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Dr. Robert Wisner: Grain Outlook 3/15/06

Dr. Robert Wisner: Grain Outlook 3/15/06. Brazil – mid-Feb. 2006. Dates are approximate. Key Corn Variables for 2006-2010. Fertilizer costs & crop rotations Ethanol trends – very positive Bird flu? China corn exports? Weather: U.S. & World?. Gap: $6.20. May 2006 Soybeans.

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Dr. Robert Wisner: Grain Outlook 3/15/06

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  1. Dr. Robert Wisner: Grain Outlook 3/15/06

  2. Brazil – mid-Feb. 2006

  3. Dates are approximate

  4. Key Corn Variables for 2006-2010 • Fertilizer costs & crop rotations • Ethanol trends – very positive • Bird flu? • China corn exports? • Weather: U.S. & World?

  5. Gap: $6.20 May 2006 Soybeans

  6. Nov. 2006 Soybeans

  7. May 2006 Corn Gaps: $2.338 & $2.448 (Sept. & Aug. ’05) Offer Contracts

  8. Price Objectives: Gaps: June ’04: $2.665, $2.64, High of $2.69 On June 1, 2004. Offer Contracts December 2006 Corn

  9. Monthly CRB Index

  10. Feed Grain Outlook • Large U.S. supplies • Gradual strength in W. Corn Belt Basis & corn price into planting season • Stronger recovery in drought areas & near ethanol plants • 1.3 billion bushel reserve tempers possible ’06 yield problems • Wheat concerns • Tightening supply in ’08-’10

  11. World Supply Changes Vs. Last Year • Soybeans +6.6% • U.S. +2% • Wheat +1% • Feed Grain -1.0% • U.S. Corn +3%

  12. Monthly Natural Gas Futures

  13. Mar. ’06 Natural Gas Futures 53% drop from high

  14. 13% of U.S. Wheat TX.-Ok.

  15. World stocks down 5% in ‘ 06: USDA

  16. Current & planned Iowa Corn Processing Plants, Normal Iowa corn production, & supplies available to ship out of state Mil. bu. available to ship out of state is from normal production after large carryover stocks have been used – provided corn acreage remains at 2005 level. The market is likely to buy more corn acres In future years.

  17. -171 27 106 86 71 -532 63 -344

  18. ?

  19. Iowa Corn Acres Projected from Non-soy Sources in 2010 • To corn from oats, hay 0.2 Mil. A. • CRP land: 0.8 out of 1.2 mil. A. expire in 2005-09 going to corn/soybean rotation (50% to corn = 0.4 mil. A.) • Yield potential on this land: 80% of state Avg.

  20. Total Iowa Acreage & Crop Rotations: China Imports Corn • Total corn-SB acreage, 2010: • Corn: 16.7 million acres • Soybeans: 6.9 million acres • Iowa crop rotations: • Average in 2001: 48.5% soybeans, 51.5% corn • Average in 2005: 44% soybeans, 56% corn • Projected average by 2010: 29.2% soybeans, 70.8% corn

  21. What Could Alter the Projected Acreage Pattern? • Accelerated Growth in Corn Yields • Some Ethanol Projects Put on Hold (not in sight currently) • More CRP or Hay Acres Going to Corn • Iowa Losing Corn Export Share (What states will make up difference?) • Ethanol production from biomass, sugar, or imports • Plants not operating at full capacity • Reduced Livestock feeding

  22. Cumulative Corn Export Sales 3/02/06 Mil. Bu. • Japan +9% 453 • Africa -11% 140 • Taiwan +25% 124 • Other Asia +34% 134 • W. Hemisphere +8% 424 • Unknown +109% 51 Total +9% 1,276

  23. Potential U.S. DGS demand by 2012 Potential U.S. DGS demand by 20 COF @ 15% of ration 5.30 mil. T. Dairy @ 18% of ration 5.52 mil. T. Hogs @ 10% of ration 4.48 mil. T. Total 15.30 mil.T. Potential production 32.5 Mil. T. Potential production

  24. Soybean Outlook Large U.S. SB crop but < 2004 S. America ’05 crop underestimated? Current good conditions in S. America Projected drop in Brazil/Argent. Soy Acres but ‘06 crop up 330 mil. Bu. Next 4-8 years: more DGS competion Biodiesel Asian Soy Rust & bird flu?

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