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Crop Market Outlook

Get insights on the 2009 crop market outlook, including supply and use of corn and soybeans, drought impacts in South America, Chinese corn production, livestock adjustments, ethanol margins, input costs, and more.

cynthiajsmith
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Crop Market Outlook

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  1. Crop Market Outlook 2009 Weather, Crop, & Livestock Outlook Seminar Hills, Iowa January 28, 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. World Corn Production Source: USDA-WAOB, Jan. 2009

  5. World Soybean Production Source: USDA-WAOB, Jan. 2009

  6. Drought in South America Source: USDA-WAOB, Dec. 2008

  7. 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

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

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

  10. Crop Basis Patterns Sources: CARD, Iowa State; IA Dept. of Ag.

  11. 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

  12. Ethanol Margins Source: ISU, CARD

  13. Biodiesel Margins Source: ISU, CARD

  14. Renewable Fuels Standard (RFS)

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

  16. Outside Influences (Jan. 2007 = 1)

  17. Outside Influences (Sept. 2008 = 1)

  18. Corn & Soybean Area Growth rate of 1.55 million acres per year

  19. CRP Expiring Contracts Source: USDA-FSA

  20. Input Costs Source: USDA, Agricultural Prices, Dec. 2008

  21. The Rise and Fall of Fertilizer Prices Source: http://www.fertilizerworks.com/html/market/ TheMarket.pdf

  22. Ammonia Prices Source: http://www.fertilizerworks.com/html/market/ TheMarket.pdf

  23. Iowa Corn Prices vs. Costs Source: USDA-NASS and Duffy and Smith, http://www.extension.iastate.edu/agdm/crops/pdf/a1-21.pdf

  24. Iowa Soybean Prices vs. Costs Source: USDA-NASS and Duffy and Smith, http://www.extension.iastate.edu/agdm/crops/pdf/a1-21.pdf

  25. Estimates for 2009 Iowa Costs December 2009 Corn Futures = $4.23 (1/27/09) November 2009 Soy Futures = $9.355 (1/27/09) Source: Duffy and Smith, http://www.extension.iastate.edu/agdm/crops/pdf/a1-20.pdf

  26. Crop Exports Source: USDA, PSD

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

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

  29. 2007 World Corn Exports Drought issues for 2008 crops Source: USDA, FAS

  30. 2007 World Soybean Exports Drought issues for 2008 crops Source: USDA, FAS

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

  32. 2008 U.S. Corn Exports Source: USDA, FAS

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

  34. 2008 U.S. Soybean Exports Source: USDA, FAS

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

  36. World Stocks-to-Use Ratios

  37. 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

  38. 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 $9.00 for soybeans • Key factor: Economic growth returns by late 2009/early 2010

  39. 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/

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