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Grain, Oilseed, and Biofuel Outlook

Grain, Oilseed, and Biofuel Outlook. Chad Hart Center for Agricultural and Rural Development Iowa State University E-mail: chart@iastate.edu January 18, 2008 Pro Ag Outlook Harlan, Iowa. Nearby Corn Futures. Corn Futures As Of 1/16/2008. Corn Market Factors. Domestic demand changes

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Grain, Oilseed, and Biofuel Outlook

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  1. Grain, Oilseed, and Biofuel Outlook Chad Hart Center for Agricultural and Rural Development Iowa State University E-mail: chart@iastate.edu January 18, 2008 Pro Ag Outlook Harlan, Iowa

  2. Nearby Corn Futures

  3. Corn Futures As Of 1/16/2008

  4. Corn Market Factors • Domestic demand changes • Livestock feed • Biofuels • South American plantings • Export competition • Competition for acreage • Corn vs. soybeans vs. wheat • Tighter stocks • More sensitivity to weather shocks

  5. U.S. Corn Supply and Demand Source: USDA

  6. Source: USDA

  7. Source: USDA

  8. Corn Utilization

  9. Exchange Rates

  10. Exchange Rate Futures

  11. World Corn Production Source: USDA

  12. South American Corn Area

  13. Temperatures in Argentina WMO data indicate that temperatures were not high enough to cause significant widespread damage to corn advancing through the tasseling and silking stages. Source: USDA

  14. Corn Production Costs - National Source: USDA-ERS

  15. Basis in 2006

  16. Basis in 2007

  17. Basis in 2008

  18. Nearby Soybean Futures

  19. Soybean Futures As Of 1/16/2008

  20. Soybean Market Factors • Domestic demand changes • Livestock feed • Biofuels • South American plantings • Export competition • Competition for acreage • Corn vs. soybeans vs. wheat • Tighter stocks • More sensitivity to weather shocks

  21. U.S. Soybean Supply and Demand Source: USDA

  22. # Source: USDA

  23. Source: USDA

  24. Soybean Meal Futures as of 1/16/2008

  25. Soybean Oil Futures as of 1/16/2008

  26. Exchange Rates

  27. World Soybean Production Source: USDA

  28. South American Soybean Area

  29. Precipitation in Brazil Brazil Crop Weather Summary January 10, 2008 Favorable Erratic Showers • Significant late start to the rainy season in most major soybean areas; • Seasonal showers still sporadic in portions of the central interior (beans flowering – pod-filling); • Near-normal precipitation in southern growing areas. Normal rains Source: USDA

  30. Corn-Soybean Price Ratio

  31. Soybean Production Costs - National Source: USDA-ERS

  32. Source: USDA

  33. Price Summary 2007/08 2006/07 forecast Change from Change from estimate (midpoint) last month last year Crops and products Percent Wheat ($/bu) 4.26 6.65 3.9 56.1 Rice ($/cwt) 9.74 11.15 0.0 14.5 Corn ($/bu) 3.04 4.00 9.6 31.6 Soybeans ($/bu) 6.43 10.40 6.7 61.7 Soybean oil (¢/lb) 31.02 47.50 10.5 53.1 Soybean meal ($/s.t.) 205.44 320.00 14.3 55.8 Cotton (¢/lb) 46.50 51.50* *Average price for August-November 2007. USDA is prohibited by law from publishing cotton price projections. Source: USDA

  34. Biofuel Factors • Feedstock costs and competition • High corn prices • High soybean oil prices • Vegetable oil demand in Southeast Asia • Energy markets • High oil and gas prices • Continued government support • Passage of the 2007 Energy Act • Efforts to extend biofuel tax credits • Consumer demand for biofuels • Southeast U.S.

  35. Ethanol Expansion Source: Renewable Fuels Association

  36. Biodiesel Growth Source: National Biodiesel Board

  37. Renewable Fuels Standard

  38. RFS by Fuel

  39. U.S. Ethanol Industry • Current ethanol capacity: 137 plants, 7.63 billion gallons/year • Total capacity under construction and expansion: 5.74 billion gallons/year • 63 new ethanol plants and 7 expansion projects underway • 2.1 billion bushels of corn were used in producing fuel ethanol in 2006/2007 marketing year. • 3.2-3.5 billion bushels of corn are expected to be used in producing fuel ethanol for 2007/2008 marketing year.

  40. Oil Futures As Of 1/16/2008

  41. Historical Ethanol Margins

  42. Projected Ethanol Margins

  43. Plant Location

  44. Comparing Futures Prices

  45. A Quick Look at Ethanol Blending Gasoline and ethanol prices are monthly average rack prices for Omaha

  46. Ethanol Usage - 2004 (latest available)

  47. RFS by Fuel

  48. U.S. Biodiesel Industry • Current biodiesel capacity: 165 plants, 1.85 billion gallons/year • Total capacity under construction and expansion: 1.35 billion gallons/year • 80 new plants underway • 2.8 billion pounds of soybean oil was used in producing biodiesel in 2006/2007 marketing year. • 3.8 billion pounds of soybean oil are expected to be used in producing biodiesel for 2007/2008 marketing year.

  49. Biodiesel Growth Source: National Biodiesel Board

  50. Biodiesel Internationally EU Biofuel targets: 5.75% by 2010 10% by 2020 Argentina Biodiesel mandate: 5% by 2010 Brazil Biodiesel mandate: 2% in 2008 5% by 2010 Many U.S. producers have targeted the EU market

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