Global Outlook Julian Binfield (binfieldj@missouri.edu) Food and Agricultural Policy Research Institute University of Missouri www.fapri.missouri.edu ReNAPRI Outlook Conference Nairobi, Kenya November 10-11, 2016

U.S. Election Result Typically president does not have significant impact on the U.S. farm bill Will impact competitiveness through changes in regulations and immigration Republicans will control house, senate and administration But will they all get along? There has been a lot of talk about trade in the election. It is trade policy rather than domestic policy that will impact commodity markets

Outlook from August FAPRI-MU baseline update Issued August 2016 Based on mid-August conditions Remember – things change fast! We don’t have a crystal ball! Now entering our 2017 baseline cycle

Things change fast! Source: www.globaldairy.info, November 4, 2016

Exchange rates 2015 2016 2017 2018 Euro per dollar 0.90 0.93 (dollars per euro) 1.11 1.08 (Nov. 4, 2016) Chinese yuan per dollar 6.28 6.62 6.82 6.97 6.76 Japanese yen per dollar 121 107 106 112 103 Brazilian real per dollar 3.33 3.50 3.68 3.89 3.24 Sources: IHS Global Insight, October 2016 and www.oanda.com, Nov. 4, 2016

Global real GDP growth outlook 2015 2016 2017 2018 World IHS (Oct.) 2.5 2.2 2.6 2.9 China 6.9 6.6 6.3 6.4 Economist poll (Oct.) Euro area 1.9 1.6 1.4 1.5 1.3 Sources: IHS Global Insight, October 2016 and The Economist magazine poll of forecasters, October 2016

China’s meat consumption (Pork, chicken and beef) Increase in China’s consumption from 1991-2015: 49 mmt Total U.S. consumption in 2015: 36 mmt Source: USDA’s PSD Online, September 2015

Biofuels “boom” bust? Source: Oilworld, September 23, 2016

World Price Outlook ($/tonne)

Important prices - outlook

Policy developments EU U.S. Has been re-coupling policies Brexit Means less money for Common Agricultural Policy Means a different UK policy environment U.S. Has moved away from direct payments Trade agreements could have impact on policies elsewhere

Summary points – Global markets Global grain and oilseed supplies remain large, depressing prices Under normal conditions, expect agricultural prices to average well below peak levels Weather and other factors can always cause a positive (or negative) surprise in any given year With a mature biofuel sector and questions about China, what will be the future engine of crop demand growth?

World population Source: IHS Global Insight, July 2016 The world’s population continues to grow. Asia accounts for most of the world’s population, but Africa’s share is rising. By 2030, Africa accounts for most of the annual increase in the world’s population. Overall, the annual increase in the world’s population peaked in 2013 at 85 million. While growth continues, the world as a whole is growing more slowly. All else equal, this makes it easier to meet food security goals. Source: IHS Global Insight, July 2016

Population

Population

Population

Population

Thanks! FAPRI-MU website: www.fapri.missouri.edu Follow us on Twitter: @FAPRI_MU To contact Julian Binfield: 573-882-1460 binfieldj@missouri.edu FAPRI-MU team: Julian Binfield Sera Chiuchiarelli Deepayan Debnath Scott Gerlt Hoa Hoang Lauren Jackson Willi Meyers Kateryna Schroeder Wyatt Thompson Patrick Westhoff Jarrett Whistance Peter Zimmel This material is based upon work supported by the U.S. Department of Agriculture, Office of the Chief Economist, under Agreement #58-0111-15-008, and the USDA National Institute of Food and Agriculture, Hatch project number MO-HASS0024. Any opinion, findings, conclusions, or recommendations expressed in this publication are those of the authors and do not necessarily reflect the view of the U.S. Department of Agriculture nor the University of Missouri.

2015 Missouri estimated corn ARC-CO payments per base acre Note wide differences in expected payment rates for corn harvested in 2015 Same national price used in all calculations But differences in 2015 county yields vs. 2010-2014 average yields cause large differences in payment rates $0/acre in many counties; over $60/acre in others—all in just one of the 50 states Jackson Lafayette Saline Johnson Cass Bates Henry Pettis Ray Clay Clinton Platte Buchanan Caldwell Carroll Livingston Linn Chariton Randolph Howard Cooper Moniteau Morgan Benton St. Clair DeKalb Miller Camden Hickory V ernon Boone Callaway Audrain Montgomery Lincoln W arren St. Charles St. Louis Jefferson Franklin Gasconade Osage Maries Phelps Crawford ashington Pulaski Cole Monroe Pike Dent Iron St. Francois Ste. Genevieve Dallas Laclede Polk Webster T exas Wright Douglas Ozark Howell Shannon Oregon Ripley Carter Reynolds ayne Butler Christian aney Stone Greene Pemiscot Dunklin New Madrid Mississippi Stoddard Bollinger Cape Girardeau Madison Scott Perry Clark Lewis Marion Shelby Ralls Knox Scotland Schuyler Adair Macon Sullivan Putnam Nodaway Andrew Holt Atchison Harrison Worth Gentry Daviess Grundy Mercer Cedar Dade Lawrence Barry McDonald Newton Jasper Barton $0 $1 - $20 $21 - $40 $41 - $60 $61 - $80 Insufficient data Source: FAPRI-MU estimates based on USDA county yield data and May 2016 estimates of 2015/16 prices