Grain Market Grain Market OutlookOutlook
Ag Profitability ConferenceAg Profitability ConferenceWakeeney, KansasWakeeney, Kansas
December 20, 2007December 20, 2007
Mike Woolverton & Daniel O’BrienMike Woolverton & Daniel O’BrienK-State Research and ExtensionK-State Research and Extension
[email protected]@agecon.ksu.edu [email protected] [email protected]
Historic vs Current Grain Historic vs Current Grain Prices, Prices,
Dollars per BushelDollars per Bushel
2000-07 2000-07 AverageAverage 12/17/0712/17/07
WheatWheat $3.36 $3.36 $9.56 $9.56CornCorn $2.27 $2.27 $4.24 $4.24Grain SorghumGrain Sorghum $2.20 $2.20
$4.19$4.19SoybeansSoybeans $5.64 $5.64 $10.93 $10.93
1 1 Average price per bushel, 2000-2007. Average price per bushel, 2000-2007. 2 2 Kansas City cash truck bids, 17 December 2007.Kansas City cash truck bids, 17 December 2007.
WheatWheatMarketsMarkets
Wakeeney, KS Cash Wheat Wakeeney, KS Cash Wheat PricesPrices
Midwest Coop, Wakeeney, KansasJan. 19 – Dec. 18, 2007Source: DTN Bid Analyzer
March 2008 HRW Wheat March 2008 HRW Wheat FuturesFutures
KCBT: April 2006-December 2007“2008 Old Crop March HRW Contract”
Contract Volume & Open Interest
July 2008 HRW Wheat July 2008 HRW Wheat FuturesFutures
KCBT: April 2006-December 2007“2008 New Crop July HRW Contract”
Contract Volume & Open Interest
U.S. Wheat Supply-DemandU.S. Wheat Supply-Demand 2005/06 2006/07 2007/08 Planted Ac. (mln.) 57.2 57.3 60.4 Harvested Ac (mln.) 50.1 46.8 51.0 Yield (bu./ac.) 42.0 38.7 40.5 Beg. Stocks 540 571 456 Production 2,105 1,812 2,067
Total Supplies 2,727 2,505 2,613 Food 914 933 945 Seed 78 81 88 Exports 1,009 909 1,175 Feed & Residual 154 125 125
Total Use 2,155 2,049 2,333 End Stocks (%S/U) (26%) 571 (22%) 456 (12%) 280 U.S. Ave. Farm $ $3.42 $4.26 $6.20-$6.60
U.S. Wheat Planted Acreage
55.0
60.0
65.0
70.0
75.0
80.0
85.0
90.0
73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07Harvest Year
Mill
ion
Acr
es
.
Source: USDAWASDE Report: 7.12.07
KSU Dept. of Ag Econwww.agmanager.info
U.S Wheat Yields
25.027.029.031.033.035.037.039.041.043.045.047.0
73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07Year
Whe
at Y
ield
(B
u./A
cre)
.
2007 Estimate
KSU Dept. of Ag Econwww.agmanager.info
U.S. Wheat Production
1.4
1.6
1.8
2.0
2.2
2.4
2.6
2.8
3.0
73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07Year
Prod
ucti
on (
Bill
ion
Bu)
2007 Estimate
KSU Dept. of Ag Econwww.agmanager.info
U.S. Wheat Exports
0.8
1.0
1.2
1.4
1.6
1.8
2.0
73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07
Year
Expo
rts
(Bill
ion
Bu.
)
.
2007 Estimate
KSU Dept. of Ag Econwww.agmanager.info
Production of Major Wheat Production of Major Wheat ExportersExporters
Million Metric Tons Million Metric Tons 2006/072006/07 2007/082007/08
EU-27EU-27 124.80 124.80 120.50 120.50 United StatesUnited States 49.32 49.32 56.25 56.25 CanadaCanada 25.27 25.27 20.05 20.05 AustraliaAustralia 9.90 9.90 13.00 13.00
(12.7)(12.7) ArgentinaArgentina 15.20 15.20 15.00 15.00
World ProductionWorld Production 593.07 593.07 602.31 602.31
World Ending StocksWorld Ending Stocks 125.08 110.06 125.08 110.06
Soybean Soybean MarketsMarkets
Hays, KS Cash Soybean Hays, KS Cash Soybean $s$s
Midland Marketing - Hays, KansasJan. 19 – Dec. 18, 2007Source: DTN Bid Analyzer
March 2008 E-Soybean March 2008 E-Soybean FuturesFutures
CBOT: April 2006-December 2007“2008 Old Crop Soybean Contract”
Contract Volume & Open Interest
November 2008 E-Soybean November 2008 E-Soybean FuturesFutures
CBOT: April 2006-December 2007“2008 Old Crop Soybean Contract”
Contract Volume & Open Interest
U.S. Soybean Supply-U.S. Soybean Supply-DemandDemand
2005/06 2006/07 2007/08 Planted Ac. (mln.) 72.0 75.5 63.7 Harvested Ac (mln.) 71.3 74.6 62.8 Yield (bu./ac.) 43.0 42.7 41.3 Beg. Stocks 256 449 573 Production 3,063 3,188 2,594
Total Supplies 3,322 3,647 3,173 Crushings 1,739 1,806 1,830 Exports 940 1,118 995 Seed 93 78 86 Residual 101 71 77
Total Use 2,873 3,074 2,988 End Stocks (%S/U) (16%) 449 (19%) 573 (6%) 185 U.S. Ave. Farm $ $5.66 $6.43 $9.25-$10.25
U.S. Soybean Planted Acreage
45
50
55
60
65
70
75
80
73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07
Harvest Year
Mill
ion
Acre
s
.
Source: USDAWASDE Report: 7.12.07
KSU Dept. of Ag Econwww.agmanager.info
U.S. Soybean Yields
20
25
30
35
40
45
73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07
Year
Soyb
ean
Yiel
d (B
u/Ac
re)
. Actual Yield Trend Yield
Source: USDA & KSUWASDE Report: 12.11.07
KSU Dept. of Ag Econwww.agmanager.info
U.S. Soybean Production
1.0
1.5
2.0
2.5
3.0
3.5
73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07Harvest Year
Billi
on B
ushe
ls
Source: USDA & KSU Ag. Econ.WASDE Report: 12.11.07
KSU Dept. of Ag Econwww.agmanager.info
USDA 2007 estimate assumes yield of 41.3 bu./acre
U.S. Soybean Exports
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07Year
Expo
rts
(Bill
ion
Bu.)
,
Source: USDAWASDE Report: 12.11.07
KSU Dept. of Ag Econwww.agmanager.info
Soybean Price vs. Ending StocksEnding Stocks as a % of Total Usage
0%
5%
10%
15%
20%
25%
30%
35%
73 77 81 85 89 93 97 01 05
Year
Endi
ng S
tock
s (
% o
f U
sage
)
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$10.00
$11.00
Average Farm
Price ($/Bu.)
Ending Stocks (%) Avg Farm Price
Source: USDAWASDE Report: 12.11.07
KSU Dept. of Ag Econwww.agmanager.info
Wakeeney, KS Corn Cash Wakeeney, KS Corn Cash PricesPrices
Midwest Coop, Wakeeney, KSJan. 19 – Dec. 18, 2007Source: DTN Bid Analyzer
Wakeeney, KS Grain Wakeeney, KS Grain Sorghum Sorghum
Cash PricesCash Prices
Midwest Coop, Wakeeney, KSJan. 19 – Dec. 18, 2007Source: DTN Bid Analyzer
March 2008 E-Corn FuturesMarch 2008 E-Corn Futures
CBOT: April 2006-December 2007“2008 Old Crop Corn Contract”
Contract Volume & Open Interest
December 2008 E-Corn December 2008 E-Corn FuturesFutures
CBOT: April 2006-December 2007“2008 New Crop Corn Contract”
Contract Volume & Open Interest
U.S. Corn Supply-DemandU.S. Corn Supply-Demand 2005/06 2006/07 2007/08 Planted Ac. (mln.) 81.8 78.3 93.6 Harvested Ac (mln.) 75.1 70.6 86.1 Yield (bu./ac.) 148.0 149.1 153.0 Beg. Stocks 2,114 1,967 1,304 Production 11,114 10,535 13,168
Total Supplies 13,237 12,514 14,487 Ethanol 1,603 2,117 3,200 Other Food, Seed, Indust. 1,378 1,371 1,390 Exports 2,134 2,125 2,450 Feed & Residual 6,155 5,598 5,650
Total Use 11,270 11,210 12,690 End Stocks (%S/U) (17%) 1,967 (12%) 1,304 (14%) 1,797 U.S. Ave. Farm $ $2.00 $3.04 $3.35-$3.95
U.S. Grain Sorghum Supply-U.S. Grain Sorghum Supply-DemandDemand
2005/06 2006/07 2007/08 Planted Ac. (mln.) 6.5 6.5 7.7 Harvested Ac (mln.) 5.7 4.9 6.7 Yield (bu./ac.) 68.5 56.2 76.8 Beg. Stocks 57 66 32 Production 393 278 515
Total Supplies 450 343 547 Food, Seed, Indust. 50 45 35 Exports 194 157 275 Feed & Residual 140 109 180
Total Use 384 311 490 End Stocks (%S/U) (17%) 66 (10%) 32 (12%) 57 U.S. Ave. Farm $ $1.86 $3.29 $3.20-$3.80
U.S. Corn Planted Acreage
60
65
70
75
80
85
90
95
100
40 45 50 55 60 65 70 75 80 85 90 95 00 05
Harvest Year
Mill
ion
Acre
s
.
KSU Dept. of Ag Econwww.agmanager.infoSource: USDA WASDE: 12.11.07
U.S. Corn Yield
607080
90100110120130140
150160170
70 75 80 85 90 95 00 05Harvest Year
Corn
Yie
ld
(Bu.
/Acr
e)
Actual Yield
Trend Yield
Source: USDA & K-State Ag. Econ.WASDE Report: 12.11.07
2004 Yield = 160 bu./ac2005 Yield= 148 bu./ac2006 Yield= 149.1 bu./ac2007 Trend Yield = 154.1 bu./ac.USDA 2007 Proj. = 153.0 bu./ac.
KSU Dept. of Ag Econwww.agmanager.info
Total U.S. Corn Production
4
5
6
7
8
9
10
11
12
13
14
73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07Harvest Year
Prod
uctio
n (B
illio
n Bu
.)
.
Source: USDA & K-State Ag. Econ. WASDE Report: 12.11.07
KSU Dept. of Ag Econwww.agmanager.info
USDA estimate assumes yield of 153.0 bu/acre
Dynamics of U.S. Corn UsageDynamics of U.S. Corn Usage USDA/WASDE USDA/WASDEUSDA/WASDE USDA/WASDE 2006/072006/07 2007/08 2007/08
est.est.
Feed and ResidualFeed and Residual 5,598 5,598 5,6505,6501 1 (+1%) (+1%) Food, Seed, and Industrial 1,371Food, Seed, and Industrial 1,371 1,3901,3902 2 (+1%)(+1%)Ethanol for FuelEthanol for Fuel 2,117 2,117 3,2003,200 (+51%) (+51%) Net ExportsNet Exports 2,125 2,125 2,450 (+15%)2,450 (+15%)Ending StocksEnding Stocks 1,3041,304 1,797 (+38%)1,797 (+38%)Total UsageTotal Usage 12,515 12,515 14,487 (+16%) 14,487 (+16%)ProductionProduction 10,535 10,535 13,168 (+25%) 13,168 (+25%)1 1 Assumes DDGS retain 30% of the feed value of corn and are included in the feed and Assumes DDGS retain 30% of the feed value of corn and are included in the feed and
residual category by the USDA. residual category by the USDA.
2 2 Industrial, food, and seed less ethanol. Industrial, food, and seed less ethanol.
World Corn Production & World Corn Production & ConsumptionConsumption
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
2007
/200
8
Production Consumption
Global production Global production up 9% from up 9% from 2006/07. Demand 2006/07. Demand up 6%.up 6%.
Production will Production will be 2.9 MMT (114 be 2.9 MMT (114 mil. Bu.) greater mil. Bu.) greater than than consumption.consumption.
Ending stocks Ending stocks forecast to forecast to increase slightly increase slightly from last year to from last year to 14 % of usage.14 % of usage.
Million MT
Land in CropsLand in Crops (Millions of acres)(Millions of acres)
55 yr. Ave.yr. Ave. 07/08USDA07/08USDA Proj. 08/09Proj. 08/09
CornCorn 79.6 79.6 93.6 93.6 88.0 88.0 (-6%)(-6%) SoybeansSoybeans 74.2 74.2 63.7 63.7 70.0 70.0 (+10%)(+10%)
HayHay 62.4 62.4 61.8 61.8 61.8 61.8 (--)(--)
WheatWheat 59.5 59.5 60.4 60.4 62.2 62.2 (+3%)(+3%)
CottonCotton 14.1 14.1 10.9 10.9 10.0 10.0 (-8%)(-8%)
Grain Sorghum 8.1 Grain Sorghum 8.1 7.7 7.7 7.4 7.4 (-(-4%)4%)
Principle Crops Principle Crops 297.9 297.9 298.1 298.1 299.4299.4CRPCRP 35.9 35.9 34.9 34.9 (-3%)(-3%)
Total crop land in the United States – 441.6 million acresTotal crop land in the United States – 441.6 million acres
Crop Acres Coming Out of Crop Acres Coming Out of CRPCRP
2007–2017, Millions of Acres2007–2017, Millions of AcresSource: USDA, FSASource: USDA, FSA
00.20.40.60.8
11.21.41.6
Cropland Coming Out of CRP (mln ac)
Grain Marketing Grain Marketing ConsiderationsConsiderations
WheatWheat – Global shortage of quality milling – Global shortage of quality milling wheat, reduced Australian and Argentinean wheat, reduced Australian and Argentinean production, and acres planted N. Hemisphere.production, and acres planted N. Hemisphere.
Corn/G.S.Corn/G.S. – Strong demand from overseas – Strong demand from overseas buyers, ethanol demand, and bid for acres.buyers, ethanol demand, and bid for acres.
SoybeansSoybeans – Dryness hurting Argentinean and – Dryness hurting Argentinean and Brazilian crops, hectares in Brazil up only 1%, Brazilian crops, hectares in Brazil up only 1%, and critically low carryover in the U.S.and critically low carryover in the U.S.
Factors to WatchFactors to Watch:: Tight global S/D balances for wheat and soybeansTight global S/D balances for wheat and soybeans Battle for acres this springBattle for acres this spring Harvest of Southern Hemisphere cropsHarvest of Southern Hemisphere crops
Questions???Questions???
K-State Extension Agricultural K-State Extension Agricultural Economics:Economics:
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