Crop Situation and Outlook

46
Department of Economics Crop Situation and Outlook Tri County Ag Marketing Club 2009 Grain Marketing Outlook Workshop Grundy Center, Iowa July 23, 2009 Chad Hart Assistant Professor/Grain Markets Specialist [email protected] 515-294-9911

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Crop Situation and Outlook. Tri County Ag Marketing Club 2009 Grain Marketing Outlook Workshop Grundy Center, Iowa July 23, 2009 Chad Hart Assistant Professor/Grain Markets Specialist [email protected] 515-294-9911. U.S. Corn Supply and Use. Source: USDA. U.S. Soybean Supply and Use. - PowerPoint PPT Presentation

Transcript of Crop Situation and Outlook

Page 1: Crop Situation and Outlook

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

[email protected]

Page 2: Crop Situation and Outlook

Department of Economics

Page 3: Crop Situation and Outlook

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

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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

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Department of Economics

U.S. Crop Statistics

Source: USDA, Crop Progress

Page 6: Crop Situation and Outlook

Department of EconomicsSource: USDA, Weekly Weather and Crop Bulletin

Page 7: Crop Situation and Outlook

Department of EconomicsSource: USDA, Weekly Weather and Crop Bulletin

Page 8: Crop Situation and Outlook

Department of EconomicsSource: USDA, Weekly Weather and Crop Bulletin

Page 9: Crop Situation and Outlook

Department of EconomicsSource: USDA, Weekly Weather and Crop Bulletin

Page 10: Crop Situation and Outlook

Department of Economics

U.S. Crop Conditions

Source: USDA, Crop Progress

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Department of Economics

Corn Yield Estimates

Source: USDA, World Ag. Outlook Board

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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

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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

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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

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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

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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

Page 17: Crop Situation and Outlook

Department of Economics

2008 U.S. Corn Exports

Source: USDA, FAS

Taiwan8%

South Korea11%

Other28%

Mexico17%

Japan36%

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Department of Economics

2008 U.S. Soybean Exports

Source: USDA, FAS

Japan7%

Mexico9%

Other21%

EU7%

China56%

Page 19: Crop Situation and Outlook

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

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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

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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

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Department of Economics

Ethanol Margins

Source: ISU, CARD

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Department of Economics

Biodiesel Margins

Source: ISU, CARD

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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

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Department of Economics

Dept. of Energy Projections

Source: Energy Information Administration,Annual Energy Outlook 2009

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Department of Economics

Draft Lifecycle GHG Reductions

Source: EPA, May 2009

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Department of Economics

CARB Fuel Carbon Values

Source: CA Air Resources Board, April 2009

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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

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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

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/3/2

00

8

1/3

/20

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3/3

/20

09

5/3

/20

09

7/3

/20

09

$ p

er

ga

llon

Ethanol Gasoline

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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

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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

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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

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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

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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

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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

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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

Page 37: Crop Situation and Outlook

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

Page 38: Crop Situation and Outlook

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

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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

Page 40: Crop Situation and Outlook

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.

Page 41: Crop Situation and Outlook

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

Page 42: Crop Situation and Outlook

Department of Economics

Climate Change Legislation

Source: FAPRI-Missouri, Report #05-09

Page 43: Crop Situation and Outlook

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.”

Page 44: Crop Situation and Outlook

Department of Economics

Climate Change Legislation

Source: USDA, Office of Chief Economist“A Preliminary Analysis of the Effects of HR2454 on U.S. Agriculture”

Page 45: Crop Situation and Outlook

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

Page 46: Crop Situation and Outlook

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/