Grain and Oilseed Outlook

Extension and Outreach/Department of Economics

Grain and Oilseed Outlook

Omaha Ag OutlookOmaha, Nebraska

Dec. 7, 2013

Chad HartAssociate Professor/Crop Markets Specialist

[email protected]


U.S. Corn Supply and Use2009 2010 2011 2012 2013

Area Planted (mil. acres) 86.4 88.2 91.9 97.2 95.3

Yield (bu./acre) 164.7 152.8 147.2 123.4 160.4

Production (mil. bu.) 13,092 12,447 12,360 10,780 13,989

Beg. Stocks (mil. bu.) 1,673 1,708 1,128 989 824

Imports (mil. bu.) 8 28 29 162 25

Total Supply (mil. bu.) 14,774 14,182 13,517 11,932 14,837

Feed & Residual (mil. bu.) 5,125 4,795 4,557 4,333 5,200

Ethanol (mil. bu.) 4,591 5,019 5,000 4,648 4,900

Food, Seed, & Other (mil. bu.) 1,370 1,407 1,428 1,396 1,450

Exports (mil. bu.) 1,980 1,834 1,543 731 1,400

Total Use (mil. bu.) 13,066 13,055 12,528 11,108 12,950

Ending Stocks (mil. bu.) 1,708 1,128 989 824 1,887

Season-Average Price ($/bu.) 3.55 5.18 6.22 6.89 4.50

Source: USDA-WAOB


U.S. Soybean Supply and Use2009 2010 2011 2012 2013


Yield (bu./acre) 44.0 43.5 41.9 39.8 43.0


Beg. Stocks (mil. bu.) 138 151 215 169 141

Imports (mil. bu.) 15 14 16 36 15


Crush (mil. bu.) 1,752 1,648 1,703 1,689 1,685

Seed & Residual (mil. bu.) 110 130 88 90 109

Exports (mil. bu.) 1,499 1,501 1,365 1,320 1,450

Total Use (mil. bu.) 3,361 3,280 3,155 3,098 3,243

Ending Stocks (mil. bu.) 151 215 169 141 170


Source: USDA-WAOB


Projected Corn Yields

Source: USDA-NASS

Top: 2013 Projected YieldBottom: Change from last monthUnits: Bushels/acre


Projected Soybean Yields

Source: USDA-NASS

Top: 2013 Projected YieldBottom: Change from last monthUnits: Bushels/acre


World Corn Production

Source: USDA-WAOB


World Soybean Production

Source: USDA-WAOB


U.S. Meat Production & Prices

Source: USDA-WAOB


Corn Export Shifts

Source: USDA-FAS


Corn Export Sales

Source: USDA-FAS


Soybean Export Sales

Source: USDA-FAS


Soy Export Shifts

Source: USDA-FAS


Corn Grind for Ethanol

Extension and Outreach/Department of EconomicsSource: DOE-EIA, Annual Energy Outlook


Current Corn Futures

Source: CME Group, 12/4/2013

4.17

4.28

4.39


Current Soybean Futures


12.42

11.0110.86


Corn Prices vs. Costs

Sources: USDA-NASS for Prices, Duffy for Costs

Per Bushel Cost calculated as Per Acre Cost from ISU Extension divided by Actual Yield per Acre


Soybean Prices vs. Costs

Sources: USDA-NASS for Prices, Duffy for Costs

Per Bushel Cost calculated as Per Acre Cost from ISU Extension divided by Actual Yield per Acre


Crop Acreage

Source: USDA-NASS


Crop Shifts

Source: USDA-NASS


Thoughts for 2014 and BeyondSupply/demand concerns

Corn demand rebounding? Yes, so far, so goodAcreage allocation for 2014: Where do the extra corn acres go?Markets favoring soybeans in the short term and corn longer term

2012/13

USDA

2013/14 USDA

2013/14

Futures

(12/4/13)

Corn $6.89 $4.50 $4.17

Soybeans $14.40 $12.15 $12.42


World Corn Markets

Source: USDA


Arable Land


Thank you for your time!

Any questions?

My web site:http://www.econ.iastate.edu/~chart/

Iowa Farm Outlook:http://www.econ.iastate.edu/ifo/

Ag Decision Maker:http://www.extension.iastate.edu/agdm/


U.S. Wheat Supply and Use2009 2010 2011 2012 2013


Yield (bu./acre) 44.5 46.3 43.7 46.3 47.2


Beg. Stocks (mil. bu.) 657 976 862 743 718

Imports (mil. bu.) 119 97 112 123 150


Food (mil. bu.) 919 926 941 945 950

Seed (mil. bu.) 69 71 76 73 73

Feed & Residual (mil. bu.) 150 132 162 388 310

Exports (mil. bu.) 879 1,289 1,051 1,007 1,100

Total Use (mil. bu.) 2,018 2,417 2,231 2,414 2,433

Ending Stocks (mil. bu.) 976 862 743 718 565


Source: USDA-WAOB


Winter Wheat Acreage

Source: USDA-NASS


Winter Wheat Production

Source: USDA-NASS

Top: 2013 Projected ProductionBottom: % Change from last yearUnits: Million bushels


Durum Wheat Production

Source: USDA-NASS



Other Spring Wheat Production

Source: USDA-NASS



National Wheat Projections


National Wheat Projections


World Wheat Production

Source: USDA-WAOB


Wheat Export Pace

Source: USDA-FAS


Wheat Export Shifts

Source: USDA-FAS


Current Wheat Futures


6.86

6.45 6.54

Extension and Outreach/Department of EconomicsSource: USDA-NASS

Iowa Crop Shifts


Renewable Fuels Standard (RFS)

0

5

10

15

20

25

30

35

40

2009 2012 2015 2018 2021

Bill

ion g

allo

ns

Conventional Biofuels Cellulosic Biofuels

Biodiesel Additional Advanced Biofuels


Liquid Fuel Usage2007 2015 2020 2025 2030 2035

(Million Barrels Oil Equivalent per

Day) (Percent of 2007 Value)

United States 20.6 98% 100% 102% 104% 107%

Canada 2.3 96% 96% 96% 100% 104%

Mexico 2.1 105% 110% 114% 129% 138%

Europe 15.3 92% 88% 88% 89% 90%

Japan 5.0 84% 86% 86% 84% 82%

China 7.6 132% 153% 178% 201% 222%

India 2.8 114% 129% 139% 154% 168%

Africa 3.1 113% 116% 126% 135% 148%

Central and South America 6.0 110% 112% 117% 125% 133%

World 86.1 103% 107% 113% 121% 128%

Source: DOE-EIA


Corn Prices vs. Costs


Carry shows the additional revenue that can be obtained from holding on to the crop

But there are costs to holding on:storageinterest/opportunity costs

These are known as the cost of ownership

Carry vs. Costs


Why Crops Fail

44%

4%22%

3%

6%

8%

13% Drought

Heat

Excess Moisture

Cold Wet Weather

Freeze

Hail

Other


Building a Marketing Plan5 basic steps:

Estimate number of bushels/animals to sell

Calculate breakeven price

Project price and production scenarios

Compare pricing tools and analyze market opportunities

Develop a pricing plan


Marketing Types

HarvestAveragingPrice TargetTime and PriceExtended Time and Price


Harvest Averaging Price Target Time and Price Extended Time and Price2000 1.66 1.91 1.76 2.02 2.022001 1.69 1.87 1.69 1.69 1.692002 2.29 2.11 2.31 2.29 2.352003 1.88 2.05 1.96 1.88 1.882004 1.73 2.24 2.40 2.41 2.332005 1.48 1.69 1.48 1.48 1.482006 2.69 2.35 2.69 2.69 2.692007 3.02 3.27 3.11 3.28 3.112008 3.69 5.13 4.16 5.24 4.162009 3.47 3.77 3.68 3.47 3.682010 5.04 3.84 3.87 3.74 3.872011 6.10 6.02 5.25 5.94 5.252012 7.42 6.17 5.97 5.80 5.972013

Average 3.24 3.26 3.10 3.23 3.11Min 1.48 1.69 1.48 1.48 1.48Max 7.42 6.17 5.97 5.94 5.97

Average Price Captured


Lowest AverageHarvest Averaging Price Target Time and Price Extended Time and Price

2000 1.66 1.91 1.76 2.02 2.022001 1.69 1.87 1.69 1.69 1.692002 2.29 2.11 2.31 2.29 2.352003 1.88 2.05 1.96 1.88 1.882004 1.73 2.24 2.40 2.41 2.332005 1.48 1.69 1.48 1.48 1.482006 2.69 2.35 2.69 2.69 2.692007 3.02 3.27 3.11 3.28 3.112008 3.69 5.13 4.16 5.24 4.162009 3.47 3.77 3.68 3.47 3.682010 5.04 3.84 3.87 3.74 3.872011 6.10 6.02 5.25 5.94 5.252012 7.42 6.17 5.97 5.80 5.972013

8 2 3 6 4


Highest AverageHarvest Averaging Price Target Time and Price Extended Time and Price

2000 1.66 1.91 1.76 2.02 2.022001 1.69 1.87 1.69 1.69 1.692002 2.29 2.11 2.31 2.29 2.352003 1.88 2.05 1.96 1.88 1.882004 1.73 2.24 2.40 2.41 2.332005 1.48 1.69 1.48 1.48 1.482006 2.69 2.35 2.69 2.69 2.692007 3.02 3.27 3.11 3.28 3.112008 3.69 5.13 4.16 5.24 4.162009 3.47 3.77 3.68 3.47 3.682010 5.04 3.84 3.87 3.74 3.872011 6.10 6.02 5.25 5.94 5.252012 7.42 6.17 5.97 5.80 5.972013

4 4 1 5 3


Longer HistoryHarvest Averaging Price Target Time and Price Extended Time and Price

Average 2.54 2.61 2.53 2.59 2.55Min 1.14 1.41 1.14 1.14 1.14Max 7.42 6.17 5.97 5.94 5.97

Low Price 23 8 4 11 9High Price 10 8 3 15 10

Out of 37 years (1976-2012)

Extension and Outreach/Department of EconomicsSource: USDA


Iowa Land Values

Source: Mike Duffy, ISU


Iowa Land Values – Log Scale



Land Values and Income



Land Values and Income



Corn Prices and Recessions


Crop Prices for the Next Decade

Source: USDA-ERS


Net Farm Income

Source: USDA


GDP Growth

Source: USDA-ERS


GDP Growth

Source: USDA-ERS


Thank you for your time!

Any questions?

My web site:http://www.econ.iastate.edu/~chart/

Iowa Farm Outlook:http://www.econ.iastate.edu/ifo/

Ag Decision Maker:http://www.extension.iastate.edu/agdm/

Documents

Grain and Oilseed Outlook