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Soybean Outlook

Soybean Outlook. Pat Westhoff ( westhoffp@missouri.edu ) Food and Agricultural Policy Research Institute ( www.fapri.missouri.edu ) Midwest and Great Plains/ Western Outlook Conference Indianapolis, August 15, 2007. Agenda. Outlook for related markets Petroleum and biofuel markets

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Soybean Outlook

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  1. Soybean Outlook Pat Westhoff (westhoffp@missouri.edu) Food and Agricultural Policy Research Institute (www.fapri.missouri.edu) Midwest and Great Plains/ Western Outlook Conference Indianapolis, August 15, 2007

  2. Agenda • Outlook for related markets • Petroleum and biofuel markets • Corn and other crops • Soybean and soybean product outlook • World • U.S.

  3. Petroleum Prices Source: WTI from Global Insight forecast, August 2007; light sweet crude oil from the NYMEX close for July contracts on Aug. 13, 2007

  4. Rack Prices for Ethanol and Gasoline Source: Nebraska government website: http://www.neo.ne.gov/statshtml/66.html Note: AMS reported Iowa plant prices for ethanol of $1.80-$1.92/gallon Aug. 10

  5. Futures Prices for Ethanol, Gasoline Source: CBOT and NYMEX close for Aug. 13, 2007. Ratio of (ethanol price – tax credit) to RBOB gasoline price: 70% in Sep 2007; 61% in Sep. 2008

  6. FAPRI Projections of Gasoline and Ethanol Prices Source: FAPRI baseline update, August 2007

  7. FAPRI Projections of Diesel and Biodiesel Prices Source: FAPRI baseline update, August 2007

  8. Economics of a Dry Mill Ethanol Plant(Dollars per Gallon of Ethanol) Ethanol value and corn costs for July 2008 based on CBOT futures, Aug. 10, 2007 (for corn, ($3.85-$0.20 basis)/2.75 gallons/bu.). Distillers grains based on Iowa prices ($92 per ton) reported by AMS on Aug. 10, 2007.

  9. Source: FAPRI baseline update, August 2007

  10. Wheat and Corn Farm Prices Source: FAPRI baseline update, August 2007

  11. Source: FAPRI baseline update, August 2007

  12. Source: FAPRI baseline update, August 2007

  13. Wheat, Corn & Soybean Area Planted Source: FAPRI baseline update, August 2007

  14. November 2007 Soybeans, CBOT

  15. Source: Real price = Dollar price * real/dollar exchange rate (cal yr. t /3 + cal. yr. (t+1)*2/3)

  16. Source: USDA estimates, August 2007

  17. Source: USDA estimates, August 2007

  18. Source: USDA estimates, August 2007

  19. Source: Figures for 2006/07 from WASDE, August 2007

  20. Source: FAPRI estimates

  21. Biodiesel Statistics • National Biodiesel Board: • June 2007 capacity: 1.39 bil. gal. • 2005/06 production: 250 mil. gal. • Soyoil-based production based on Aug. 2007 USDA estimates of soyoil used for methyl ester • 2005/06: 202 mil. gal. • 2006/07: 325 mil. gal. • 2007/08: 455 mil. gal. • Much new capacity; much existing capacity not fully utilized for biodiesel production

  22. Economics of a Biodiesel Plant(Dollars per Gallon of Biodiesel) Source: FAPRI estimates, August 2007. Soyoil cost assumes 7.7 pounds of crude soybean oil per gallon of ethanol, and prices of 23.41 cents/lb. in 2005/06, 31.00 cents/lb. in 2006/07 and 34.16 cents/lb. in 2007/08

  23. Biodiesel Plant Costs and Returns Source: FAPRI baseline update, August 2007

  24. Source: FAPRI baseline update, August 2007

  25. Source: FAPRI baseline update, August 2007

  26. Soybean Meal and Oil Prices Source: FAPRI baseline update, August 2007

  27. Source: FAPRI baseline update, August 2007

  28. Relative Meal and Oil prices • In 2003/04, soymeal accounted for 65% of combined value of meal and oil in 1 bushel of soybeans • By 2006/07, that has declined to 58% • FAPRI projects a further decline to 53% by 2012/13 • Biodiesel here and abroad increases demand and prices for soybean oil • Increased availability of distillers’ grains puts some downward pressure on meal prices, even though DDGS primarily displaces corn in feed rations

  29. Soybean Meal and Corn Co-Products Domestic Use Source: FAPRI baseline update, August 2007

  30. Feed and Residual Use Source: FAPRI baseline update, August 2007

  31. U.S. Soybean Use Source: FAPRI baseline update, August 2007

  32. Soybean Acreage and Yields Source: FAPRI baseline update, August 2007

  33. Other Issues • Basis is currently very weak • $7.74 National Soybean Index, 8/13/07 • $8.61/bu. CBOT Aug. contract, 8/13/07 • $0.87/bu. implied basis • Consumer demand for “healthy” oils • Roundup Ready 2 and other new technologies • Soybean rust • ???

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