feed for fuel: coping with the new reality

Department of Economics

Feed for Fuel: Coping with the New Reality

2009 Western Canadian Association of Swine Veterinarian’s Annual Conference

Saskatoon, SaskatchewanOctober 16, 2009

Chad HartAssistant Professor/Grain Markets Specialist

[email protected]


Crude Oil Prices

Source: EIA

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Ethanol, “Fuel of the Future”

Photo Source: Nebraska Historical Society

Famous quote from Henry Ford

Many early automobiles ran on ethanol

The U.S. has gone through several waves of ethanol experimentation


Ethanol Plant Map

Source: Ethanol Producer Magazine


Ethanol Production

Source: F. O. Licht

0

10

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30

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60

70

2004 2005 2006 2007 2008

Billi

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US Brazil China India Canada Others


Ethanol Margins

Source: ISU, CARD


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Conventional Biofuels Cellulosic Biofuels

Biodiesel Additional Advanced Biofuels

Renewable Fuels Standard (RFS)

60% GHG Emission Reduction

50% GHG Emission Reduction

20% GHG Emission ReductionIf construction started after Dec. 2007


Outside Influences (Jan. 2007 = 1)

0.5

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Corn Soybeans Wheat Oil


Hog Returns vs. Corn Prices

Sources: ISU Extension, Farrow-to-Finish;USDA-NASS

-50

-40

-30

-20

-10

0

10

20

30

Sep-06

Jan-07

May-07

Sep-07

Jan-08

May-08

Sep-08

Jan-09

May-09

Sep-09

$ p

er

hea

d

2

3

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$ p

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bush

el


U.S. Corn Supply and Use

Source: USDA

2004 2005 2006 2007 2008 2009

Area Planted

mha 32.8 33.1 31.7 37.8 34.8 35.0

Production mmt 300 282 267 331 307 331

Feed & Residual

mmt 156 156 142 150 133 137

Ethanol mmt 34 41 54 77 93 107

Exports mmt 46 54 54 62 47 55

Season-Average Price

$U.S./mt

81.10 78.74 119.69 165.35 159.84 131.89


U.S. Soybean Supply and Use

Source: USDA

2004 2005 2006 2007 2008 2009

Area Planted

mha 30.4 29.2 30.6 26.2 30.6 31.4

Production mmt 85 84 87 73 81 88

Crush mmt 46 47 49 49 45 46

Exports mmt 30 26 30 32 35 36


$U.S./mt

210.87 207.94 236.22 371.05 366.27 330.64


U.S. Wheat Supply and Use

Source: USDA

2004 2005 2006 2007 2008 2009

Area Planted

mha 24.1 23.2 23.2 24.5 25.6 23.9


Feed & Residual

mmt 5 4 3 0 7 5

Food & Other

mmt 25 25 26 26 25 26

Exports mmt 29 27 25 34 28 24


$U.S./mt

124.91 125.64 156.50 238.06 249.08 178.18


Canadian Corn Supply and Use

Sources: FAPRIAgriculture and Agri-Food Canada

2004 2005 2006 2007 2008 2009

Area Harvested

mha 1.07 1.09 1.06 1.37 1.17 1.19

Production mmt 8.84 9.33 8.99 11.65 10.59 10.18

Feed mmt 7.91 8.55 8.43 10.26 8.43 7.96

Food & Other

mmt 2.41 2.29 2.98 3.57 3.80 4.30

Imports mmt 2.13 1.68 1.79 2.30 1.30 2.20


Canadian Soybean Supply and Use2004 2005 2006 2007 2008 2009

Area Harvested

mha 1.17 1.17 1.20 1.17 1.20 1.39

Production mmt 3.04 3.16 3.46 2.70 3.34 3.55

Crush mmt 1.55 1.50 1.52 1.38 1.28 1.35

Exports mmt 0.74 0.97 1.45 1.47 1.56 1.70



Canadian Wheat Supply and Use2004 2005 2006 2007 2008 2009

Area Harvested

mha 9.39 9.40 9.68 8.64 10.03 9.56

Production mmt 24.80 25.75 25.27 20.05 28.61 22.50

Feed mmt 4.07 4.11 4.84 2.08 4.10 2.75

Food & Other

mmt 4.17 4.14 4.21 4.23 3.51 3.52

Exports mmt 14.62 15.73 19.11 15.73 18.10 16.30



Factors Leading to Higher Commodity Prices

Source: USDA-ERS, Trostle, July 2008


Crude Oil Prices

Sources: EIA, NYMEX

0

20

40

60

80

100

120

140

Jan-

86

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$ pe

r ba

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Projected Ethanol Production

Source: FAPRI

0

20

40

60

80

100

120

140

2010 2011 2012 2013 2014 2015 2016 2017 2018

Billi

on li

ters

US Brazil Canada Other


Renewable Fuels Standard (RFS)

0

2

4

6

8

10

12

14

16

2009 2010 2011

Bill

ion g

allo

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Additional Advanced Biofuels Biodiesel

Cellulosic Biofuels Conventional Biofuels

CropYear

Billion Bushels

2008 3.57

2009 4.11

2010 4.43

2011 4.64


Bio-based Market Opportunities

Source: Informa Economics, Biobased Multi-Client Study, March 2006


Biobased Pathways

Source: USDA, 2008, U.S. Biobased Products: Market Potential and Projections Through 2025


Dept. of Energy Projections

Source: Energy Information Administration,Annual Energy Outlook 2009


Draft Lifecycle GHG Reductions

Source: EPA, May 2009


1.5

2

2.5

3

3.5

0% 5% 10% 15% 20% 25% 30%

Stocks-to-use ratio

Pric

e ($

per

bus

hel)

Corn1990 - 2006


2007/082008/092009/10 May

2009/10 June

2009/10 July

2009/10 Aug.2009/10 Sept. 2009/10 Oct.

1.50

2.00

2.50

3.00

3.50

4.00

4.50

0% 5% 10% 15% 20% 25% 30%

Stocks-to-use ratio

Pric

e ($

per

bus

hel)

Corn


U.S. Corn Supply and Use

Source: FAPRI

2010 2011 2012 2013 2014 2015

Area Planted

mha 35.5 35.6 35.8 35.9 36.3 36.7

Production mmt 323 328 334 339 347 355

Feed & Residual

mmt 134 132 132 131 132 133

Ethanol mmt 109 117 119 124 130 134

Exports mmt 45 47 48 50 51 53


$U.S./mt

145.37 151.52 152.77 158.43 161.22 162.90


U.S. Soybean Supply and Use

Source: FAPRI

2010 2011 2012 2013 2014 2015

Area Planted

mha 30.5 30.8 31.0 31.1 31.1 31.1


Crush mmt 48 50 51 52 53 54

Exports mmt 32 33 33 33 32 32


$U.S./mt

322.72 333.40 341.50 350.76 359.32 365.05


U.S. Wheat Supply and Use

Source: FAPRI

2010 2011 2012 2013 2014 2015

Area Planted

mha 24.3 24.1 24.0 23.9 23.7 23.6


Feed & Residual

mmt 6 6 6 6 6 6

Food & Other

mmt 27 27 27 27 28 28

Exports mmt 28 29 29 29 29 29


$U.S./mt

193.06 198.87 202.49 207.51 212.25 215.15


Canadian Corn Supply and Use

Source: FAPRI

2010 2011 2012 2013 2014 2015

Area Harvested

mha 1.29 1.31 1.30 1.29 1.29 1.30

Production mmt 11.94 12.21 12.24 12.25 12.37 12.56

Feed mmt 7.38 7.64 7.93 8.04 8.13 8.18

Food & Other

mmt 4.58 4.71 4.76 4.80 4.84 4.89

Imports mmt 0.06 0.17 0.47 0.60 0.58 0.50


Canadian Soybean Supply and Use

Source: FAPRI

2010 2011 2012 2013 2014 2015

Area Harvested

mha 1.16 1.15 1.15 1.15 1.16 1.17

Production mmt 3.20 3.17 3.19 3.22 3.25 3.29

Crush mmt 1.39 1.40 1.41 1.44 1.47 1.49

Exports mmt 1.40 1.42 1.43 1.44 1.46 1.45


Canadian Wheat Supply and Use

Source: FAPRI

2010 2011 2012 2013 2014 2015

Area Harvested

mha 9.34 9.21 9.12 9.05 8.95 8.89

Production mmt 25.35 25.16 25.11 25.09 25.01 25.02

Feed mmt 3.52 3.62 3.74 3.81 3.86 3.90

Food & Other

mmt 5.08 5.16 5.23 5.29 5.34 5.40

Exports mmt 16.27 16.06 15.99 15.96 15.89 15.80


U.S. Hog Statistics

Source: FAPRI

2010 2011 2012 2013 2014 2015

Hog Inventory mil. head

59.86 59.76 60.26 61.28 62.33 63.59

Live Hog Imports

mil. head

7.10 7.07 7.25 7.29 7.46 7.50

Production mmt 10.30 10.42 10.57 10.82 11.09 11.37

Consumption mmt 8.73 8.77 8.84 8.95 9.09 9.27

Exports mmt 1.57 1.64 1.73 1.86 1.99 2.09

Barrow & Gilt Price

$U.S. per cwt.

53.04 55.04 56.26 54.79 53.98 53.70


Canadian Hog Statistics

Source: FAPRI

2010 2011 2012 2013 2014 2015

Hog Inventory mil. head

11.37 12.30 13.19 13.56 14.10 14.18

Live Hog Exports

mil. head

7.10 7.07 7.25 7.29 7.46 7.50

Production mmt 1.86 1.95 2.02 2.04 2.06 2.07

Consumption mmt 0.98 1.00 1.01 1.04 1.05 1.06

Exports mmt 0.88 0.95 1.01 1.01 1.01 1.01

Pork Farm Price

$C per cwt.

66.41 63.95 64.13 61.91 62.76 64.44


Thank you for your time!

Any questions?

My web site:http://www.econ.iastate.edu/faculty/hart/

feed for fuel: coping with the new reality

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