DTN's 2019 Ag Summit, held in Chicago on Dec. 9-11, had a theme of Winning Strategies to Overcome Obstacles. It seems that this conference could have been held in many locations across the North American farm belt and the mood in the crowd would be the same -- challenging spring conditions that led to challenging fall conditions, reduced crop quality, tough and damp grain, unharvest crop and top it off with challenges on the trade front.
As stated by DTN Lead Analyst Todd Hultman, a suspicion over current U.S. government production estimates came up in conversations at Ag Summit, as has frequently been the case. Governments on both sides of the border are being kept on their toes to make adjustments for the millions of acres of unharvested crop that could lead to yield and quality losses and even abandonment.
Deere and Company's Chief Economist Luke Chandler spoke on Navigating an Uncertain and Increasingly Competitive Environment. The long-term trend is positive for ag, with global consumption of ag commodities up for 24 consecutive years while consumption has exceeded production for the past two years.
At the same time, global economic growth is seen decelerating although a recession will likely be avoided. China's debt situation is viewed as the largest risk to the global economy, while southeast Asia, along with the Middle East and Europe are viewed as key markets where increased trade could help offset lost China business.
On the light side, Chandler pointed to a John Deere photo from 1918 of a team of horses pulling a plow, with a caption stating that the horse will always be the mainstay of American agriculture. As in technical analysis, trends remain in place until broken -- this one clearly was, although that was not obvious at the time.
Dave Horsager, CEO of the Trust Edge Leadership Institute, presented a talk titled the Trust Edge. While the talk revolved around the issue of trust within a corporation, the message for ag producers was clear, given the need to maintain trust with consumers. Horsager stated "Everything of value is based in trust" and it takes a long time to build trust, defined as a confident belief in a person, product or organization. He also said that trust is uniqueness seen in the greatest leaders of all time.
Doug Tatum, Chairman of Newport LLC. presented Where Growing Ag Businesses Fail: The New Normal. In this presentation, he referred to a book he authored titled No Man's Land, Where Growing Companies Fail. He sees a challenge for companies he views as too small to be big, while too big to be small. The challenges for these organizations is wrapped up into what he calls The Four M's Model -- markets, management, model and money. The key takeaway was that he views that getting bigger is not the only option, while business leaders must act like entrepreneurs and face situations by saying "I can change that."
Rabo AgriFinance, one of the sponsors of the Summit, hosted a Breakout Session titled Create New Profit Opportunities, focusing on nontraditional diversification strategies to increase profit margins. Two Rabobank employees were included on the panel, one of which specialized in alternative energy financing such as ethanol plants, solar operations and biodigesters.
Two Rabobank customers also sat on the panel and between them have first-hand experience in diversifying into chia production and marketing, ethanol production, coho salmon farming (why grow cheap tilapia when you can grow salmon, one stated) and greenhouse tomato production, because available tomatoes at the time were of poor quality. The challenge is to surround yourself with good people and be willing to challenge conventional norms, the audience was told.
A discussion that came up briefly from the audience and again further over a breakfast conversation over issues facing ethanol producers in the U.S. Midwest when dealing with the regions of massive demand, in this case California. This situation closely resembled the current Canadian inter-provincial relations.
Two of the most anticipated presentations were held on the last morning of the Ag Summit, when DTN analysts present their outlooks for both weather and grain markets.
DTN Senior Ag Meteorologist Bryce Anderson presented the Reign of Rain. So it's over, right? Not so fast! Bryce moved through 2019 and the conditions that led to a late spring, lower temperatures and unfavorable precipitation that led to harvest delays in 2019, while laying the foundation for a similar experience in 2020.
While Environment Canada has called for a milder-than-normal winter for Canada, DTN weather models are pointing for consistent northern cold, a late start to spring fieldwork due to late-winter conditions in the U.S., early spring precipitation, followed by a cool and wet summer. The Reign of Rain could continue.
DTN Lead Analyst Todd Hultman presented on Surviving Chronic Surpluses. Here he pointed to the magnitude of the problem, with the U.S. carrying vast quantities of corn, soybeans, wheat and cotton, while recent lows seen for prices across these markets range from the lowest in nine to 13 years. This comes at a time when global growth continues to slow down, protectionist actions are taken, the U.S. dollar remains high and planting is poised to increase in the year ahead.
On the positive side, the pace in growth of global demand for corn and soybeans far exceeds world population growth. Todd shared his estimates for the range of prices for the year ahead, along with his ideas on how to survive bear markets.
We hope to see you at 2020 DTN Ag Summit, to be held on Dec. 7-9 at the Chicago Millennium Park Hotel.
Cliff Jamieson can be reached at firstname.lastname@example.org
Follow him on Twitter @CliffJamieson
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