grain and oilseed outlook

Extension and Outreach/Department of Economics

Grain and Oilseed Outlook

Omaha Ag OutlookOmaha, Nebraska

Dec. 7, 2013

Chad HartAssociate Professor/Crop Markets Specialist

chart@iastate.edu515-294-9911

U.S. Corn Supply and Use2009 2010 2011 2012 2013

Area Planted (mil. acres) 86.4 88.2 91.9 97.2 95.3

Yield (bu./acre) 164.7 152.8 147.2 123.4 160.4

Production (mil. bu.) 13,092 12,447 12,360 10,780 13,989

Beg. Stocks (mil. bu.) 1,673 1,708 1,128 989 824

Imports (mil. bu.) 8 28 29 162 25

Total Supply (mil. bu.) 14,774 14,182 13,517 11,932 14,837

Feed & Residual (mil. bu.) 5,125 4,795 4,557 4,333 5,200

Ethanol (mil. bu.) 4,591 5,019 5,000 4,648 4,900

Food, Seed, & Other (mil. bu.) 1,370 1,407 1,428 1,396 1,450

Exports (mil. bu.) 1,980 1,834 1,543 731 1,400

Total Use (mil. bu.) 13,066 13,055 12,528 11,108 12,950

Ending Stocks (mil. bu.) 1,708 1,128 989 824 1,887

Season-Average Price ($/bu.) 3.55 5.18 6.22 6.89 4.50

Source: USDA-WAOB

U.S. Soybean Supply and Use2009 2010 2011 2012 2013

Yield (bu./acre) 44.0 43.5 41.9 39.8 43.0

Beg. Stocks (mil. bu.) 138 151 215 169 141

Imports (mil. bu.) 15 14 16 36 15

Crush (mil. bu.) 1,752 1,648 1,703 1,689 1,685

Seed & Residual (mil. bu.) 110 130 88 90 109

Exports (mil. bu.) 1,499 1,501 1,365 1,320 1,450

Total Use (mil. bu.) 3,361 3,280 3,155 3,098 3,243

Ending Stocks (mil. bu.) 151 215 169 141 170

Source: USDA-WAOB

Projected Corn Yields

Source: USDA-NASS

Top: 2013 Projected YieldBottom: Change from last monthUnits: Bushels/acre

Projected Soybean Yields

Source: USDA-NASS

Top: 2013 Projected YieldBottom: Change from last monthUnits: Bushels/acre

World Corn Production

Source: USDA-WAOB

World Soybean Production

Source: USDA-WAOB

U.S. Meat Production & Prices

Source: USDA-WAOB

Corn Export Shifts

Source: USDA-FAS

Corn Export Sales

Source: USDA-FAS

Soybean Export Sales

Source: USDA-FAS

Soy Export Shifts

Source: USDA-FAS

Corn Grind for Ethanol

Extension and Outreach/Department of EconomicsSource: DOE-EIA, Annual Energy Outlook

Current Corn Futures

Source: CME Group, 12/4/2013

Current Soybean Futures

11.0110.86

Corn Prices vs. Costs

Sources: USDA-NASS for Prices, Duffy for Costs

Per Bushel Cost calculated as Per Acre Cost from ISU Extension divided by Actual Yield per Acre

Soybean Prices vs. Costs

Sources: USDA-NASS for Prices, Duffy for Costs

Per Bushel Cost calculated as Per Acre Cost from ISU Extension divided by Actual Yield per Acre

Crop Acreage

Source: USDA-NASS

Crop Shifts

Source: USDA-NASS

Thoughts for 2014 and BeyondSupply/demand concerns

Corn demand rebounding? Yes, so far, so goodAcreage allocation for 2014: Where do the extra corn acres go?Markets favoring soybeans in the short term and corn longer term

2012/13

2013/14 USDA

2013/14

Futures

(12/4/13)

Corn $6.89 $4.50 $4.17

Soybeans $14.40 $12.15 $12.42

World Corn Markets

Source: USDA

Arable Land

Thank you for your time!

Any questions?

My web site:http://www.econ.iastate.edu/~chart/

Iowa Farm Outlook:http://www.econ.iastate.edu/ifo/

Ag Decision Maker:http://www.extension.iastate.edu/agdm/

U.S. Wheat Supply and Use2009 2010 2011 2012 2013

Yield (bu./acre) 44.5 46.3 43.7 46.3 47.2

Beg. Stocks (mil. bu.) 657 976 862 743 718

Imports (mil. bu.) 119 97 112 123 150

Food (mil. bu.) 919 926 941 945 950

Seed (mil. bu.) 69 71 76 73 73

Feed & Residual (mil. bu.) 150 132 162 388 310

Exports (mil. bu.) 879 1,289 1,051 1,007 1,100

Total Use (mil. bu.) 2,018 2,417 2,231 2,414 2,433

Ending Stocks (mil. bu.) 976 862 743 718 565

Source: USDA-WAOB

Winter Wheat Acreage

Source: USDA-NASS

Winter Wheat Production

Source: USDA-NASS

Top: 2013 Projected ProductionBottom: % Change from last yearUnits: Million bushels

Durum Wheat Production

Source: USDA-NASS

Other Spring Wheat Production

Source: USDA-NASS

National Wheat Projections

World Wheat Production

Source: USDA-WAOB

Wheat Export Pace

Source: USDA-FAS

Wheat Export Shifts

Source: USDA-FAS

Current Wheat Futures

6.45 6.54

Extension and Outreach/Department of EconomicsSource: USDA-NASS

Iowa Crop Shifts

Renewable Fuels Standard (RFS)

2009 2012 2015 2018 2021

Conventional Biofuels Cellulosic Biofuels

Biodiesel Additional Advanced Biofuels

Liquid Fuel Usage2007 2015 2020 2025 2030 2035

(Million Barrels Oil Equivalent per

Day) (Percent of 2007 Value)

United States 20.6 98% 100% 102% 104% 107%

Canada 2.3 96% 96% 96% 100% 104%

Mexico 2.1 105% 110% 114% 129% 138%

Europe 15.3 92% 88% 88% 89% 90%

Japan 5.0 84% 86% 86% 84% 82%

China 7.6 132% 153% 178% 201% 222%

India 2.8 114% 129% 139% 154% 168%

Africa 3.1 113% 116% 126% 135% 148%

Central and South America 6.0 110% 112% 117% 125% 133%

World 86.1 103% 107% 113% 121% 128%

Source: DOE-EIA

Corn Prices vs. Costs

Carry shows the additional revenue that can be obtained from holding on to the crop

But there are costs to holding on:storageinterest/opportunity costs

These are known as the cost of ownership

Carry vs. Costs

Why Crops Fail

13% Drought

Excess Moisture

Cold Wet Weather

Freeze

Building a Marketing Plan5 basic steps:

Estimate number of bushels/animals to sell

Calculate breakeven price

Project price and production scenarios

Compare pricing tools and analyze market opportunities

Develop a pricing plan

Marketing Types

HarvestAveragingPrice TargetTime and PriceExtended Time and Price

Harvest Averaging Price Target Time and Price Extended Time and Price2000 1.66 1.91 1.76 2.02 2.022001 1.69 1.87 1.69 1.69 1.692002 2.29 2.11 2.31 2.29 2.352003 1.88 2.05 1.96 1.88 1.882004 1.73 2.24 2.40 2.41 2.332005 1.48 1.69 1.48 1.48 1.482006 2.69 2.35 2.69 2.69 2.692007 3.02 3.27 3.11 3.28 3.112008 3.69 5.13 4.16 5.24 4.162009 3.47 3.77 3.68 3.47 3.682010 5.04 3.84 3.87 3.74 3.872011 6.10 6.02 5.25 5.94 5.252012 7.42 6.17 5.97 5.80 5.972013

Average 3.24 3.26 3.10 3.23 3.11Min 1.48 1.69 1.48 1.48 1.48Max 7.42 6.17 5.97 5.94 5.97

Average Price Captured

Lowest AverageHarvest Averaging Price Target Time and Price Extended Time and Price

2000 1.66 1.91 1.76 2.02 2.022001 1.69 1.87 1.69 1.69 1.692002 2.29 2.11 2.31 2.29 2.352003 1.88 2.05 1.96 1.88 1.882004 1.73 2.24 2.40 2.41 2.332005 1.48 1.69 1.48 1.48 1.482006 2.69 2.35 2.69 2.69 2.692007 3.02 3.27 3.11 3.28 3.112008 3.69 5.13 4.16 5.24 4.162009 3.47 3.77 3.68 3.47 3.682010 5.04 3.84 3.87 3.74 3.872011 6.10 6.02 5.25 5.94 5.252012 7.42 6.17 5.97 5.80 5.972013

8 2 3 6 4

Highest AverageHarvest Averaging Price Target Time and Price Extended Time and Price

2000 1.66 1.91 1.76 2.02 2.022001 1.69 1.87 1.69 1.69 1.692002 2.29 2.11 2.31 2.29 2.352003 1.88 2.05 1.96 1.88 1.882004 1.73 2.24 2.40 2.41 2.332005 1.48 1.69 1.48 1.48 1.482006 2.69 2.35 2.69 2.69 2.692007 3.02 3.27 3.11 3.28 3.112008 3.69 5.13 4.16 5.24 4.162009 3.47 3.77 3.68 3.47 3.682010 5.04 3.84 3.87 3.74 3.872011 6.10 6.02 5.25 5.94 5.252012 7.42 6.17 5.97 5.80 5.972013

4 4 1 5 3

Longer HistoryHarvest Averaging Price Target Time and Price Extended Time and Price

Average 2.54 2.61 2.53 2.59 2.55Min 1.14 1.41 1.14 1.14 1.14Max 7.42 6.17 5.97 5.94 5.97

Low Price 23 8 4 11 9High Price 10 8 3 15 10

Out of 37 years (1976-2012)

Extension and Outreach/Department of EconomicsSource: USDA

Iowa Land Values

Source: Mike Duffy, ISU

Iowa Land Values – Log Scale

Land Values and Income

Corn Prices and Recessions

Crop Prices for the Next Decade

Source: USDA-ERS

Net Farm Income

Source: USDA

GDP Growth

Source: USDA-ERS

GDP Growth

Source: USDA-ERS

Thank you for your time!

Any questions?

My web site:http://www.econ.iastate.edu/~chart/

Iowa Farm Outlook:http://www.econ.iastate.edu/ifo/

Ag Decision Maker:http://www.extension.iastate.edu/agdm/

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