Feedgrain Market Outlook & Pricing Opportunities Grain Sorghum School Ness City, Kansas February 29,...

Feedgrain Market Feedgrain Market OutlookOutlook

& Pricing & Pricing OpportunitiesOpportunities

Grain Sorghum SchoolGrain Sorghum SchoolNess City, KansasNess City, Kansas

February 29, 2008February 29, 2008Daniel O’Brien & Mike WoolvertonDaniel O’Brien & Mike WoolvertonK-State Research and ExtensionK-State Research and Extension

[email protected]@oznet.ksu.edu [email protected]@agecon.ksu.edu

Historic vs Current Grain Historic vs Current Grain PricesPrices

CropCrop2000-2000-

0606

AveragAveragee

2007/08 Mkt 2007/08 Mkt Yr Yr

USDA Est.USDA Est.

KC MO.KC MO.Feb. 28, Feb. 28,

‘08‘08

Grain Grain SorghumSorghum

$2.$2.2020 /bu/bu $3.$3.6565 – $4.– $4.1515

/bu/bu$5.$5.2323 /bu/bu

CornCorn $2.$2.2424 /bu/bu $3.$3.7575 – $4.– $4.2525

/bu/bu$5.$5.3636 /bu/bu

WheatWheat $3.$3.3535 /bu/bu $6.$6.4545 – $6.– $6.8585

/bu/bu$11.$11.9595 //

bubu

SoybeansSoybeans $5.$5.6666 /bu/bu $10.$10.0000 – $10.– $10.8080

/bu/bu

$14.$14.1717 //bubu

Land in CropsLand in Crops (Millions of acres)(Millions of acres) 55 yr. Ave.yr. Ave. 07/0807/08 USDA USDA

Proj. 08/09Proj. 08/09 1 1

CornCorn 79.6 79.6 93.6 93.6 90.0 90.0 (-4%)(-4%) SoybeansSoybeans 74.2 74.2 63.6 63.6 71.0 71.0 (+11%)(+11%)

HayHay 62.4 62.4 61.8 61.8 61.8 61.8 (--)(--)

WheatWheat 59.5 59.5 60.4 60.4 64.0 64.0 (+6%)(+6%)

CottonCotton 14.1 14.1 10.8 10.8 9.5 9.5 (-13%)(-13%)

Grain Sorghum 8.1 Grain Sorghum 8.1 7.7 7.7 7.4 7.4 (-(-4%)4%)

Principle Crops Principle Crops 22 297.9 297.9 297.9 297.9 303.7303.7CRPCRP 35.9 35.9 34.9 34.9 (-3%)(-3%)

11Estimates for corn, soybeans, wheat, and cotton from the USDA Commodity Estimates for corn, soybeans, wheat, and cotton from the USDA Commodity Outlook Forum, released February 22, 2008.Outlook Forum, released February 22, 2008.

22 Total crop land in the United States – 441.6 million acres Total crop land in the United States – 441.6 million acres

Feedgrain Feedgrain

Markets:Markets:Corn & Corn & Grain Grain

SorghumSorghum

Current Feedgrain Market Factors

U.S. Feedgrain stocks are adequate Feedgrain supplies not as tight as for wheat & soybeans Large 2008 crop (12.5–13.0 billion bu) needed to meet

demand

U.S. Ethanol demand continues strong Strong demand from overseas export buyers

Reduced production in Argentina (dry Dec-Jan) & Mexico (lower area than expected), increases in South Africa (good rains)

Southern hemisphere corn export competition to increase seasonally.

Expected competition for U.S. crop acres vs other crops in Spring 2008 (“bidding” during Feb-May)

MAY 2008 Corn FuturesMAY 2008 Corn Futures

Contract Volume & Open Interest

CBOT: April 2006-February 2008“2008 MAY Old Crop Corn Contract”

Ness City, KansasNess City, KansasCash Grain Sorghum PriceCash Grain Sorghum Price

De Bondurant Grain Co., Ness City, KansasMarch 2, 2007 – February 28, 2008Source: DTN Bid Analyzer

$4.97/bu on 2/28/08Basis: $0.46/bu underCBOT March 2008 Corn

Ness City, KansasNess City, KansasCash Corn PriceCash Corn Price

De Bondurant Grain Co., Ness City, KansasMarch 2, 2007 – February 28, 2008Source: DTN Bid Analyzer

$5.30/bu on 2/28/08Basis: $0.13/bu underCBOT March 2008 Corn

December 2008 Corn December 2008 Corn FuturesFutures

CBOT: Jan 2006-February 2008“2008 New Crop Corn Contract”


Wakeeney, KansasWakeeney, KansasNew Crop Grain Sorghum New Crop Grain Sorghum

PricesPricesMidwest Coop, Wakeeney, KansasMarch 2, 2007 – February 28, 2008Source: DTN Bid Analyzer

$5.18/bu on 2/28/08FC Basis: $0.47/bu underCBOT DEC 2008 Corn

Scott City, KansasScott City, KansasNew Crop Corn PricesNew Crop Corn Prices

Scott Coop Assn., Scott City, KansasMarch 2, 2007 – Feb. 28, 2008Source: DTN Bid Analyzer

$5.51/bu on 2/28/08FC Basis: $0.14/bu underCBOT DEC 2008 Corn

U.S. Corn Supply-DemandU.S. Corn Supply-Demand 2006/07 2007/08 2008/09 Planted Ac. (mln.) 78.3 93.6 90.0 Harvested Ac (mln.) 70.6 86.5 82.7 Yield (bu./ac.) 149.1 151.1 154.9 Beg. Stocks 1,967 1,304 1,438 Production 10,535 13,074 12,810

Total Supplies 12,514 14,393 14,263 Ethanol 2,117 3,200 4,100 Other Food, Seed, Indust. 1,371 1,355 1,370 Exports 2,125 2,450 2,150 Feed & Residual 5,598 5,950 5,400

Total Use 11,210 12,955 13,020 End Stocks (%S/U) (12%) 1,304 (11%) 1,438 (9.5%) 1,243

U.S. Ave. Farm $ $3.04 $3.75-$4.25 $4.60

Dynamics of U.S. Corn UsageDynamics of U.S. Corn Usage USDA USDAUSDA USDA 2006/072006/07 2007/08 2007/08

est. (Mln. Bu.)est. (Mln. Bu.)

Feed and Residual 5,598 5,9501 (+6%) Food, Seed, and Industrial 1,371 1,3552 ( 1%־ )

Ethanol for Fuel 2,117 3,200 (+51%) Net Exports 2,125 2,450 (+15%)

Ending Stocks 1,304 1,438 (+10%)

Total Usage 11,210 12,995 (+16%)

Production 10,535 13,074 (+24%)1 Assumes DDGS retain 30% of the feed value of corn and are included in the

feed and residual category by the USDA. 2 Industrial, food, and seed less ethanol.

U.S. Grain Sorghum Supply-U.S. Grain Sorghum Supply-DemandDemand

2005/06 2006/07 2007/08 Planted Ac. (mln.) 6.5 6.5 7.7 Harvested Ac (mln.) 5.7 4.9 6.8 Yield (bu./ac.) 68.5 56.2 74.2 Beg. Stocks 57 66 32 Production 393 278 505

Total Supplies 450 343 537 Food, Seed, Indust. 50 45 35 Exports 194 157 285 Feed & Residual 140 109 175

Total Use 384 311 495 End Stocks (%S/U) (17%) 66 (10%) 32 (9%) 42 U.S. Ave. Farm $ $1.86 $3.29 $3.65-$4.15

U.S. Corn Planted AcreageU.S. Corn Planted Acreage1973-2007 1973-2007 + Projected 2008+ Projected 2008

90.093.6

50.0

60.0

70.0

80.0

90.0

100.0

'73 '75'77 '79 '81'83'85 '87 '89 '91'93 '95 '97'99 '01'03 '05'07 '09

Marketing Year

Mill

ion

Acr

es

U.S. Corn YieldsU.S. Corn Yields1998-2007 1998-2007 + 2008 Trend Yield+ 2008 Trend Yield

134 134 137 138129

142

160148 149 151 154.9

0

20

40

60

80

100

120

140

160

180

'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08

Harvest Year

Bus

hels /

Acr

e

U.S. Corn ProductionU.S. Corn Production1973-2007 1973-2007 + Projected 2008+ Projected 2008

9.5

7.9 8.28.9

9.910.1

11.812.8

13.1

0.0

3.0

6.0

9.0

12.0

15.0

'73 '75 '77 '79 '81'83 '85 '87 '89 '91'93 '95 '97 '99 '01'03 '05 '07

Marketing Year

Bill

ion

Bus

hels

Record 2007 Corn ProductionProjected 264 mln bu decrease in 2008

U.S. Corn Food, Seed & U.S. Corn Food, Seed & Industrial UseIndustrial Use

1973/74 thru 2007/08 Marketing Years1973/74 thru 2007/08 Marketing Years

0.0

1.0

2.0

3.0

4.0

5.0

6.0

'73 '76 '79 '82 '85 '88 '91 '94 '97 '00 '03 '06

Marketing Year

Bill

ion

Bus

hels

Other Food, Seed, Industrial Use Ethanol

2007/08 Ethanol-related Use of Corn = 3.2 billion bu.25% of Total U.S. Corn Use

Estimated Bioenergy / Ethanol Use for 1973/74 - 2001/02

Projected 2008/09 Ethanol-related Corn Use: 4.1 bln bu.

U.S. Ethanol Industry at a U.S. Ethanol Industry at a GlanceGlance

2006 2008 Number of operating ethanol plants: 97

139 Under construction or expanding: 35 69

Announced plants: 300(17%) 100(?)

Current production capacity: (BGPY) 4.8 7.9 Projected production capacity: 11.7 BGPY end of

2008 13.5 BGPY end of 2009

Feedstock Use Proportion:Corn 97%Sorghum 2%Other 1%

Corn Demand IncreaseCorn Demand IncreaseDue to Ethanol DevelopmentDue to Ethanol Development

CornQuantity

CornPrice

DCorn DCorn w. Ethanol

Short Run Ethanol Effect on Short Run Ethanol Effect on PricesPrices

CornQuantity

CornPrice


Short Run Supply (2007-08 Corn Crop & Stocks)

Q 2007-08

PSR

P0

Ethanol vs RBOB PricesEthanol vs RBOB PricesApril 2007 – February 2008 April 2007 – February 2008 (Source: DTN)(Source: DTN)

Ethanol Plant ProfitabilityEthanol Plant ProfitabilityFebruary 2007 – January 2008 February 2007 – January 2008 (Source: DTN)(Source: DTN)

Long Run Effect of Ethanol Long Run Effect of Ethanol on Corn-Feedgrain Priceson Corn-Feedgrain Prices

CornQuantity

CornPrice


SSht Run

Q07

PSR

Long Run Supply (2008-2012 Corn Supplies)

PLR

Q2008-2012

U.S. Corn ExportsU.S. Corn Exports1973/74 thru 2007/08 Marketing Years 1973/74 thru 2007/08 Marketing Years + +

Projected 2008/09Projected 2008/09

2.152.232.372.40

2.152.45

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

'73 '75 '77 '79 '81 '83 '85 '87 '89 '91'93 '95 '97 '99 '01 '03 '05 '07 '09

Marketing Year

Bill

ion

Bus

hels

325 Million Bu Increase (15%) in 2007/08 over 2006/07 ?

Total U.S. Corn UseTotal U.S. Corn Use1973/74 thru 2007/08 Marketing Years1973/74 thru 2007/08 Marketing Years

6.25.9

10.79.3

7.2

9.89.4

11.3

8.17.6

13.013.0

0.0

3.0

6.0

9.0

12.0

15.0

'73 '75 '77 '79 '81'83 '85 '87 '89 '91'93 '95 '97 '99 '01 '03 '05 '07 '09

Marketing Year

Bill

ion

Bus

hels

Total Use Over Trend in 2007/08 Due to Ethanol, Exports, etc.

World Coarse Grain Supply-World Coarse Grain Supply-DemandDemand


977 992

107164

982 1010

115 137

1052

120 126

1062

0

300

600

900

1200

1500

Production Use Exports Ending Stocks

Mill

ion

Met

ric

Ton

s

'2005/ 06 Mktg Yr '2006/ 07 Mktg Yr '2007/ 08 Mktg Yr

World Coarse Grain S-D driven by U.S. Feedgrain S-D Trends:

Record World Corn Exports,…Lowest Ending Stocks in 30 Yrs

Production of World Coarse Production of World Coarse Grain ExportersGrain Exporters


0

50

100

150

200

250

300

350

400

U.S. Argentina Australia Canada Brazil China FSU-12

Mill

ion

Met

ric

Ton

s


Major Increase in U.S. Coarse Grain Production

Record '07 Canada Corn

Crop

Exports of World Coarse Grain Exports of World Coarse Grain ExportersExporters


0

10

20

30

40

50

60

70

80

U.S. Argentina Australia Canada Brazil China FSU-12

Mill

ion

Met

ric

Ton

s


U.S. is the only major Supplier with marked increase in Exports in 2007/08 Mktg Year

Limited prospects for other Coarse Grain Exporters

4.37 mmt LESSChina CoarseGrain Exports

1.15 mmt MORE Canada Coarse

Grain Exports

World Corn Supply & DemandWorld Corn Supply & Demand

200

250

300

350

400

450

500

550

600

650

700

750

Production Consumption

Global production Global production up 9% from up 9% from 2006/07. Use up 2006/07. Use up 7%7%

Production will be Production will be 5.5.3737 MMT (212 mil. MMT (212 mil. Bu.) less than Bu.) less than UsageUsage

World Ending World Ending Stocks to decrease Stocks to decrease 5.5.3737 MMT from last MMT from last year, down to 13 % year, down to 13 % of Usage.of Usage.

Million MT

U.S. Corn Ending Stocks U.S. Corn Ending Stocks CornCorn Ending Stocks as a % of UsageEnding Stocks as a % of Usage

12

2527

55

6662

23

49

2723

1191117 19 20 20

9.58711 11

510

0

24

48

72

'73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09

Marketing Year

% S

tock

s to

Use

2007/08 Ending Stocks: 1.438 Billion Bu. 11% Stocks/Use

'08/09Est.

U.S. Corn Stocks/Use% vs U.S. Corn Stocks/Use% vs PricePrice

$4.00

$3.04

$2.00

$2.42

$3.24$3.21

$3.12

$3.02

$4.60

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

'73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09

Marketing Year

% S

tock

s/U

se

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

U.S

. C

orn

$

Stocks/Use% U.S. Corn Price

2007/08 Record High: $3.75 - $4.25 / bu

@ 11% Stocks/Use

2008/09 Projection

WheatWheatMarketsMarkets

Current Wheat Market Current Wheat Market FactorsFactors

World wheat stocks at a 30 year low

Global shortage of quality milling wheat Strong support for U.S. Hard Red Spring Wheat prices

Weak U.S. dollar & Lower Ocean Freight Rates Helping U.S. wheat exports Wheat export regulations in Argentina & Russia Attracting speculative interest to U.S. commodity

markets

U.S. wheat acreage & production concerns in ’08 HRS vs soybeans in upper Great Plains; HRW

production

Need for greater 2008 U.S. / World wheat production in to rebuild stocks.

MAY 2008 HRW Wheat MAY 2008 HRW Wheat FuturesFutures

KCBT: February 2007-March 2008“2008 MAY Old Crop HRW Contract”


Ness City, Kansas Ness City, Kansas Cash Wheat PricesCash Wheat Prices

De Bondurant Grain Co., Ness City, KansasMarch 1, 2007 – Feb. 28, 2008Source: DTN Bid Analyzer

$11.55 /bu on 2/28/08Basis: $0.80/bu underKC March 2008 Wheat

July 2008 HRW Wheat July 2008 HRW Wheat FuturesFutures

KCBT: April 2006-February 2008“2008 JULY New Crop HRW Contract”


Scott City, Kansas Scott City, Kansas New Crop Wheat PricesNew Crop Wheat Prices

Scott Coop Assn., Scott City, KansasMarch 1, 2007 – February 28, 2008Source: DTN Bid Analyzer

$10.71 /bu on 2/28/08FC Basis: $0.60 /bu underJuly 2008 KC Wheat

March 2008 Hard Red March 2008 Hard Red Spring WheatSpring Wheat


MGE: April 2006-February 2008“2008 MARCH Old Crop HRS Contract”

U.S. Wheat Supply-DemandU.S. Wheat Supply-Demand 2006/07 2007/08 2008/09 Planted Ac. (mln.) 57.3 60.4 64.0 Harvested Ac (mln.) 46.8 51.0 54.4 Yield (bu./ac.) 38.7 40.5 42.8 Beg. Stocks 571 456 272 Production 1,812 2,067 2,330

Total Supplies 2,505 2,613 2,702 Food, Seed & Ind. 1,014 1,031 1,039 Exports 909 1,200 950 Feed & Residual 125 110 175

Total Use 2,049 2,341 2,164 End Stocks (%S/U) (22.3%) 456 (11.6%) 272 (24.9%) 538

U.S. Ave. Farm $ $4.26 $6.45-$6.85 $7.00

U.S. Wheat Planted AcreageU.S. Wheat Planted Acreage1973-2007 1973-2007 + Projected 2008+ Projected 2008

25

50

75

100

125

'73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09

Marketing Year

Mill

ion

Acr

es

U.S. Wheat Seedings Up 4%; but lower than expected 2007/08 HRW Wheat seedings (-1%);

(SRW up 21%, HRS up 13% to 17.4 mln acres)

Kansas HRW Acres Seeded down by 500K in 2007/08

U.S. Wheat YieldsU.S. Wheat Yields1973-2007 1973-2007 + 2008 Trend Yield+ 2008 Trend Yield

42.8

0

10

20

30

40

50

60

'89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09

Harvest Year

Bus

hels /

Acr

e

U.S. Trend Wheat Yields for 2008/09: 42.8 bu / ac

U.S. Wheat ProductionU.S. Wheat Production1973-2007 1973-2007 + Projected 2008+ Projected 2008

2.12.1

2.6

2.22.4

2.62.72.8

2.3

0.0

1.0

2.0

3.0

4.0

'73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09

Marketing Year

Bill

ion

Bus

hels

Projected increase in U.S. Wheat Production in 2008/09(More U.S. Wheat Acres x Trend Yields)

U.S. Wheat ExportsU.S. Wheat Exports1973/74 thru 2007/08 1973/74 thru 2007/08 + Projected 2008/09+ Projected 2008/09

0.95

1.38 1.42

1.771.59

1.351.24

1.09 1.16 1.2

0.0

0.5

1.0

1.5

2.0

2.5

'73 '75 '77'79 '81'83 '85'87 '89 '91'93 '95'97 '99 '01'03 '05'07 '09

Marketing Year

Bill

ion

Bus

hels

Strong Pace for U.S. Wheat Exports for 2007/08 Export declines expected in March-May 2008

'08/09Forecast

World Wheat Supply-DemandWorld Wheat Supply-Demand2005/06 thru 2007/08 Marketing Years2005/06 thru 2007/08 Marketing Years

621 624

116 148

593 616

111 125

604 619

106 110

0

200

400

600

800


Mill

ion

Met

ric

Ton

s


"Some" Price Rationing of Wheat Export Purchases

30 year low for World Wheat Ending Stocks

(since 1977/78)

Production of World Wheat Production of World Wheat ExportersExporters


0

30

60

90

120

150

Mill

ion

Met

ric

Ton

s

EU-27 U.S. Canada Australia Argentina FSU-12


Unchanged-Declining 2007/08 Wheat Productionfor World's Major Wheat Exporters

FSU-12 production gains

Exports of World Wheat Exports of World Wheat ExportersExporters


0

5

10

15

20

25

30

35

Mill

ion

Met

ric

Ton

s

EU-27 U.S. Canada Australia Argentina FSU-12


U.S. & FSU 12 Only Major Exporters to increase Sales in 2007/08

U.S. Wheat Ending Stocks U.S. Wheat Ending Stocks Wheat Ending Stocks as a % of UsageWheat Ending Stocks as a % of Usage

252720 2017 1619

12

0

20

40

60

80

100

'73'75 '77 '79 '81'83 '85 '87 '89'91 '93 '95 '97'99 '01 '03'05 '07 '09

Marketing Year

% S

tock

s to

Use

60 Year Low U.S. Wheat Ending Stocks12% Stocks/Use @ 272 mln bu

Forecast

U.S. Wheat Stocks/Use% vs U.S. Wheat Stocks/Use% vs PricePrice

$7.00

$3.99$3.72

$4.50

$3.56

$3.42

$4.26

$6.65

0

25

50

75

100

125

'73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09

Marketing Year

% S

tock

s/U

se

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

U.S

. W

hea

t $

U.S. Wheat Ending Stocks to Use % U.S. Wheat Price

Record 2007/08 U.S. Wheat Price: $6.45 - $6.85 /bu @ 12% Stocks/Use

Forecast

Impact of Scarce U.S. & Impact of Scarce U.S. & World Wheat Supplies on World Wheat Supplies on

PricesPrices

WheatQuantity

WheatPrice

DWheat

SLarge SupplySMedium SupplySShort

Supply

QLSQMSQSS

PSS

PMS

PLS

Marketing Loan$

Soybean Soybean &&

Oilseed Oilseed MarketsMarkets

Current Oilseed Market Current Oilseed Market FactorsFactors

Brazilian soybean area up only 1% Recent South American rains helping soybean crop

High soymeal-soyoil prices & exports High soyoil prices damaging U.S. soydiesel

industry Weak U.S. dollar & lower ocean freight

rates helping soybean exports Attracting speculative interest to U.S.

commodity markets Critically low U.S. carryover

Only 19 days inventory on hand at end of 2007/08 Need for U.S. acreage & production

increase in 2008 to rebuild stocks

March 2008 Soybean March 2008 Soybean FuturesFutures

CBOT: December 2006-March 2008“2008 MAY Old Crop Soybean Contract”


Ness City, Kansas Cash Ness City, Kansas Cash Soybean $sSoybean $s

De Bondurant Grain Co., Ness City, KansasMarch 1, 2007 – Feb. 28, 2008Source: DTN Bid Analyzer

$13.65 /bu on 2/28/08Basis: $1.34/bu under CBOT March 2008 Soybeans

November 2008 Soybean November 2008 Soybean FuturesFutures

CBOT: January 2006-February 2008“2008 NOV New Crop Soybean Contract”


Scott City, KansasScott City, KansasNew Crop Soybean PricesNew Crop Soybean Prices

Scott Coop Assn., Scott City, KansasMarch 1, 2007 – Feb. 28, 2008Source: DTN Bid Analyzer

$13.14 /bu on 2/28/08FC Basis: $1.25/bu under CBOT NOV 2008 Soybeans

U.S. Soybean Supply-U.S. Soybean Supply-DemandDemand

2006/07 2007/08 2008/09 Planted Ac. (mln.) 75.5 63.6 71.0 Harvested Ac (mln.) 74.6 62.8 70.1 Yield (bu./ac.) 42.7 41.2 42.1 Beg. Stocks 449 574 160 Production 3,188 2,585 2,950

Total Supplies 3,647 3,165 3,116 Crushings 1,806 1,835 1,860 Exports 1,118 1,005 910 Seed & Residual 148 165 177

Total Use 3,073 3,005 2,947 End Stocks (%S/U) (19%) 574 (5.3%) 160 (5.7%) 169

U.S. Ave. Farm $ $6.43 $10.00-$10.80 $11.50

U.S. Soybean Planted U.S. Soybean Planted AcreageAcreage

1973-2007 1973-2007 + Projected 2008 Acreage+ Projected 2008 Acreage

74.370.971.4 75.5

63.6

71

0

25

50

75

100

'73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09

Marketing Year

Mill

ion

Acr

es

Recovery in U.S. Soybean Acres Expected for 2008/09

U.S. Soybean YieldsU.S. Soybean Yields1973-2007 1973-2007 + 2008 Trend Yield+ 2008 Trend Yield

42.139 4038

34

28 29 31 3237

41 43 41

0

10

20

30

40

50

60

'73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09

Harvest Year

Bus

hels /

Acr

e

U.S. Trend Soybean Yield for 2008/09: 42.1 bu/acre

U.S. Soybean ProductionU.S. Soybean Production1973-2007 1973-2007 + Projected 2008+ Projected 2008

2.62.95

3.23.12.92.7

2.5

2.12.22.3

1.81.5

0.0

1.0

2.0

3.0

4.0

'73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09

Marketing Year

Bill

ion

Bus

hels

Higher U.S. Soybean Production Expected for 2008/09

U.S. Soybean ExportsU.S. Soybean Exports1973/74 thru 2007/08 Marketing Years1973/74 thru 2007/08 Marketing Years

910

622

838

539

875929804

973106411031118

1005

0

400

800

1200

1600

'73'75'77'79 '81'83'85 '87'89 '91'93'95'97'99 '01'03'05 '07'09

Marketing Year

Mill

ion

Bus

hels

U.S. Soybean exports maintaining (weak dollar, lower ocean freight)Exports to slow when Brazil & Argentina crops available.

World Soybean Supply-World Soybean Supply-DemandDemand


220 215

64 53

236 225

71 62

220236

7646

0

50

100

150

200

250

300


Mill

ion

Met

ric

Ton

s


Decreasing World ProductionIncreasing Use & ExportsDeclining Ending Stocks

Production of World Soybean Production of World Soybean ExportersExporters


0.00

20.00

40.00

60.00

80.00

100.00

Mill

ion

Met

ric

Ton

s

U.S. Brazil Argentina


Brazil 2007/08 Acres up 3.9% to 21.5 mln hectares(500K hectares less than expected)

Exports of World Soybean Exports of World Soybean ExportersExporters


0

10

20

30

40

U.S. Brazil Argentina

Mill

ion

Met

ric

Ton

s


Not as large an increase in Brazilian soybean production as expected has diminished Export prospects & pushed World Soybean $Prices higher

Record Prospects for Argentina Soy Exports

U.S. Soybean Ending StocksU.S. Soybean Ending StocksSoybean Ending Stocks as a % of UsageSoybean Ending Stocks as a % of Usage

6

19

710 10 9988 7

546 6

16

0

10

20

30

40

'73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09

Marketing Year

% S

tock

s to

Use

Sharp Reduction in 2007/08 Soybean Stocks (160 mb, 5.3% S/U), i.e., 19 days inventory: lowest since 2003/04 (112 mln bu)

Forecast

U.S. Soybean Stocks/Use% U.S. Soybean Stocks/Use% vs Pricevs Price

$11.50

$6.64$6.81

$7.57 $7.83$7.42 $7.35

$10.40

$6.43

$7.34

0

5

10

15

20

25

30

35

'73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09

Marketing Year

% S

tock

s/U

se

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

Stocks/Use% U.S. Soybean Price

Record U.S. Soybean Price: $10.00 - $10.80 /bu

Forecast

Impact of Scarce U.S. & Impact of Scarce U.S. & World Soybean Supplies on World Soybean Supplies on

PricesPrices

SoybeanQuantity

SoybeanPrice

DSoybeans

SLarge SupplySMedium SupplySShort

Supply

QLSQMSQSS

PSS

PMS

PLS

Marketing Loan$

Long Run Long Run

Grain Grain MarketMarket

PerspectiPerspectivesves

Crop Acres Coming Out of Crop Acres Coming Out of CRPCRP

2007–2017 (2007–2017 (Source: USDA, FSA)Source: USDA, FSA)

1.0

0.5

0.9 1.0

1.4 1.3

1.1

0.90.8 0.8

0.4

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.7520

07

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Mil

lio

n A

cres

PricesPrices11 and Price and Price RatiosRatios05/0605/06 06/0706/07 07/0807/08

CornCorn $2.00$2.00 $3.04$3.04$4.00$4.00

SoybeansSoybeans 5.66 5.66 6.43 6.4310.4010.40

WheatWheat 3.42 3.42 4.26 4.26 6.656.65

SB/CornSB/Corn 2.8 2.8 2.1 2.1 2.6 2.6

Wheat/CornWheat/Corn 1.7 1.7 1.4 1.4 1.7 1.7

SB/WheatSB/Wheat 1.7 1.7 1.5 1.5 1.6 1.6

11Prices are actual and USDA projected average farm prices.Prices are actual and USDA projected average farm prices.

Long Run Grain Prices Long Run Grain Prices 2000-06 USDA Long RunAverage 2007/08 Projection

Wheat $3.35 $6.45 - $6.85 $4.50 - $5.50

Corn $2.24 $3.70 - $4.30 $3.50 - $4.50

Grain Sorghum $2.20 $3.60 - $4.20 $3.40 - $4.40

Soybeans $5.66 $9.90 - $10.90 $7.50 - $8.50

Sunflowers $11.57 $19.60 - $21.20 $15 - $17

1 National marketing year average price per unit, 2000-2006.

Questions???Questions???

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