1 / 10

Ag & Energy A Disruptive Event

Ag & Energy A Disruptive Event. David Miller Director, Research & Commodity Services, Iowa Farm Bureau. Food, Feed or Energy. A couple key questions If crude oil stays above $60, how will agriculture be affected? Are biofuels a fad or a sustainable trend?

gareth
Télécharger la présentation

Ag & Energy A Disruptive Event

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Ag & EnergyA Disruptive Event David Miller Director, Research & Commodity Services, Iowa Farm Bureau

  2. Food, Feed or Energy • A couple key questions • If crude oil stays above $60, how will agriculture be affected? • Are biofuels a fad or a sustainable trend? • What unintended consequences are apt to arise from the emergence of the biofuels industry? • Will we run out of corn?

  3. A Disruptive Event • Corn price expectations • Land capitalization • Increased risk • Acreage shifts

  4. Pulling: Ethanol From Corn • Where do we get all of these acres?

  5. Ethanol & Corn Use • What if: • 100 million acres of corn • 200 bushels per acre • 20 billion bushel corn crop • 10 billion ethanol grind • 30 billion gallons of ethanol • Is this possible in a decade?

  6. Corn Price Determination • PC = 3*[(PG*.667)+VEETC+DDG-OP-CAP] • PC = 3*[(1.80*.667)+0.51+0.22-0.52-0.24] • PC = 2*1.77 = 3.54

  7. Land Values • P(Land) = [(P(Corn)*Y(Corn))+G(Payments)-OP(Costs)]/(I(rate)) • P(Land05) = [($2.00*170)+$50-$150]/(.06) • P(Land05) = [$240]/(.06) = $4,000 • P(Land08) = [($3.50*180)+$0-$180]/(.06) • P(Land08) = [$450]/(.06) = $7,500

  8. Cash Rents • CR = P(Land) * 0.05 • CR(Land05) = $4,000 * 0.05 = $200 • CR(Land08) = $7,500 * 0.05 = $375

  9. In Conclusion • Demand shocks last much longer than supply shocks • Supply adjustments will come much quicker than we currently anticipate • Livestock production will adjust to new price levels • Adjustments will be made worldwide • It appears that we can have food, feed and fuel

More Related