GRAIN OUTLOOK Agricultural Lenders Conference 2007

GRAIN OUTLOOKGRAIN OUTLOOK

Agricultural Lenders Agricultural Lenders ConferenceConference

20072007

Mike WoolvertonMike WoolvertonKansas State UniversityKansas State [email protected]@agecon.ksu.edu

WHEATWHEAT

PRODUCTION PROJECTIONS, PRODUCTION PROJECTIONS, MAJOR WHEAT EXPORTERS, MAJOR WHEAT EXPORTERS,

2006/07 - 2007/08 (MMT)2006/07 - 2007/08 (MMT)2006/072006/07 2007/082007/08

EU-27EU-27 124.80 124.80 121.83 121.83 United StatesUnited States 49.32 49.32 57.53 57.53 CanadaCanada 25.27 25.27 20.30 20.30 AustraliaAustralia 9.90 9.90 21.00 21.00 (15.5)(15.5) ArgentinaArgentina 15.20 15.20 14.00 14.00

Total World Prod.Total World Prod. 593.07 593.07 606.24 606.24

Ending StocksEnding Stocks 125.08 112.36 125.08 112.36

Wheat Balance SheetWheat Balance Sheet05-06 06-07 07/0805-06 06-07 07/08

Plant A. (mil.)Plant A. (mil.) 57.2 57.2 57.3 57.3 60.5 60.5

Harvest A. (mil.)Harvest A. (mil.) 50.1 50.1 46.8 52.1 46.8 52.1

Bu./A. Bu./A. 42.0 42.0 38.7 38.7 40.6 40.6

ProductionProduction 2,105 2,105 1,812 1,812 2,114 2,114

ImportsImports 82 82 122 122 85 85

Carryover Carryover 540 540 571 571 456 456

Total Supply Total Supply 2,727 2,727 2,505 2,505 2,655 2,655

Utilization:Utilization:

Feed and ResidualFeed and Residual 154 154 129 129 170 170

FoodFood 914 914 930 930 940 940

Seed Seed 78 78 81 83 81 83

ExportsExports 1,009 1,009 909 1,100 909 1,100

Total UtilizationTotal Utilization 2,155 2,155 2,049 2,049 2,293 2,293CarryoverCarryover 571 571 (26%)(26%) 456 456 (22%)(22%) 362362

(16%)(16%)

U.S. Farm PriceU.S. Farm Price $3.42 $4.26 $5.50-6.10 $3.42 $4.26 $5.50-6.10

U.S. Wheat Planted Acreage

55.0

60.0

65.0

70.0

75.0

80.0

85.0

90.0

73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07Harvest Year

Mill

ion

Acr

es

.

Source: USDAWASDE Report: 7.12.07

KSU Dept. of Ag Econwww.agmanager.info

U.S Wheat Yields

25.027.029.031.033.035.037.039.041.043.045.047.0

73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07Year

Whe

at Y

ield

(B

u./A

cre)

.

Source: USDA & KSUWASDE Report: 7.12.07

2007 Estimate


U.S. Wheat Production

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07Year

Prod

ucti

on (

Bill

ion

Bu)


2007 Estimate


U.S. Wheat Exports

0.8

1.0

1.2

1.4

1.6

1.8

2.0

73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07

Year

Expo

rts

(Bill

ion

Bu.

)

.


2007 Estimate


Share of World Wheat Exports, Share of World Wheat Exports, 2007/08, USDA2007/08, USDA

U.S.

Canada

Australia

EU-27

Russia

Argentina

Kazak.

Ukraine

SOYBEANSSOYBEANS

Soybean Balance SheetSoybean Balance Sheet05-06 05-06 06-0706-07 07/0807/08

Plant A. (mil.)Plant A. (mil.) 72.0 75.5 72.0 75.5 64.1 64.1Harvest A. (mil.)Harvest A. (mil.) 71.3 74.6 71.3 74.6 63.3 63.3Bu./A. Bu./A. 43.0 42.7 43.0 42.7 41.4 41.4ProductionProduction 3,063 3,188 3,063 3,188 2,619 2,619 ImportsImports 3 3 8 8 6 6 Beginning Carryover Beginning Carryover 256 256 449 449 555 555


Utilization:Utilization: Crushings Crushings 1,739 1,739 1,805 1,805 1,825 1,825 Seed Seed 93 79 93 79 85 85 ExportsExports 947 947 1,115 975 1,115 975 ResidualResidual 93 93 92 92 79 79

Total UtilizationTotal Utilization 2,8732,873 3,091 2,964 3,091 2,964 Ending CarryoverEnding Carryover 449 449 (16%)(16%) 555 555 (18%) (18%) 215 215 (7%)(7%)

U.S. Farm PriceU.S. Farm Price $5.66 $6.40 $7.35-8.35$5.66 $6.40 $7.35-8.35

U.S. Average Soybean Price

$4.00

$4.50

$5.00

$5.50

$6.00

$6.50

$7.00

$7.50

$8.00

$8.50

73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07Year

Aver

age

Farm

Pri

ce (

$/Bu

.)

.



U.S. Soybean Planted Acreage

45

50

55

60

65

70

75

80

73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07

Harvest Year

Mill

ion

Acre

s

.



U.S. Soybean Yields

20

25

30

35

40

45

73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07

Year

Soyb

ean

Yiel

d (B

u/Ac

re)

. Actual Yield Trend Yield

Source: USDA & KSUWASDE Report: 7.12.07


U.S. Soybean Exports

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07Year

Expo

rts

(Bill

ion

Bu.)

,



Share of World Soybean Exports, Share of World Soybean Exports, 2007/08, USDA2007/08, USDA

U.S.

Brazil

Argentina

CORNCORN

Corn Balance SheetCorn Balance Sheet 05-06 05-06 06-07 06-07 07/0807/08

Plant A. (mil.)Plant A. (mil.) 81.8 81.8 78.3 78.3 92.9 92.9

Harvest A. (mil.)Harvest A. (mil.) 75.1 75.1 70.6 70.6 85.4 85.4

Bu./A. Bu./A. 148.0 148.0 149.1 152.8 149.1 152.8

Production 11,114 10,535 13,054Production 11,114 10,535 13,054

ImportsImports 9 9 10 10 15 15

Beginning Carryover 2,114Beginning Carryover 2,114 1,967 1,967 1,1371,137


Utilization:Utilization:

Feed and ResidualFeed and Residual 6,141 6,141 5,750 5,750 5,7505,750

Food, seed, industrial 2,981Food, seed, industrial 2,981 3,525 4,790 3,525 4,790 Ethanol for fuelEthanol for fuel 1,603 1,603 (14%) (14%) 2,150 2,150 (20%) (20%) 3,400 3,400 (26%)(26%)

ExportsExports 2,147 2,100 2,147 2,100 2,150 2,150

Total UtilizationTotal Utilization 11,270 11,270 11,375 12,690 11,375 12,690

Ending CarryoverEnding Carryover 1,967 1,967 (17%) (17%) 1,137 1,137 (10%)(10%) 1,516 1,516 (12%)(12%)

U.S. Farm PriceU.S. Farm Price $2.00 $3.00 $2.80-3.40 $2.00 $3.00 $2.80-3.40

U.S. Corn Planted Acreage

60

65

70

75

80

85

90

95

100

40 45 50 55 60 65 70 75 80 85 90 95 00 05

Harvest Year

Mill

ion

Acre

s

.

KSU Dept. of Ag Econwww.agmanager.infoSource: USDA Acreage Report: 6.29.07

U.S. Corn Yield

607080

90100110120130140

150160170

70 75 80 85 90 95 00 05Harvest Year

Corn

Yie

ld

(Bu.

/Acr

e)

Actual Yield

Trend Yield

Source: USDA & K-State Ag. Econ.WASDE Report: 8.10.07

2004 Yield = 160 bu./ac2005 Yield= 148 bu./ac2006 Yield= 149.1 bu./ac2007 Trend Yield = 154 bu./ac.USDA 2007 Proj. = 155.8 bu./ac.


Total U.S. Corn Production

4

5

6

7

8

9

10

11

12

13

14

73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07

Harvest Year

Prod

uctio

n (B

illio

n Bu

.)

.

Source: USDA WASDE Report: 8.10.07 & K-State Ag. Econ.


Assumes national average yield of 155.8 bu./A.

Corn Used for Ethanol

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

02 03 04 05 06 07

Harvest Year

Billi

on B

ushe

ls



U.S. Total Corn Usage

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

13.0

14.0

73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07Harvest Year

Billi

on B

u.

.

Domestic Corn Usage

Trendline



Corn Usage Estimates Corn Usage Estimates (Millions of Bushels)(Millions of Bushels)

USDA/WASDE USDA/WASDEUSDA/WASDE USDA/WASDE 2006/072006/07 2007/08 est. 2007/08 est.

Feed and ResidualFeed and Residual 5,7505,750 5,700 5,7001 1 (-1%)(-1%) Food, Seed, and Industrial Food, Seed, and Industrial 1,3751,375 1,390 1,3902 2 (+1%)(+1%)

Ethanol for FuelEthanol for Fuel 2,1502,150 3,400 3,400 (+58%)(+58%) Net ExportsNet Exports 2,1002,100 2,000 2,000 (-5%)(-5%)

Ending StocksEnding Stocks 1,1371,137 1,5021,502Total UsageTotal Usage 12,512 12,512 13,992 13,992 (+12%)(+12%)

1 1 Assumes DDGS retain 30% of the feed value of corn and are included in the feed and residual Assumes DDGS retain 30% of the feed value of corn and are included in the feed and residual category by the USDA. category by the USDA.

2 2 Industrial, food, and seed less ethanol. Industrial, food, and seed less ethanol.

U.S. Corn Exports .

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07

Harvest Year

Expo

rts

(Bi

llion

Bu.

)

.

Source: USDA WASDE Report: 8.10.07

2007 Estimate


World Corn Production and ConsumptionWorld Corn Production and Consumption

200

250

300

350

400

450

500

550

600

650

700

750

1979

/198

0

1981

/198

2

1983

/198

4

1985

/198

6

1987

/198

8

1989

/199

0

1991

/199

2

1993

/199

4

1995

/199

6

1997

/199

8

1999

/200

0

2001

/200

2

2003

/200

4

2005

/200

6

2007

/200

8

Production Consumption

Global production Global production up 10% from up 10% from 2006/07. Demand 2006/07. Demand up 6%.up 6%.

Production will be Production will be 4.5 MMT (176 mil. 4.5 MMT (176 mil. Bu.) greater than Bu.) greater than consumption.consumption.

Ending stocks Ending stocks forecast to increase forecast to increase slightly from last slightly from last year to 14 % of year to 14 % of usage.usage.

Million MT

Share of World Corn Exports, Share of World Corn Exports, 2007/08, USDA2007/08, USDA

U.S.

Argentina

Brazil

China

Ukraine

S. Africa

Land in CropsLand in Crops (Millions of acres)(Millions of acres) 55 yr. Ave.yr. Ave. 07/08USDA07/08USDA Proj. 08/09Proj. 08/09

CornCorn 79.6 92.9 79.6 92.9 88.2 88.2 (-5%)(-5%) SoybeansSoybeans 74.2 64.1 74.2 64.1 68.9 68.9 (+7%)(+7%)

HayHay 62.4 61.8 62.4 61.8 61.8 61.8 (--)(--)

WheatWheat 59.5 60.5 62.6 59.5 60.5 62.6 (+2%)(+2%)

CottonCotton 14.1 11.1 10.0 14.1 11.1 10.0 (-11%)(-11%)

Grain Sorghum 8.1 7.8 7.4 Grain Sorghum 8.1 7.8 7.4 (-5%)(-5%)

Principle Crops 322.0 320.1 321.1Principle Crops 322.0 320.1 321.1CRPCRP 35.9 34.9 35.9 34.9 (-3%)(-3%)

Total crop land in the United States – 441.6 million acresTotal crop land in the United States – 441.6 million acres

Crop Acres Coming Out of CRP, Crop Acres Coming Out of CRP, 2007–2017, Millions of Acres2007–2017, Millions of Acres

Source: USDA, FSASource: USDA, FSA

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

Out of CRPMil. A.

Land in CRP, Leading States, 2007Land in CRP, Leading States, 2007Millions of AcresMillions of Acres

Source: USDA, FSASource: USDA, FSA

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

TX MT ND KS CO IA MN MO SD WA NE IL

Land In CRP

Grain Marketing ConsiderationsGrain Marketing Considerations Wheat – Global shortage of quality milling Wheat – Global shortage of quality milling

wheat, Australian production, and acres planted wheat, Australian production, and acres planted N. Hemisphere.N. Hemisphere.

Corn/G.S. – Strong demand from domestic Corn/G.S. – Strong demand from domestic livestock and overseas buyers, ethanol livestock and overseas buyers, ethanol demand, and bid for acres.demand, and bid for acres.

Soybeans – national average yield, hectares in Soybeans – national average yield, hectares in Brazil and acres in the U.S., growing demand Brazil and acres in the U.S., growing demand for SBO for biodiesel.for SBO for biodiesel.

Factors to Watch:Factors to Watch: Global S/D balancesGlobal S/D balances Battle for Acres Battle for Acres Southern Hemisphere CropsSouthern Hemisphere Crops Ethanol PriceEthanol Price

Documents

GRAIN OUTLOOK Agricultural Lenders Conference 2007