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[email protected]. 2014-15 Market Perspective or. What do we do now Ollie??. Last December Every Headline Was Bearish!. New farm crisis? Iowa farmers expected to lose money over next four years –Des Moines Register - PowerPoint PPT Presentation
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2014-15 Market Perspective
or
What do we do now Ollie??
Last December Every Headline Was Bearish!
• New farm crisis? Iowa farmers expected to lose money over next four years –Des Moines Register
• Iowa corn and soybean growers can expect to see a $1.4 billion hit to farm income this year alone
• Record Wheat Harvest Curbs Costs for Domino’s Pizza: Commodities – Bloomberg
• Canola futures in Winnipeg declined sharply by Can-$15 during the past two trading days, despite the strength in soybeans – Oil World
• Canadian 13/14 canola ending stocks to set record level• Minn-Dak CEO says growers will likely lose money in 2014 –
Fargo Forum
One Bullish Headline!
The rising standard of living and the shift to more consumer-oriented economies in the emerging markets result in a reversal of the decline in agricultural commodity prices. Corn goes to $5.25 a bushel, wheat to $7.50 and soybeans to $16.00.Byron R. Wien, Vice Chairman, Blackstone Advisory Partners
Things to Consider
• World consumption of grains and oilseeds increasing annually regardless of prices, economies, world turmoil
• World inventories will increase in 2013-14 but will still be historically small – except oilseeds
• There will again be price volatility• It is now about weather & yields
Total World Grains
Will get smaller again on April 9th
Record world corn consumptiondespite high prices
Expected to continue to increaseProhibited GMO variety??
Possible 2014/15 Corn OutlookU.S. Corn Supply/Demand (million bushels)
USDA May My 2014/15 Guess
Planted Acres 91.7 90.2Harvested Acres 84.3 83Yield 165.3* 162Production 13,935 13,446Carry In 1,146 1,146Supply 15,111 14,622Total Demand 13,385 13,400Ending Supplies 1,726 1,222
December Corn Futures
Tightest ever w/ record imports!
Record large world supplies!
World consumes what it produces!
China’s import growth continues unabated despite talk of slowing economy, poor crush margins, etc., etc.
Total World Soybeans
Possible 2014/15 Soybean Outlook
U.S. Corn Supply/Demand (million bushels) USDA May My 2014/15
GuessPlanted Acres 81.5 83Harvested Acres 80.5 82Yield 45.2* 44Production 3,635 3,608Carry In 130 130Imports 15 (90) 15Supply 3,780 3,753Total Demand 3,450 3,450Ending Supplies 330 303
November Soybeans
Mpls December Wheat
Stats Canada Impact
Chicago December Wheat
Kansas City December Wheat
Possible 2014/15 Wheat OutlookU.S. Wheat Supply/Demand (million bushels)
USDA May My 2014/15
Planted Acres 55.8 55Harvested Acres 45.9 45Yield 42.7 43Production 1,963 1,935Carry In 583 583Imports 160 160?Supply 2,706 2,678Total Demand 2,166 (-285) 2,200Ending Supplies 558 478
U.S. Wheat Issues• Hard red winter wheat - very tight and maybe
quality issues (light test weight, high protein, sprout?)
• Soft red winter wheat – good crop but no demand?
• Hard red spring wheat – Canada’s 2013 hangover?
World Wheat Issues
• EU has been and will be aggressive soft wheat seller drawing stocks down
• Russia/Ukraine will sell first tonnage “cheap”, balance will depend on crop size
• Southern Hemisphere wheat crop ?? El Nino??
• World demand still growing, but competing with cheaper corn for feed consumption
Why Has Demand Been So Strong?
Global Policy Analysis Division Office of Global Analysis
“Middle Class” Outside the U.S. Expected to Double by 2022 – To Nearly 1 Billion Households
0
200
400
600
800
1000
Foreign households w/real PPP incomes greater than $20,000 a year
Mill
ions
of H
ouse
hold
s
Developing countries
Developed countries (ex US)
Source: Global Insight’s Global Consumer Markets data as analyzed by OGA
Global Policy Analysis Division Office of Global Analysis
Developing Countries With Fastest Growing Middle Class24% of households in these countries are middle class. By 2022, this could increase to 51%
South Korea
Egypt
Thailand
Turkey
Indonesia
Mexico
Brazil
Russia
India
China
0 25 50 75 100 125 150 175 200
2
3
3
4
4
6
13
18
56
122
Households with real PPP incomes greater than $20,000 (millions)
2011 Proj. gains by 2021
Source: Global Insight’s Global Consumer Markets data as analyzed by OGA
Meat increase in developing countries is 36% vs. 7% in developed
Change in Meat Consumption (2011 vs. 2001)
61%
40%
7%
39%
Data Source: USDA - PS&D
6%
48%78%
43%
30%
12%
19%
-1%
Meat Consumption Growth Focused in Developing Nations
Things to Consider• U.S. old crop soybean supplies will stay very
tight• Corn supplies not as burdensome as many had
predicted – strong demand at lower prices• U.S. Wheat is very tight but Canada still has to
find a home for 2013 crop • Big World Crops in 2014 Keeps Markets Bearish• The world is still a production problem away
from sharply higher prices (John Deere CEO)
The next bearish hurdles?• USDA June 30 Reports– Acreage revisions– How much less corn and more soybeans?
• Quarterly stocks– The magical 300 to 400 million bushels of corn?– Soybean supplies?– Wheat feed usage?
• Weather & yields?