Grain Market Outlook Cover Your Acres Conference Oberlin, Kansas January 22-23, 2008 Daniel OBrien & Mike Woolverton K-State Research and Extension

Historic vs Current Grain Prices USDA Average 2007/08 Wheat $3.35 $6.45–$6.85 Corn $2.24 $3.70–$4.30 Grain Sorghum $2.20 $3.60–$4.20 Soybeans $5.66 $9.90–$10.90 Sunflowers$11.57 /cwt $19.60–$ National marketing year average price per unit,

Wheat Markets

Oberlin, KS Cash Wheat Prices Decatur Coop, Oberlin, Kansas Jan. 22, 2007 – Jan. 18, 2008 Source: DTN Bid Analyzer

March 2008 HRW Wheat Futures KCBT: April 2006-January Old Crop March HRW Contract Contract Volume & Open Interest

July 2008 HRW Wheat Futures KCBT: April 2006-January New Crop July HRW Contract Contract Volume & Open Interest

U.S. Wheat Supply-Demand

U.S. Wheat Planted Acreage Projected 2008 Kansas HRW Acres Seeded down by 500K in 2007/08

U.S. Wheat Yields Trend

U.S. Wheat Production Projected 2008

U.S. Wheat Exports 1973/74 thru 2007/08 Marketing Years

World Wheat Supply-Demand 2005/06 thru 2007/08 Marketing Years

Production of World Wheat Exporters 2005/06 thru 2007/08 Marketing Years

Exports of World Wheat Exporters 2005/06 thru 2007/08 Marketing Years

U.S. Wheat Ending Stocks Wheat Ending Stocks as a % of Usage

U.S. Wheat Stocks/Use% vs Price

Soybean Markets

Oberlin, KS Cash Soybean $s Decatur Coop - Oberlin, Kansas Jan. 22, 2007 – Jan. 18, 2008 Source: DTN Bid Analyzer

Bird City, KS New Crop SF $s Frontier Equity Coop Exchange – Bird City, Kansas New Crop Oil-Type Sunflower Bids Jan. 22, 2007 – Jan. 18, 2008 Source: DTN Bid Analyzer

March 2008 Soybean Futures CBOT: October 2006-January Old Crop Soybean Contract Contract Volume & Open Interest

November 2008 Soybean Futures CBOT: January 2006-January Old Crop Soybean Contract Contract Volume & Open Interest

U.S. Soybean Supply-Demand

U.S. Soybean Planted Acreage Projected 2008

U.S. Soybean Yields Trend

U.S. Soybean Production Projected 2008

U.S. Soybean Exports 1973/74 thru 2007/08 Marketing Years

World Soybean Supply-Demand 2005/06 thru 2007/08 Marketing Years

Production of World Soybean Exporters 2005/06 thru 2007/08 Marketing Years

Exports of World Soybean Exporters 2005/06 thru 2007/08 Marketing Years

U.S. Soybean Ending Stocks Soybean Ending Stocks as a % of Usage

U.S. Soybean Stocks/Use% vs Price

Feedgrain Markets: Corn & Grain Sorghum

Oberlin, KS Corn Cash Prices Decatur Coop, Oberlin, KS Jan. 22, 2007 – Jan. 18, 2008 Source: DTN Bid Analyzer

Oberlin, KS Grain Sorghum Cash Prices Decatur Coop, Oberlin, KS Jan. 22, 2007 – Jan. 18, 2008 Source: DTN Bid Analyzer

March 2008 Corn Futures CBOT: February 2006-January Old Crop Corn Contract Contract Volume & Open Interest

December 2008 Corn Futures CBOT: April 2006-December New Crop Corn Contract Contract Volume & Open Interest

U.S. Corn Supply-Demand

Dynamics of U.S. Corn Usage USDA USDA USDA USDA 2006/ /08 est. 2006/ /08 est. Feed and Residual 5,598 5,950 1 (+6%) Food, Seed, and Industrial 1,371 1,355 2 ( ־ 1%) Ethanol for Fuel 2,117 3,200 (+51%) Net Exports 2,125 2,450 (+15%) Ending Stocks 1,304 1,438 (+10%) Total Usage 11,21012,995 (+16%) Production 10,53513,074 (+24%) 1 Assumes DDGS retain 30% of the feed value of corn and are included in the feed and residual category by the USDA. 2 Industrial, food, and seed less ethanol.

U.S. Grain Sorghum Supply-Demand

U.S. Corn Planted Acreage Projected 2008

U.S. Corn Yields Trend

U.S. Corn Production Projected 2008

U.S. Corn Food, Seed & Industrial Use 1973/74 thru 2007/08 Marketing Years

U.S. Ethanol Industry at a Glance Number of operating ethanol plants: Under construction or expanding: Announced plants: 300 (17%) 100 (?) Current production capacity: (BGPY) Projected production capacity: 11.5 BGPY end of BGPY end of 2009 Feedstock Use Proportion: Corn 97% Sorghum 2% Other 1%

U.S. Corn Exports 1973/74 thru 2007/08 Marketing Years

Total U.S. Corn Use 1973/74 thru 2007/08 Marketing Years

World Corn Supply & Demand Global production up 9% from 2006/07. Demand up 7% Production will be 6 MMT (240 mil. Bu.) less than Usage World Ending Stocks to decrease 5.8 mmt from last year, down to 13 % of Usage. Million MT

World Coarse Grain Supply-Demand 2005/06 thru 2007/08 Marketing Years

Production of World Coarse Grain Exporters 2005/06 thru 2007/08 Marketing Years

Exports of World Coarse Grain Exporters 2005/06 thru 2007/08 Marketing Years

U.S. Corn Ending Stocks Corn Ending Stocks as a % of Usage

U.S. Corn Stocks/Use% vs Price

Long Run Grain Market Perspectives

Land in Crops (Millions of acres) 5 yr. Ave. 07/08USDA Proj. 08/09 5 yr. Ave. 07/08USDA Proj. 08/09 Corn (-6%) Soybeans (+10%) Hay (--) Wheat (+3%) Cotton (-7%) Grain Sorghum (-4%) Principle Crops CRP (-3%) Total crop land in the United States – million acres

Crop Acres Coming Out of CRP 2007–2017 (Source: USDA, FSA)

Long Run Grain Prices USDA Long Run Average 2007/08 Projection Wheat $3.35 $6.45–$6.85$5.00 Corn $2.24 $3.70–$4.30$3.50 Grain Sorghum $2.20 $3.60–$4.20$3.40 Soybeans $5.66 $9.90–$10.90$7.50 Sunflowers$11.57 $19.60–$21.20 $ National marketing year average price per unit,

Grain Marketing Considerations Wheat – Global shortage of quality milling wheat, reduced Australian and Argentinean production, and acres planted N. Hemisphere. Wheat – Global shortage of quality milling wheat, reduced Australian and Argentinean production, and acres planted N. Hemisphere. Corn/G.S. – Strong demand from overseas buyers, ethanol demand, and bid for acres. Corn/G.S. – Strong demand from overseas buyers, ethanol demand, and bid for acres. Soybeans – Dryness hurting Argentinean and Brazilian crops, hectares in Brazil up only 1%, and critically low carryover in the U.S. Soybeans – Dryness hurting Argentinean and Brazilian crops, hectares in Brazil up only 1%, and critically low carryover in the U.S. Factors to Watch: Tight global S/D balances for wheat and soybeans Tight global S/D balances for wheat and soybeans Battle for acres this spring Battle for acres this spring Harvest of Southern Hemisphere crops Harvest of Southern Hemisphere crops

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