2014 U.S. Grain Outlook C hris Hurt Purdue Extension Service August 2013, [email protected]

Department of Agricultural EconomicsPurdue University

2014 U.S. Grain Outlook

Chris Hurt

Purdue Extension ServiceAugust 2013, [email protected]

http://www.google.com/url?sa=i&rct=j&q=famr+scene&source=images&cd=&cad=rja&docid=dxpRBVgg99aI6M&tbnid=xJYx3Mr2jLWyCM:&ved=0CAUQjRw&url=http://www.flickr.com/photos/44592521@N02/4101824448/&ei=-41RUfL0KOOR2gWW3ICQAQ&bvm=bv.44158598,d.b2I&psig=AFQjCNGgVUR9zIyir9te2nnjovWuH3_4iQ&ust=1364385642764444


$2 to $3

$4

$7.50 $8$8.50

’10 = 153 bu./ac‘11 = 147 bu./ac‘12 = 123 bu./ac

Moderation to What?

Base Today:$5.00 corn

$12.00 beans2.0% 10-Year Treasury

00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/140

5

10

15

20

25

30

35

40

45

50

8.4 7.8

13.014.9 16.3 16.1

20.2

26.6

34.6

39.3

45.246.7 47.3

43.8

U.S. Acres Required for Chinese Soybean Exports; Ethanol (ddgs ad-justed); and Chinese Corn Purchases

U.S. Harvest Year

Mill

ion

Acr

es


1.5M acre/year

5.8M acre/year

1.1M acre/year

1,600,000

1,700,000

1,800,000

1,900,000

2,000,000

2,100,000

2,200,000

2,300,000

2,400,000

1972/73=1,872

1981/82=2,115 1996/07=

2,104

2002/03=2,033

2005/06= 2,141

2013/14=2,288

World Harvested ACRES 13 Major Crops Total: (Millions)

147 Million acres added in 8 years (7%)

243 Million acres added in 9 years

-3,000

2,000

7,000

12,000

17,000

22,000

27,000

32,000

37,000

42,000 40,199.1

27,992.1

21,747.718,332.7

15,483.614,606.4

8,853.8

3,938.91,433.2

766.0 662.2 412.7

Change in Area Harvested in 13 major World crops 2013/14 vs. 2005/06 (Million Acres) Total +147 million acres


12%14%16%18%20%22%24%26%28%30%32%34%36%

23.5%

26.9%

15.1% 14.6% 15.0%14.2%

16.1%

World Stocks to Use %: USDA August 2013Wheat

Soybeans

Corn


90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 8 9 10 11 12 130

20406080

100120140160180200

72

51

91

41

61

18

37

5470 66 71

59

4234

7264

42 46 51 4832 29 23

53

1624 20 15

25

83

U.S. Ending Stocks in Days: Corn, Soybeans, Wheat

CornSoybeansWheat


Corn: USDA

8/12/13 09/10 10/11 11/12 12/13 13/14 Million Bushels Carry in 1,673 1,708 1,128 989 719 Production 13,110 12,447 12,358 10,780 13,763 Total Supply 14,791 14,182 13,514 11,934 14,512 Feed & Residual 5,166 4,792 4,547 4,450 5,100 FSI Non-Fuel 1,370 1,406 1,426 1,400 1,450 FSI Fuel (Ethanol) 4,560 5,021 5,011 4,650 4,900 Export 1,987 1,835 1,541 715 1,225 Total Use 13,083 13,054 12,525 11,215 12,675 Ending Stocks 1,708 1,128 989 719 1,837 US Farm Price $3.55 $5.18 $6.22 $6.95 $4.90

$6.75-$7.15$4.50 - $5.30


90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 8 9 10 11 12 13100

110

120

130

140

150

160

170

118.5

108.6

131.4

100.7

138.6

113.5

127.1126.7

134.4133.8136.9138.2

129.3

142.2

160.3

147.9149.1151.1

153.9

164.7

152.8

147.2

123.4

154.4

U.S. Corn YieldsB

ushe

ls/A

cre


6/2/

13

6/9/

13

6/16

/13

6/23

/13

6/30

/13

7/7/

13

7/14

/13

7/21

/13

7/28

/13

8/4/

13

8/11

/13

8/18

/13

8/25

/13

9/1/

13

9/8/

13

9/15

/13

9/22

/13

9/29

/13

240

260

280

300

320

340

360

380

400 U.S. Corn Crop Ratings: USDA

'06'07'08'0920102011'1213


Iowa Ill Neb Mn Indiana SD U.S.0

10

20

30

40

50

60

70

80

90

100

50

57

75

58

7371

64

58

68

76

63

8176

68

53

64 63 62

7673

63

49

68 67

61

77

70

64

Corn Ratings 6 Largest States: % Good/Excellent


90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 8 9 10 11 12 136

7

8

9

10

11

12

13

14

7.937.48

9.48

6.34

10.05

7.40

9.239.219.76

9.439.92

9.518.97

10.09

11.81

11.11

10.53

13.07

12.09

13.11

12.4512.36

10.78

13.76

U.S. Corn ProductionB

illion

Bus

hels


$4.46


August 23 to 29 Precip Moisture


Harvest 13 Harvest 14 Harvest 15 Harvest 16$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

$5.50

$4.50

$4.83 $4.81 $4.73

Corn Cash Harvest Bids Based on Futures August 15, 2013

Average = $4.72


90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 8 9 10 11 12 1332

34

36

38

40

42

44

34.134.2

37.6

32.6

41.4

35.3

37.6

38.938.9

36.6

38.1

39.6

38.0

33.9

42.2

43.0 42.7

41.7

39.7

44.043.5

39.6

42.6

U.S. Soybean YieldsB

ushe

ls/A

cre


90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 8 9 10 11 12 131.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

3.6

1.931.99

2.19

1.87

2.52

2.17

2.38

2.692.742.65

2.762.89

2.76

2.45

3.123.063.19

2.68

2.97

3.51

3.33

3.093.02

3.26

U.S. Soybean ProductionB

illio

n B

ushe

ls


Soybeans: USDA

8/12/13 09/10 10/11 11/12 12/13 13/14 Million Bushels Carry in 138 151 215 169 125 Production 3,359 3,329 3,094 3,015 3,255 Total Supply 3,512 3,495 3,325 3,219 3,395 Seed & Residual 108 132 88 94 115 Crush 1,752 1,648 1,703 1,685 1,675 Exports 1,501 1,500 1,365 1,315 1,385 Total Use 3,361 3,280 3,156 3,094 3,175 Ending Stock 151 215 169 125 220

Farm Price $9.59 $11.30 $12.50 $14.40 $11.35

$10.35-

$12.35


$11.62


Harvest 13 Harvest 14 Harvest 15 Harvest 16$7

$8

$9

$10

$11

$12

$13$12.39

$11.67$11.21

$10.84

Bean Cash Harvest Prices Based on Futures August 15, 2013

Average = $11.53


Wheat: USDA

8/12/13 09/10 10/11 11/12 12/13 13/14 Million Bushels Carry in 657 976 862 743 718Production 2,218 2,207 1,999 2,269 2,114Total Supply 2,993 3,279 2,974 3,135 2,962Feed & Residual 148 133 164 388 280Other Domestic 988 995 1,017 1,020 1,031Exports 881 1,289 1,050 1,009 1,100Total Use 2,017 2,417 2,231 2,417 2,411

End Stocks 976 862 743 718 551Farm Price $4.87 $5.70 $7.24 $7.80 $7.00 $6.40-$7.60


2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016$0

$50

$100

$150

$200

$250

$300

$350

0

1

2

3

4

5

6

7

8

$113

$156

$333

$234

$136

$332$357

$297

$250$234 $242 $249

4.18

5.11 5.10

4.103.72

3.20 3.002.62

3.00

3.50

4.004.50

Estimated Ownership Returns/Acre to Average Quality Indiana Land, August 15, 2013

Returns/Acre

Discount Rate 10Yr Treasury

Inte

rest

%


Next 4 Years:

Time to be cautious for some and aggressive for others?

Tea Leaves 2013-2016Moderation-with a Downward Slope??


Weaker tone for Crop ProducersWho’s Vulnerable?-High % of Hi cash rent-Weak financial position-High costs for whatever reason-Recent large land purchases?

Strategies:-Turn more cautious-Focus on driving costs down-Delay pricing inputs-No multiple year locking in inputs-Forward price product more aggressively-Earn storage returns

Weaker tone for Input Suppliers-Lower fertilizer prices/volume-Lower seed prices & more competition-Lower cash rents-Lower machinery demand-Lenders: Declining loan volumes in $

-Reduce inventories-Caution about ordering-No new capital investments-Collect accounts payable

Improved tone: Margins and Volume -Grain Handlers-Grain & Soybean Processors-Animal product producers & suppliers-Food consumers: Slower food price inflation-Foreign buyers

-Rejoice!-Improve financial position-Become more aggressive-Consider expansion

2014 U.S. Grain Outlook C hris Hurt Purdue Extension Service August 2013, [email protected]

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