Effects of Southern Hemisphere
Production on Stocks, Trade and
Prices
JOSEPH W. GLAUBER
US DEPARTMENT OF AGRICULTURE
MARIO J. MIRANDA
THE OHIO STATE UNIVERSITY
Futures spreads relative to harvest contract
Corn
Wheat
125%
120%
115%
110%
105%
100%
95%
90%
120%
115%
110%
105%
100%
Jul-Sep
Jul-Mar
Jul-Dec
Jul-May
90%
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
1961
1966
1971
1976
1981
1986
1991
1996
2001
2006
2011
95%
Dec-Mar
Dec-May
Dec-Jul
Soybean futures spreads relative to harvest
contract
115%
110%
105%
Nov-Jan
Nov-Mar
Nov-May
Nov-Jul
Nov-Aug
Nov-Sep
100%
95%
90%
85%
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
80%
Major wheat importers and exporters
Source: FAO
Southern hemisphere share of global wheat
supply and demand
1980
1990
2000
2010
2014
Percent
Production
5.8
5.9
7.9
8.8
7.5
Consumption
4.6
4.5
5.7
6.1
6.3
Exports
15.1
16.9
27.4
25.0
18.9
Imports
10.6
11.2
19.0
18.8
17.9
Ending stocks
4.2
3.4
4.5
9.8
8.3
USDA, PSD database
Major coarse grain importers and exporters
Source: FAO
Southern hemisphere share of global corn supply
and demand
1980
1990
2000
2010
2014
Percent
Production
16.6
12.7
15.4
16.0
16.1
Consumption
12.6
12.9
13.3
13.3
13.4
Exports
18.0
9.0
23.8
32.6
35.9
Imports
3.0
4.3
9.9
12.9
11.5
Ending stocks
8.0
2.9
4.4
19.4
15.2
USDA, PSD database
Major oilseed exporters and importers
Source: FAO
Southern hemisphere share of global soybean
supply and demand
1980
1990
2000
2010
2014
Percent
Production
25.1
29.6
41.9
52.0
53.8
Consumption
20.6
25.1
28.1
34.4
33.5
Exports
20.3
31.5
47.2
50.6
54.8
Imports
6.0
3.2
4.8
2.5
2.6
Ending stocks
38.0
46.1
56.3
66.3
68.2
USDA, PSD database
Intraseasonal Storage Model with Trade
 Stochastic spatial-temporal equilibrium model
 Two periods: spring and fall
 Four regions:




Northern hemisphere exporters, harvest in Fall
Southern hemisphere exporters, harvest in Spring
ROW1: Large net importers, harvest in Fall
ROW2: exogenous, harvest in Spring/Fall
 Trade:


North => ROW
South => ROW
 Storage:


North exporters
South exporters
Intraseasonal Storage Model with Trade
 Constant unit transportation and storage costs
 Model poses a functional nonlinear complementarity
problem lacking closed-form solution
 Solved numerically using cubic spline collocation
and nonlinear complementarity methods
 Use CompEcon Toolbox (Miranda & Fackler)
 Solved and simulated under parameterizations
reflecting 1990, 2000, 2014, and 2023 market
conditions
Effects of shifts in production on trade patterns
1990
2000
2014
2023
North
50.3
42.7
33.0
28.8
South
27.4
40.3
51.1
58.4
ROW
22.3
17.0
15.9
12.8
North
75.9
48.4
42.6
33.7
South
24.1
51.6
57.4
66.3
Share of production
Share of exports
Effects of shifts in production on trade patterns
1990
2000
2014
2023
North
72.9
38.4
31.7
14.3
South
27.1
61.6
68.3
85.7
North
94.2
87.2
78.5
67.7
South
5.8
12.8
21.5
32.3
Fall
19.8
44.9
51.9
72.9
Spring
80.2
55.1
48.1
27.1
Fall
6.2
17.2
23.0
22.1
Spring
93.8
82.8
77.0
77.9
Share of spring exports
Share of fall exports
Share of North exports
Share of South exports
Percent of US crops exported in first half of
marketing year
90%
85%
80%
75%
70%
65%
Soybeans
Wheat
Corn
60%
55%
50%
45%
1976/77
1978/79
1980/81
1982/83
1984/85
1986/87
1988/89
1990/91
1992/93
1994/95
1996/97
1998/99
2000/01
2002/03
2004/05
2006/07
2008/09
2010/11
2012/13
40%
Source: ERS based on Dept of Commerce trade data
US soybean exports by month
10,000
9,000
5yr avg (03/04-07/08)
8,000
2008/09
1000 tons
7,000
2009/10
6,000
2010/11
5,000
2011/12
2012/13
4,000
3,000
2,000
1,000
0
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Brazil soybean exports by month
8,000
5yr avg (03/04-07/08)
1000 tons
7,000
2008/09
6,000
2009/10
5,000
2010/11
2011/12
4,000
2012/13
3,000
2,000
1,000
0
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Argentina soybean exports by month
4,000
5yr avg (03/0407/08)
2008/09
3,500
3,000
2009/10
2,500
1000 tons
2010/11
2,000
2011/12
1,500
2012/13
1,000
500
0
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Global soybean exports (major exporters)
14,000
5yr avg (03/0407/08)
2008/09
12,000
2009/10
2010/11
1000 tons
10,000
2011/12
2012/13
8,000
6,000
4,000
2,000
0
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Effects of production shifts on stocks
1990
2000
Share of production
2014
2023
percent
North
50.3
42.7
33.0
28.8
South
27.4
40.3
51.1
58.4
ROW
22.3
17.0
15.9
12.8
North
35.8
20.4
7.7
5.8
South
64.2
79.6
92.3
94.2
North
94.2
87.2
78.5
67.7
South
5.8
12.8
21.5
32.3
Share of spring stocks
Share of fall stocks
Probability of stockout
percent
North
0.2
5.6
10.3
38.4
South
79.1
33.4
29.7
8.5
Sept-1998
May-1999
Jan-2000
Sept-2000
May-2001
Jan-2002
Sept-2002
May-2003
Jan-2004
Sept-2004
May-2005
Jan-2006
Sept-2006
May-2007
Jan-2008
Sept-2008
May-2009
Jan-2010
Sept-2010
May-2011
Jan-2012
Sept-2012
May-2013
Jan-2014
Soybean stocks held by US
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Sept-1998
May-1999
Jan-2000
Sept-2000
May-2001
Jan-2002
Sept-2002
May-2003
Jan-2004
Sept-2004
May-2005
Jan-2006
Sept-2006
May-2007
Jan-2008
Sept-2008
May-2009
Jan-2010
Sept-2010
May-2011
Jan-2012
Sept-2012
May-2013
Jan-2014
Soybean stocks held by major S. hemisphere
exporters
120,000
100,000
80,000
60,000
40,000
20,000
0
Sept-1998
May-1999
Jan-2000
Sept-2000
May-2001
Jan-2002
Sept-2002
May-2003
Jan-2004
Sept-2004
May-2005
Jan-2006
Sept-2006
May-2007
Jan-2008
Sept-2008
May-2009
Jan-2010
Sept-2010
May-2011
Jan-2012
Sept-2012
May-2013
Jan-2014
Soybean stocks held by major exporters
120,000
100,000
80,000
60,000
40,000
20,000
0
BZ+AR
US
April-1998
Dec-1998
Aug-1999
April-2000
Dec-2000
Aug-2001
April-2002
Dec-2002
Aug-2003
April-2004
Dec-2004
Aug-2005
April-2006
Dec-2006
Aug-2007
April-2008
Dec-2008
Aug-2009
April-2010
Dec-2010
Aug-2011
April-2012
Dec-2012
Aug-2013
April-2014
Soybean stocks held by major exporters
120,000
100,000
80,000
60,000
40,000
20,000
0
April-1998
Jan-1999
Oct-1999
July-2000
April-2001
Jan-2002
Oct-2002
July-2003
April-2004
Jan-2005
Oct-2005
July-2006
April-2007
Jan-2008
Oct-2008
July-2009
April-2010
Jan-2011
Oct-2011
July-2012
April-2013
Jan-2014
Soybean stocks held by major exporters
120,000
100,000
80,000
60,000
40,000
20,000
Sep 1
Mar 1
0
April-1998
Jan-1999
Oct-1999
July-2000
April-2001
Jan-2002
Oct-2002
July-2003
April-2004
Jan-2005
Oct-2005
July-2006
April-2007
Jan-2008
Oct-2008
July-2009
April-2010
Jan-2011
Oct-2011
July-2012
April-2013
Jan-2014
Soybean stocks held by major exporters
120,000
100,000
80,000
60,000
40,000
20,000
Jun 1
Dec 1
0
Effects of production shifts on price correlations
Region/period
1990
2000
2014
2023
North-ROW /fall
0.986
0.998
1.000
0.999
North –ROW /spring
1.000
0.970
0.959
0.844
South-ROW /fall
0.639
0.723
0.738
0.892
South-ROW /spring
0.885
1.000
1.000
1.000
North-South /fall
0.644
0.721
0.737
0.894
North-South/spring
0.885
0.970
0.959
0.844
Jan-1980
Jul-1981
Jan-1983
Jul-1984
Jan-1986
Jul-1987
Jan-1989
Jul-1990
Jan-1992
Jul-1993
Jan-1995
Jul-1996
Jan-1998
Jul-1999
Jan-2001
Jul-2002
Jan-2004
Jul-2005
Jan-2007
Jul-2008
Jan-2010
Jul-2011
Jan-2013
Soybean prices
$/tonne
800
700
600
500
400
300
200
100
0
US FOB Gulf
Brazil FOB Rio Grande
Jan-1990
Feb-1991
Mar-1992
Apr-1993
May-1994
Jun-1995
Jul-1996
Aug-1997
Sep-1998
Oct-1999
Nov-2000
Dec-2001
Jan-2003
Feb-2004
Mar-2005
Apr-2006
May-2007
Jun-2008
Jul-2009
Aug-2010
Sep-2011
Oct-2012
Nov-2013
US gulf price as percent of BZ soybean price
140%
130%
120%
110%
100%
90%
80%
7/6/2013
7/6/2012
7/6/2011
7/6/2010
7/6/2009
7/6/2008
7/6/2007
7/6/2006
7/6/2005
7/6/2004
7/6/2003
7/6/2002
7/6/2001
Rotterdam soybean prices
800
700
600
500
400
300
200
Brazil Paranagua
US Gulf
100
0
Conclusions
 Model provides a number of insights that support
empirical data:




Shifts in soybean production from North to South has altered trade
patterns
Shifts in stocks from North to South
Measures of market tightness (eg, stocks-to-use) must recognize 6
month cycles
Price integration with exporting countries
 Further work:




Price responsive supply (e.g., Haile et al.)
Increasing yield volatility (e.g., Black Sea)
Trade between exporting regions
Role of China
outtakes
China soybean imports
7,000,000
2010-12 avg
6,000,000
5,000,000
Other
Argentina
Brazil
US
4,000,000
3,000,000
2,000,000
1,000,000
0
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Soybean futures spreads
115%
110%
105%
Nov-Jan
Nov-Mar
Nov-May
Nov-Jul
Nov-Aug
Nov-Sep
100%
95%
90%
85%
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
80%
Soybean futures spreads
115%
110%
105%
Nov-Jan
Nov-Mar
Nov-May
Nov-Jul
100%
95%
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
90%
Sept-1998
May-1999
Jan-2000
Sept-2000
May-2001
Jan-2002
Sept-2002
May-2003
Jan-2004
Sept-2004
May-2005
Jan-2006
Sept-2006
May-2007
Jan-2008
Sept-2008
May-2009
Jan-2010
Sept-2010
May-2011
Jan-2012
Sept-2012
May-2013
Jan-2014
Soybean stocks held by US
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Sept-1998
May-1999
Jan-2000
Sept-2000
May-2001
Jan-2002
Sept-2002
May-2003
Jan-2004
Sept-2004
May-2005
Jan-2006
Sept-2006
May-2007
Jan-2008
Sept-2008
May-2009
Jan-2010
Sept-2010
May-2011
Jan-2012
Sept-2012
May-2013
Jan-2014
Soybean stocks held by US
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
100,000
Sept-1998
May-1999
Jan-2000
Sept-2000
May-2001
Jan-2002
Sept-2002
May-2003
Jan-2004
Sept-2004
May-2005
Jan-2006
Sept-2006
May-2007
Jan-2008
Sept-2008
May-2009
Jan-2010
Sept-2010
May-2011
Jan-2012
Sept-2012
May-2013
Jan-2014
Soybean stocks held by major exporters
120,000
United States
Brazil
Argentina
80,000
60,000
40,000
20,000
0
100,000
Sept-1998
May-1999
Jan-2000
Sept-2000
May-2001
Jan-2002
Sept-2002
May-2003
Jan-2004
Sept-2004
May-2005
Jan-2006
Sept-2006
May-2007
Jan-2008
Sept-2008
May-2009
Jan-2010
Sept-2010
May-2011
Jan-2012
Sept-2012
May-2013
Jan-2014
Soybean stocks held by major S. hemisphere
exporters
120,000
Brazil
Argentina
80,000
60,000
40,000
20,000
0
100,000
Sept-1998
May-1999
Jan-2000
Sept-2000
May-2001
Jan-2002
Sept-2002
May-2003
Jan-2004
Sept-2004
May-2005
Jan-2006
Sept-2006
May-2007
Jan-2008
Sept-2008
May-2009
Jan-2010
Sept-2010
May-2011
Jan-2012
Sept-2012
May-2013
Jan-2014
Soybean stocks held by major S. hemisphere
exporters
120,000
Brazil
Argentina
80,000
60,000
40,000
20,000
0
Wheat futures spreads
125%
120%
115%
110%
Jul-Sep
Jul-Dec
Jul-Mar
Jul-May
105%
100%
95%
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
90%
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
Wheat futures spreads
120%
115%
110%
105%
100%
Jul-Sep
Jul-Dec
Jul-Mar
95%
90%
Corn futures spreads
120%
115%
110%
105%
Dec-Mar
Dec-May
Dec-Jul
Dec-Sep
100%
95%
90%
85%
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
80%
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
Corn futures spreads
120%
115%
110%
105%
Dec-Mar
Dec-May
Dec-Jul
100%
95%
Futures spreads relative to harvest contract
Corn
Wheat
125%
120%
115%
110%
105%
100%
95%
90%
120%
115%
110%
105%
100%
Jul-Sep
Jul-Mar
Jul-Dec
Jul-May
90%
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
1961
1966
1971
1976
1981
1986
1991
1996
2001
2006
2011
95%
Dec-Mar
Dec-May
Dec-Jul
Effects of production shifts on price volatility
1990
2000
2014
2023
percent
North-Fall
29.4
26.1
27.1
34.4
North-Spring
35.5
35.5
37.8
40.8
South-Fall
39.8
42.3
42.3
40.6
South-Spring
36.1
33.9
36.6
37.2
ROW-Fall
24.0
22.6
23.4
29.8
ROW-Spring
30.7
29.3
31.6
32.0