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Oklahoma State University

Corn &Wheat Situation and Outlook. Kim B. Anderson. Oklahoma State University. Policy comes and policy goes but weather determines prices. Luther Tweeten. Corn production area. Soybean production area. Cotton production area. HRW wheat production area. SRW wheat production area. Corn.

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Oklahoma State University

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  1. Corn &Wheat Situation and Outlook Kim B. Anderson Oklahoma State University

  2. Policy comes and policy goes but weather determines prices. Luther Tweeten

  3. Corn production area

  4. Soybean production area

  5. Cotton production area

  6. HRW wheat production area

  7. SRW wheat production area

  8. Corn

  9. CornusedforEthanol(billion bushels) ’09/10 4.3 bb ’08/09 4.0 bb ’07/08 3.2 bb ’06/07 2.1 bb

  10. 2000 79.6 72.4 136.9 10.0 (91.0) 2001 75.7 68.8 138.2 9.5 (90.9) 2002 78.9 69.3 129.3 9.0 (87.8) 2003 78.6 70.9 142.2 10.1 (90.2) 2004 80.9 73.6 160.4 11.8 (91.0) 2005 81.8 75.1 148.0 11.1 (91.8) 2006 78.3 70.7 149.1 10.5 (90.3) 2007 93.6 86.1 154.7 13.2 (92.0) 7-YR Avg. 79.1 71.5 143.4 10.3 U.S. Corn Situation Harvested Acres Planted Acres Yield Production Year (Million Bushels) (Billion Bushels) Percentage harvested in parenthesizes

  11. U. S.Price EndingStocks Year Production Consumption 2000 10.0 9.6 2.1 $1.82 2001 9.5 9.8 1.6 $1.85 2002 9.0 9.5 1.0 $1.97 2003 10.1 10.2 1.0 $2.30 2004 11.8 10.6 2.2 $2.42 2005 11.1 11.1 2.0 $2.06 2006 10.5 11.4 1.3 $3.00 2007 13.2 12.6 1.9 $3.50 7-YR 10.3 10.3 1.6 $2.20 Avg. U.S. Corn Situation (Billion Bushels)

  12. EndingStocks Year Production Consumption 2000 23.2 23.8 6.0 2001 23.6 24.5 5.8 2002 23.7 24.7 4.9 2003 24.3 25.5 4.1 2004 27.8 26.9 5.1 2005 27.3 27.3 4.8 2006 27.6 28.5 4.1 2007 30.3 30.1 3.9 7-YR 25.4 25.9 4.8 Avg. World Corn Situation (Billion Bushels)

  13. 2008 Corn Production 2007 use + ethanol increase – 1 bb ending stocks = required production ÷ yield = acres harvested ÷ % harvested = required planted acres 12.6 bb + 0.7 bb – 1 bb = 12.3 bb ÷ 153 bu/ac = 80 ma ÷ .91 = 88 million acres

  14. CBT Corn Monthly Nearest Weather Ethanol Before ethanol

  15. CBT Soybeans Monthly Nearest Ethanol & bio-diesel Before ethanol & bio-diesel Weather

  16. U.S. Corn Situation CBT Nearby Ending Stocks USDACash Est. Month Price Range Open/Close 06/07 07/08 (Cents per Bushel) (Billion Bushels) (± 30) May 0.937 0.947 345-390 345-395 340 June 0.937 0.997 388-329 323-426 340 July 1.137 1.502 332-326 308-344 310 Aug 1.516 326-324 310-354 310 Sept 1.675 327-373 320-390 310 Oct 1.997 375-372 335-376 320 Nov 1.897 374-379 367-390 350

  17. Key points • 2007 corn production 13.2 billion bushels (bb). • 2007 corn use 12.6 bb. • 2007 ethanol corn use 3.2 bb. • 2008 projected ethanol corn use 3.9 bb. • corn end stocks ~ 1.9 bb  $3.50 avg. annual price. • corn end stocks ~ 1.0 bb  $3.90 avg. annual price. • 2008 planted acres 88 mil., production of 12.3 bb, ending stocks 1.0 bb & $3.70 avg. annual price.

  18. Wheat

  19. U.S. Wheat Situation Harvested Acres Planted Acres Yield Production Year (Million Bushels) (Billion Bushels) 2000 62.5 53.1 42.0 2.23 (85.0) 2001 59.4 48.5 40.2 1.95 (81.6) 2002 60.3 45.8 35.0 1.61 (76.0) 2003 62.1 53.1 44.2 2.34 (85.5) 2004 59.7 50.0 43.2 2.26 (83.8) 2005 57.2 50.1 42.0 2.10 (87.6) 2006 57.3 46.8 38.7 1.81 (81.7) 2007 60.4 51.0 40.5 2.07 (84.4) 7-YR Avg. 59.9 49.8 40.7 2.00 (83.2) Percentage harvested in parenthesizes

  20. U. S.Price EndingStocks Year Production Consumption 2000 2.23 2.39 .873 $2.62 2001 1.50 2.15 .777 $2.78 2002 1.61 1.99 .492 $3.56 2003 2.34 2.35 .546 $3.40 2004 2.16 2.24 .540 $3.40 2005 2.11 2.16 .571 $3.42 2006 1.80 2.05 .456 $4.26 2007 2.07 2.30 .312 $6.10 7-YR 1.96 2.19 .608 $3.35 Avg. U.S. Wheat Situation (Billion Bushels) 13.6%

  21. EndingStocks Year Production Consumption 2000 21.4 21.5 7.4 2001 21.3 21.5 7.4 2002 20.8 22.2 6.2 2003 20.4 21.6 4.8 2004 23.0 22.3 5.5 2005 22.9 23.1 5.4 2006 21.8 22.7 4.6 2007 22.2 22.7 4.0 7-YR 21.7 22.1 5.9 Avg. World Wheat Situation (Billion Bushels) 17.8%

  22. KCBT Monthly Nearest Ethanol Weather Before ethanol

  23. KCBT March ‘08

  24. KCBT July “08

  25. U.S. Wheat Situation KCBT Nearby Ending Stocks USDACash Est. Month Price Range Open/Close 06/07 07/08 (Billion Bushels) (Cents per Bushel) (± 30) May 412 469 480-504 462-512 465 June 417 443 504-597 500-630 480 July 456 418 604-629 573-657 510 Aug 404 629-721 617-733 540 Sept 362 751-929 751-950 580 Oct 307 947-827 815-950 610 Nov 312 831-905 756-925 610

  26. Beginning stocks Production Supply, Total Exports Use, Total Ending Stocks Avg. farm price U.S. Wheat Supply and Use USDA 07/08 Kim’s 08/09 millionbushels 456 2,067 2,608 1,150 2,301 307 $6.10 307 2,350 2,657 1,050 2,250 407 $5.20

  27. KCBT July wheat contract price $7.98 Elevator forward contract basis -$0.53 Forward contract offer $7.45 Buy KCBT July 800 call -$0.70 FC/Call minimum price $6.75 Buy KCBT July 800 Put (800¢ - 70¢) $7.30 Expected June 2008 basis -$0.45 Expected minimum price $6.85 June 2008 wheat delivery prices

  28. Key Points • Weather is the major price factor. • Corn continues to set the floor for wheat prices. • U.S. and world wheat stocks below average. • Wheat planted acres increase ~5% (63 ma). • Wheat stocks increase in 2008/09 – below avg. • 2008/09 wheat price range $3.75 to $8.50. • June 2008 wheat price ~ $6.00 $4.50 to $8.50.

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