May 21, 2018

Jackson Takach, Director of Economic and

Financial Research

Ryan Kuhns, Economist

The Feed – Summer 2018

FARMER MAC

Agenda

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Highlights from the analysis

Why they are important for

producers and lenders alike

Other news and factoids

How you can access this and future editions

Q&A

FARMER MAC

Highlight 1: Off-Cycle Ag Economic Update

• Lots of newly updated data on the agricultural economy published since

USDA’s last forecast back in February

• Authoritative Analytics forecast suggest 2017 may have been stronger than

initially expected

• Outlook for 2018 is relatively flat incomeFARMER MAC REFRESH

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0

20

40

60

80

100

120

140

160

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018F

Authoritative

Analytics May

Forecast

USDA February Forecast

Source: Authoritative Analytics forecast and USDA, Economic Research Service Farm Income and Wealth Statistics, February 2018 forecast and historical data.

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Highlight 2: Chinese Ag Trade

• China imports a lot of agricultural goods

• Newly enacted/proposed tariffs only affect a portion of all agricultural goods exported from

the U.S. to China

• But some of them really matter like soybeans, pork, wheat, and a handful of nut products

• Population and income growth still make China a tremendous growth opportunity for U.S.

producers

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0%

5%

10%

15%

20%

25%

30%

-

30

60

90

120

150

180

2000 2002 2004 2006 2008 2010 2012 2014 2016

Percen

t Share o

f Imp

orts

Ch

ines

e Im

po

rts

($ B

illio

ns)

Chinese Imports

Share of Chinese Imports from U.S. (right)

China's Share of World Ag Imports (right)

Source: United Nations Trade data accessed from USDA, Foreign Agricultural Service, GATS.

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Highlight 3: Dairy Doldrums Reversing

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0

50

100

150

200

250

300

350

Milk

Incom

e O

ver

Feed C

osts

Per

Cow

Per

Month

Source: University of Wisconsin Understanding Dairy Markets, Authors Calculations.

Expansion

Contraction

Avg.

Forecast Implied by

May Futures Prices

• Strong exports in February and March pulling up dairy prices

• USDA recently revised milk prices by $0.60 per cwt

• Current futures prices imply average profitability by late 2018 and into 2019

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Highlight 4: Weather

• Drought persists in Southern

Plains and Southwest

• California water low but not

dire straights

• Some dryness in Midwest but

otherwise fairly good

conditions

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Source: Drought Monitor, University of Nebraska-Lincoln; NOAA

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Highlight 5: Aw Nuts

• U.S. almond, pistachio,

and walnut acreage

continue to grow

• Strong demand and

weather-related

production concerns

have lifted Almond

prices

• Walnut markets are

dealing with lower

export demand

compared to last year

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0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2007 2009 2011 2013 2015 2017

Thousands

Almonds Pistachios Walnuts

Source: USDA, National Agricultural Statistics Service.

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Other News

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China soybean snub?

Tight protein margins

Farm bill bust

Economic booster shot

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Details on The Feed

• Quarterly publication

• Focus on sectors and stories

relevant to the season

• Available on the Farmer Mac

website to download or

subscribe

(https://www.farmermac.com/thef

eed/)

• Subscribers automatically

receive it via email

• Send comments and requests to

thefeed@farmermac.com

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FARMER MAC REFRESH MAR2018

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Publication Schedule

Questions?

Thank You!