Grain Outlook

1. Grain Outlook Steve Riggins, Extension Professor Department of Agricultural Economics October 2005

2. World Corn Production and Consumption

3. World Wheat Production and Consumption

5. U.S. Corn Yield Agricultural Economics

7. U.S. Corn Acres & Production Agricultural Economics

8. U.S. Corn Use Agricultural Economics

9. Animal Production– Feed Use2005-06/2004-05

10. U.S. Corn Use: Exports & FSI Agricultural Economics

11. U.S. Ethanol Capacity • 2004 – record growth continued – 81 plants in 20 States • Record production of 3.41 billion gallons – 21% increase over 2003 • An increase of 109 percent since 2000 • Completed 12 new plants in 2004 • At the end of 2004: 16 new plants under construction and 2 major expansions underway – Dry Mills accounted for 75% of Capacity • By July 2005 existing plus new capacity projected to equal 4.906 billion gallons by fall/winter of 2005 • Energy bill passed authorizing 4 billion gallons of renewable fuels to be blended into nation’s fuel supply in 2006, rising to 7.5 billion gallons by 2012 • Source -- RFA Agricultural Economics

12. Corn Exports by Major Competitors

13. U.S. Corn Balance Sheet Agricultural Economics

14. Within Season Cash Price Range: Ohio Valley • 95/96 – 2.52 • 96/97 – 1.25 • 97/98 – 0.97 • 98/99 – 0.55 • 99/00 – 0.81 • 00/01 – 0.73 • 01/02 – 0.91 • 02/03 – 0.65 • 03/04 – 1.14 • 04/05 – 0.65

15. Corn Basis: Ohio Valley

16. Cash Corn Prices: Ohio Valley

17. Cash and Futures: Corn Prices– Ohio Valley

18. Corn Marketing • Local basis levels highly variable, too much corn in some areas – too little elsewhere • Historically large LDP’s/MLG’s, especially if early export activity is light • Should have big recovery in cash market – strong domestic use and exports • Dec. 06 contract should challenge $2.50-$2.75 area next spring/summer – will help “old” May, July and Sep contracts some • Cash prices likely at lows now • Current spread between Dec and July (28 cents) + 50 to 60 cent basis gain = 78-88 cent gross return to storage from harvest to June (9 mos.) from storage hedge • Store some “naked” • Write “Covered Calls” on a portion of stored corn ($2.30 July @ 15 cents today) • Put corn under loan – use 60 day “lock-in” on repayment rate

19. U.S. Soybean Yield Agricultural Economics

20. U.S. Soybean Acres & Production Agricultural Economics

21. U.S., Brazil & Argentina: Soybean Production Agricultural Economics

22. U.S. Soybean Use Agricultural Economics

23. Soybean Balance Sheet

24. Cash Soybean Prices : Ohio Valley

25. Soybean Basis : Ohio Valley

26. Soybean Marketing • Futures market should be past harvest low • If South American crop is record large could retest lows next February • If South America has a serious production problem prices much higher • Could be fight for acres in U.S. next spring: corn vs. soybeans • Basis should make a large post-harvest recovery • Storage profitable (how long?) • Market is offering more to store corn than soybeans • Demand for soy-diesel is already a market factor • China demand for U.S. soybeans crucial

27. U.S. Wheat Acres & Yield

28. U.S. Wheat Acres & Production Agricultural Economics

29. U.S. Wheat Use Agricultural Economics

30. U.S. Wheat Balance Sheet

31. Wheat Marketing • Global wheat supplies down from last season’s record • U.S. has largest supply of best quality • Time of year for wheat prices to improve • FSU has a lot of wheat to sell • India may import wheat for first time in 6 years • High cost of nitrogen for next year’s corn crop may have added to winter wheat acres planted this fall • U.S. carryover stocks fully adequate • Price wheat anytime it is over $3.70 – both 05 and expected 06 crop • Don’t let price drop below $3.50 without “covering” a major portion of expected 06 production