Commodities study mba ( michael toney , mike toney )

US COMMODITIES (CORN)

JJ, Boone, and Mike Toney , Michael Toney

History of Corn:

Colonists vs. Native Americans  Midwestern Expansion  Technological Changes of the 1940’s

Technology changes the landscape

Today US Corn Yield is 20% higher than any other country in the world!HOWEVER – beware of volatility!

World Corn Trade

Corn accounts for 75% of total grain crops traded in the world and the US accounts for almost 60% of total world production.

Domestic Corn Use 60% of the total world production, only

15% of what the US produces is exported 3 major uses for corn in the US

Food Feed Industrial Uses

Domestic Corn Use, % of Total

What Affects the Price of Corn? Futures Price Weather- 8 states = 76% of corn International

- 12% of Agricultural Export Value- We set the Price that that rest of the world

(Asia) pays- only 15% vs. 60%- S. America

The United States & USDA “Corn/Fed”

Expected Acres-Based on baseline projections

Expected Yield - Since 1960- Steadily increasing

Subsidies- Keeps prices artificially low- Sauk Valley Farms $4m ‘95-’12

Gasoline, Affects and is Affected

Ethanol Producers-Energy Independence and Security

Act-If corn supplies limited, ethanol

industry will pay any price needed to meet quota

What do corn prices affect? Farmers

-Incentivized by price of corn to grow more/less corn- Subsidies Livestock producers / Dairy-2009 Dairy Cattle alone consumed 30.5 million metric tons of corn-based feed = 3.8m bushels-Rule of thumb: Every 10-cent change in price / bu changes feeder cattle prices by $1-Livestock can quickly turn from beings profitable to unprofitable Meat prices -If corn price increases, meat price initially decreases and then increases later

What else do corn prices affect? Corn-sumers

-3/4 products in supermarket contain some form of corn-Price takers-Foreign consumers also subject to changing corn prices

The Future of Corn Positive America will maintain dependence on

corn-Steady price (weather)-Grain stocks strengthening

Increasing foreign demand Renewable fuel mandates decreasing

-However, demand from other markets will make up for this

Dedicated to Nick

Questions?