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Oklahoma State UniversityOklahoma State University

Corn &WheatSituation and Outlook

Corn &WheatSituation and Outlook

Kim B. AndersonKim B. Anderson

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Policy comes and policy goes but weather determines prices.Luther Tweeten

Policy comes and policy goes but weather determines prices.Luther Tweeten

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Corn production areaCorn production area

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Soybean production areaSoybean production area

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Cotton production areaCotton production area

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HRW wheat production areaHRW wheat production area

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SRW wheat production areaSRW wheat production area

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CornCorn

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CornCorn usedused forfor EthanolEthanol(billion bushels)billion bushels)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

’07/08 3.2 bb

’08/09 4.0 bb’09/10 4.3 bb

’06/07 2.1 bb

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U.S. Corn SituationU.S. Corn Situation

(Billion Bushels)(Million Bushels)

PlantedAcres

Harvested Acres

Yield ProductionYear

2000 79.6 72.4 (91.0) 136.9 10.02001 75.7 68.8 (90.9) 138.2 9.52002 78.9 69.3 (87.8) 129.3 9.02003 78.6 70.9 (90.2) 142.2 10.12004 80.9 73.6 (91.0) 160.4 11.82005 81.8 75.1 (91.8) 148.0 11.12006 78.3 70.7 (90.3) 149.1 10.52007 93.6 86.1 (92.0) 154.7 13.27-YR Avg. 79.1 143.4 10.371.5Percentage harvested in parenthesizes

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U.S. Corn SituationU.S. Corn Situation

Production ConsumptionEndingStocks

U. S.PriceYear

(Billion Bushels)

2000 10.0 9.6 2.1 $1.822001 9.5 9.8 1.6 $1.852002 9.0 9.5 1.0 $1.972003 10.1 10.2 1.0 $2.302004 11.8 10.6 2.2 $2.422005 11.1 11.1 2.0 $2.062006 10.5 11.4 1.3 $3.002007 13.2 12.6 1.9 $3.50

7-YRAvg. 10.3 10.3 1.6 $2.20

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World Corn SituationWorld Corn Situation

Production ConsumptionEndingStocksYear

(Billion Bushels)

2000 23.2 23.8 6.02001 23.6 24.5 5.82002 23.7 24.7 4.92003 24.3 25.5 4.12004 27.8 26.9 5.12005 27.3 27.3 4.82006 27.6 28.5 4.12007 30.3 30.1 3.9

7-YRAvg. 25.4 25.9 4.8

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2008 Corn Production 2008 Corn Production

2007 use + ethanol increase – 1 bb ending stocks = required production ÷ yield =acres harvested ÷ % harvested =required planted acres

12.6 bb + 0.7 bb – 1 bb = 12.3 bb ÷ 153 bu/ac= 80 ma ÷ .91 = 88 million acres

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CBT Corn Monthly NearestCBT Corn Monthly Nearest

Before ethanol

Weather Ethanol

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CBT Soybeans Monthly CBT Soybeans Monthly NearestNearest

Before ethanol& bio-diesel Weather

Ethanol& bio-diesel

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U.S. Corn SituationU.S. Corn Situation

(Billion Bushels)

06/07Month 07/08Ending Stocks

(Cents per Bushel)(± 30)

USDACash Est.Price RangeOpen/Close

CBT Nearby

May 0.937 0.947 345-390 345-395 340

June 0.937 0.997 388-329 323-426 340

July 1.137 1.502 332-326 308-344 310

Aug 1.516 326-324 310-354 310

Sept 1.675 327-373 320-390 310

Oct 1.997 375-372 335-376 320

Nov 1.897 374-379 367-390 350

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Key pointsKey points 2007 corn production 13.2 billion bushels (bb).

2007 corn use 12.6 bb.

2007 ethanol corn use 3.2 bb.

2008 projected ethanol corn use 3.9 bb.

corn end stocks ~ 1.9 bb $3.50 avg. annual price.

corn end stocks ~ 1.0 bb $3.90 avg. annual price.

2008 planted acres 88 mil., production of 12.3 bb,

ending stocks 1.0 bb & $3.70 avg. annual price.

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WheatWheat

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U.S. Wheat SituationU.S. Wheat Situation

(Billion Bushels)(Million Bushels)

PlantedAcres

Harvested Acres

Yield ProductionYear

2000 62.5 53.1 (85.0) 42.0 2.232001 59.4 48.5 (81.6) 40.2 1.95 2002 60.3 45.8 (76.0) 35.0 1.612003 62.1 53.1 (85.5) 44.2 2.342004 59.7 50.0 (83.8) 43.2 2.262005 57.2 50.1 (87.6) 42.0 2.102006 57.3 46.8 (81.7) 38.7 1.812007 60.4 51.0 (84.4) 40.5 2.077-YR Avg. 59.9 40.7 2.0049.8 (83.2)

Percentage harvested in parenthesizes

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Production ConsumptionEndingStocks

U. S.PriceYear

(Billion Bushels)

U.S. Wheat SituationU.S. Wheat Situation

2000 2.23 2.39 .873 $2.622001 1.50 2.15 .777 $2.782002 1.61 1.99 .492 $3.562003 2.34 2.35 .546 $3.402004 2.16 2.24 .540 $3.402005 2.11 2.16 .571 $3.422006 1.80 2.05 .456 $4.262007 2.07 2.30 .312 $6.10

7-YR Avg. 1.96 2.19 .608 $3.35

13.6%

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World Wheat SituationWorld Wheat Situation

(Billion Bushels)

Production ConsumptionEndingStocksYear

2000 21.4 21.5 7.42001 21.3 21.5 7.42002 20.8 22.2 6.22003 20.4 21.6 4.82004 23.0 22.3 5.52005 22.9 23.1 5.42006 21.8 22.7 4.62007 22.2 22.7 4.0

7-YRAvg. 21.7 22.1 5.9

17.8%

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KCBT Monthly KCBT Monthly NearestNearest

Before ethanol

WeatherEthanol

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KCBT March KCBT March ‘08‘08

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KCBT July KCBT July “08“08

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U.S. Wheat SituationU.S. Wheat Situation

(Billion Bushels)

06/07USDA

Cash Est.Month 07/08Ending Stocks

(Cents per Bushel)(± 30)

Price RangeOpen/Close KCBT Nearby

May 412 469 480-504 462-512 465

June 417 443 504-597 500-630 480

July 456 418 604-629 573-657 510

Aug 404 629-721 617-733 540

Sept 362 751-929 751-950 580

Oct 307 947-827 815-950 610

Nov 312 831-905 756-925 610

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U.S. Wheat Supply and U.S. Wheat Supply and UseUse

Beginning stocksProduction Supply, TotalExports

Use, TotalEnding StocksAvg. farm price

307

2,350

2,657

1,050

2,250

407

$5.20

million bushels

Kim’s08/09

456

2,067

2,608

1,150

2,301

307

$6.10

USDA07/08

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KCBT July wheat contract price $7.98Elevator forward contract basis -$0.53Forward contract offer $7.45

Buy KCBT July 800 call -$0.70FC/Call minimum price $6.75

Buy KCBT July 800 Put (800¢ - 70¢) $7.30Expected June 2008 basis -$0.45Expected minimum price $6.85

June 2008 wheat delivery pricesJune 2008 wheat delivery prices

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Key PointsKey Points

Weather is the major price factor. Weather is the major price factor.

Corn continues to set the floor for wheat prices. Corn continues to set the floor for wheat prices.

U.S. and world wheat stocks below average.U.S. and world wheat stocks below average.

Wheat planted acres increase ~5% (63 ma).Wheat planted acres increase ~5% (63 ma).

Wheat stocks increase in 2008/09 – below avg.Wheat stocks increase in 2008/09 – below avg.

2008/09 wheat price range $3.75 to $8.50.2008/09 wheat price range $3.75 to $8.50.

June 2008 wheat price ~ $6.00June 2008 wheat price ~ $6.00 $4.50 to $8.50. $4.50 to $8.50.