GRAIN OUTLOOK GRAIN OUTLOOK Mike Woolverton Mike Woolverton Kansas State University Kansas State University [email protected] [email protected]
GRAIN OUTLOOK Mike Woolverton Kansas State University [email protected].
Mar 27, 2015
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GRAIN OUTLOOKGRAIN OUTLOOK
Mike WoolvertonMike Woolverton
Kansas State UniversityKansas State [email protected]@agecon.ksu.edu
WHEATWHEAT
PRODUCTION PROJECTIONS, PRODUCTION PROJECTIONS, U.S., 2006/07U.S., 2006/07
All Wheat – 1.812 bil. Bu. – down 14%All Wheat – 1.812 bil. Bu. – down 14%
Hard Winter – 682 mil. Bu. – down 27%Hard Winter – 682 mil. Bu. – down 27% Hard Spring – 432 mil. Bu. – down 7%Hard Spring – 432 mil. Bu. – down 7% Soft Red – 390 mil. Bu. – up 26%Soft Red – 390 mil. Bu. – up 26% White – 254 mil. Bu. – down 15%White – 254 mil. Bu. – down 15% Durum – 53 mil. Bu. - down 48%Durum – 53 mil. Bu. - down 48%
PRODUCTION PROJECTIONS, PRODUCTION PROJECTIONS, MAJOR WHEAT EXPORTERS, MAJOR WHEAT EXPORTERS,
2006/07 2006/07 (MMT)(MMT)
2006/072006/07 2005/062005/06 EU-25EU-25 117.24 117.24 (-4%)(-4%) 122.59 122.59 United StatesUnited States 49.32 49.32 (-14%)(-14%) 57.28 57.28 CanadaCanada 26.3 26.3 (+1%)(+1%) 25.98 25.98 AustraliaAustralia 10.5 10.5 (-57%)(-57%) 24.5 24.5 ArgentinaArgentina 13.25 13.25 (+6%)(+6%) 12.5 12.5
Total World Prod.Total World Prod. 586.81 586.81 (-6%)(-6%) 621.86621.86
Wheat Balance SheetWheat Balance Sheet04-05 04-05 05-06 05-06 06-0706-07
Plant A. (mil.)Plant A. (mil.) 59.7 59.7 57.2 57.2 57.3 57.3
Harvest A. (mil.)Harvest A. (mil.) 50.0 50.0 50.1 50.1 46.8 46.8
Bu./A. Bu./A. 43.2 43.2 42.0 42.0 38.7 38.7
ProductionProduction 2,158 2,158 2,105 2,105 1,8121,812
ImportsImports 71 71 82 82 105 105
Carryover Carryover 546 546 540 540 571 571
Total Supply Total Supply 2,775 2,775 2,727 2,727 2,4882,488
Utilization:Utilization:
Feed and ResidualFeed and Residual 201 201 200 200 145 145
FoodFood 895 895 915 915 920 920
Seed Seed 79 79 78 78 80 80
ExportsExports 1,060 1,060 1,009 1,009 925 925
Total UtilizationTotal Utilization 2,235 2,235 2,155 2,155 2,0702,070CarryoverCarryover 540 540 (24%)(24%) 571 571 (26%)(26%) 418 418
(20%)(20%)
U.S. Farm PriceU.S. Farm Price $3.40 $3.42 $4.15-$4.55 $3.40 $3.42 $4.15-$4.55
Current Market Influences - WheatCurrent Market Influences - Wheat
Low CarryoverLow Carryover Australian Drought Australian Drought (-57%) (-57%)
Winter Wheat Plantings Winter Wheat Plantings
GRAIN SORGHUMGRAIN SORGHUM
Sorghum Estimates, USDA, Sorghum Estimates, USDA, Nov. 2006Nov. 2006
YieldYield ProductionProduction
U.S.U.S. 54.254.2288.5 mil.288.5 mil.
KansasKansas 55.055.0132.0 mil.132.0 mil.(75.0)(75.0) (195.0 mil.) (195.0 mil.)
Sorghum Balance SheetSorghum Balance Sheet04-05 04-05 05-06 05-06 06-0706-07
Plant A. (mil.)Plant A. (mil.) 7.5 7.5 6.5 6.5 6.3 6.3
Harvest A. (mil.)Harvest A. (mil.) 6.5 6.5 5.7 5.7 5.3 5.3
Bu./A. Bu./A. 69.9 69.9 68.7 68.7 54.2 54.2
Production 454 Production 454 394 394 288 288
ImportsImports 0 0 0 0 0 0
Beginning Carryover Beginning Carryover 34 34 57 57 65 65
Total Supply Total Supply 487 487 451 451 354 354
Utilization:Utilization:
Feed and ResidualFeed and Residual 191 141 191 141 95 95
Food, seed, industrialFood, seed, industrial 55 55 50 50 55 55
ExportsExports 184 184 195 195 150 150
Total UtilizationTotal Utilization 430 430 386 386 315 315
Ending CarryoverEnding Carryover 57 57 (13%)(13%) 65 65 (17%)(17%) 39 39(12%)(12%)
U.S. Farm PriceU.S. Farm Price $1.79 $1.86 $2.80-$3.20 $1.79 $1.86 $2.80-$3.20
Current Market Influences – Current Market Influences – Grain SorghumGrain Sorghum
Demand from ethanol Demand from ethanol producersproducers
Demand from livestock Demand from livestock feedersfeeders
Export demand – Mexico and Export demand – Mexico and Spain Spain
CORNCORN
WORLD COARSE GRAIN PRODUCTION 2002 TO 2007 est.
800
850
900
950
1000
1050
2002/03 2003/04 2004/05 2005/06 2006/07 est
YEAR
MM
T
WORLD COARSE GRAIN USAGE, 2002 TO 2007 est.
840
860
880
900
920
940
960
980
1000
1020
2002/03 2003/04 2004/05 2005/06 2006/07 est
YEAR
MM
T
WORLD COARSE GRAIN WORLD COARSE GRAIN STOCKS TO USAGE RATIOSTOCKS TO USAGE RATIO
0102030405060708090
100
2002-03 2003-04 2004-05 2005-06 2006-07
World Corn Use Outpaces ProductionWorld Corn Use Outpaces Production
200
250
300
350
400
450
500
550
600
650
700
750
1979
/198
0
1981
/198
2
1983
/198
4
1985
/198
6
1987
/198
8
1989
/199
0
1991
/199
2
1993
/199
4
1995
/199
6
1997
/199
8
1999
/200
0
2001
/200
2
2003
/200
4
2005
/200
6
Production Consumption
Consumption in Consumption in 2006/07 forecast 2006/07 forecast to set new to set new record.record.
Production down Production down slightly from slightly from 2005/06.2005/06.
Stocks forecast Stocks forecast to reach 23-year to reach 23-year lows.lows.
Million MT
Corn Estimates, USDA, Corn Estimates, USDA, Nov. 2006Nov. 2006
YieldYield BushelsBushels
U.S.U.S. 151.2151.2 10.7 bil.10.7 bil.
KansasKansas 123.0123.0 387 mil.387 mil. (135.0)(135.0) (465.8 mil.)(465.8 mil.)
Corn Balance SheetCorn Balance Sheet04-05 04-05 05-06 05-06 06-0706-07
Plant A. (mil.)Plant A. (mil.) 80.9 80.9 81.8 81.8 78.6 78.6
Harvest A. (mil.)Harvest A. (mil.) 73.6 73.6 75.1 75.1 71.0 71.0
Bu./A. Bu./A. 160.4 160.4 147.9 147.9 151.2 151.2
Production 11,807Production 11,807 11,112 11,112 10,745 10,745
ImportsImports 11 11 9 9 10 10
Beginning Carryover Beginning Carryover 958 958 2,114 2,114 1,971 1,971
Total Supply Total Supply 12,776 12,776 13,23513,235 12,725 12,725
Utilization:Utilization:
Feed and ResidualFeed and Residual 6,162 6,136 6,162 6,136 6,050 6,050 Food, seed, industrialFood, seed, industrial 2,686 2,686 2,981 2,981 3,540 3,540 Ethanol Ethanol
for fuelfor fuel 1,323 1,323 (12%) (12%) 1,603 1,603 (14%)(14%) 2,150 2,150 (18%)(18%)
ExportsExports 1,814 1,814 2,147 2,200 2,147 2,200
Total UtilizationTotal Utilization 10,662 10,662 11,26411,264 11,790 11,790
Ending CarryoverEnding Carryover 2,114 2,114 (20%)(20%) 1,971 1,971 (17%)(17%) 935 935 (8%)(8%)
U.S. Farm PriceU.S. Farm Price $2.06 $2.00 $2.80-$3.20 $2.06 $2.00 $2.80-$3.20
Ethanol Industry at a GlanceEthanol Industry at a Glance Number of operating ethanol plants: 108 Number of operating ethanol plants: 108 Plants under construction or expansion: 62Plants under construction or expansion: 62 Announced plants: 100+*Announced plants: 100+* 2005 production: 3.9 billion gallons 2005 production: 3.9 billion gallons Current production capacity: 5.1 BGPY Current production capacity: 5.1 BGPY Projected production capacity: 7.7 BGPY in 2007 Projected production capacity: 7.7 BGPY in 2007 (RFS Program mandate 7.5 BG by 2012)(RFS Program mandate 7.5 BG by 2012) Size: Newer plants 100 MGPYSize: Newer plants 100 MGPY Process: wet or dryProcess: wet or dry Daily water usage – 1.5 million gallonsDaily water usage – 1.5 million gallons Feedstock percentage:Feedstock percentage:
CornCorn 97 97SorghumSorghum 2 2Other 1Other 1
Distiller’s Grain FactsDistiller’s Grain Facts Each bushel of corn dry grind processed Each bushel of corn dry grind processed
for ethanol yields about 1/3 bushel of for ethanol yields about 1/3 bushel of distiller’s grain.distiller’s grain.
Distiller’s grain retains one-third of the Distiller’s grain retains one-third of the nutrient value of corn.nutrient value of corn.
In N. America: In N. America: 45% dairy45% dairy
37% beef37% beef
13% swine13% swine
5% poultry5% poultry
Current Market Influences - CornCurrent Market Influences - Corn
Demand from ethanol Demand from ethanol producersproducers
Competition for acresCompetition for acres Strong export demand Strong export demand
SOYBEANSSOYBEANS
Soybean Estimates, USDA, Soybean Estimates, USDA, Nov. 2006Nov. 2006
YieldYield ProductionProduction
U.S.U.S. 43.043.03.204 bil.3.204 bil.
KansasKansas 31.031.093 mil.93 mil.(37.0)(37.0) (105.5 mil.)(105.5 mil.)
Soybean Balance SheetSoybean Balance Sheet04-05 04-05 05-06 05-06 06-0706-07
Plant A. (mil.)Plant A. (mil.) 75.2 75.2 72.0 72.0 75.6 75.6 Harvest A. (mil.)Harvest A. (mil.) 74.0 74.0 71.3 71.3 74.5 74.5Bu./A. Bu./A. 42.2 42.2 43.0 43.0 43.0 43.0ProductionProduction 3,124 3,124 3,063 3,063
3,2043,204 ImportsImports 6 6 3 3 4 4 Beginning Carryover Beginning Carryover 112 112 256 256 449 449
Total Supply Total Supply 3,242 3,242 3,322 3,322 3,6573,657
Utilization:Utilization: Crushings Crushings 1,696 1,696 1,739 1,739
1,7801,780 Seed Seed 88 88 93 91 93 91 ExportsExports 1,103 1,103 947 947 1,145 Residual 1,145 Residual
99 99 95 95 75 75 Total UtilizationTotal Utilization 2,986 2,986 2,874 2,874 3,091 3,091
Ending CarryoverEnding Carryover 256 256 (9%)(9%) 449 449 (16%)(16%) 565 565 (18%)(18%)
U.S. Farm PriceU.S. Farm Price $5.74 $5.74 5.66 $5.40-$6.40 5.66 $5.40-$6.40
Current Market Influences - Current Market Influences - SoybeansSoybeans
Competition for acres Competition for acres Large CarryoverLarge Carryover Brazilian plantings Brazilian plantings Bio-diesel potentialBio-diesel potential
Crop Price RelationshipsCrop Price Relationships
12/412/4 Ratio Ratio Price if ratio is… Ratio Ratio Price if ratio is…
10 yr. ave10 yr. ave. . 12/412/4 NormalNormal New New
Corn Corn $3.63 $3.63 - - - - - - - -
Soybeans $6.59Soybeans $6.59 2.49 1.82 $9.00 $7.26 2.49 1.82 $9.00 $7.26
WheatWheat $5.21 1.44 1.44 $5.21 $5.21 1.44 1.44 $5.21 $3.63 $3.63
Corn Acreage CalculationCorn Acreage CalculationCorn Demand 07/08Corn Demand 07/0811 13,999 mil. Bu.13,999 mil. Bu.Supply with DDGS creditSupply with DDGS credit22 -1,953-1,953Needed corn productionNeeded corn production 12,046 mil. Bu.12,046 mil. Bu.Acres needed to plantAcres needed to plant33 86.2 mil. A. 86.2 mil. A.(Trend line yield 147.5 bpa)(Trend line yield 147.5 bpa)
Acres planted in 06/07Acres planted in 06/07 78.678.6 mil. mil.Additional acres in 07/08 7.6 mil.Additional acres in 07/08 7.6 mil.1 1 Assumes all uses except ethanol production remain the same as 06/07. Assumes all uses except ethanol production remain the same as 06/07.
Includes one billion bushels of carryover stocks.Includes one billion bushels of carryover stocks.22 Assumes DDGS retain 30% of the feed value of corn and all DDGS are used Assumes DDGS retain 30% of the feed value of corn and all DDGS are used
for livestock feed. for livestock feed. 3 3 Assumes the percentage of acres planted to acres harvested remains at Assumes the percentage of acres planted to acres harvested remains at
91%. Need to harvest 78.41 million acres.91%. Need to harvest 78.41 million acres.
Land in CropsLand in Crops (Millions of acres, Most recent three year average)(Millions of acres, Most recent three year average)
CornCorn 78.678.6SoybeansSoybeans 75.675.6HayHay 63.463.4WheatWheat 57.357.3CottonCotton 15.315.3Grain SorghumGrain Sorghum 6.3 6.3
TotalTotal 296.5 296.5
Total crop land in the United States – 348.7 million acresTotal crop land in the United States – 348.7 million acres
Market PsychologyMarket Psychology
Producers – This is too good to be true; Producers – This is too good to be true; hold current crop, sell next year’s crophold current crop, sell next year’s crop
Buyers – Future uncertain; cover needs Buyers – Future uncertain; cover needs now rather than laternow rather than later
Speculative Funds – Get out of oil; buy ag. Speculative Funds – Get out of oil; buy ag. commodities…but getting nervouscommodities…but getting nervous
Critical Months: Jan.- Feb.; April–May; July-Critical Months: Jan.- Feb.; April–May; July-Aug. Aug.
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