wheat and feed grain market outlook and situation
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Wheat and Feed Grain Market Outlook and Situation
Southern Extension Outlook ConferenceTunica, Mississippi
September 24, 2002
Kurt M. GuidryLSU Agricultural Center
Current Market Situation
•Supply Driven Rally
•Improved Fundamentals Increase Market Sensitivity
•Since June, Futures Prices Have Increased
Wheat Futures Moved Over $1.00 Per Bushel Higher Corn Futures Moved Over $0.70 Per Bushel Higher
•Significantly Improved Markets From Last 3 Years
Where Will Prices Go ?
•Prices Have Softened With Harvest Pressure And Likelihood Of Increased Acres For Wheat
•Demand Will Likely Play Big Role In Continued Price Movement
•Increased Prices Will Likely Bring More Acreage Into Production
•Improved Supply and Demand Fundamentals Should Provide Support
Estimated Costs and Returns For Selected Commodities - Southern StatesCorn Wheat Soybeans Cotton Grain Sorghum
Yield 103.5 45.0 27.3 628.0 63.1Price $2.59 $3.52 $5.21 $0.53 $2.46 Revenue $267.99 $158.23 $142.23 $332.85 $155.28
Variable Cost $151.14 $87.85 $85.60 $334.24 $94.63
Returns Above Variable Cost $116.85 $70.38 $56.63 -$1.40 $60.66
U.S. Corn Supply and Use (Domestic Measure)
2001/02 2001/02 ------------------ 2002/03-------------------
2002/03
Item Estimate (Sept. - Aug.) August September (Sept. - Aug.)
Million Acres Change Million Acres Million Acres ChangeArea Planted 75.8 0.00 78.8 78.8 0.00 Harvested 68.8 0.00 71.0 70.5 -0.50
Bushels Bushels BushelsYield per harvested acre 138.2 0.00 125.2 125.4 0.20
Million Bushels Million Bushels Million BushelsBeginning stocks 1,899 0.00 1,636 1,636 0.00 Production 9,507 0.00 8,886 8,849 -37.00 Imports 10 0.00 15 15 0.00 Supply, total 11,416 0.00 10,537 10,499 -38.00 Feed and residual 5,825 0.00 5,600 5,600 0.00 Food, seed, & industrial 2,055 0.00 2,170 2,170 0.00
Domestic, total 7,880 0.00 7,770 7,770 0.00 Exports 1,900 0.00 2,000 2,000 0.00 Use, total 9,780 0.00 9,770 9,770 0.00 Ending Stocks 1,636 0.00 767 729 -38.00 Stocks To Use 16.73% 7.85% 7.46%
Avg. Farm Price ($/bu) 1.97 2.30 - 2.70 2.35 - 2.75
Source: USDA, World Agricultural Supply and Demand Report, September 12, 2002.
U.S. Corn Production
8,000
8,500
9,000
9,500
10,000
1998/99 1999/00 2000/01 2001/02 2002/03
Marketing Year
Mill
ion
Bush
els
U.S. Corn Food, Seed, and Industrial Use
1,600
1,700
1,800
1,900
2,000
2,100
2,200
1998/99 1999/00 2000/01 2001/02 2002/03
Marketing Year
Mill
ion
Bus
hels
Source: DTN AgDayta
U.S. Corn Exports
1,850
1,900
1,950
2,000
2,050
1998/99 1999/00 2000/01 2001/02 2002/03
Marketing Year
Mill
ion
Bus
hels
Source: DTN AgDayta
U.S. Corn Ending Stocks
0
500
1,000
1,500
2,000
1998/99 1999/00 2000/01 2001/02 2002/03
Marketing Year
Mill
ion
Bus
hels
World Corn Production
575000
580000
585000
590000
595000
600000
605000
610000
1998/99 1999/00 2000/01 2001/02 2002/03
Marketing Year
1,00
0 M
etric
Ton
s
Corn Production Of Selected Countries
0
20000
40000
60000
80000
100000
120000
140000
Argentina Brazil China Hungary South Africa
1,00
0 M
etri
c To
ns
1998/99 1999/00 2000/01 2001/02 2002/03
World Corn Imports
64000
66000
68000
70000
72000
74000
76000
78000
1998/99 1999/00 2000/01 2001/02 2002/03
Marketing Year
1000
Met
ric T
ons
Corn Exports Of Selected Countries
0
2000
4000
6000
8000
10000
12000
14000
Argentina Brazil China Hungary South Africa
1,00
0 M
etric
Ton
s
1998/99 1999/00 2000/01 2001/02 2002/03
Corn Ending Stocks
0
50000
100000
150000
200000
China United States World
1,00
0 M
etric
Ton
s
1998/99 1999/00 2000/01 2001/02 2002/03
U.S. Sorghum S upply and Use (Dome stic M ea sure)2001/02 2001/02 - --- --- --- ---- --- - 2002/03 ---- --- --- ---
-- --- -2002/03
Item Es tim ate (Sept. - A ug.) A ugust S eptem ber (S ept. - A ug.)
Million Ac res Ch ange Million A cres M illion A c res C hangeA rea P lanted 10.3 0.00 9.3 9.3 0.00 H arves ted 8.6 0.00 7.5 7.5 0.00
Bushels B ushels B ushelsY ield per harvested acre 59.9 0.00 50.3 51.0 0.70
M illion Bushels Million Bushels Million B ushelsB eginning s tocks 42 0.00 56 56 0.00P roduc tion 515 0.00 3 80 384 4.00Im po rts 0 0.00 0 0 0.00 S upply, total 556 0.00 4 36 441 5.00Feed and residual 215 0.00 1 35 135 0.00Food, seed, & indus trial 45 0.00 45 45 0.00 D omes tic , total 260 0.00 1 80 180 0.00E xports 240 0.00 2 20 220 0.00 Use, total 500 0.00 4 00 400 0.00E nding S tocks 56 0.00 36 41 5.00S tocks To Use 11.20% 9.00% 10.25% A vg. Farm Price ($/bu) 1.95 2.30 - 2.70 2.35 - 2.75
S ource: US DA, W orld A gricultural S upply and Dem and Re port, Septem ber 1 2, 2002.
U.S. W hea t S upply and Use (Dom e stic M ea sure)2001/02 2 001/02 - --- --- --- ---- --- - 2002/03 ---- --- --- ---
-- --- -2002/03
Item Es tim ate (Sept. - Aug.) A ugust S eptem ber (S ept. - A ug.)
M illion Ac res Cha nge Million A cres M illion A c res C hangeA rea P lanted 59.6 0.00 60.1 60.1 0.00 H arves ted 48.7 0.00 47.6 47.6 0.00
Bushels B ushels B ushelsY ield per harvested acre 40.2 0.00 35.4 35.4 0.00
M illion Bushels Million Bushels Million B ushelsB eginning s tocks 876 0.00 772 772 0.00 P roduc tion 1,958 0.00 1,686 1,686 0.00 Im po rts 108 0.00 105 85 -20.00 S upply, total 2,941 0.00 2,563 2,543 -20.00 Food 928 -2.00 940 930 -10.00 S eed 81 0.00 81 81 0.00 Feed and Residual 199 2.00 175 175 0.00
D omes tic , total 1,208 0.00 1,196 1,186 -10.00 E xports 961 0.00 900 950 50.00 Use, total 2,169 0.00 2,096 2,136 40.00 E nding S tocks 772 0.00 467 407 -60.00 S tocks To Use 35.59% 22.28% 19.05% A vg. Farm Price ($/bu) 2.78 3.20 -3.80 3.45 - 4.05
Source: USDA, World Agricultural Supply and Demand Report, September 12, 2002
U.S. Wheat Production
0500
1,0001,5002,0002,5003,000
Marketing Year
Mill
ion
Bush
els
Source: DTN AgDayta
Source: DTN AgDayta
U.S. Wheat Food Use
860880900920940960
Marketing Year
Mill
ion
Bush
els
U.S. Wheat Feed And Residual Use
0100200
300400500
Marketing Year
Mill
ion
Bush
els
U.S. Wheat Exports
850900
9501,000
1,0501,100
Marketing Year
Mill
ion
Bush
els
U.S. Wheat Ending Stocks
0
200400
600800
1,000
Marketing Year
Mill
ion
Bush
els
World Wheat Production
560000565000
570000575000580000585000
590000595000
1998/99 1999/00 2000/01 2001/02 2002/03
Marketing Year
1,00
0 M
etric
Ton
s
Wheat Production Of Selected Countries
0
20000
40000
60000
80000
100000
120000
Argentina Australia Canada European Union
1,00
0 M
etric
Ton
s
1998/99 1999/00 2000/01 2001/02 2002/03
Source: DTN AgDayta
World Wheat Imports
90000
95000
100000
105000
110000
115000
1998/99 1999/00 2000/01 2001/02 2002/03
Marketing Year
1,00
0 M
etric
Ton
s
Wheat Exports Of Selected Countries
0
5000
10000
15000
20000
25000
Argentina Australia Canada European Union
1,00
0 M
etric
Ton
s
1998/99 1999/00 2000/01 2001/02 2002/03
World Wheat Ending Stocks
0
50000
100000
150000
200000
1998/99 1999/00 2000/01 2001/02 2002/03
Marketing Year
1,00
0 M
etric
Ton
s
CBOT Corn Futures Contract PricesContract Open High Low Last
2-Sep 2714 2714 2660 2664*
2-Dec 2650 2656 2600 2606*
3-Jan 2102 2102 2102*
3-Mar 2724 2724 2670 2680*
3-May 2750 2760 2712 2714*
3-Jul 2750 2764 2710 2712*
3-Sep 2640 2640 2584 2590*
3-Dec 2530 2540 2490 2490*
Source: DTN AgDayta
CBOT Wheat Futures Contract PricesContract Open High Low Last
2-Sep 4022 4040 3950 3950*
2-Dec 3930 4054 3910 4000*
3-Mar 3944 4050 3934 3980*
3-May 3750 3860 3750 3790*
3-Jul 3480 3550 3474 3516*
Source: DTN AgDayta
Conclusions
•Despite Improved Fundamentals, Increased Acres And A Return To More Typical Yields Will Place Pressure On Price
•Improved Fundamentals Likely Will Cause More Sensitivity To Production Difficulties And/Or Improved Demand
•Potential For Increased Production Provides Incentive To Consider Current Prices For Expected 2003 Production
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