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Corn Outlook

Corn Outlook. Midwest, Great Plains, and Western Outlook Conference Kansas City, Missouri August 19, 2008 Chad Hart chart@iastate.edu 515-294-9911. Nearby Corn Futures. Source: CBOT nearby futures. Corn Supply and Use. -0.3 +0.4. +6.6. +573. +3. +100. +50. +150. -25. -22.

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Corn Outlook

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  1. Corn Outlook Midwest, Great Plains, and Western Outlook Conference Kansas City, Missouri August 19, 2008 Chad Hart chart@iastate.edu 515-294-9911

  2. Nearby Corn Futures Source: CBOT nearby futures

  3. Corn Supply and Use -0.3 +0.4 +6.6 +573 +3 +100 +50 +150 -25 -22 +300 $6.00 -0.60 $5.40 -0.10 Source: USDA

  4. Source: USDA-NASS, August 12, 2008

  5. Crop Acreage Ratio of Harvested to Planted Acres These 4 states are harvesting 877,000 acres less than usual. Given projected yields, that’s 147 million bushels.

  6. Crop Progress Source: USDA-NASS, August 12, 2008

  7. Continuing Weather Concerns Source: The Weather Channel

  8. Harvest Time Outlook Source: National Weather Service, Climate Prediction Center

  9. Renewable Fuels Standard (RFS)

  10. Renewable Fuels Standard (RFS)

  11. Crude Oil Prices Source: U.S. Dept. of Energy, Energy Information Administration

  12. Price Ratios (Jan. 2, 2008 = 1) Sources: CBOT and NYMEX nearby futures

  13. Population Source: U.S. Bureau of the Census, International Data Base

  14. Real GDP Sources: International Financial Statistics, Global Insight

  15. Per Capita Meat Consumption Source: FAPRI

  16. Exchange Rate Ratios (Jan. 2007 = 1) Source: USDA-ERS

  17. Exchange Rate Ratios (Jan. 2007 = 1) Source: CME futures

  18. World Corn Production Source: USDA, WASDE Report, August 12, 2008

  19. Corn & Soybean Area Source: USDA-NASS

  20. Corn & Soybean Area Growth rate of 1.5 million acres per year

  21. CRP Expiring Contracts Source: USDA-FSA

  22. Land Availability Data from 1997 and 2002 Census of Agriculture 1997 2002 Land in farms 955 938 Total cropland 445 434 Harvested cropland 319 303 Cropland in pasture 66 61 Other cropland 60 71 Total woodland 77 76 Pastureland (not crop) 398 395 Land in other uses 34 33 2007 931 304 Source: USDA-NASS

  23. Input Costs Source: USDA, Agricultural Prices, July 31, 2008

  24. Source: USDA-NASS, August 12, 2008

  25. Stocks-to-Use Ratios

  26. Acreage Competition for 2009 • More land will shift to corn and soybeans • High prices for both crops • Tight stock situations • Demand remaining fairly strong • Futures price ratio favors corn (8/15/08) • Dec. 2009 Corn = $5.925 per bushel • Nov. 2009 Soy = $12.19 per bushel • Current ratio = 2.06 • Historical average ratio ~ 2.3

  27. Thoughts for 2008 • Looking for a later than average frost • Wet spring/flooding impacts will likely show up in yields • Demands will adjust with prices • Slack capacity in ethanol • Feed wheat vs. coarse grains • How about the dollar? • Weaker dollar has helped hold up exports • Most important ag. statistic: Crude oil price? • Higher prices provide room for ethanol • But also lead to higher input costs

  28. Thoughts for 2009 and Beyond • Many of the storylines from the past few years will continue • The race of supply vs. demand • The competition for acreage • Ethanol’s buildout • Livestock’s adjustment • Energy price & general economy concerns • Market volatility will remain high • Tight stocks • Link to the energy markets • More market players with different trading objectives

  29. Thoughts for 2009 and Beyond • Farming is a competitive industry • Input costs are racing to catch up • Fertilizer and fuel prices leading the way • Land prices/rents have had a strong run • “What’s your break-even price?” • The potential and the pitfalls of cellulosic biofuels • One crop, many demands Reportedly ancient agricultural curse: May you live (and market) in interesting times.

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