1
Oklahoma State UniversityOklahoma State University
Corn &WheatSituation and Outlook
Corn &WheatSituation and Outlook
Kim B. AndersonKim B. Anderson
2
Kim’s Web siteKim’s Web site
agecon.okstate.edu/anderson
“Other articles”
agecon.okstate.edu/anderson
“Other articles”
3
Policy comes and policy goes but weather determines prices.Luther Tweeten
Policy comes and policy goes but weather determines prices.Luther Tweeten
4
Corn production areaCorn production area
5
Soybean production areaSoybean production area
6
Cotton production areaCotton production area
7
HRW wheat production areaHRW wheat production area
8
SRW wheat production areaSRW wheat production area
9
CornCorn
10
CornCorn usedused forfor EthanolEthanol(billion bushels)billion bushels)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
’07/08 3.2 bb
’08/09 4.0 bb’09/10 4.3 bb
’06/07 2.1 bb
11
U.S. Corn SituationU.S. Corn Situation
(Billion Bushels)(Million Bushels)
PlantedAcres
Harvested Acres
Yield ProductionYear
2000 79.6 72.4 (91.0) 136.9 10.02001 75.7 68.8 (90.9) 138.2 9.52002 78.9 69.3 (87.8) 129.3 9.02003 78.6 70.9 (90.2) 142.2 10.12004 80.9 73.6 (91.0) 160.4 11.82005 81.8 75.1 (91.8) 148.0 11.12006 78.3 70.7 (90.3) 149.1 10.52007 93.6 86.1 (92.0) 154.7 13.27-YR Avg. 79.1 143.4 10.371.5Percentage harvested in parenthesizes
12
U.S. Corn SituationU.S. Corn Situation
Production ConsumptionEndingStocks
U. S.PriceYear
(Billion Bushels)
2000 10.0 9.6 2.1 $1.822001 9.5 9.8 1.6 $1.852002 9.0 9.5 1.0 $1.972003 10.1 10.2 1.0 $2.302004 11.8 10.6 2.2 $2.422005 11.1 11.1 2.0 $2.062006 10.5 11.4 1.3 $3.002007 13.2 12.6 1.9 $3.50
7-YRAvg. 10.3 10.3 1.6 $2.20
13
World Corn SituationWorld Corn Situation
Production ConsumptionEndingStocksYear
(Billion Bushels)
2000 23.2 23.8 6.02001 23.6 24.5 5.82002 23.7 24.7 4.92003 24.3 25.5 4.12004 27.8 26.9 5.12005 27.3 27.3 4.82006 27.6 28.5 4.12007 30.3 30.1 3.9
7-YRAvg. 25.4 25.9 4.8
14
2008 Corn Production 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
15
CBT Corn Monthly NearestCBT Corn Monthly Nearest
Before ethanol
Weather Ethanol
16
U.S. Corn SituationU.S. Corn Situation
(Billion Bushels)
06/07Month 07/08Ending Stocks
(Cents per Bushel)(± 30)
USDACash Est.Price RangeOpen/Close
CBT Nearby
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 pointsKey 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 $3.50 avg. annual price.
2008 planted acres 88 mil., production of 12.3 bb,
ending stocks 1.0 bb & $3.70 avg. annual price.
18
WheatWheat
19
U.S. Wheat SituationU.S. Wheat Situation
(Billion Bushels)(Million Bushels)
PlantedAcres
Harvested Acres
Yield ProductionYear
2000 62.5 53.1 (85.0) 42.0 2.232001 59.4 48.5 (81.6) 40.2 1.95 2002 60.3 45.8 (76.0) 35.0 1.612003 62.1 53.1 (85.5) 44.2 2.342004 59.7 50.0 (83.8) 43.2 2.262005 57.2 50.1 (87.6) 42.0 2.102006 57.3 46.8 (81.7) 38.7 1.812007 60.4 51.0 (84.4) 40.5 2.077-YR Avg. 59.9 40.7 2.0049.8 (83.2)
Percentage harvested in parenthesizes
20
Production ConsumptionEndingStocks
U. S.PriceYear
(Billion Bushels)
U.S. Wheat SituationU.S. Wheat Situation
2000 2.23 2.39 .873 $2.622001 1.50 2.15 .777 $2.782002 1.61 1.99 .492 $3.562003 2.34 2.35 .546 $3.402004 2.16 2.24 .540 $3.402005 2.11 2.16 .571 $3.422006 1.80 2.05 .456 $4.262007 2.07 2.30 .312 $6.10
7-YR Avg. 1.96 2.19 .608 $3.35
21
World Wheat SituationWorld Wheat Situation
(Billion Bushels)
Production ConsumptionEndingStocksYear
2000 21.4 21.5 7.42001 21.3 21.5 7.42002 20.8 22.2 6.22003 20.4 21.6 4.82004 23.0 22.3 5.52005 22.9 23.1 5.42006 21.8 22.7 4.62007 22.1 22.6 4.0
7-YRAvg. 21.7 22.1 5.9
22
KCBT Monthly KCBT Monthly NearestNearest
Before ethanol
WeatherEthanol
23
KCBT March KCBT March ‘08‘08
24
KCBT July KCBT July “08“08
25
U.S. Wheat SituationU.S. Wheat Situation
(Billion Bushels)
06/07USDA
Cash Est.Month 07/08Ending Stocks
(Cents per Bushel)(± 30)
Price RangeOpen/Close KCBT Nearby
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 312 831-777 770-835 610
26
U.S. Wheat Supply and U.S. Wheat Supply and UseUse
Beginning stocksProduction Supply, TotalExports
Use, TotalEnding StocksAvg. farm price
307
2,350
2,657
1,050
2,250
407
$5.20
million bushels
Kim’s08/09
456
2,067
2,608
1,150
2,301
307
$6.10
USDA07/08
27
KCBT July wheat contract price $6.92Elevator forward contract basis -$0.53Forward contract offer $6.39
Buy KCBT July 690 call -$0.70FC/Call minimum price $5.69
Buy KCBT July 690 Put (690¢ - 70¢) $6.20Expected June 2008 basis -$0.45Expected minimum price $5.75
June 2008 wheat delivery pricesJune 2008 wheat delivery prices
28
Key PointsKey Points
Weather is the major price factor. Weather is the major price factor.
Corn continues to set the floor for wheat prices. Corn continues to set the floor for wheat prices.
U.S. and world wheat stocks below average.U.S. and world wheat stocks below average.
Wheat planted acres increase ~5% (63 ma).Wheat planted acres increase ~5% (63 ma).
Wheat stocks increase in 2008/09 – below avg.Wheat stocks increase in 2008/09 – below avg.
2008/09 wheat price range $3.75 to $8.50.2008/09 wheat price range $3.75 to $8.50.
June 2008 wheat price ~ $5.80June 2008 wheat price ~ $5.80 $4.50 to $8.50. $4.50 to $8.50.
29
Kim’s Web siteKim’s Web site
agecon.okstate.edu/andersonagecon.okstate.edu/anderson
30
31
Kim’s rules for marketingKim’s rules for marketing
Keep it simpleKeep it simple
Make a planMake a plan
Write the plan downWrite the plan down
Have the discipline to follow the planHave the discipline to follow the plan
Do not—ever, ever—listen to market outlook Do not—ever, ever—listen to market outlook economists.economists.
32
SorghumSorghum
33
U.S. Sorghum SituationU.S. Sorghum Situation
(Million Bushels)
Production ConsumptionEndingStocks
U. S.PriceYear
2000 470 515 20 $1.802001 515 495 61 $1.942002 361 379 43 $2.352003 411 421 34 $2.392004 455 422 57 $1.792005 393 384 66 $1.802006 278 305 38 $3.302007 501 475 59 $3.00
7-YRAvg. 412 417 46 $2.20
34
(Million Bushels)
Foreign Sorghum SituationForeign Sorghum Situation
Production ConsumptionEndin
gStocks
Year
2000 1.65 1.91 0.112001 1.78 2.00 0.132002 1.72 1.92 0.112003 1.88 2.04 0.152004 1.81 2.03 0.112005 1.91 2.10 0.112006 1.98 2.10 0.142007 1.98 1.82 0.12
7-YRAvg. 1.82 2.02 0.12
35
(Million Bushels)
World Sorghum SituationWorld Sorghum Situation
Production ConsumptionEndin
gStocks
Year
2000 471.6 516.9 20.12001 516.8 497.0 61.12002 362.7 380.9 43.12003 412.9 423.0 34.12004 456.8 424.0 57.12005 394.9 386.1 66.12006 280.0 307.1 38.12007 503.0 477.2 59.1
7-YRAvg. 413.7 419.3 45.7
36
Key PointKey Point
Sorghum prices follow corn prices
37
CottonCotton
38
U.S. Cotton SituationU.S. Cotton Situation
Production ConsumptionEndingStocks
U. S.PriceYear
(Million Bales)
2000 17.2 15.6 6.0 49.9 ¢2001 20.3 18.7 7.5 29.8 ¢2002 17.2 19.2 5.4 44.5 ¢2003 18.3 20.3 3.5 61.8 ¢2004 23.3 19.7 7.1 42.8 ¢2005 23.9 23.9 6.1 47.7 ¢2006 21.6 18.0 9.7 47.3 ¢2007 18.5 21.3 6.4 44.9 ¢
7-YRAvg. 20.3 19.3 6.5 46.3 ¢
39
World Cotton SituationWorld Cotton Situation
Production ConsumptionEndingStocksYear
(Million Bales)
2000 88.7 92.2 42.42001 98.5 94.5 47.22002 88.3 98.5 38.12003 95.1 98.6 40.22004 120.2 108.0 50.62005 115.7 116.4 57.62006 119.3 122.7 57.92007 120.3 129.5 55.0
7-YRAvg. 103.7 104.4 47.7
41
U.S. and world cotton stocks above average.U.S. and world cotton stocks above average.
Cotton acreage planted to beans and corn.Cotton acreage planted to beans and corn.
Prices expected to average 55 cents.Prices expected to average 55 cents.
Key pointsKey points
42
43
SoybeanSoybean
44
U.S. Soybeans SituationU.S. Soybeans Situation
(Billion Bushels)(Million Bushels)
PlantedAcres
Harvested Acres
Yield ProductionYear
2000 74.3 72.4 (97.4) 38.1 2.762001 74.1 73.0 (98.5) 39.6 2.892002 74.0 72.5 (98.1) 38.0 2.762003 73.4 72.5 (98.8) 33.9 2.452004 75.2 74.0 (98.4) 42.2 3.122005 72.1 71.3 (98.9) 43.0 3.062006 75.5 74.6 (98.8) 42.7 3.192007 63.7 62.8 (98.6) 41.4 2.607-YR Avg. 72.8 143.4 10.371.5 (98.4)
Percentage harvested in parenthesizes
45
U.S. Soybean SituationU.S. Soybean Situation
(Billion Bushels)
Production ConsumptionEndingStocks
U. S.PriceYear
2000 2.8 2.8 0.25 $4.542001 2.9 2.9 0.21 $4.382002 2.8 2.8 0.18 $5.532003 2.5 2.5 0.11 $7.342004 3.1 2.9 0.36 $5.652005 3.1 2.8 0.50 $5.662006 3.2 3.1 0.58 $6.402007 2.6 3.0 0.22 $8.007-YRAvg. 2.9 2.8 0.31 $5.64
46
Production ConsumptionEndingStocksYear
Foreign Soybean SituationForeign Soybean Situation
(Billion Bushels)
2000 3.6 3.5 0.92001 3.9 3.9 1.02002 4.4 4.2 1.32003 4.4 4.5 1.32004 5.1 4.6 1.72005 5.0 5.0 1.52006 5.5 5.2 1.82007 5.5 5.6 1.67-YRAvg. 4.7 4.4 1.3
47
Production ConsumptionEndingStocksYear
World Soybean SituationWorld Soybean Situation
(Billion Bushels)
2000 6.4 6.3 1.122001 6.8 6.8 1.182002 7.2 7.0 1.502003 6.9 7.0 1.372004 8.2 7.5 2.102005 8.1 7.8 1.982006 8.7 8.3 2.372007 8.1 8.6 1.867-YRAvg. 7.5 7.2 1.66
48
CBT Soybeans Monthly CBT Soybeans Monthly NearestNearest
Before ethanol& bio-diesel Weather
Ethanol& bio-diesel
49
U.S. Soybean SituationU.S. Soybean Situation
(Million Bushels)
06/07USDA
Cash Est.Month 07/08Ending Stocks
(Cents per Bushel)(± 50)
Price RangeOpen/Close CBT Nearby
May 610 320 726-806 725-816 700
June 610 320 806-850 792-876 720
July 600 245 863-834 810-915 775
Aug 575 220 840-868 789-880 775
Sept 555 215 881-991 875-1017 785
Oct 573 215 996 -996 923-1007 835
51
Key points
U.S. soybean stocks below average.
World soybean stocks above average.
Expect Brazil to increase production.
Increased 2008 planted acres (70 ma)
Prices remain above average.
52
Key points
Ending stocks ~225 mb $9 - $10
Ending stocks ~600 mb $7