Will Crop Production Keep Pace With Bioproduct Demand Later This Decade? Unlikely Without Higher Prices!

Monthly Global Agriculture Report

Will Crop Production Keep Pace With Bioproduct Demand Later This Decade? Unlikely Without Higher Prices!

Key Findings

• General Thoughts: US corn production has been rangebound during the past ~10 years, suggesting that absent a supply boost this decade rising bioproduct demand will favor crop price support – a plus for farm input sellers.
• Agriculture Inputs: We discuss recent US fertilizer and agricultural chemical equity performance, and why we think a weaker agriculture economy YoY in 2024 will likely set the stage for constructive sector sentiment into 2025.
• Sustainable Agriculture: We discuss an RFP issued by GEVO to identify and secure low-carbon corn for an SAF project, highlighting the significant supply-chain complexities and higher cost of producing a low-carbon crop.
• Biofuels: US ethanol production margins have bounced higher from YTD lows, after a strong close to 2023, and we discuss challenges facing airline initiatives mostly targeting fuels to meet their long-term zero-emission targets.
• Crop Markets & Demand: We discuss recent crop price movements, highlight recent US soy-to-corn price ratios that favor soy plantings, and flag a few crop production and end-market health indicators worth consideration.

Exhibit 1: The increased consumption of corn in ethanol spurred corn prices higher from 2005-2012, while feed and residual use for corn relatively declined. Rising bioproduct demand later this decade favors crop price support.

Source: Bloomberg, AFDC.Energy.GOV, C-MACC Analysis, April 2024

See PDF below for all charts, tables and diagrams