Transcript WHEAT OUTLOOK Midwest Outlook Conference 2005

GRAIN OUTLOOK
Mike Woolverton
Kansas State University
[email protected]
WHEAT
PRODUCTION PROJECTIONS,
U.S., 2006/07
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All Wheat – 1.812 bil. Bu. – down 14%
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Hard Winter – 682 mil. Bu. – down 27%
Hard Spring – 432 mil. Bu. – down 7%
Soft Red – 390 mil. Bu. – up 26%
White – 254 mil. Bu. – down 15%
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Durum – 53 mil. Bu. - down 48%
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PRODUCTION PROJECTIONS,
MAJOR WHEAT EXPORTERS,
2006/07 (MMT)
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EU-25
United States
Canada
Australia
Argentina
2006/07
117.24 (-4%)
49.32 (-14%)
26.3 (+1%)
10.5 (-57%)
13.25 (+6%)
2005/06
122.59
57.28
25.98
24.5
12.5
Total World Prod.
586.81
621.86
(-6%)
Wheat Balance Sheet
Plant A. (mil.)
Harvest A. (mil.)
Bu./A.
Production
Imports
Carryover
Total Supply
Utilization:
Feed and Residual
Food
Seed
Exports
Total Utilization
Carryover
U.S. Farm Price
04-05
05-06
59.7
50.0
43.2
2,158
71
546
2,775
57.2
50.1
42.0
2,105
82
540
2,727
201
895
79
1,060
2,235
540
$3.40
200
915
78
1,009
2,155
571
$3.42
(24%)
06-07
57.3
46.8
38.7
1,812
105
571
2,488
145
920
80
925
2,070
(26%)
418 (20%)
$4.15-$4.55
Current Market Influences - Wheat
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Low Carryover
Australian Drought (-57%)
Winter Wheat Plantings
GRAIN SORGHUM
Sorghum Estimates, USDA,
Nov. 2006
U.S.
Kansas
Yield
54.2
55.0
(75.0)
Production
288.5 mil.
132.0 mil.
(195.0 mil.)
Sorghum Balance Sheet
04-05
05-06
Plant A. (mil.)
Harvest A. (mil.)
Bu./A.
Production
Imports
Beginning Carryover
Total Supply
7.5
6.5
69.9
454
0
34
487
6.5
5.7
68.7
394
0
57
451
Utilization:
Feed and Residual
Food, seed, industrial
Exports
Total Utilization
Ending Carryover
U.S. Farm Price
191
55
184
430
57 (13%)
$1.79
141
50
195
386
65 (17%)
$1.86
06-07
6.3
5.3
54.2
288
0
65
354
95
55
150
315
39(12%)
$2.80-$3.20
Current Market Influences –
Grain Sorghum
Demand from ethanol
producers
 Demand from livestock
feeders
 Export demand – Mexico and
Spain
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CORN
WORLD COARSE GRAIN PRODUCTION 2002 TO 2007 est.
1050
1000
MMT
950
900
850
800
2002/03
2003/04
2004/05
YEAR
2005/06
2006/07 est
WORLD COARSE GRAIN USAGE, 2002 TO 2007 est.
1020
1000
980
MMT
960
940
920
900
880
860
840
2002/03
2003/04
2004/05
YEAR
2005/06
2006/07 est
WORLD COARSE GRAIN
STOCKS TO USAGE RATIO
100
90
80
70
60
50
40
30
20
10
0
2002-03 2003-04 2004-05 2005-06 2006-07
World Corn Use Outpaces Production
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Consumption in
2006/07
forecast to set
new record.
750
Million MT
700
650
600
550
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Production
down slightly
from 2005/06.
500
450
400
350
300
250
Stocks forecast
to reach 23-year
lows.
200
19
79
19 /198
81 0
19 /198
83 2
19 /198
85 4
19 /198
87 6
19 /198
89 8
19 /199
91 0
19 /199
93 2
19 /199
95 4
19 /199
97 6
19 /199
99 8
/
20 200
01 0
20 /200
03 2
20 /200
05 4
/2
00
6
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Production
Consumption
Corn Estimates, USDA,
Nov. 2006
U.S.
Kansas
Yield
151.2
123.0
(135.0)
Bushels
10.7 bil.
387 mil.
(465.8 mil.)
Corn Balance Sheet
04-05
05-06
06-07
Plant A. (mil.)
Harvest A. (mil.)
Bu./A.
Production
Imports
Beginning Carryover
Total Supply
80.9
73.6
160.4
11,807
11
958
12,776
81.8
75.1
147.9
11,112
9
2,114
13,235
78.6
71.0
151.2
10,745
10
1,971
12,725
Utilization:
Feed and Residual
Food, seed, industrial
Ethanol for fuel
Exports
Total Utilization
Ending Carryover
U.S. Farm Price
6,162
2,686
1,323
1,814
10,662
2,114
$2.06
6,136
6,050
2,981
3,540
1,603 (14%)
2,150 (18%)
2,147
2,200
11,264
11,790
1,971 (17%)
935 (8%)
$2.00
$2.80-$3.20
(12%)
(20%)
Ethanol Industry at a Glance
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Number of operating ethanol plants: 108
Plants under construction or expansion: 62
Announced plants: 100+*
2005 production: 3.9 billion gallons
Current production capacity: 5.1 BGPY
Projected production capacity: 7.7 BGPY in 2007
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(RFS Program mandate 7.5 BG by 2012)
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Size: Newer plants 100 MGPY
Process: wet or dry
Daily water usage – 1.5 million gallons
Feedstock percentage:
Corn
97
Sorghum
2
Other
1
Distiller’s Grain Facts
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Each bushel of corn dry grind processed
for ethanol yields about 1/3 bushel of
distiller’s grain.
Distiller’s grain retains one-third of the
nutrient value of corn.
In N. America: 45% dairy
37% beef
13% swine
5% poultry
Current Market Influences - Corn
Demand from ethanol
producers
 Competition for acres
 Strong export demand
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SOYBEANS
Soybean Estimates, USDA,
Nov. 2006
U.S.
Kansas
Yield
43.0
31.0
Production
3.204 bil.
93 mil.
(37.0)
(105.5 mil.)
Soybean Balance Sheet
04-05
05-06
Plant A. (mil.)
Harvest A. (mil.)
Bu./A.
Production
Imports
Beginning Carryover
Total Supply
75.2
74.0
42.2
3,124
6
112
3,242
72.0
71.3
43.0
3,063
3
256
3,322
75.6
74.5
43.0
3,204
4
449
3,657
Utilization:
Crushings
Seed
Exports
Residual
Total Utilization
Ending Carryover
1,696
88
1,103
99
2,986
256 (9%)
1,739
93
947
95
2,874
449 (16%)
1,780
91
1,145
75
3,091
565 (18%)
U.S. Farm Price
$5.74
5.66
06-07
$5.40-$6.40
Current Market Influences Soybeans
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Competition for acres
Large Carryover
Brazilian plantings
Bio-diesel potential
Crop Price Relationships
12/4
Ratio
Ratio
Price if ratio is…
Corn
$3.63
10 yr. ave.
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12/4
-
Normal
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Soybeans
$6.59
2.49
1.82
$9.00
$7.26
Wheat
$5.21
1.44
1.44
$5.21
$3.63
New
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Corn Acreage Calculation
Corn Demand 07/081
13,999 mil. Bu.
Supply with DDGS credit2 -1,953
Needed corn production 12,046 mil. Bu.
Acres needed to plant3
86.2 mil. A.
(Trend line yield 147.5 bpa)
Acres planted in 06/07
Additional acres in 07/08
78.6 mil.
7.6 mil.
Assumes all uses except ethanol production remain the same as 06/07.
Includes one billion bushels of carryover stocks.
2 Assumes DDGS retain 30% of the feed value of corn and all DDGS are used
for livestock feed.
3 Assumes the percentage of acres planted to acres harvested remains at
91%. Need to harvest 78.41 million acres.
1
Land in Crops
(Millions of acres, Most recent three year average)
Corn
78.6
Soybeans
75.6
Hay
63.4
Wheat
57.3
Cotton
15.3
Grain Sorghum
6.3
Total
296.5
Total crop land in the United States – 348.7 million acres
Market Psychology
Producers – This is too good to be true;
hold current crop, sell next year’s crop
Buyers – Future uncertain; cover needs
now rather than later
Speculative Funds – Get out of oil; buy ag.
commodities…but getting nervous
Critical Months: Jan.- Feb.; April–May;
July-Aug.