Transcript Sanders Policy 12/5/2007 PowerPoint

Corn &Wheat
Situation and Outlook
Kim B. Anderson
Oklahoma State University
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Policy comes and policy goes
but weather determines prices.
Luther Tweeten
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Corn production area
3
Soybean production area
4
Cotton production area
5
HRW wheat production area
6
SRW wheat production area
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Corn
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Corn used for Ethanol
(billion bushels)
5.0
’09/10 4.3 bb
4.5
’08/09 4.0 bb
4.0
3.5
’07/08 3.2 bb
3.0
2.5
’06/07 2.1 bb
2.0
1.5
1.0
0.5
0.0
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U.S. Corn Situation
Year
Planted
Acres
Harvested
Acres
Yield
(Million Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
79.6
75.7
78.9
78.6
80.9
81.8
78.3
93.6
79.1
72.4
68.8
69.3
70.9
73.6
75.1
70.7
86.1
(91.0)
(90.9)
(87.8)
(90.2)
(91.0)
(91.8)
(90.3)
(92.0)
71.5
Percentage harvested in parenthesizes
Production
(Billion Bushels)
136.9
138.2
129.3
142.2
160.4
148.0
149.1
154.7
10.0
9.5
9.0
10.1
11.8
11.1
10.5
13.2
143.4
10.3
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U.S. Corn Situation
Year
Ending
Production Consumption Stocks
U. S.
Price
(Billion Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
10.0
9.5
9.0
10.1
11.8
11.1
10.5
13.2
9.6
9.8
9.5
10.2
10.6
11.1
11.4
12.6
2.1
1.6
1.0
1.0
2.2
2.0
1.3
1.9
$1.82
$1.85
$1.97
$2.30
$2.42
$2.06
$3.00
$3.50
10.3
10.3
1.6
$2.20
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World Corn Situation
Year
Production
Consumption
Ending
Stocks
(Billion Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
23.2
23.6
23.7
24.3
27.8
27.3
27.6
30.3
23.8
24.5
24.7
25.5
26.9
27.3
28.5
30.1
6.0
5.8
4.9
4.1
5.1
4.8
4.1
3.9
25.4
25.9
4.8
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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
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CBT Corn Monthly Nearest
Weather
Ethanol
Before ethanol
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CBT Soybeans Monthly Nearest
Before ethanol
Weather
& bio-diesel
Ethanol
& bio-diesel
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U.S. Corn Situation
Month
Ending Stocks
06/07
07/08
CBT Nearby
USDA
Open/Close Price Range Cash Est.
(Billion Bushels)
(Cents per Bushel)
(± 30)
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
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Key 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  $3.90 avg. annual price.
2008 planted acres 88 mil., production of 12.3 bb,
ending stocks 1.0 bb & $3.70 avg. annual price.
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Wheat
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U.S. Wheat Situation
Year
Planted
Acres
Harvested
Acres
Yield
(Million Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
62.5
59.4
60.3
62.1
59.7
57.2
57.3
60.4
59.9
53.1
48.5
45.8
53.1
50.0
50.1
46.8
51.0
Production
(Billion Bushels)
(84.4)
42.0
40.2
35.0
44.2
43.2
42.0
38.7
40.5
2.23
1.95
1.61
2.34
2.26
2.10
1.81
2.07
49.8 (83.2)
40.7
2.00
(85.0)
(81.6)
(76.0)
(85.5)
(83.8)
(87.6)
(81.7)
Percentage harvested in parenthesizes
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U.S. Wheat Situation
Year
Ending
Production Consumption Stocks
U. S.
Price
(Billion Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
2.23
1.50
1.61
2.34
2.16
2.11
1.80
2.07
2.39
2.15
1.99
2.35
2.24
2.16
2.05
2.30
.873
.777
.492
.546
.540
.571
.456
.312
$2.62
$2.78
$3.56
$3.40
$3.40
$3.42
$4.26
$6.10
1.96
2.19
.608
$3.35
13.6%
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World Wheat Situation
Year
Production
Consumption
Ending
Stocks
(Billion Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
21.4
21.3
20.8
20.4
23.0
22.9
21.8
22.2
21.5
21.5
22.2
21.6
22.3
23.1
22.7
22.7
7.4
7.4
6.2
4.8
5.5
5.4
4.6
4.0
21.7
22.1
5.9
17.8%
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KCBT Monthly Nearest
Ethanol
Weather
Before ethanol
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KCBT March ‘08
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KCBT July “08
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U.S. Wheat Situation
Month
Ending Stocks
06/07
07/08
KCBT Nearby
USDA
Open/Close Price Range Cash Est.
(Billion Bushels)
(Cents per Bushel)
(± 30)
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
831-905 756-925
610
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U.S. Wheat Supply and Use
USDA
07/08
Kim’s
08/09
million bushels
Beginning stocks
Production
Supply, Total
Exports
Use, Total
Ending Stocks
Avg. farm price
456
2,067
2,608
1,150
2,301
307
$6.10
307
2,350
2,657
1,050
2,250
407
$5.20
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June 2008 wheat delivery prices
KCBT July wheat contract price
Elevator forward contract basis
Forward contract offer
$7.98
-$0.53
$7.45
Buy KCBT July 800 call
FC/Call minimum price
-$0.70
$6.75
Buy KCBT July 800 Put (800¢ - 70¢) $7.30
Expected June 2008 basis
-$0.45
Expected minimum price
$6.85
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Key Points
Weather is the major price factor.
Corn continues to set the floor for wheat prices.
 U.S. and world wheat stocks below average.
 Wheat planted acres increase ~5% (63 ma).
 Wheat stocks increase in 2008/09 – below avg.
 2008/09 wheat price range $3.75 to $8.50.
 June 2008 wheat price ~ $6.00 $4.50 to $8.50.
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