The profit formula on corn or soybeans seems simple: yield multiplied by price minus cost. But the plans made in winter and the reality at harvest can turn into something completely different.

The three variables of the profit equation are just beginning to be worked out for the 2023 crops.

Over the past few weeks, the USDA has provided initial indications for the year ahead in reports from two of its wings that have mostly flown under the radar as traders focus on the here and now. . First, the World Agricultural Outlook Board released its Advance Release Tables of USDA agricultural projections through 2032 on Nov. 7. This so-called baseline on the future is rightly ignored, except for except for a set of key figures: early supply and demand forecasts for the coming year, including acreage, yields and prices.

Then, on Nov. 15, the Economic Research Service released an updated production cost forecast with guidance on what to expect in 2023.

Both of these reports are based on statistical guesswork, not farmer surveys. The baseline forecast used 2022 crop data from the USDA’s October World Agricultural Supply and Demand Estimates as a starting point for 2023, so it’s already a bit dated. World events – the war in Ukraine, tensions with China, a faltering global economy – make all price and cost assumptions highly variable. And the weather, as always, is difficult to predict six months before a long growing season.

Fine print aside, pushing a pen through your fields sounds promising. Corn and soybeans project profits – if USDA projections come true. Here’s what the new crystal ball says, and what might get better or worse in the outlook.

Corn beats soy

For corn, the 2023 base yields of 181.5 bushels per acre and the average cash price of $5.70 generated revenues of $1034. Total costs of $870 per acre would generate a profit of $164, compared to an estimated $290 this year and a record $323 in 2021.

Soybean yields of 52 bpa and average cash prices of $13 produce revenue of $676 less costs of $591 for profit of $85, compared to a 2022 estimate of $100 and a record high. $156 for 2021.

What to think of these first projections?

The USDA uses an adjusted trend yield in its estimates until its first survey of farmer opinions in August. This forecasts yields over time to account for increased productivity, assuming normal weather conditions during the growing season. The yields published in November appear to be a rounded average of the statistical and weather-adjusted yields. In my first forecasts, I only rely on the projection of the trend of the last 20 years. For corn this is lower than the USDA at 177.6 bpa, for soybeans a bit higher at 52.5 bpa. Of course, these trend returns could change a bit depending on the final 2022 returns released in January.

Total 2023 supplies combine production and imports with old crop stocks remaining at the start of the September 1 marketing year. so much from year to year.

Production is a function of harvested area multiplied by yield. Assuming normal dropout rates, the USDA estimated corn seedlings at 92 million planted with 84.1 million harvested. Soybean plantings were 87 million, with a harvested area of ​​86.2 million.

Surprise corn acreage?

On the supply side, acreage is where the real debate begins. Projected earnings differentials aren’t the only factor affecting farmers’ planting decisions, but they are significant, accounting for 61% of the variance in the ratio of corn and soybean planting intentions reported at the end of March. The USDA baseline called for 6% more corn acres than soybeans, but the profit differential suggests corn’s advantage could be much greater. While soybean acreage could drop, farmers are more likely to choose to add corn with good returns to get rotations back in line after cutting ground corn in 2022.

More acres would increase corn supply if yields hold, putting additional pressure on demand to keep stocks and prices in line. Early forecasts call for a recovery in global acreage and production in 2023, limiting our exports, inflating the US surplus and driving down spot and futures prices by $1 or more.

Rising soybean production in South America could have a similar effect on prices. Of course, it will even be months before the 2022-2023 crops are harvested in Brazil and Argentina, where there are already concerns about dry conditions – another variable that could confuse early price calculations.

The other side of the ledger

Costs per bushel vary with yields, but total expenses could also change from recent USDA estimates. Rising interest rates could affect loan repayments more than expected, and energy costs are also subject to the vagaries of the market. But the USDA predicts lower costs per acre in 2023, in part due to lower fertilizer bills from record highs set this year.

While the USDA sees only a modest 3% reduction in nutrient expenditure, the actual numbers could be lower. Farmers buying N, P and K for fall applications paid 10-15% less than the records set this spring after Russia invaded Ukraine.

Whether prices continue to fall largely depends on global food prices, with acreage and demand also impacting the market. Based on current cereal price forecasts, the UN Food Price Index could fall 17% from the record set this year – it has already fallen 9%.

International fertilizer markets appear to be pricing in this decline, but these reductions have yet to show up in the agricultural supply chain. If they trickle down – a big if, given the potential for shipping and other disruptions – costs could come down. Ammonia could trade for $1,065 to $1,130 at the farm level under this scenario. Retailers in parts of the Southwest Plains closer to the main production areas are already in this range, so it’s not an impossibility. December ammonia contracts in the Gulf are expected to settle at a substantial discount from the current price of $1,045.

Potash prices could also fall from current on-farm averages of around $825, but price declines could depend on what happens to exports from Russia and Belarus. Russia is pushing to remove obstacles to deals and could hammer out a framework with the West similar to its fragile grain deal to allow Ukrainian shipments out of the Black Sea. If trade normalizes, retail potash could drop to the $615-$695 level.

Phosphates could also be heading for a drop from recent retail levels above $900 to around $670-$740 if all goes well. Gulf swaps showed a $50 break in the spring last week.

Phosphate compounds, as well as urea, could be influenced by China’s aggressive return to the international market. China’s fertilizer production has been essentially flat since 2020. First, the government pressured manufacturers to limit sales and maintain supplies at home as its corn surplus dwindled. Then the COVID lockdowns hit many factories. Overall fertilizer production recovered in September, but year-to-date phosphate exports are down 55%, while urea sales are down 61%.

For clues on the international market, look at what’s happening with US stocks in the Gulf. U.S. nitrogen exports are down 22% so far in 2022, but net ammonia sales rose 41% in September, with prices here low enough to encourage overseas buyers to take on shipments. For better or for worse, fertilizers are an international market. U.S. natural gas prices remain low relative to the rest of the world, which could create headwinds for producers looking for lower costs.

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Knorr writes from Chicago, Illinois. Email him at [email protected]

The opinions of the author are not necessarily those of Farm Futures or Farm Progress.

Neves said the company redesigned the organization with a focus on efficiency, including staffing and spending discipline around marketplaces, Farfetch Platform Solutions (FPS) and platforms. -brand forms. “Farfetch’s global luxury platform is on track to more than double in size in three years, despite an unprecedented series of global events,” Neves said in a statement. “It’s really important to take a step back,” he told investors on the call. “These three years have been very volatile.”

He is optimistic about his strategic partnerships with Ferragamo, Neiman Marcus and, pending regulatory approval, Yoox Net-a-Porter (YNAP). The company was unable to provide a timeline for the latter, but noted that it is currently working with regulators in multiple jurisdictions. The slowdown follows a growth spurt in the second quarter, with sales rising 10.7%. The company expects to return to solid growth and free cash flow in 2023, as it forecasts a decline in the fourth quarter.

The loss of business related to China and Russia is evident in the decline of the market. CFO Elliot Jordan attributes the year-over-year drop in EMEA to shutdowns in Russia and the drop in Asia-Pacific to China’s Covid regulations, noting the strength of the US dollar’s impact in both regions as well. In 2021, Russia accounted for about 7% of Farfetch’s market GMV, making it a significant dropout for 2022, Jordan said. He says Farfetch will annualize the negative headwind at the end of the first quarter of next year. “Russia is a mathematical equation. We will drop it by March next year.

Excess stocks due to the Russian and Chinese situations also pose problems. Farfetch does not plan to do promotions, in order to maintain its gross margins. He therefore expects the fourth quarter to “get worse” due to excess inventory.

Chief Customer Officer Stephanie Phair cited year-over-year growth in private customers, a return to in-person events and the continued shift from wholesale to concessions and direct-to-consumer channels. consumers among luxury brands like positives, noting the recent sale of a $930,000 emerald Bulgari ring. She added that this quarter, Farfetch is rolling out a 3D viewer for handbags to its platforms.

While Farfetch supports Web3-related startups in its new class of accelerators — which is often an early look at future partners or acquisitions — a digital mode acquisition isn’t being considered at this time. The opportunity, according to Neves, currently lies in infrastructure, bitcoin price notwithstanding. “A platform needs to create building blocks for other businesses to build on.”

Comments, questions or comments? Email us at feedback@voguebusiness.com.

More on this topic:

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A Caithness campaigner has insisted measures to improve safety on rural roads are ‘long overdue’ after national statistics were released showing country roads in Scotland are far more deadly than those in urban areas .

Iain Gregory, a retired police area commander, advanced police driver first class and accident investigator, called the latest figures “shocking” and identified a range of measures that could improve the situation.

He was speaking this week after rural insurer NFU Mutual released an analysis of statistics showing what it called a “disproportionate risk” in rural areas.

A representative from the far north of an equestrian charity called the figures “disappointing but not surprising”, while the life chairman of the Caithness Cycling Club, based in Thurso, said some of the secondary roads in the county could constitute a “major danger” for people on bicycles.

In 2021, there were 149% more fatalities on Scottish rural roads (102) than on urban roads (41), although rural roads saw 60% fewer vehicles in any given 24 hour period . Nationally, rural roads have seen 70% more fatalities than urban roads, although rural roads see more than a third fewer vehicles per day.

Mr Gregory, who co-founded Caithness Roads Recovery and is part of the Forss campaign group calling for safety improvements on a section of the A836, said: ‘These statistics are shocking and a campaign focused on safety on the rural roads is long overdue.

“The far north is predominantly rural, with towns and villages making up a very small percentage of the roads in the Highlands.

“During a policing career spanning more than three decades, I have investigated countless fatal and life-altering collisions, many of which have occurred on rural roads, and each of them has been a tragedy for those involved.

“I doubt we can ever reduce road casualties to zero, but we can continue to reduce the numbers by combining strategies.

“I don’t think simply applying ‘global’ speed limits is the solution. The issue is much more complicated than that.

“Roads themselves should be well maintained, with junctions and hazards clearly marked and signposted, with active identification of potential danger areas – sometimes just cutting bushes and vegetation can open up a corner beforehand” blind”, for example.

“Driver training is vital and we all need to be considerate of each other. Pedestrians, cyclists, cyclists and drivers are all responsible for their own safety and for each other.

“We also need a lot more police traffic patrol units on the road – high visibility and unmarked – rather than the occasional van tour of security cameras, which only focus on one aspect of a very complex equation.

“Locally Caithness is an area with a lot of equine activity. Horses and riders have every right to use our roads – in fact they were here long before the motoring – so be aware, slow down, give them plenty of time, space, and doing nothing to scare the horse.

“Farming is a vital part of our way of life, and farmers must also use the roads, so be aware that slow tractors may be present and drive accordingly.

“In the summer we have a large number of tourists in the area, including many motorhomes, driven with varying degrees of skill, and we have to take that into account as well.”

Mr Gregory added: ‘There is one golden rule which will greatly increase your safety: always drive defensively, anticipate potential hazards and remain alert and observant at all times.’

Donna Mather, British Horse Society access manager in the Highland North region, said: “The statistics in the report are disappointing but not surprising.

“Rural roads are now busier than ever, but speed is the number one cause of serious accidents. It can be tempting to speed up when the road is clear, but rural road conditions can change very quickly due to the slow machinery, mud, wild animals and hollows and hidden bends in the road.

“Sharing rural roads with vulnerable users such as walkers, cyclists, horse riders and horse-drawn vehicles is a huge responsibility.

“As horses are kept in rural areas, drivers have a duty to watch them. They need to realize that horses are not motorcycles and the quietest horses can suddenly get scared.

“The 2022 additions to the Highway Traffic Act that prioritize the safety of vulnerable road users are a welcome change. I have already noticed that motorists are overtaking more carefully while driving this year.

“Of course, riders need to make sure they are seen well by wearing fluorescent clothing, and not cause frustration by blocking the road unnecessarily.

“The combination of changes in the hierarchy of road users and the increasing availability of affordable, body-worn action cameras means that drivers are more likely to be held liable for causing crashes or near misses. -accidents to equestrians and other vulnerable road users.

“Every road user has the responsibility to stay informed of changes in the highway code.”

Alasdair Washington, life president of the Caithness Cycling Club, said: “In Caithness our secondary roads are not normally busy, but our very poor road surfaces can pose a major hazard to cyclists.

“I do a lot of cycling in Strathspey, where – despite much harsher winters – most of the surfaces are excellent. Often the only way to avoid really bad sections is to ride carefully close to the center of the road and that takes experience.

“Although traffic here is often sparse, there have been serious accidents elsewhere with agricultural vehicles turning in fields or overtaking with wide trailers, often misjudging the speed of the cyclist. Fortunately, this is not a problem which I encountered in Caithness, but cyclists and drivers should be well aware of the potential problem.”

Mr Washington added: “Cyclists must of course ride safely. Firstly, be visible. Secondly, don’t ride close to the edge, even when the surface is good, because that leaves no room to avoid the nests. – hen or give way in an emergency – this is particularly the case in sharp left turns and allows drivers to see cyclists better.

“Third, be courteous to other road users. Courtesy begets courtesy.”

NFU Mutual runs a rural road safety campaign which is supported by the Department for Transport, British Cycling and the British Horse Society.

Jade Devlin, Rural Roads Specialist at NFU Mutual, said: “These latest figures confirm our fears that an increase in rural road traffic has led to an increase in the number of deaths and injuries on country roads – the vulnerable users of the road generally carrying the weight. of this one.

“Rural roads are a lifeline for many isolated people and a shared space for the whole population, so this is a national tragedy that is rightly a major concern for our customers and the greater audience.

“That’s why, together with our partners, we urge all road users to act now to ensure that any further increase in traffic on rural roads does not lead to an increase in tragic and preventable deaths.”

NFU Mutual conducted an online survey to find out what motorists think about rural road safety and what they see as the biggest hazards. Almost a quarter (23%) of respondents said they had been involved in a collision or accident on a rural road.

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Packaging can play a surprisingly large role in the sustainability equation for consumer product (PC) companies, affecting everything from consumer perception to reducing waste to emissions. And with legislative measures such as the SEC’s proposed disclosure rule and the EU Sustainability Reporting Directive looming, companies need to quickly determine their next steps and put their plans into action.

Consumer packaging accounts for nearly 60%¹ of all packaging end uses, which means that CP companies have a major role to play in solving this problem. Since most CP companies have a few suppliers focused on this area, there are opportunities to make systemic changes. However, evaluating and implementing changes to improve sustainability continues to be a challenge.

Moving from commitment to action

Most major CPG companies are committed to increasing recyclability, minimizing packaging, or creating reusable packaging materials. However, the speed from concept to implementation is still slow.

It remains a complex problem with a multitude of choices: from incremental changes such as lightening and changing raw materials, to redesigning and redesigning packaging concepts and entire supply chains. Companies should first take stock of the solutions and technologies available to vendors in the market, such as increasing the percentage of post-consumer recycled (PCR) content and using biodegradable resins or fiberglass. source to replace conventional petroleum-based resins. Companies should also keep an eye on the latest developments in the recycling industry and upgrade their packaging design accordingly to maximize their impact. For example, the cutting-edge chemical recycling solution is the next wave of infrastructure needed to tackle multi-resin or lightweight plastics. The environmental qualities of these options must be assessed, which can often be a stumbling block, as various considerations require a detailed end-to-end life cycle assessment.

Then, they should adopt a detailed end-to-end costing to aid in decision-making and prioritization. Finally, they must mobilize cross-functional teams to implement and capture the impact of initiatives across the entire value chain, while considering potential operational challenges.

Balancing Tradeoffs and Benefits

In addition to understanding the environmental impact across the entire lifecycle, it is essential to assess all trade-offs, including cost, ease of implementation, and impact on functionality. Packaging also plays an important role in the qualitative and quantitative perception of the brand. Because it’s often the first thing a customer will see when buying, receiving, or unboxing a product, companies need to both ensure that any packaging meets brand standards and doesn’t offend. today’s increasingly environmentally conscious consumers. According to a recent survey, consumers are 57% less likely to buy products in environmentally harmful packaging, and 44% of consumers said they would not buy products in environmentally harmful packaging. .

For any CP company looking to create or scale a sustainable packaging initiative, there are several key elements to completing the technical implementation:

Set top-down goals and gain management support: It is imperative that specific, measurable and achievable goals are defined and clearly articulated – these goals can be more market-driven (such as enabling consumers to reduce, recycle and reuse) or more driven by regulations governing single-use plastics , recycling levels , and mandatory recycled content. PC companies are increasingly committing to packaging-specific ESG goals. P&G, for example, has committed to producing 100% recyclable or reusable packaging by 2030 and will reduce the use of virgin petroleum-based plastic in packaging by 50% by 2039.

Create dedicated teams to get things done:Empower procurement and sustainability teams to launch specific initiatives. Companies should establish a detailed, phased plan, allowing plenty of time for briefing, laying the groundwork, research, testing, and ultimately production. Companies should explore sustainable packaging solutions across multiple dimensions, with pros and cons that come with each, especially since some changes can take up to two years to fully absorb into operations.

Prepare to compromise: Every company must find a balance between its financial performance, its brand image, its operational impacts and its environmental impacts. There are some cases where design changes can create a win-win situation. For example, a luxury retailer has replaced bubble wrap with honeycomb paper and expects to see a 56% cost reduction while relieving customers concerned about plastic packaging. However, in general, companies should take a portfolio view of their options because not all options will result in a win-win.

Packaging selection is a critical lever that can help CP companies achieve multiple ESG goals at once. With looming government regulations and mounting consumer pressure, companies should embark on this journey as soon as possible so they have enough time to articulate a clear and realistic goal, align with stakeholders, build teams internals, understand and mitigate trade-offs, plan budgets, test and learn.

Footnote

1. Credit Suisse Connection Series; Global Packaging: how packaging could be the solution, not the problem; page 11; February 2022

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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With the Danish general election just days away, what can forecasting models tell us about the outcome? Based on a model characterized by economic growth, Richard Nadeau, Michael S. Lewis-Beck and Karina Kosiara-Pedersen predict a comfortable victory for a leftist coalition led by the ruling Social Democrats.

Prime Minister Mette Frederiksen, centre-left leader of the Danish government, has called for general elections to be held on November 1. An allied party, the Social Liberals, had threatened a vote of no confidence if an election was not held, in light of a report critical of the government’s order to cull all mink for reasons of health during the Covid-19 pandemic.

Frederiksen hopes to build a broad coalition of parties, bridging the left-right divide, thereby replacing the one-party minority government of Social Democrats she currently leads. The unusual bipartisan gesture comes during the country’s troubled times, including soaring gas prices and claims that Frederiksen and his one-party government have been too powerful and opaque, not just when dealing with Covid-19 and the slaughter of mink. Faced with these difficult times, some polls suggest that she should be afraid.

Besides the polls, what does the other systematic evidence suggest? To predict the last Danish election (2019), we developed a political economy model in advance that successfully predicted the outcome of this competition. We now apply this same model, updated to forecast the 2022 election. The model is based on fundamental economic and political forces acting on the electorate. With regard to the economy, the focus is on economic growth in the run-up to the elections. As for political issues, their currents are captured in retrospective aggregate voting intentions. The theory is tested against data from the last 21 general elections, 1964-2019.

Given the complex multi-party nature of the Danish system, the electoral outcome to be predicted might not seem obvious. However, the system itself offers some useful regularities. Specifically, there are key Danish parties, accounting for nearly 70% of the total vote, that have been around for a very long time: the Social Democrats and Social Liberals (which can be lumped together in a left-wing coalition); and liberals and conservatives (which can be grouped into a right-wing coalition share).

For the 2022 election, the size of these two coalitions can be measured simply by using opinion polls measuring voting intentions. We use our standard time frame of three months, with an estimate end of July/beginning of August (average of two Epinon and Voxmeter surveys). Based on these surveys, we calculated the expected voting intentions for each of these four major parties at 23.6% for the Social Democrats and 6.5% for the Social Liberals (30.1% for the coalition left), with 14.7% for the liberals and 12% for the conservatives (26.7% for the right-wing coalition).

We see that the Social Democrats would still dominate the left coalition and that the left coalition would be larger, with a lead of 3.4 percentage points. However, when the share of the left coalition is calculated as a proportion of the votes for the two coalitions, it is only 53%. This margin, while positive for the left, is narrow and suggests that the race is indeed close, according to the polls.

However, the picture changes when considering the economy. Elsewhere, the impact of the economy on the Danish voter has been well demonstrated. The economic measure we focus on here is economic growth before the election, specifically the previous three quarters (t-9 GDP, the annual growth rate of the three quarters before the election). This growth figure shows robustness, at 6.6 percentage points, reflecting well the recovery of the Danish economy after the Covid-19 pandemic.

We “synthesize” these two measures of independent variables together in a regression equation, to predict the proportion of left votes based on these political and economic fundamentals. Estimating this equation with ordinary least squares yields a forecast of 58.4% for the left coalition. This strongly suggests a victory for the left-wing coalition. Why? Because over the entire electoral series, when a left-wing coalition has won, its vote represents, on average, 55.4% of the total support for these four permanent government parties. Our current estimate of 58.4% is 3 percentage points above this benchmark.

So once economic performance is factored in, as it should be, a Social Democrat-led coalition appears to be heading for a clear victory. This is, of course, at odds with the picture polls have often painted of a race too close to be called. That doesn’t seem to be the case now. The bottom line leads to a victory for the left, with the economy as the crucial factor.

Note: This article gives the point of view of the authors, and not the position of EUROPP – European Politics and Policy or the London School of Economics. Featured Image Credit: European Union

By Shan Haq.

Most accountants and accounts payable professionals have never worked in an environment where inflation was so high that it impacted the decision-making process. Unfortunately, in today’s highly inflationary period, everything is changing. Simply put, the world is different and organizations need to respond accordingly.

As inflation hits generational highs, many organizations are looking to build more resilient businesses that can withstand rising prices and rising cost of capital. An often overlooked area to start building this resilience is in accounts payable.

By investing in automation technology, PA teams can adopt three key strategies that enable their organizations to face today’s economic realities head-on.

1. Margin optimization

2. Stabilize supply chains

3. Increase Access Point Efficiency