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Crop Outlook and Grain Flow Shifts

Crop Outlook and Grain Flow Shifts. Iowa Cooperative Managers’ Association Johnston, Iowa February 10, 2009 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911. U.S. Corn Supply and Use. +81. -50. -100. -50. +316. $4.00. -0.10. $3.90.

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Crop Outlook and Grain Flow Shifts

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  1. Crop Outlook and Grain Flow Shifts Iowa Cooperative Managers’ Association Johnston, Iowa February 10, 2009 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

  2. U.S. Corn Supply and Use +81 -50 -100 -50 +316 $4.00 -0.10 $3.90 Source: USDA-WAOB, Jan. 2009

  3. U.S. Soybean Supply and Use +38 -30 +50 $9.00 NC $9.00 Source: USDA-WAOB, Jan. 2009

  4. 2.05 billion bushels of corn were produced during the 2006/07 marketing year. 82% sold, 11% utilized on the farm, 7% remaining for future sales 510 million bushels of soybeans were produced 92% sold, 1% used on the farm, 7% expected to be marketed Grain Marketers Survey Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  5. Producer Markets for Corn Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  6. Shifting Markets for Corn percent Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  7. Producer Markets for Soybeans Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  8. Shifting Markets for Soybeans percent Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  9. About 1.09 billion bushels of corn and 311 million bushels of soybeans were processed or shipped. More than 2 million tons of ethanol co-products were handled during the 2006/07 marketing year. Corn shipments 1999/2000: 43% by truck, 57% by rail 2006/07: 66% by truck, 30% by rail Grain Handlers Survey Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  10. Handler Markets for Corn Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  11. Shifting Markets for Corn Handlers percent Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  12. Handler Markets for Soybeans Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  13. Shifting Markets for Soy Handlers percent Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  14. Livestock Adjustments Sows farrowing: Sept-Nov 2008 2.99 million, down 6% from last year Dec-Feb 2009 2.97 million, down 3% from last year Mar-May 2009 3.01 million, down 2% from last year Broiler-type eggs set: 203 million, down 7% from last year Broiler chicks placed: 166 million, down 6% from last year Feedlot placements: 2.02 million, down 5% from last year Sources: Various USDA-NASS reports

  15. Ethanol Margins Source: ISU, CARD

  16. Renewable Fuels Standard (RFS)

  17. U.S. Blended Motor Gasoline Consumption Source: Energy Information Administration

  18. Outside Influences (Jan. 2007 = 1)

  19. Outside Influences (Sept. 2008 = 1)

  20. Crop Exports Source: USDA, PSD

  21. Exchange Rates (Jan. 2003 = 1) Source: USDA, ERS

  22. Exchange Rates (Jan. 2003 = 1) Source: USDA, ERS

  23. Argentine Drought Impacts (Early Reports) 2007 Production Corn 20.9 million tons Soybeans 46.2 million tons Current USDA Estimates Corn 16.5 million tons -21% Soybeans 49.5 million tons +7% Estimates from Buenos Aires Cereal Exchange Corn 12.3 to 13.7 million tons -35 to -41% Soybeans 34.5 to 38.2 million tons -17 to -25% Source: Dow Jones Newswires

  24. Chinese Corn Production Source: USDA-WAOB, Jan. 2009

  25. Soybeans in China Source: USDA-PSD, Jan. 2009

  26. 2007 World Corn Exports Drought issues for 2008 crops Source: USDA, FAS

  27. 2007 World Soybean Exports Drought issues for 2008 crops Source: USDA, FAS

  28. Pace of Corn Export Sales Source: USDA, FAS

  29. 2008 U.S. Corn Exports Source: USDA, FAS

  30. Pace of Soybean Export Sales Source: USDA, FAS

  31. 2008 U.S. Soybean Exports Source: USDA, FAS

  32. U.S. Stocks-to-Use Ratios

  33. Estimates for 2009 Iowa Costs December 2009 Corn Futures = $4.2175 (2/9/09) November 2009 Soy Futures = $9.43 (2/9/09) Source: Duffy and Smith, http://www.extension.iastate.edu/agdm/crops/pdf/a1-20.pdf

  34. Finishing Out the 2008 Crop Year • General economic conditions • A lot of recent market trade has been tied to reaction to the financial crisis and the world’s response • Economic slowdown raises concern about export and energy demand • Most important ag. statistic: Exchange rates or South American production • Current futures are indicating 2008 season-average prices of $3.75-4.25 for corn and $9.25-9.75 for soybeans • Stress on South American crops has provided some support for prices

  35. Thoughts for 2009 and Beyond • Many of the storylines from 2008 will continue • Tight stocks for corn (worldwide) and soybeans (U.S.) • The competition for acreage • Ethanol’s buildout & livestock’s adjustment • Energy price & general economy concerns • Market volatility will remain high • Link to the energy markets • More market players with different trading objectives • Given current factors, the 2009 outlook is for crop prices around $4.00 for corn and $8.50-8.75 for soybeans • Key factor: Economic growth returns by early 2010

  36. Thank you for your time!Any questions?My web site:http://www.econ.iastate.edu/faculty/hart/Iowa Farm Outlook:http://www.econ.iastate.edu/outreach/agriculture/periodicals/ifo/Ag Decision Maker:http://www.extension.iastate.edu/agdm/ Grain and Biofuel Flow Survey Report:http://www.card.iastate.edu/publications/DBS/PDFFiles/08sr102.pdf

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