yield (lbs./bu.) 11.59 11.43 11.61 11.54 11.47 11.55 Decatur (cents/lb.) 32.48 30.04 28.26 31.50 30.75 30.75

Note: Soybean oil market factors, forecasts and recommendations are as of April 3, 2020. For questions or further discussion, contact Rob Hatchett, (901) 570-2097 or e-mail at rhatchett@farmjournal.com.

Jan-Feb-Mar

Apr-May-Jun

Jul-Aug-Sept

Oct-Nov-Dec

2013 48.46-53.57 45.85-50.61 40.76-47.57 38.54-42.12

2014 36.80-44.70 37.76-43.57 31.34-39.04 31.12-34.95

2015 29.32-33.71 30.39-35.29 25.38-33.60 26.74-31.96

2016 29.01-34.37 30.74-35.14 29.28-34.41 32.33-38.11

2017 31.60-36.07 30.86-33.44 32.01-35.60 32.07-35.44

2018 31.28-33.86 27.79-32.73 26.88-29.13 26.96-29.76

2019 27.88-31.01 26.03-29.41 26.50-30.50 28.80-35.22

2020 24.68-35.25 24.70-31.00 26.50-31.25 26.00-30.50

2021 27.00-31.50 28.00-32.50 28.25-32.75

SOY MEAL—APRIL 3, 2020

Recommendations:

Our focus remains on extending summer coverage. Maintain our previous target to July coverage 25% at $300 or better based the respective contract. Place a new target based the August contract to extend coverage 25% at $298.50 or better. Catchup coverage recommended through June should prices fall below $300.00 per ton. Bullish Factors:

• Census soybean meal exports for Feb. topped expectations based on weekly FAS shipment data. • Weekly FAS soybean meal exports rebounded in the latest reporting week helping to boost Doane’s ideas for March shipment. • These greater exports have prompted Doane to raise our export forecast 100,000 tons this week to 13.400 million. • Friday’s CFTC data showed that funds were buyers of 10,519 contracts of soybean meal in the last week of March. • Oil World sees Argentina soybean crush falling short of last year in March-August 2020. • Local South American sources continue to lower their ideas of both the Brazilian and Argentine soybean crops. • Late-season dryness is reportedly showing up both in quality and yields of new-crop South American soybeans. • Doane again lowered our corn-ethanol forecast this week following February data. This is seen resulting in even fewer DDGs for feed rations. • Doane raised our 2019/20 domestic meal disappearance forecast recently by 310,000 tons. • Census import data fell short of expectations prompting another slight reduction to our MY 2019/20 forecast. • USDA lowered Argentina’s crush forecast in the March WASDE. This suggests potential for greater export opportunities for U.S. soy products. • Higher taxes in Argentina and recent slowing of domestic bean movement may bring additional spot export demand to U.S. soybean meal. • Chinese crush margins remain elevated as the population returns from quarantine and pig numbers rebound from ASF. • Phase One of the U.S/China trade agreement calls for considerable increase to China’s imports of U.S. agricultural products. • According to officials, China still looks to make good on Phase One trade levels. This should bring better demand for U.S. soybeans.

Bearish Factors:

• Argentine crushers are reportedly beginning to see improved soybean deliveries as governments ease transportation restrictions. • Doane has again increased our crush forecast another 5M bus. this week to 2.120B. Some in the trade touting higher crush forecasts. • Doane’s larger crush forecast has added 130,000 tons to our old-crop soybean meal balance sheet offsetting slightly lower imports. • Soybean meal stocks rose to 442,000 tons in February according to NASS. • Doane’s analysis of USDA’s planting intentions report has upped our soybean plantings to 750K acres to 84.5 million this week. • Increased new-crop soybean supplies are seen bolstering larger new-crop soybean crushings of 2.140 billion bushels. • Disappointing export outlook has again prompted Doane to lower our soybean export forecast adding to our carryout forecast. • Further weakness in South American currencies relative to the USD cheapening soy and soy product prices for foreign buyers. • Reports that greater millfeed supplies from increased flour milling have begun to gain favor in domestic livestock feed rations. • Depressed corn and cotton prices relative to soybeans increase the odds of farmers switching intentions from corn to larger soy plantings. • The global fallout from the continued spread of the COVID-19 maintained fears of global recessions again this week. • USDA’s initial 2020/21 U.S. soybean meal balance sheet showed a solid gain in soybean meal supplies on 25M-bushel increase to crush. • A wetter spring outlook could see a greater switch out of intended corn acres to later-planted soybeans in 2020. • Additional U.S. crush capacity has come online, helping to bolster additional soybean meal production in coming months.

Swing Factors:

• Macro market response to spread of COVID-19 • South American soy availability • Chinese demand for U.S. soybeans • April WASDE – 4/9

Coverage and Insights: Soybean meal needs have been secured through June, while July coverage stands at 50% and the initial 25% of August meal needs have been purchased. Easing soybean supply concerns in top soybean meal exporter Argentina have eased late this week, providing some relief to nearby soybean meal price ideas. Lower corn demand for ethanol forecasts are seen offering even less competition for soybean meal in feed rations, which should provide some solid support given current livestock population forecasts. Larger U.S. soybean planting ideas may return pressure to the U.S. soybean complex once planting season has begun in earnest over the coming weeks. Sharp losses for the week in the soybean market have spilled over to pressure the remainder of the soybean complex this week. Reports of better soybean movement in South America this week have alleviated some of the nearby supply concerns. This likely removed a degree of support to soybean meal prices heading into the weekend. For the week, the nearby May contract gave up nearly $20.00 per ton while losses in the deferred contracts were less extreme as the forward curve has flattened. Ideas that U.S. soybean plantings will top USDA’s annual intentions survey findings are expected to weigh on price ideas as demand destruction remains a concern from the extended economic shutdown from COVID-19. There was plenty of fodder this week for soybean traders and analysts to digest. Many of these implications have been highlighted in the Bullish and Bearish Factors outlined above. These changes to Doane’s U.S. soybean meal outlook are expected to be reflected in USDA’s April WASDE report due for release next Thursday ahead of the three-day holiday weekend. Doane’s changes have done little to alter our U.S. soybean meal price outlook.

SOY MEAL (PAGE 2)—APRIL 3, 2020

Nearby Soybean Meal Futures Price Ranges ($/short ton.)

Note: Green areas show Doane projections.

U.S. Soybean Meal Balance Sheet October/September Crop Year (1,000 short tons)

2016/17 2017/18 2018/19 Mar. USDA

2019/20 Doane 2019/20

Doane 2020/21

Supply Beginning Stocks 10/1 264 401 555 402 402 300 Production 44,787 49,226 48,809 49,473 49,808 50,300 Imports 350 483 684 500 650 550 Total Supply 45,401 50,109 50,048 50,375 50,860 51,150 Disappearance Domestic use 33,420 35,537 36,092 36,800 37,160 37,500 Exports 11,580 14,016 13,544 13,200 13,400 13,350 Total Disappearance 45,000 49,554 49,646 50,000 50,560 50,850

Ending Stocks 401 555 402 375 300 300 Crush* (mil. bu) 1,908 2,079 2,085 2,105 2,120 2,140 Avg Meal Yield (lbs./bu.) 46.94 47.35 46.82 47.01 46.98 47.01 Decatur-48% Protein ($ per short ton) $316.88 $345.02 $308.28 $305 $310 $315

Note: Soybean meal market factors, forecasts and recommendations are as of April 3, 2020. For questions or further discussion, contact Rob Hatchett, (901) 570-2097 or e-mail at rhatchett@farmjournal.com.

Jan-Feb-Mar

Apr-May-Jun

Jul-Aug-Sept

Oct-Nov-Dec

2013 $394.50-$445.00

$389.90-$491.50

$393.80-$545.10

$391.80-$510.00

2014 $413.80-$486.50

$445.00-$509.40

$303.50-$464.20

$295.10-$417.60

2015 $317.20-$372.10

$296.30-$360.40

$300.80-$382.50

$263.90-$312.30

2016 $255.70-$276.60

$265.90-$432.50

$293.90-$406.20

$293.00-$328.80

2017 $307.00-$353.70

$292.00-$319.40

$291.80-$338.80

$305.80-$346.10

2018 $308.00-$399.70

$320.30-$404.90

$298.80-$342.60

$303.00-$327.00

2019 $296.5-$320.10

$280.70-$328.10

$286.40-$317.00

$290.50-$311.90

2020 $284.80-$336.30

$300.00-$350.00

$295.00-$345.00

$285.00- $335.00

2021 $280.00-$345.00

$285.00- $340.00

$290.00- $345.00

WHEAT—APRIL 3, 2020

Recommendations:

Objectives to extend winter wheat coverage were achieved this week. HRS futures traded lower but not to target. Use previous targets to catch up coverage. Retain previous HRS target basis July contract of 525 cents to complete June coverage and add 25% to July coverage. Bullish Factors:

• USDA’s Prospective Plantings report confirms record low plantings of 44.655 million acres • Barring very high yields, 2020 production destined to be much below demand. • Brazil millers looking for wheat and lobbying for reduced tariffs. Potential for additional US exports to Brazil. • India’s strict shelter in place said to be stopping its rice exports under food security psychology. Might that policy disrupt its wheat harvest? • Hoarding psychology at work, ranging from domestic consumer flour buying to nations restricting exports, due to COVID-19 fears • Ukraine limits 2019/20 wheat exports to 20.2 mmt to temper a rise in domestic prices • Russia will cap grain exports over the last three months of the crop year. Kazakhstan to place quotas on wheat and flour exports • Private weather forecasters that we contacted raised concerns spring/summer risk of dry weather in eastern Europe into Black Sea region • China bought more new-crop wheat in the latest reporting week. Market will assume there are more wheat sales to China in motion • The trade agreement with China stipulates 2020 purchases of $36.5 billion of ag products, the most ever. Wheat should get a share. • Trade deal stipulates 2021 ag purchases of $43.5 billion. Underlines even larger potential for wheat sales. • Below average condition ratings in Delta soft red wheat crop. Wet weather in long-range outlooks increase risks for losses • 2020/21 ending stocks seen dropping below 800 million bushels. Market appreciating risk for ever tightening stocks in early 2020s • 2020/21 would be the fourth consecutive year of lower domestic stocks. Only two other times - between 85/86-90/90 and 09/10-13/14 • The March WASDE - World Ex-China stocks-use ratio of 17.2% is its lowest since 2007/08. 10-year average is 19.2%. • French sowings down 5.6% YOY, production forecast 33.8 mmt down from 39.5 mmt YOY. French condition only 62% good to excellent • German area down 20% YOY. Private UK forecasts wheat area down 20% YOY & production outlook of 10.6 mmt vs 16.2 mmt last year.

Bearish Factors:

• USDA will issue its first condition rating on Monday. 10-year average is 45% good to excellent. We look for USDA to report 60% or higher • Doane lifts its wheat yield forecast to an above average 49.0 bushels per acre on the basis of much above average ratings for Plains states • Global financial panic associated with COVID-19 with investors reducing positions in risk assets. • COVID-19 disrupting global shipping patterns, including loading or offloading grains at ports and internal country shipping • Lagging pace of export shipments places USDA’s 2019/20 export forecast in jeopardy. Doane trims its export forecast again this week • Trump indicating farmers likely to receive MFP payments in 2020, which will encourage spring wheat planting to qualify for the aid • At the Outlook Forum, USDA forecast 20/21 cash wheat at $4.90, which is low against forecast for ending stocks below 800 million • Russia sees its next wheat harvest at 78.744 mmt, up 5.9% YOY • Canada forecasting in 2020 3% increase in wheat area and 4.8% increase in production to 33.9 mmt • Record 2019/20 global wheat stocks of 287.14 mmt and up 9.57 mmt from 2018/19 • India expected to harvest a record wheat crop this spring, assuming they can get labor to fields while the country shelters in place • Rains into eastern Australia after months of below average precipitation. Improves prospects for plantings. • Trading firms once again getting fairly net long at 35,971 positions

Swing Factors:

• April 9 WASDE • Growing season weather

Coverage and Insights: For all classes, May coverage is complete, June coverage is complete for the winter wheats and at 75% for spring wheat. July coverage is at 75% for winter wheats and at 50% for spring wheat. Winter wheat coverage was advanced by 25% for June and July this week. Basis the respective May futures and despite gains of over 1% on Friday, it was a week of setbacks for futures prices. Soft red winter slumped 22 cents to 549.25 cents, hard red winter dropped 14.75 cents to 472 cents and hard red spring fell 12.50 cents to close at 524 1/2 cents. The investment markets were once again broadly focused on COVID-19 and its implications for global economies and the human needs for health, food and shelter. Prices turned in their weakest performances on Wednesday and Thursday to begin the new month and new quarter. Public sentiment was even more negative from forecasts that US deaths from COVID-19 could reach between 100,000 and 240,000. More state governors threw in the towel on holding back from declaring statewide shelter in place orders. Equities were lower. Huge job losses were reported. Many jobless people faced April 1 mortgage or rental payments. The whole food sector crumbled with heavy losses in protein markets as well as crops. There was a lot of new crop data out from USDA, both specific to wheat and to the broad grain and oilseeds complex. From the quarterly grain stocks, weekly exports sales, and planting intentions data, we have lowered old-crop exports and feed forecasts, and raised the seed use forecast. Old crop carryout increases 11 million to 951 million bushels. We have adopted USDA planting intentions. Crop condition ratings in the Plains are good, implying below average abandonment and above average potential for HRW yields. Our yield forecast lifts to 49.0 bu/a. But with lower plantings, production is marginally greater at 1.845 billion bushels. Feed and seed use are adjusted higher. Ending stocks are unchanged from last week at 780 million bushels. Quarterly price range forecasts are adjusted. We will comment on USDA’s April WASDE in next week’s report.

WHEAT (PAGE 2)—APRIL 3, 2020

Nearby Chicago Wheat Futures Price Ranges ($/bu)

Note: Green areas show Doane projections.

Nearby Kansas City Wheat Futures Price Ranges ($/bu)

Note: Green areas show Doane projections.

Nearby Minneapolis Wheat Futures Price Ranges ($/bu)

Note: Green areas show Doane projections.

Jan-Feb-Mar

Apr-May-Jun

Jul-Aug-Sept

Oct-Nov-Dec

2013 $6.73 – $8.00 $6.47 - $7.27 $6.23 - $6.95 $5.99 - $7.11

2014 $5.50 - $7.24 $5.56 - $7.35 $4.66 - $5.72 $4.70 - $6.77

2015 $4.81 - $6.04 $4.60- $6.15 $4.56 - $6.16 $4.51 - $5.32

2016 $4.35 - $4.88 $4.23 - $5.24 $3.60 - $4.40 $3.70 - $4.28

2017 $4.04 - $4.64 $3.98 - $5.12 $3.94 - $5.56 $3.86 - $4.50

2018 $4.13 - $5.06 $4.46 - $5.54 $4.70 - $5.93 $4.87 - $5.35

2019 $4.22 - $5.31 $4.16 - $5.58 $4.44 - $5.39 $4.85 - $5.65

2020 $4.92 - $5.92 $4.95 - $6.10 $5.00 - $6.15 $5.00 - $6.05

2021 $5.00 - $6.05 $5.10 - $6.10 $4.90 - $6.00

Jan-Feb-Mar

Apr-May-Jun

Jul-Aug-Sept

Oct-Nov-Dec

2013 $7.23 – $8.52 $6.71 - $8.05 $6.72 - $7.47 $6.33 - $7.76

2014 $6.08 - $7.99 $7.02 - $8.55 $5.54 - $7.11 $5.50 - $7.06

2015 $5.14 - $6.42 $4.84 - $5.93 $4.40 - $5.93 $4.46 - $5.21

2016 $4.37 - $4.91 $3.97 - $4.98 $3.67 - $4.27 $3.82 - $4.28

2017 $4.14 - $4.74 $3.99 - $5.11 $3.91 - $5.57 $3.94 - $4.45

2018 $4.20 - $5.27 $4.53 - $5.75 $4.50 - $5.99 $4.59 - $5.32

2019 $4.14 - $5.18 $3.78 - $4.97 $3.62 - $4.73 $3.99 - $4.87

2020 $4.20 - $5.06 $4.25 - $5.25 $4.30 - $5.35 $4.30 - $5.35

2021 $4.30 - $5.45 $4.40 - $5.50 $4.50 - $5.55

Jan-Feb-Mar

Apr-May-Jun

Jul-Aug-Sept

Oct-Nov-Dec

2013 $7.71 – $8.82 $7.61 -$8.58 $6.97 - $8.27 $6.28 - $7.66

2014 $5.95 - $7.70 $6.67 - $7.99 $5.29 - $7.38 $5.25– $6.80

2015 $5.38 - $6.38 $5.13 - $6.25 $4.85 - $6.19 $4.91 - $5.35

2016 $4.81 - $5.31 $4.92 - $5.57 $4.82 - $5.34 $5.04 - $5.50

2017 $5.15 - $5.90 $5.19 - $7.81 $6.10 - $8.16 $5.96 - $6.58

2018 $5.75 - $6.36 $5.20 - $6.51 $5.12 - $6.39 $5.49 - $6.00

2019 $5.48 - $5.85 $4.85 - $5.90 $4.67 - $5.59 $4.88 - $5.62

2020 $4.80 - $5.68 $4.70 - $5.80 $4.80 - $5.85 $5.05 - $6.00

2021 $5.20 - $6.15 $5.25 - $6.20 $5.00 - $6.00

WHEAT (PAGE 3)—APRIL 3, 2020

U.S. Wheat Balance Sheet June/May Crop Year (million bushels)

2016/17 2017/18 2018/19 Mar. USDA 2019/20

Doane 2019/20

Doane 2020/21

Planted Acres (mil) 50.1 46.1 47.8 45.2 45.2 44.7 Harvested Acres (mil) 43.8 37.6 39.6 37.2 37.2 37.6 Yield (bu/a) 52.7 46.4 47.6 51.7 51.7 49.0 Beginning Stocks 6/1 976 1,181 1,099 1,080 1,080 951 Production 2,309 1,741 1,885 1,920 1,920 1,845 Imports 118 158 135 105 100 125 Total Supply 3,402 3,080 3,119 3,105 3,100 2,921 Food 949 964 955 955 965 963 Seed 61 63 59 60 59 63 Feed and Residual 161 47 90 150 150 115 Domestic Use 1,171 1,075 1,103 1,165 1,174 1,141 Exports 1,051 906 936 1,000 975 1,000 Total Disappearance 2,222 1,981 2,039 2,165 2,149 2,141 Ending Stocks 1,181 1,099 1,080 940 951 780 Stocks-to-Use 53.1% 55.5% 52.9% 43.4% 44.3% 36.4% Avg Farm Price ($/bu) 3.89 4.73 5.16 4.55 4.55 5.20

Note: Wheat market factors, forecasts and recommendations are as of April 3, 2020. For questions or further discussion, contact Bill Nelson, (224) 358-6994 or e-mail at bnelson@farmjournal.com.