Corn &Wheat
Situation and Outlook
Kim B. Anderson
Oklahoma State University
1
Kim’s Web site
agecon.okstate.edu/anderson
“Other articles”
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)
5.0
’09/10 4.3 bb
4.5
’08/09 4.0 bb
4.0
3.5
’07/08 3.2 bb
3.0
2.5
’06/07 2.1 bb
2.0
1.5
1.0
0.5
0.0
96
/9
7
98
/9
9
00
/0
1
02
/
03
04
/
06
08
10
12
14
16
/
/
/
/
/
/1
05
07
09
11
13
15
7
10
U.S. Corn Situation
Year
Planted
Acres
Harvested
Acres
Yield
(Million Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
79.6
75.7
78.9
78.6
80.9
81.8
78.3
93.6
79.1
72.4
68.8
69.3
70.9
73.6
75.1
70.7
86.1
(91.0)
(90.9)
(87.8)
(90.2)
(91.0)
(91.8)
(90.3)
(92.0)
71.5
Percentage harvested in parenthesizes
Production
(Billion Bushels)
136.9
138.2
129.3
142.2
160.4
148.0
149.1
154.7
10.0
9.5
9.0
10.1
11.8
11.1
10.5
13.2
143.4
10.3
11
U.S. Corn Situation
Year
Ending
Production Consumption Stocks
U. S.
Price
(Billion Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
10.0
9.5
9.0
10.1
11.8
11.1
10.5
13.2
9.6
9.8
9.5
10.2
10.6
11.1
11.4
12.6
2.1
1.6
1.0
1.0
2.2
2.0
1.3
1.9
$1.82
$1.85
$1.97
$2.30
$2.42
$2.06
$3.00
$3.50
10.3
10.3
1.6
$2.20
12
World Corn Situation
Year
Production
Consumption
Ending
Stocks
(Billion Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
23.2
23.6
23.7
24.3
27.8
27.3
27.6
30.3
23.8
24.5
24.7
25.5
26.9
27.3
28.5
30.1
6.0
5.8
4.9
4.1
5.1
4.8
4.1
3.9
25.4
25.9
4.8
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
U.S. Corn Situation
Month
Ending Stocks
06/07
07/08
CBT Nearby
USDA
Open/Close Price Range Cash Est.
(Billion Bushels)
(Cents per Bushel)
(± 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
16
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  $3.50 avg. annual price.
2008 planted acres 88 mil., production of 12.3 bb,
ending stocks 1.0 bb & $3.70 avg. annual price.
17
Wheat
18
U.S. Wheat Situation
Year
Planted
Acres
Harvested
Acres
Yield
(Million Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
62.5
59.4
60.3
62.1
59.7
57.2
57.3
60.4
59.9
53.1
48.5
45.8
53.1
50.0
50.1
46.8
51.0
Production
(Billion Bushels)
(84.4)
42.0
40.2
35.0
44.2
43.2
42.0
38.7
40.5
2.23
1.95
1.61
2.34
2.26
2.10
1.81
2.07
49.8 (83.2)
40.7
2.00
(85.0)
(81.6)
(76.0)
(85.5)
(83.8)
(87.6)
(81.7)
Percentage harvested in parenthesizes
19
U.S. Wheat Situation
Year
Ending
Production Consumption Stocks
U. S.
Price
(Billion Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
2.23
1.50
1.61
2.34
2.16
2.11
1.80
2.07
2.39
2.15
1.99
2.35
2.24
2.16
2.05
2.30
.873
.777
.492
.546
.540
.571
.456
.312
$2.62
$2.78
$3.56
$3.40
$3.40
$3.42
$4.26
$6.10
1.96
2.19
.608
$3.35
20
World Wheat Situation
Year
Production
Consumption
Ending
Stocks
(Billion Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
21.4
21.3
20.8
20.4
23.0
22.9
21.8
22.1
21.5
21.5
22.2
21.6
22.3
23.1
22.7
22.6
7.4
7.4
6.2
4.8
5.5
5.4
4.6
4.0
21.7
22.1
5.9
21
KCBT Monthly Nearest
Ethanol
Weather
Before ethanol
22
KCBT March ‘08
23
KCBT July “08
24
U.S. Wheat Situation
Month
Ending Stocks
06/07
07/08
KCBT Nearby
USDA
Open/Close Price Range Cash Est.
(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
831-777 770-835
610
25
U.S. Wheat Supply and Use
USDA
07/08
Kim’s
08/09
million bushels
Beginning stocks
Production
Supply, Total
Exports
Use, Total
Ending Stocks
Avg. farm price
456
2,067
2,608
1,150
2,301
307
$6.10
307
2,350
2,657
1,050
2,250
407
$5.20
26
June 2008 wheat delivery prices
KCBT July wheat contract price
Elevator forward contract basis
Forward contract offer
$6.92
-$0.53
$6.39
Buy KCBT July 690 call
FC/Call minimum price
-$0.70
$5.69
Buy KCBT July 690 Put (690¢ - 70¢) $6.20
Expected June 2008 basis
-$0.45
Expected minimum price
$5.75
27
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 ~ $5.80 $4.50 to $8.50.
28
Kim’s Web site
agecon.okstate.edu/anderson
29
30
Kim’s rules for marketing
Keep it simple
Make a plan
Write the plan down
Have the discipline to follow the plan
Do not—ever, ever—listen to market outlook
economists.
31
Sorghum
32
U.S. Sorghum Situation
Year
Ending
Production Consumption Stocks
U. S.
Price
(Million Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
470
515
361
411
455
393
278
501
515
495
379
421
422
384
305
475
20
61
43
34
57
66
38
59
$1.80
$1.94
$2.35
$2.39
$1.79
$1.80
$3.30
$3.00
412
417
46
$2.20
33
Foreign Sorghum Situation
Year
Production
Consumption
Ending
Stocks
(Million Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
1.65
1.78
1.72
1.88
1.81
1.91
1.98
1.98
1.91
2.00
1.92
2.04
2.03
2.10
2.10
1.82
0.11
0.13
0.11
0.15
0.11
0.11
0.14
0.12
1.82
2.02
0.12
34
World Sorghum Situation
Year
Production
Consumption
Ending
Stocks
(Million Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
471.6
516.8
362.7
412.9
456.8
394.9
280.0
503.0
516.9
497.0
380.9
423.0
424.0
386.1
307.1
477.2
20.1
61.1
43.1
34.1
57.1
66.1
38.1
59.1
413.7
419.3
45.7
35
Key Point

Sorghum prices follow corn prices
36
Cotton
37
U.S. Cotton Situation
Year
Ending
Production Consumption Stocks
U. S.
Price
(Million Bales)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
17.2
20.3
17.2
18.3
23.3
23.9
21.6
18.5
15.6
18.7
19.2
20.3
19.7
23.9
18.0
21.3
6.0
7.5
5.4
3.5
7.1
6.1
9.7
6.4
49.9 ¢
29.8 ¢
44.5 ¢
61.8 ¢
42.8 ¢
47.7 ¢
47.3 ¢
44.9 ¢
20.3
19.3
6.5
46.3 ¢
38
World Cotton Situation
Year
Production
Consumption
Ending
Stocks
(Million Bales)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
88.7
98.5
88.3
95.1
120.2
115.7
119.3
120.3
92.2
94.5
98.5
98.6
108.0
116.4
122.7
129.5
42.4
47.2
38.1
40.2
50.6
57.6
57.9
55.0
103.7
104.4
47.7
39
Key points
 U.S. and world cotton stocks above average.
 Cotton acreage planted to beans and corn.
 Prices expected to average 55 cents.
41
42
Soybean
43
U.S. Soybeans Situation
Year
Planted
Acres
Harvested
Acres
Yield
(Million Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
74.3
74.1
74.0
73.4
75.2
72.1
75.5
63.7
72.8
72.4
73.0
72.5
72.5
74.0
71.3
74.6
62.8
(97.4)
(98.5)
(98.1)
(98.8)
(98.4)
(98.9)
(98.8)
(98.6)
71.5 (98.4)
Percentage harvested in parenthesizes
Production
(Billion Bushels)
38.1
39.6
38.0
33.9
42.2
43.0
42.7
41.4
2.76
2.89
2.76
2.45
3.12
3.06
3.19
2.60
143.4
10.3
44
U.S. Soybean Situation
Year
Ending
Production Consumption Stocks
U. S.
Price
(Billion Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
2.8
2.9
2.8
2.5
3.1
3.1
3.2
2.6
2.8
2.9
2.8
2.5
2.9
2.8
3.1
3.0
0.25
0.21
0.18
0.11
0.36
0.50
0.58
0.22
$4.54
$4.38
$5.53
$7.34
$5.65
$5.66
$6.40
$8.00
2.9
2.8
0.31
$5.64
45
Foreign Soybean Situation
Year
Production
Consumption
Ending
Stocks
(Billion Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
3.6
3.9
4.4
4.4
5.1
5.0
5.5
5.5
3.5
3.9
4.2
4.5
4.6
5.0
5.2
5.6
0.9
1.0
1.3
1.3
1.7
1.5
1.8
1.6
4.7
4.4
1.3
46
World Soybean Situation
Year
Production
Consumption
Ending
Stocks
(Billion Bushels)
2000
2001
2002
2003
2004
2005
2006
2007
7-YR
Avg.
6.4
6.8
7.2
6.9
8.2
8.1
8.7
8.1
6.3
6.8
7.0
7.0
7.5
7.8
8.3
8.6
1.12
1.18
1.50
1.37
2.10
1.98
2.37
1.86
7.5
7.2
1.66
47
CBT Soybeans Monthly Nearest
Before ethanol
Weather
& bio-diesel
Ethanol
& bio-diesel
48
U.S. Soybean Situation
Month
Ending Stocks
06/07
07/08
CBT Nearby
USDA
Open/Close Price Range Cash Est.
(Million Bushels)
(Cents per Bushel)
(± 50)
May
610
320
726-806
725-816
700
June
610
320
806-850
792-876
720
July
600
245
863-834
810-915
775
Aug
575
220
840-868
789-880
775
Sept
555
215
881-991 875-1017
785
Oct
573
215
996 -996
835
923-1007
49
Key points
 U.S. soybean stocks below average.
 World soybean stocks above average.
 Expect Brazil to increase production.
 Increased 2008 planted acres (70 ma)
 Prices remain above average.
51
Key points
 Ending stocks ~225 mb  $9 - $10
 Ending stocks ~600 mb  $7
52