Crop Market Outlook

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Crop Market Outlook

November 2008 Chad Hart Assistant
Professor/Grain Markets Specialist chart_at_iastate.e
du 515-294-9911
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U.S. Corn Supply and Use
-0.1
-13
-50
36
-0.35
4.75
4.40
Source USDA-WAOB, Nov. 2008
3
U.S. Soybean Supply and Use
-0.2
-17
-15
-0.60
10.45
9.85
Source USDA-WAOB, Nov. 2008
4
World Corn Production
Source USDA-WAOB, Nov. 2008
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World Soybean Production
Source USDA-WAOB, Nov. 2008
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Crop Basis Patterns
Sources CARD, Iowa State IA Dept. of Ag.
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Livestock Adjustments
Sows farrowing Sept-Nov 2008 3.01 million,
down 5 from last year Dec-Feb 2009 2.98
million, down 3 from last year Broiler-type
eggs set 195 million, down 8 from last
year Broiler chicks placed 168 million, down 4
from last year Feedlot placements 2.06 million,
down 3 from last year (2nd lowest since 1996)
Sources Various USDA-NASS reports
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Ethanol Margins
Source ISU, CARD
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Biodiesel Margins
Source ISU, CARD
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Renewable Fuels Standard (RFS)
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U.S. Blended Motor Gasoline Consumption
Source Energy Information Administration
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Outside Influences (Jan. 2007 1)
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Outside Influences (Sept. 2008 1)
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Corn Soybean Area
Growth rate of 1.55 million acres per year
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CRP Expiring Contracts
Source USDA-FSA
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Input Costs
Source USDA, Agricultural Prices, Oct. 2008
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The Rise and Fall of Fertilizer Prices
Source http//www.fertilizerworks.com/html/market
/ TheMarket.pdf
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Urea Prices
Source http//www.fertilizerworks.com/html/market
/ TheMarket.pdf
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Iowa Corn Prices vs. Costs
Source USDA-NASS and Duffy and Smith,
http//www.extension.iastate.edu/agdm/crops/pdf/a
1-21.pdf
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Iowa Soybean Prices vs. Costs
Source USDA-NASS and Duffy and Smith,
http//www.extension.iastate.edu/agdm/crops/pdf/a
1-21.pdf
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Crop Costs for Central Illinois
Source Schnitkey, July 2008
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Rough Estimates for 2009 Iowa Corn
December 2009 Corn Futures 4.41 (11/7/08)
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Rough Estimates for 2009 Iowa Soybeans
November 2009 Soybean Futures 9.47 (11/7/08)
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Crop Exports
Source USDA, PSD
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U.S. Stocks-to-Use Ratios
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World Stocks-to-Use Ratios
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Crop Price Variability
Price distributions for corn based on October
prices for the following July futures
October 2005 for July 2006 2.26 per bushel,
20 volatility October 2008 for July 2009 4.50
per bushel, 44 volatility
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Risk Management

• Crop insurance
• Yield insurance APH
• Revenue insurance CRC, RA, IP
• Area insurance GRP, GRIP
• Government programs
• CCP or ACRE
• Marketing loans
• SURE
• Futures and options

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Thoughts for 2008

• General economic conditions
• A lot of recent market trade has been tied to
  reaction to the financial crisis and the worlds
  response
• Economic slowdown raises concern about export and
  energy demand
• Energy demand
• Higher energy prices did constrain demand
• Will it recover?
• Most important ag. statistic Crude oil price
  or Dow Jones Index
• Current futures are indicating 2008
  season-average prices of 3.80-4.20 for corn and
  9.00-9.50 for soybeans

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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 around 4.50 for corn and 9.50 for
  soybeans

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Thank you for your time!Any
questions?http//www.econ.iastate.edu/faculty/ha
rt/