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Crop Market Outlook

This presentation discusses the outlook for crop markets, focusing on the supply and use of U.S. corn and soybeans, the impact of the Renewable Fuels Standard, urea prices, Iowa corn and soybean prices compared to costs, stocks-to-use ratios, and thoughts for 2008, 2009, and beyond.

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Crop Market Outlook

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  1. Crop Market Outlook Iowa Institute for Cooperatives 2008 Annual Meeting Ames, Iowa November 25, 2008 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

  2. U.S. Corn Supply and Use $4.75 -0.35 $4.40 Source: USDA-WAOB, Nov. 2008

  3. U.S. Soybean Supply and Use $10.45 -0.60 $9.85 Source: USDA-WAOB, Nov. 2008

  4. Renewable Fuels Standard (RFS)

  5. Outside Influences (Sept. 2008 = 1)

  6. Urea Prices Source: http://www.fertilizerworks.com/html/market/ TheMarket.pdf

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

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

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

  10. World Stocks-to-Use Ratios

  11. Thoughts for 2008 • 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 • Energy demand • Higher energy prices did constrain demand • Will it recover? • Most important ag. statistic: Crude oil price or Dow Jones Index • Current futures are indicating 2008 season-average prices of $3.60 for corn and $8.50 for soybeans

  12. Thoughts for 2009 and Beyond • Many of the storylines from the past few years will continue • Tight stocks for both corn and soybeans • 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 $4.50 for corn and $9.50 for soybeans

  13. Thank you for your time!Any questions?http://www.econ.iastate.edu/faculty/hart/

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