Grain Outlook For 2004-05Grain Outlook For 2004-05Grain Outlook For 2004-05Grain Outlook For 2004-05

Dr. Robert WisnerDr. Robert WisnerIowa State UniversityIowa State University

Dr. Robert WisnerDr. Robert WisnerIowa State UniversityIowa State University

3/12/2004

Grain Outlook, 2003-04

• Near-Record Low world grain stocks • Foreign weather--bad last 2 years• China?• World soy stocks: 9% below 2003, 11%

above 2002, 17% above 2001—USDA• Soy exports rationed, but not crush• U.S. soy: record low stocks/use?• U.S. corn/soy yield ratio & ‘04 plantings?• Strong corn domestic & export demand• Market tops probably not be in yet

3/10/04

Map From BBC News

Asian Bird Flu

65 million birds destroyed?

3/10/04

Cumulative Export Sales, 2003-04 vs. Yr. Ago

3/04/04 % Chg. Proj. % Chg.

•Corn +28 +26• Soybeans* -09 -15• Soybean meal -23 -29• Soybean oil -66 -62•All Wheat +43 +32•Grain Sorghum +14 +06 • * China up 13% from Y/A.

China Corn, USDA Export Projections vs. actual

Projections too low, except for 1998

October March

• 2002-03 38% 21% below actual• 2001-02 55% 65% below actual• 2000-01 45% 18% below actual• 1999-00 50% 20% below actual• 1998-99 17% 17% above actual• 1997-98 58% 17% below actual• 1996-97 87% 74% below actual

Figure 1. China Gross Corn Imports & USDA Projections

0

5

10

15

1961 1966 1971 1976 1981 1986 1991 1996 2001 2006

Mil

. M

etr

ic T

on

s

1997 1998 1999 2000 Actual

1 metric ton = 39.4 bushels

For discussion of Soybean yield problems, see: http://www.biotech-info.net/first_generation_GMC.pdf

Planted Acreage, Major U.S. Grains, Soybeans, & Cotton, 1997-2003

0

50

100

150

200

250

1997 1998 1999 2000 2001 2002 2003 wisner USDA

Mil.

Acr

es

Cotton

Oats & Barley

Sorghum

Wheat

Soybeans

Corn

May 04 corn

Locations of Under-ConstructionEthanol Plants, March 2004

Source: Renewable Fuels Assoc.

Ann. Mil. Bu. Corn Use

• West Burlington, IA , 16• Hopkinsville, KY 8

• Lexington, NE 16.8

• Mason City, IA 16• Hanlontown, IA 18

• Palestine, IL 16 • Malta Bend, MO 16• Iowa Falls, IA 16

Annual Mil. Bu.

Corn Use

• Ashton, IA 18

• Steam Boat Rock, IA 8• Hudson, SD 18 • Friesland, WI 16

Total 182.8

Extreme right = 55 m.t. Brazil crop

Typical dirt road in Brazil during the beginning of the dry season.Brazil Brazil CerradosCerradosTop Soil 120 ftTop Soil 120 ft

Yield trend: +0.6bu/A./Yr.

Yield trend: +0.56 bu./A./Yr.

May 04 Soybeans

Cumulative Export Sales, 2003-04 vs. Yr. Ago

3/04/04 % Chg. Proj. % Chg.•HRW wheat +82 +26• SRW wheat +41 -15•HRS wheat* +4 -29•White wheat +45 -62•Durum wheat +36•All Wheat +43 +32•Wheat prod. +55 +06 • *China 176 mil. Bu. HRS, 26 m.b. SRW, 7 WW

Chicago May Wheat

Occurred 79% of time

Excluding 1995-96

Figure 2. Change in November Soybeans 3rd. Week of May vs. mid-Oct. & 4th. Wk. of Feb.vs. Oct. After Short Crops, 1975-2001

-2.00

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

2.00

2.50

$ pe

r Bus

hel

*

Avg. -$0.30

Positive risk prem.= Early price above fall price

•Very Low world grain reserve•Global soybean supplies more adequate -- if S. America crop holds at USDA 3/10/04•Soybeans: exports rationed, but not crush—strong basis & higher prices to cut margins •Corn export sales recently slowing•Ethanol expansion to continue strong, limiting future export growth potential•Corn, wheat, soybean & product prices explosive if major weather problems•Some downside risk in late spring, summer

Key Points

http://www.econ.iastate.edu/faculty/wisner/