Wheat

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• Wheat!

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2007 Colorado Wheat Crop(estimates)

• 2.47 million planted acres -- up 300,000
• 2.27 million harvested acres
• 91 of planted acres (strong).
• Average yield of 39 bu/ac up 18 bu/ac from
  06.
• Avg. Colorado Prices
• September 2006 4.28 per bu.
• August 2007 5.56 per bu.
• September 2007 6.75 per bu.
• October 2007 8.02 per bu.
• Large CO production, but significant sales
  exports
• Some difficulty in moving wheat into the
  commodity pipeline.

Source Colorado Ag Statistics, 2007
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Futures Prices
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2007-08 Wheat Crop

• September 2007 Futures Price Settle -- 8.40/bu
• More than 1 above previous record (1996)!
• US Ending Stocks
• 307 million bushels
• Lowest since 1948/49
• Stocks to Use only 13
• Some weakness ahead December 07 futures lt July
  08
• Downward trend in nearby futures.
• Global Trade
• Global stocks lowest since 1975-76
• US exports very blistering!
• Australian drought reducing competition
• High prices shift wheat from domestic use to
  exports
• Exports three times faster than last year.

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2008-09 Wheat Crop

• Colorado on November 1st, 2007
• 100 Planted, 93 emergence in Colorado
• 65 rates good to excellent (similar in Great
  Plains)
• US Wheat Crop
• High prices may attract additional 3 million
  acres.
• Must compete with corn and soybeans.
• Global Wheat Crop
• Return to normal conditions implies a supply
  response.
• Weaker price outlook for next years crop.
• Upside potential if significant weather event in
• North American winter/spring.

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Wheat Prices vs. Currency Rates
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US Wheat Balance Sheet

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Estimated Production Costs and Returns Hard Red
Winter Wheat (Per Acre)

• Gross Receipts
• 25 bushel yield
• 5.10/ bushel average farm price 127.50
• Crop Insurance Indemnity 0.00
• Total Receipts 127.50
• Direct Costs
• Pre-Harvest 88.84
• Harvest 12.72
• Property and Ownership Costs 44.83
• Returns to Land, Management Risk (18.89)
• Source Colorado State University Department of
  Agricultural and Resource Economics
• 2006 Dryland Winter Wheat (Reduced Tillage)
  Enterprise Budget in Northeast Colorado

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Wheat Outlook

• Record prices will attract acreage back to wheat.
• World production problems hard to fix.
• Current winter wheat conditions are poor
  especially in KS and OK.
• Fundamentals support 5.00/bu.
• Weak basis from transportation problems
• in eastern CO.

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Wheat Outlook

• U.S. is one place in world with a good wheat crop
  
• Colorado is one place in U.S. with good wheat
  crop.
• Record U.S. wheat prices do not show up in world
  price because of very weak dollar.

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• Thank You!