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Crop Market Outlook

Crop Market Outlook. 4 th Annual Beginning Farmers Conference Ames, Iowa February 7, 2009 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911. U.S. Corn Supply and Use. +81. -50. -100. -50. +316. $4.00. -0.10. $3.90. Source: USDA-WAOB, Jan. 2009.

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Crop Market Outlook

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  1. Crop Market Outlook 4th Annual Beginning Farmers Conference Ames, Iowa February 7, 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 = $4.16 (2/2/09) November 2009 Soy Futures = $9.25 (2/2/09) 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 $8.50-8.75 for soybeans • Key factor: Economic growth returns by 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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