Crop%20Market%20Outlook

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Crop Market Outlook
Northeast ISU Research Farm 2008 Fall Field
Day Nashua, Iowa Sept. 4, 2008 Chad
Hart Assistant Professor/Grain Markets
Specialist chart_at_iastate.edu 515-294-9911
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Corn Supply and Use
-0.3 0.4
6.6
573
100
150
300
-0.60
6.00
5.40
Source USDA-WAOB, Aug. 2008
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U.S. Soybean Supply and Use
0.3 1.2
-1.1
-27
-16
-0.50
12.75
12.25
Source USDA-WAOB, Aug. 2008
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World Corn (million metric tons)
Source USDA-WAOB, Aug. 2008
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World Soybean (million metric tons)
Source USDA-WAOB, Aug. 2008
6
Source USDA-NASS, Aug. 2008
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Source USDA-NASS, Aug. 2008
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Crop Basis Patterns
Source CARD, Iowa State
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Renewable Fuels Standard (RFS)
Calendar Year Billion Bushels
2009 3.75
2010 4.29
2011 4.50
Crop Year Billion Bushels
2008 3.57
2009 4.11
2010 4.43
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Exchange Rate Ratios (Jan. 2007 1)
Source CME futures
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Corn Soybean Area
Growth rate of 1.5 million acres per year
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Input Costs
Source USDA, Agricultural Prices, July 2008
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Stocks-to-Use Ratios
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Thoughts for 2008

• Looking for a little rain and later than average
  frost
• Wet spring/flooding impacts will likely show up
  in yields
• Relatively good weather has moved prices lower
• But the markets are primed to move higher on
  weather concerns
• How about the dollar?
• Weaker dollar has helped hold up crop and
  livestock exports
• Most important ag. statistic Crude oil price

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Thoughts for 2009 and Beyond

• Many of the storylines from the past few years
  will continue
• Tight stocks for both corn and soybeans
• The competition for acreage
• Ethanols buildout livestocks adjustment
• Energy price general economy concerns
• Market volatility will remain high
• Link to the energy markets
• More market players with different trading
  objectives
• Given current factors, the 2009 outlook is for
  crop prices to be in the neighborhood of 2008
  prices

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Thoughts for 2009 and Beyond

• With input costs moving up, need to protect
  against downside price risk
• Forward contracting
• Futures/options
• Revenue insurance
• Know your break-even price and defend it
• The competition for acreage should lead to
  pricing opportunities pre-planting

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Thank you for your time!Any questions?