Department of Economics Current Feed Situation and Outlook Iowa Egg Industry Symposium Ames, Iowa November 5, 2008 Chad Hart Assistant Professor/Grain Markets Specialist
Department of Economics U.S. Corn Supply and Use Source: USDA-WAOB, Oct $4.70$ $5.50
Department of Economics Source: USDA-NASS, Oct. 2008
Department of Economics World Corn Production Source: USDA-WAOB, Oct. 2008
Department of Economics U.S. Soybean Supply and Use Source: USDA-WAOB, Oct $10.35$ $12.35
Department of Economics Source: USDA-NASS, Oct. 2008
Department of Economics World Soybean Production Source: USDA-WAOB, Oct. 2008
Department of Economics U.S. Soybean Meal Supply and Use Source: USDA-WAOB, Oct $360$290
Department of Economics Sources: CARD, Iowa State; IA Dept. of Ag. Crop Basis Patterns
Department of Economics Sources: Various USDA-NASS reports Livestock Adjustments Broiler-type eggs set: 195 million, down 8% from last year Broiler chicks placed: 168 million, down 4% from last year Sows farrowing: Sept-Nov 2008, 3.01 million, down 5% from last year Dec-Feb 2009, 2.98 million, down 3% from last year Feedlot placements: 2.06 million, down 3% from last year (2 nd lowest since 1996)
Department of Economics Renewable Fuels Standard (RFS) Calendar Year Billion Bushels Crop Year Billion Bushels
Department of Economics U.S. Blended Motor Gasoline Consumption Source: Energy Information Administration
Department of Economics Relative Feed Costs (Jan = 1) Source: USDA, ERS, Feed Grains Database
Department of Economics Outside Influences (Jan = 1)
Department of Economics Outside Influences (Sept = 1)
Department of Economics Corn & Soybean Area Growth rate of 1.55 million acres per year
Department of Economics CRP Expiring Contracts Source: USDA-FSA
Department of Economics Input Costs Source: USDA, Agricultural Prices, Oct. 2008
Department of Economics The Rise and Fall of Fertilizer Prices Source: TheMarket.pdf
Department of Economics Urea Prices Source: TheMarket.pdf
Department of Economics Ammonia Prices Source: TheMarket.pdf A quote from “The Market: Fertilizer News and Analysis” October 16, 2008
Department of Economics Iowa Corn Prices vs. Costs Source: USDA-NASS and Duffy and Smith,
Department of Economics Crop Costs for Central Illinois Source: Schnitkey, July 2008 CornSoybeans % Change % Change ($/acre) Fertilizer %Fertilizer % Fuel and Oil192637%Crop Ins.81250% Crop Ins %Utilities3433% Seed627826%Seed425326% Utilities4525%Fuel and Oil % Total Non- land Costs %Total Non- land Costs %
Department of Economics Crop Exports Source: USDA, PSD
Department of Economics Exchange Rate Ratios (Jan = 1) Source: OANDA.com
Department of Economics U.S. Stocks-to-Use Ratios
Department of Economics World Stocks-to-Use Ratios
Department of Economics Thoughts for 2008 General economic conditions A lot of recent market trade has been tied to reaction to the financial crisis and the world’s response Economic slowdown raises concern about export and energy demand Energy demand Higher energy prices did constrain demand Will it recover? Most important ag. statistic: Crude oil price or Dow Jones Index Current indications are pointing to 2008 season- average prices of $ for corn and $ for soybean meal
Department of Economics Thoughts for 2009 and Beyond Many of the storylines from the past few years will continue Tight stocks for both corn and soybeans The competition for acreage Ethanol’s buildout & livestock’s adjustment Energy price & general economy concerns Market volatility will remain high Link to the energy markets More market players with different trading objectives Given current factors, the 2009 outlook is for crop prices around $4.50 for corn and $290 for soybean meal
Department of Economics Thank you for your time! Any questions?