memphis meeting

7/29/2019 Memphis Meeting

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Lim it ed Resource Farming
http://agrilifecdn.tamu.edu/communications/files/2012/08/TAMAgEXT.png


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Overview

Changing Face of Agriculture

Commodity Market Outlooks Wheat Cattle

Cotton

Cost Benefit Analysis

Prices


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ChangingTimes


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C

Latest actualweekly SSTdeparture


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Temperature ( Orange/Red = Warmer Than

Normal - Blue = Colder Than Normal )


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8/41Source: NPGCD Hydrology and Groundwater Resource 2011-2012 Publication

33%


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Source: NPGCD Hydrology and GroundwaterResource 2011-2012 Publication

Active LargeProductionWells in theDistrict and

Wells AddedSince 2006


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Source: NPGCD Hydrology and Groundwater Resource 2011-2012 Publication

2.52 1.41


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How Should I Best Utilize MyLimited Resources??

Recommend a Two TierApproach

1) Study Market

Fundamentals

2) Perform aCost/Benefit Analysis


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Wheat MarketOutlook


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Marketing Year Average Wheat Prices

0.90

1.12

1.77

3.33

6.53

8.00

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

1908

1911

1914

1917

1920

1923

1926

1929

1932

1935

1938

1941

1944

1947

1950

1953

1956

1959

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

MY Avg Price Pre WWI WWI to WWII Post WWII

World Trade Biofuel Era Jul '13 CFC

$/bu


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U.S. Wheat Use

0

250

500

750

1,000

1,250

1,500

1,750

2,000

80/81

81/8

2

82/83

83/8

4

84/85

85/86

86/87

87/88

88/89

89/90

90/91

91/9

2

92/93

93/9

4

94/95

95/96

96/97

97/98

98/99

99/00

00/01

01/0

2

02/03

03/0

4

04/05

05/06

06/07

07/08

08/09

09/10

10/11

11/1

2

12/13

Million Bushels

Ending Stocks Feed and Residual Exports Food and Seed

WASDE, 11/9/2012


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U.S. Wheat Planted Acres

56.0

58.3

50.0

55.0

60.0

65.0

70.0

75.0

80.0

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Actual Predicted

Million acres

Planted acres = 63.09 + (2.51 * pricet-1) + (-1.39 * trend)R^2 = 92.4%

Updated 12/11/2012


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2013 U.S. Winter Wheat Crop Condition Ratings

100

150

200

250

300

350

400

450

500

0

10

20

30

40

50

60

70

80

90

100

10/28/2012

11/4/2012

11/11/2012

11/18/2012

11/25/2012

12/2/2012

12/9/2012

12/16/2012

12/23/2012

12/30/2012

1/6/2013

1/13/2013

1/20/2013

1/27/2013

2/3/2013

2/10/2013

2/17/2013

2/24/2013

3/3/2013

3/10/2013

3/17/2013

3/24/2013

3/31/2013

4/7/2013

4/14/2013

4/21/2013

4/28/2013

5/5/2013

5/12/2013

5/19/2013

5/26/2013

6/2/2013

6/9/2013

6/16/2013

6/23/2013

6/30/2013

7/7/2013

7/14/2013

Very Poor Poor Fair Good Excellent 2013 2012

% CCI


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July 2013 KC Wheat and Marketing Plan

500

600

700

800

900

1000

4/2/2012

4/13/2012

4/25/2012

5/7/2012

5/17/2012

5/30/2012

6/11/2012

6/21/2012

7/3/2012

7/16/2012

7/26/2012

8/7/2012

8/17/2012

8/29/2012

9/11/2012

9/21/2012

10/3/2012

10/15/2012

10/25/2012

11/6/2012

11/16/2012

11/29/2012

12/11/2012

12/21/2012

1/4/2013

1/16/2013

1/29/2013

2/6/2013

2/14/2013

2/22/2013

3/2/2013

3/10/2013

3/18/2013

3/26/2013

4/3/2013

4/11/2013

4/19/2013

4/27/2013

5/5/2013

5/13/2013

5/21/2013

5/29/2013

6/6/2013

6/14/2013

6/22/2013

6/30/2013

7/8/2013

7/16/2013

Early Season Price Rally / Early Crop Conditions Emerging from Dormancy/Late Season Conditions Harvest

/bu


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Cattle

Outlook


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SOUTHERN PLAINS CORN PRICES

Weekly

3.00

4.00

5.00

6.00

7.00

8.00

9.00

JAN

APR

JUL

OCT

$ Per Bu.

.Avg-200610

2011

2012


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JULY 1 FEEDER CATTLE SUPPLIESResidual, Outside Feedlots, U.S.

30

35

40

45

50

55

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

Mil. Head


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RETAIL ALL FRESH BEEF DEMAND INDEX

Third Quarter, Using CPI 1990=100

100 99

91 8986 84

75 73 7578

82 82 8385

9287

83 8378

74 75 7678

0

20

40

60

80

100

120

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Index Value

P i f


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11-1300 7-800 5-600

2011 114.74 131.98 140.00

2012 I 125.29 154.03 176.70

II 120.91 152.23 178.85

III 119.69 136.70 154.26

IV 125.54 141.81 158.76

2013 I 128-131 140-143 151-155

II 128-132 143-148 153-159

III 126-131 145-151 155-163

IV 128-134 146-153 153-160

2014 I 132-138 151-159 165-174

II 133-141 154-164 168-180

III 131-140 155-166 164-177

IV 133-142 153-165 161-176

Prices for 2011-2014

Texas CombinedAuction for 5-600and 7-800


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SLAUGHTER STEER PRICES

Southern Plains, Weekly

80

85

90

95

100

105

110115

120

125

130

135

JAN APR JUL OCT

$ Per Cwt.

.Avg-200610

2011

2012


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BOXED BEEF CUTOUT VALUE

Choice 600-900 Lbs. Carcass, Weekly

135

145

155

165

175

185

195

205

JAN APR JUL OCT

$ Per Cwt.

.Avg-200610

2011

2012


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May considerpurchasing putoptions


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RTC BROILER PRODUCTION

Quarterly

8.0

8.4

8.8

9.2

9.6

10.0

JAN-MAR APR-JUN JUL-SEP OCT-DEC

Bil. Pounds

Avg.2007/11

2012

2013

2014


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COMMERCIAL PORK PRODUCTION

Quarterly

5.0

5.2

5.4

5.6

5.8

6.0

6.2

6.4

6.6

JAN-MAR APR-JUN JUL-SEP OCT-DEC

Bil. Pounds

.Avg2007/11

2012

2013

2014


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Cotton MarketOutlook

Cotton Fundamentals


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Cotton Fundamentals:The Return to Normalcy

Increasing U.S. endingstocks, year over yearfits pattern ofweakening prices.

Historically high worldending stocks do too,but distorted byChinese reservestocks policy (whichaccounts for roughlyhalf of world endingstocks).

January WASDEreport tightened upU.S. numbers, butmade foreign numbersmore bearish.


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0

20406080100

120140160180200220

Dec-95

May-96

Oct-96

Mar-97

Aug-97

Jan-98

Jun-98

Nov-98

Apr-99

Sep-99

Feb-00

Jul-00

Dec-00

May-01

Oct-01

Mar-02

Aug-02

Jan-03

Jun-03

Nov-03

Apr-04

Sep-04

Feb-05

Jul-05

Dec-05

May-06

Oct-06

Mar-07

Aug-07

Jan-08

Jun-08

Nov-08

Apr-09

Sep-09

Feb-10

Jul-10

Dec-10

May-11

Oct-11

Mar-12

Aug-12

Marketing Year

Cen

ts/Lb

.an

dPercen

tage

U.S. Stks/Use Nearby Futures

U.S. Cotton Stocks-to-Use Show FundamentalRationale for Price Movements

(except too exaggerated in 2010/11!)

August 95 December 2012


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105.00

107.00

109.00

111.00

113.00

115.00

117.00

119.00

121.00

123.00

125.00

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Nov-12

Dec-12

Jan-13

Million480L

b.Bales

Monthly Estimatesof World 2012 Crop

Production

Consumption

STILL Dealing with the Effects of$2.00 Cotton

Monthly Estimates of World 2011 Crop


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European sovereign debt problem

Implies slow to negative economic growth in U.S. andEurope

Historically this is associated with reduced demandfor cotton

Weak Demand Outlook


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The Chinese govt has been stock-pilingcotton reserves since 2011

As long as this Chinese cotton remainsout of circulation, world prices havebeen supported higher than theyshould have been

But Chinese govt reserves represent a

big uncertainty1. Kicking the supply response can down the road2. Recent indicators that some releases may commence

fewer U.S. exports and lower prices.

China Influences

China to Release Cotton


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NEW YORKChina has decided to release cotton in its state reserves, a move that has the potential toshake up the global market for the fiber. The country's National Development and Reform Commissionsaid it planned to release the stocks to meet demand from the domestic textile industry, according to anotice on its website dated Dec. 28. However, the NDRC didn't give any details as to how much cottonwould be released, or when.

China is the world's largest producer and consumer of cotton. The news helped push cotton futures toa three-week low of 73.72 cents a pound during Friday's trading. The contract for March delivery on theICE Futures U.S. exchange later settled 0.5% lower at 75.05 cents a pound. China, the world's No. 1cotton producer and consumer, has been stockpiling the fiber since late 2011, and the U.S. Departmentof Agriculture forecasts that China would possess 47% of the world's raw-cotton stocks by July 31.

Its purchases of U.S. cotton had supported futures prices. Selling cotton from its reserves could meanfewer imports and less demand for U.S. cotton, analysts said. The release of cotton from China'sreserves "would be bearish to cotton futures, but we suspect they will only sell small amounts until

after planting season passes in the late spring," said John Flanagan, president of Flanagan Trading inFuquay Varina, N.C. If China released a lot of cotton, domestic prices could fall and discourage farmersfrom planting the crop. However, there are also rumors that China could link the release of reserves toimports of tax-free or low-tax cotton. Mills that buy from the stockpiles could be allowed to also bring inan equal amount from overseas. This year's cotton crop in China was of poor quality, so mills may wantimported fiber to blend with domestic stocks, according to industry participants.

China to Release CottonReserves; Futures Decline

By ALEXANDRA WEXLER Jan. 4, 2013

History of Corn: Cotton Prices


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8.00

9.00

10.00

11.00

12.0013.00

14.00

15.00

16.00

17.00

3.00 4.00 5.00 6.00 7.00 8.00 9.00

U.S.C

ottonPlantedAc

reage(mil.acres

Avg. Ratio of Corn to Cotton Futures Prices in Q1

History of Corn: Cotton PricesSuggests Fewer U.S. Cotton Acres

95

0100

06

9996

9703

04

05

02

11

9812

10 07

08 09


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Pricing Implications

Base price for YP and RP policies will beconsiderably lower than in previous year Note that a 65% RP policy essentially provides pure

downside price protection around the level of the loan

rate.

If you believe a sideways/lower price pattern($0.65-$0.85 range), then makes sense to

forward price or hedge some portion ofexpected production in 2013

Pool may be the only acres contract in town


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Cost Benefit Analysis


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Cost/Benefit Analysis

Utilize Extension Resources to Aid in DecisionMaking

Example. Assume a producer has 120 acres

under pivot and a 300 gpm well. Should he: Plant 120 acres of cotton with a target yield of 750 lbs?

Plant 60 acres of cotton with a target yield of 1500 lbs,then plant wheat/run stockers on the rest?

Plant 120 acres of wheat and just run stockers?

Harvest or graze out the wheat?

Own or lease the stockers?


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Final Thoughts

Utilize Extension Resources to Aid in Decision Making Drought Spreadsheets, Commodity Budgets, Market

Outlook Reports,http://agecoext.tamu.edu/http://Agrilife.org/southplainsprofit

FARM Assistance (Like Us on Facebook) QuickBooks Premier 2012

Questions/Thanks

DeDe JonesExtension Risk Management Specialist IIIAmarillo, Texas806-677-5600

[email protected]
http://agecoext.tamu.edu/http://agrilife.org/southplainsprofithttp://agrilife.org/southplainsprofithttp://agecoext.tamu.edu/

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