Post on 30-Dec-2015
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Department of Economics
Crop Situation and Outlook
Tri County Ag Marketing Club2009 Grain Marketing Outlook Workshop
Grundy Center, IowaJuly 23, 2009
Chad HartAssistant Professor/Grain Markets Specialist
chart@iastate.edu515-294-9911
Department of Economics
Department of Economics
U.S. Corn Supply and Use
Source: USDA
2007 2008 2009
Area Planted (mil. acres) 93.5 86.0 87.0
Yield (bu./acre) 150.7 153.9 153.4
Production (mil. bu.) 13,038 12,101 12,290
Beg. Stocks (mil. bu.) 1,304 1,624 1,770
Imports (mil. bu.) 20 15 15
Total Supply (mil. bu.) 14,362 13,740 14,075
Feed & Residual (mil. bu.) 5,938 5,250 5,200
Ethanol (mil. bu.) 3,026 3,650 4,100
Food, Seed, & Other (mil. bu.) 1,337 1,270 1,275
Exports (mil. bu.) 2,436 1,800 1,950
Total Use (mil. bu.) 12,737 11,970 12,525
Ending Stocks (mil. bu.) 1,624 1,770 1,550
Season-Average Price ($/bu.) 4.20 4.05 3.75
Department of Economics
U.S. Soybean Supply and Use
Source: USDA
2007 2008 2009
Area Planted (mil. acres) 64.7 75.7 77.5
Yield (bu./acre) 41.7 39.6 42.6
Production (mil. bu.) 2,677 2,959 3,261
Beg. Stocks (mil. bu.) 574 205 110
Imports (mil. bu.) 10 15 10
Total Supply (mil. bu.) 3,261 3,179 3,380
Crush (mil. bu.) 1,803 1,655 1,680
Seed & Residual (mil. bu.) 91 154 175
Exports (mil. bu.) 1,161 1,260 1,275
Total Use (mil. bu.) 3,056 3,070 3,130
Ending Stocks (mil. bu.) 205 110 250
Season-Average Price ($/bu.) 10.10 10.00 9.30
Department of Economics
U.S. Crop Statistics
Source: USDA, Crop Progress
Department of EconomicsSource: USDA, Weekly Weather and Crop Bulletin
Department of EconomicsSource: USDA, Weekly Weather and Crop Bulletin
Department of EconomicsSource: USDA, Weekly Weather and Crop Bulletin
Department of EconomicsSource: USDA, Weekly Weather and Crop Bulletin
Department of Economics
U.S. Crop Conditions
Source: USDA, Crop Progress
Department of Economics
Corn Yield Estimates
Source: USDA, World Ag. Outlook Board
Department of Economics
Hog Returns vs. Corn Prices
Sources: ISU Extension, Farrow-to-Finish;USDA-NASS
-50
-40
-30
-20
-10
0
10
20
30
Sep-06
Dec-06
Mar-07
Jun-07
Sep-07
Dec-07
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
$ p
er
head
2
3
4
5
6
$ p
er
bush
el
Department of Economics
Cattle Returns vs. Corn Prices
Sources: ISU Extension, Yearling Steers;USDA-NASS
-300
-250
-200
-150
-100
-50
0
50
100
Sep-06
Dec-06
Mar-07
Jun-07
Sep-07
Dec-07
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
$ p
er
hea
d
2
3
4
5
6
$ p
er
bush
el
Department of EconomicsSource: John Lawrence, ISU Extension
ISU Estimated Costs and Selling Prices, Farrow to Finish ($/cwt Live Wt)
$-
$10
$20
$30
$40
$50
$60
$70
Jan-
06
May
-06
Sep-0
6
Jan-
07
May
-07
Sep-0
7
Jan-
08
May
-08
Sep-0
8
Jan-
09
May
-09
Sep-0
9
Jan-
10
May
-10
Sep-1
0
Feed Variable Total Hog Price
July 17 Futures prices and historic basis
ProjectedReported
Department of Economics
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
Canada Mexico Brazil EU China South KoreaJapan Australia
Exchange Rates (Jan. 2003 = 1)
Source: USDA, ERS
Department of Economics
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09
Canada Mexico Brazil EU China South KoreaJapan Australia
Exchange Rates (Jan. 2003 = 1)
Source: USDA, ERS
Department of Economics
2008 U.S. Corn Exports
Source: USDA, FAS
Taiwan8%
South Korea11%
Other28%
Mexico17%
Japan36%
Department of Economics
2008 U.S. Soybean Exports
Source: USDA, FAS
Japan7%
Mexico9%
Other21%
EU7%
China56%
Department of Economics
2009 Advance Export Sales
Source: USDA, FAS
0
50
100
150
200
250
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Mill
ion b
ush
els
Corn Soybeans
Department of Economics
Crude Oil Prices
Source: Energy Information Administration
0
20
40
60
80
100
120
140
Jan
-86
Jan
-88
Jan
-90
Jan
-92
Jan
-94
Jan
-96
Jan
-98
Jan
-00
Jan
-02
Jan
-04
Jan
-06
Jan
-08
$ p
er
ba
rrel
Department of Economics
Crude Oil Futures Prices
Source: NYMEX
60
70
80
90
100
110
120
130
140
Aug.2008
Dec.2008
Dec.2009
Dec.2010
Dec.2011
Dec.2012
Dec.2013
Dec.2014
Dec.2015
Dec.2016
$ p
er
ba
rre
l
2008 2009
Department of Economics
Ethanol Margins
Source: ISU, CARD
Department of Economics
Biodiesel Margins
Source: ISU, CARD
Department of Economics
Renewable Fuels Standard (RFS)
0
2
4
6
8
10
12
14
16
2009 2010 2011
Bill
ion g
allo
ns
Additional Advanced Biofuels Biodiesel
Cellulosic Biofuels Conventional Biofuels
CropYear
Billion Bushels
2008 3.57
2009 4.11
2010 4.43
Department of Economics
Dept. of Energy Projections
Source: Energy Information Administration,Annual Energy Outlook 2009
Department of Economics
Draft Lifecycle GHG Reductions
Source: EPA, May 2009
Department of Economics
CARB Fuel Carbon Values
Source: CA Air Resources Board, April 2009
Department of Economics
Outside Influences (Jan. 2007 = 1)
0.5
0.7
0.9
1.1
1.3
1.5
1.7
1.9
2.1
2.31/3
/2007
3/3
/2007
5/3
/2007
7/3
/2007
9/3
/2007
11/3
/2007
1/3
/2008
3/3
/2008
5/3
/2008
7/3
/2008
9/3
/2008
11/3
/2008
1/3
/2009
3/3
/2009
5/3
/2009
7/3
/2009
Corn Soybeans Ethanol Gasoline
Department of Economics
Ethanol vs. Gasoline
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
1/3
/20
07
3/3
/20
07
5/3
/20
07
7/3
/20
07
9/3
/20
07
11
/3/2
00
7
1/3
/20
08
3/3
/20
08
5/3
/20
08
7/3
/20
08
9/3
/20
08
11
/3/2
00
8
1/3
/20
09
3/3
/20
09
5/3
/20
09
7/3
/20
09
$ p
er
ga
llon
Ethanol Gasoline
Department of Economics
% of Gasoline Blended with Ethanol
Source: Energy Information Administration
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%5
/7/2
00
4
9/7
/200
4
1/7
/200
5
5/7
/200
5
9/7
/200
5
1/7
/200
6
5/7
/200
6
9/7
/200
6
1/7
/200
7
5/7
/200
7
9/7
/200
7
1/7
/200
8
5/7
/200
8
9/7
/200
8
1/7
/200
9
5/7
/200
9
Department of Economics
U.S. Stocks-to-Use Ratios
0%
5%
10%
15%
20%
25%
30%
1990/9
1
1991/9
2
1992/9
3
1993/9
4
1994/9
5
1995/9
6
1996/9
7
1997/9
8
1998/9
9
1999/0
0
2000/0
1
2001/0
2
2002/0
3
2003/0
4
2004/0
5
2005/0
6
2006/0
7
2007/0
8
2008/0
9
2009/1
0
Corn Soybeans Corn - Avg. 1990-2007 Soy - Avg. 1990-2007
Department of Economics
1.5
2
2.5
3
3.5
0% 5% 10% 15% 20% 25% 30%
Pric
e ($
per
bus
hel)
Stocks-to-use ratio
Corn1990 - 2006
Department of Economics
2007/082008/09
1.5
2
2.5
3
3.5
4
4.5
0% 5% 10% 15% 20% 25% 30%
Pric
e ($
per
bus
hel)
Stocks-to-use ratio
Corn
Department of Economics
2007/082008/092009/10 May
2009/10 June
2009/10 July
1.5
2
2.5
3
3.5
4
4.5
0% 5% 10% 15% 20% 25% 30%
Pric
e ($
per
bus
hel)
Stocks-to-use ratio
Corn
Department of Economics
World Stocks-to-Use Ratios
0%
5%
10%
15%
20%
25%
1990/9
1
1991/9
2
1992/9
3
1993/9
4
1994/9
5
1995/9
6
1996/9
7
1997/9
8
1998/9
9
1999/0
0
2000/0
1
2001/0
2
2002/0
3
2003/0
4
2004/0
5
2005/0
6
2006/0
7
2007/0
8
2008/0
9
2009/1
0
Corn Soybeans Corn - Avg. 1990-2007 Soy - Avg. 1990-2007
Department of Economics
Seasonal Pricing Patterns
0.94
0.96
0.98
1.00
1.02
1.04
1.06
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Corn Soy
Source: USDA, NASS,Monthly Price Data 1980-2008
Department of Economics
3.00
3.20
3.40
3.60
3.80
4.00
Aug-0
9
Sep-0
9
Oct
-09
Nov-
09
Dec-
09
Jan-1
0
Feb-1
0
Mar-
10
Apr-
10
May-
10
Jun-1
0
Jul-10
$ p
er
bu
sh
el
Corn Futures
Source: CBOT, 7/22/09
2009 Rev. Ins. Price $4.04
Department of Economics
8.80
9.20
9.60
10.00
10.40
Au
g-0
9
Se
p-0
9
Oct
-09
No
v-09
De
c-09
Jan-1
0
Feb
-10
Mar-
10
Ap
r-1
0
May-
10
Jun-1
0
Jul-1
0
$ p
er
bu
sh
el
Soybean Futures
Source: CBOT, 7/22/09
2009 Rev. Ins. Price $8.80
Department of Economics
Basis
-140
-120
-100
-80
-60
-40
-20
0C
ents
per
bus
hel
Average 2000-05 - Corn Average 2000-05 - Soy 2008 - Corn2008 - Soy 2009 - Corn 2009 - Soy
Department of Economics
Climate Change Legislation
Source: Congressional Research Service
American Clean Energy and Security Act of 2009 (H.R. 2454)• Requires utilities to supply an increasing percentage of their demand
from a combination of energy efficiency savings and renewable energy (6% in 2012, 9.5% in 2014, 13% in 2016, 16.5% in 2018, and 20% in 2021-2039).
• Provides for issuing, trading, banking, retiring, and verifying renewable electricity credits.
• Establishes targets to cap and reduce greenhouse gas (GHG) emissions, annually, so that GHG emissions from capped sources are reduced to 97% of 2005 levels by 2012, 83% by 2020, 58% by 2030, and 17% by 2050; and establish a federal GHG registry.
• Provides for trading, banking and borrowing, auctioning, selling, exchanging, transferring, holding, or retiring emission allowances.
Department of Economics
Climate Change Legislation
Source: Craig Raysor, Gillon & Associates, PLLC
Agriculture provisions in the bill• Provides some exemptions from the GHG emission reduction
requirements for agriculture and forestry
• Provides incentive-based approach to GHG emission reduction/capture
• Allows USDA to help establish eligible GHG offset practices and review of those practices
• Shifts question on indirect-land-use to an independent panel for study with EPA and USDA to review in the future
• Allows for a specific exemption for livestock (enteric fermentation from ruminant animals) from uncapped emissions guidelines
Department of Economics
Climate Change Legislation
Source: FAPRI-Missouri, Report #05-09
Department of Economics
Climate Change Legislation
Source: Ben Lieberman, Heritage Foundation, July, 21, 2009
“Since farming is energy intensive, it will be hit hard by Waxman-Markey's energy price hikes. In addition to higher diesel fuel and electricity costs, prices for natural gas-derived fertilizers and other chemicals will also rise. Everything else affecting agriculture, from the cost of constructing farm buildings to the price of tractors and other farm equipment, will also go up. Consequently, farm profits are expected to decline by 28 percent in 2012 and will be an average 57 percent lower from 2012-2035.”
Department of Economics
Climate Change Legislation
Source: USDA, Office of Chief Economist“A Preliminary Analysis of the Effects of HR2454 on U.S. Agriculture”
Department of Economics
Thoughts for 2009 and BeyondGeneral economic conditions
Recession concerns still hold significant power in the marketsProjected economic recovery is a major key to steady/higher prices for the 2009 crop year
Most important ag. statistic: Crop yield estimates
USDA is indicating 2009 season-average prices in the neighborhood of $3.75 for corn and $9.30 for soybeans
Current futures Yesterday: Corn $3.00, Soy $8.65
Department of Economics
Thank you for your time!
Any questions?
My web site:http://www.econ.iastate.edu/faculty/hart/
Iowa Farm Outlook:http://www.econ.iastate.edu/outreach/agriculture/periodicals/ifo/
Ag Decision Maker:http://www.extension.iastate.edu/agdm/