Corn and Wheat Market
Overview and Outlook
by Cory G. Walters
Southern Regional Outlook Conference
Agricultural Economics
Grain Outlook
– Key Issues
•
•
•
•
•
2008 is over
Energy Prices
Exports
Global supplies
Policy
Agricultural Economics
• November 2009 to October 2011 crude oil
futures are trading in the 65 to 75 dollar
range
Nominal Broad U.S. Dollar Index
140
120
100
80
60
25% decline since February 2002
7.6% incline since April 2008
40
20
2000
2000
2000
2001
2001
2002
2002
2002
2003
2003
2004
2004
2005
2005
2005
2006
2006
2007
2007
2007
2008
2008
2009
2009
0
Source: www.federalreserve.gov
Acres Planted in U.S. (Millions)
Crop
2007
2008
2009
% Change
2009-2008
Corn
93.5
86.0
87.0
1.16
Soybean
64.7
75.7
77.8
2.77
Wheat
60.5
63.1
59.8
-5.23
Total
218.7
224.8
224.6
-0.09
Agricultural Economics
Policy
• HR 2454 (Waxman-Markey Bill)
• Effects of carbon pricing on
– Fuel
– Fertilizer
– Grain Prices
USDA SUPPLY/DEMAND BALANCE SHEET FOR CORN
07-08 08-09est 09-10p
Millions of Acres
Acres Planted
93.6
86.0
87.0
Acres Harvested
86.5
78.6
80.1
Bu./Harvested Acre
150.7
153.9 161.9
Millions of Bushels
Beginning Stocks
1,304
1,624 1,695
Production
13,038
12,101 12,954
Total Supply
14,362
13,740 14,660
Use:
Feed and Residual
5,938
5,350 5,350
Food, seed, & industrial
4,363
4,945 5,475
Ethanol for fuel
3,026
3,675 4,200
Exports
2,436
1,850 2,200
Total Use
10,302
12,045 13,025
%D
1.2%
1.9%
5.2%
4.4%
7.0%
6.7%
0.0%
10.7%
14.3%
18.9%
8.1%
Ending Stocks
Ending Stocks, % of Use
1,624
15.8
1,695
14.1
1,635 -3.5%
12.6 -10.8%
U.S. Season Avg. Farm Price, $/ Bu.
Crop year begins the first of September
$4.20
$4.08
$3.35 -17.9%
Agricultural Economics
U.S. Corn Supply and Disappearance 1975/76-2009/10
13,025
Millions of Bushels
14,000
12,000
12,954
10,000
Production
Food, Seed &
Industrial
8,000
Feed
5,475
6,000
5,350
4,000
Total Use
Exports
2,000
Source; WASDE, various issues
Agricultural Economics
Year
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
0
2,200
Agricultural Economics
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Millions of Bushels
U.S. Corn Ending Stocks
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,635
1,500
1,000
500
0
Agricultural Economics
U.S. Corn Stocks/Use and Average Farm Price
1975-2009
Stocks/Use
Price
4.50
60.0
4.00
50.0
3.50
3.00
40.0
2.50
30.0
2.00
1.50
20.0
1.00
10.0
0.50
Year
Agricultural Economics
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
0.00
1977
0.0
Dollars Per Bushel
5.00
1975
Stocks/Use (Percent)
70.0
Corn
– Dec 09 is trading around $3.37
• Positive carry built into market. Has been shrinking recently.
– Prices
• Negatively effected by:
– Large carry over
– Higher Acreage
– High yields
» Good growing conditions
– Weak oil prices
– Where is Ethanol going?
» Hit 10 percent blending wall – Expansion by E85
Agricultural Economics
Corn Outlook
• Dec 10 corn is trading around $3.85
– Maybe a good price with cost of inputs
dropping
• Safety Nets
– Crop Insurance
• 2010 Base Price likely to be significantly lower than
2009 price
– ACRE
• 90% of Guarantee Price - $ 3.73 per bushel
Agricultural Economics
USDA SUPPLY/DEMAND BALANCE SHEET FOR WHEAT
07-08
08-09est
09-10p
Million Acres
Acres Planted
60.5
63.1
59.6
Acres Harvested
51
55.7
48.9
Bu./Harvested Acre
40.2
44.9
41.2
Beginning Stocks
Production
Imports
Total Supply
Use:
Food
Seed
Feed & Residual
Exports
Total Use
Ending Stocks
Ending Stocks, % of Use
U.S. Season Aver. Farm Price, $/ Bu.
Source: USDA,
WASDEEconomics
Agricultural
546
2,051
113
2,620
Million Bushels
306
669
2,500
2,016
125
115
2,930
2,800
%D
-5.5%
-12.2%
-8.2%
118.6%
-19.4%
-8.0%
-4.4%
947
88
15
1,264
2,314
922
79
250
1,010
2,261
955
78
220
1,253
2,153
3.6%
-1.3%
-12.0%
24.1%
-4.8%
306
13.2
669
29.6
647.0
30.1
-3.3%
1.6%
$4.26
$6.48
$6.70
3.3%
Wheat Supply 1965-2009
3,000
Production
Food
Exports
Use
2,218
2,000
2,184
1,500
955
1,000
950
500
0
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
Millions of Bushels
2,500
Agricultural Economics
Agricultural Economics
U.S. Wheat Stocks/Use and Average Farm Price
1965-2009
Stock/Use
100.0
8.00
Price
80.0
6.00
70.0
60.0
5.00
50.0
4.00
40.0
3.00
30.0
2.00
20.0
Year
Agricultural Economics
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
0.00
1971
0.0
1969
1.00
1967
10.0
Dollars Per Bushel
7.00
1965
Stocks/Use (Percent)
90.0
Wheat Outlook
• July 10 Chicago wheat is approaching $5.00
– Lost about $2.3 per bushel since June
• World wheat supplies continue to grow
• Safety Nets
– Crop Insurance
• Significant drop in base prices
– CRC Base Price
» 2009 - $8.58 per bushel
» 2010 - $5.29 per bushel
– ACRE
• 90 % of Guarantee price - $ 5.97 per bushel
Agricultural Economics
Questions
Agricultural Economics