Department of Economics Feed Price Outlook Mandatory Country of Origin Labeling Webcast Ames, Iowa August 25, 2008 Chad Hart Assistant Professor/Grain Markets Specialist [email protected] 515-294-9911
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Department of Economics
Feed Price Outlook
Mandatory Country of Origin Labeling Webcast
Ames, IowaAugust 25, 2008
Chad HartAssistant Professor/Grain Markets Specialist
Department of Economics
Corn Supply and Use
Source: USDA-WAOB, Aug. 2008
-0.3+0.4
+6.6
+573
+100
+150
+300
-0.60$6.00 $5.40
Department of Economics
Soybean Meal Supply and Use
-350
-250-100
-25
Source: USDA-WAOB, Aug. 2008
Department of EconomicsSource: USDA-NASS & USDA-ERS, Aug. 2008
Hay DataHarvested Acres Yield Production
2007 2008 2007 2008 2007 2008
(million acres) (tons/acre) (million tons)
Alfalfa
Iowa 1.14 1.10 4.20 4.30 4.79 4.73
U.S. 21.67 20.78 3.35 3.41 72.58 70.94
Other
Iowa 0.34 0.35 2.30 2.50 0.78 0.88
U.S. 39.96 39.66 1.95 1.94 77.73 77.01
2007 Prices: Alfalfa $138/ton Other $120/ton
2008 Alfalfa Prices: May $177/ton June $172/ton
Department of EconomicsSource: USDA-NASS, Aug. 2008
Department of EconomicsSource: CARD, Iowa State
Crop Basis Patterns
Department of Economics
Renewable Fuels Standard (RFS)
0
2
4
6
8
10
12
14
16
2009 2010 2011
Bill
ion g
allo
ns
Additional Advanced Biofuels Biodiesel
Cellulosic Biofuels Conventional Biofuels
Calendar Year
Billion Bushels
2009 3.75
2010 4.29
2011 4.50
CropYear
Billion Bushels
2008 3.57
2009 4.11
2010 4.43
Department of Economics
Exchange Rate Ratios (Jan. 2007 = 1)
Source: CME futures
0.7
0.8
0.9
1
1.1
1.2
Canada Mexico Brazil RussiaChina South Korea Japan EU
Department of Economics
Corn & Soybean Area
130
135
140
145
150
155
160
165
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Mill
ion
acr
es
Growth rate of 1.5 million acres per year
Department of Economics
Input Costs
Source: USDA, Agricultural Prices, July 2008
Department of Economics
Stocks-to-Use Ratios
0.0%
5.0%
10.0%
15.0%
20.0%
2006 2007 2008
Corn Soybean
Department of Economics
Thoughts for 2008Looking for a later than average frost
Wet spring/flooding impacts will likely show up in yieldsMarkets are primed to move higher on weather concerns
How about the dollar?Weaker dollar has helped hold up crop and livestock exportsStrengthening dollar could help lower feed costs
Most important ag. statistic: Crude oil price
Department of Economics
Thoughts for 2009 and BeyondMany of the storylines from the past few years will continue
Tight stocks for both corn and soybeansThe competition for acreageEthanol’s buildout & livestock’s adjustmentEnergy price & general economy concerns
Market volatility will remain highLink to the energy marketsMore market players with different trading objectives
Given current factors, the 2009 outlook is for feed prices to be in the neighborhood of 2008 prices
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