Oklahoma State University

1
Corn Wheat Situation and Outlook
Kim B. Anderson
Oklahoma State University
2
Policy comes and policy goes but weather
determines prices. Luther Tweeten
3
Corn production area
4
Soybean production area
5
Cotton production area
6
HRW wheat production area
7
SRW wheat production area
8
Corn
9
Corn used for Ethanol(billion bushels)
09/10 4.3 bb
08/09 4.0 bb
07/08 3.2 bb
06/07 2.1 bb
10
U.S. Corn Situation
Planted Acres
Harvested Acres
Yield
Production
Year
(Billion Bushels)
(Million Bushels)
Percentage harvested in parenthesizes
11
U.S. Corn Situation
(Billion Bushels)
12
World Corn Situation
(Billion Bushels)
13
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
14
CBT Corn Monthly Nearest
Weather
Ethanol
Before ethanol
15
CBT Soybeans Monthly Nearest
Ethanol bio-diesel
Before ethanol bio-diesel
Weather
16
U.S. Corn Situation
CBT Nearby
Ending Stocks
USDACash Est.
Month
Price Range
Open/Close
06/07
07/08
(Cents per Bushel)
(Billion Bushels)
( 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
17

• 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.

18
Wheat
19
U.S. Wheat Situation
Planted Acres
Harvested Acres
Yield
Production
Year
(Billion Bushels)
(Million Bushels)
2000
62.5
53.1
42.0
2.23
(85.0)
2001
59.4
48.5
40.2
1.95
(81.6)
2002
60.3
45.8
35.0
1.61
(76.0)
2003
62.1
53.1
44.2
2.34
(85.5)
2004
59.7
50.0
43.2
2.26
(83.8)
2005
57.2
50.1
42.0
2.10
(87.6)
2006
57.3
46.8
38.7
1.81
(81.7)
2007
60.4
51.0
40.5
2.07
(84.4)
7-YR
Avg.
59.9
40.7
2.00
49.8
(83.2)
Percentage harvested in parenthesizes
20
U.S. Wheat Situation
(Billion Bushels)
13.6
21
World Wheat Situation
(Billion Bushels)
17.8
22
KCBT Monthly Nearest
Ethanol
Weather
Before ethanol
23
KCBT March 08
24
KCBT July 08
25
U.S. Wheat Situation
KCBT Nearby
Ending Stocks
USDACash Est.
Month
Price Range
Open/Close
06/07
07/08
(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
26
U.S. Wheat Supply and Use
Kims 08/09
USDA 07/08
million bushels
307 2,350 2,657 1,050 2,250 407 5.20
456 2,067 2,608 1,150 2,301 307 6.10

• Beginning stocks
• Production
• Supply, Total
• Exports
• Use, Total
• Ending Stocks
• Avg. farm price

27
June 2008 wheat delivery prices

• KCBT July wheat contract price 7.98
• Elevator forward contract basis -0.53
• Forward contract offer 7.45
• Buy KCBT July 800 call -0.70
• FC/Call minimum price 6.75
• Buy KCBT July 800 Put (800 - 70) 7.30
• Expected June 2008 basis -0.45
• Expected minimum price 6.85

28
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.