2015 Market Outlook Overview
2015 Market Outlook - Overview Hansford County Producers Meeting Spearman, Texas January 26, 2015
Presented By: Dr. Steve Amosson Regents Fellow Professor and Extension Economist
Presentation Outline • Input Prices • Cost of Production & Breakeven Prices • Feed grain outlook • Wheat outlook • Cattle fundamentals • Outlook Summary and Closing Comments • Farm Program update
2015 Feed Grains Projected Profitability
Irrigated Corn Costs of Production 2010-2015 (estimated) $210 $200 $190 $180 $170 $160 $150 $140 $130 $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0
Seed (per acre) Fertilizer (per acre) Insecticide (per acre) Herbicide (per acre) Irrigation Labor Cash Rent & Leases
Crop Profitability:
What will work in 2015? • Making the Decision • Returns over Variable Cost • Variable Cost – Out-of-Pocket Expenses Directly Related to Producing a Crop • • • •
Seed Fertilizer Chemicals Irrigation
• Returns over Total Cost • Return on Investment
Estimated Costs and Returns for 2015 Primary Irrigated Crops in Texas High Plains Wheat Soybean
Corn Silage
Sorghum Silage
75 cwt
65 bu
60 bu
27 ton
21 ton
$4.37
$0.58 / 160
$7.00
$6.02
$9.00
$40.30
$36.30
Grazing Income
-
-
-
$68
-
-
-
Gross Returns
$983
$771
$525
$459
$540
$1088
$762
Ac-In Applied*
22
12
14
15
14
20
13
Variable Costs
$718
$624
$409
$369
$385
$868
$527
Returns Over VC
$265
$147
$116
$91
$155
$220
$235
Corn Prod/Ac Price
Cotton
225 bu 1100 lbs
Sorghum
*Ac-In Priced at $4.30/mcf assuming 1 mcf = 1 ac-in
Estimated 2015 Corn returns over variable cost for various yields & prices Yield:
170
200
225
240
260
bushels
Price $/bu
Returns over Variable Costs ($)
3.50
(99.29)
(7.49)
69.01
114.91
176.11
4.00
(14.29)
92.51
181.51
234.91
306.11
4.37
48.61
166.51
264.76
323.71
402.31
4.85
130.21
262.51
372.76
438.91
527.11
5.35
215.21
362.51
485.26
558.91
657.11
Estimated 2015 Sorghum returns over variable cost for various yields & prices Yield: Price $/cwt
45
60
75
90
105
cwt Returns over Variable Costs ($)
5.60
(133.82)
(61.37)
11.08
83.53
155.98
6.40
(97.82)
(13.37)
71.08
155.53
239.98
7.00
(70.82)
22.63
116.08
209.53
302.98
7.80
(34.82)
70.63
176.08
281.53
386.98
8.60
1.18
118.63
236.08
353.53
470.98
Estimated 2015 Cotton returns over variable cost for various yields & prices Yield: Price $ / lb
500
800
1100
1400
1700
lbs Returns over Variable Costs ($)
0.50
(200.31)
(70.87)
58.57
188.00
317.44
0.55
(175.31)
(30.87)
113.57
258.00
402.44
0.58
(160.31)
(6.87)
146.57
300.00
453.44
0.65
(125.31)
49.13
223.57
398.00
572.44
0.70
(100.31)
89.13
278.57
468.00
657.44
Estimated 2015 Wheat returns over variable cost for various yields and prices Yield: Price $/bu
45
55
65
75
85
bushels Returns over Variable Costs ($)
5.00
(63.36)
(19.46)
24.44
68.34
112.24
5.50
(40.86)
8.04
56.94
105.84
154.74
6.02
(17.46)
36.64
90.74
144.84
198.94
6.50
4.14
63.04
121.94
180.84
239.74
7.00
26.64
90.54
154.44
218.34
282.24
Estimated 2015 Corn Silage returns over variable cost for various yields & prices Yield:
18
22
27
32
38
tons
Price $/bu
Returns over Variable Costs ($)
30
(249.09)
(164.29)
(58.29)
47.71
174.91
35
(159.09)
(54.29)
76.71
207.71
364.91
40
(69.09)
55.71
220.71
367.71
554.91
45
20.91
165.71
346.71
527.71
744.91
50
110.91
275.71
481.71
687.71
934.91
Estimated 2015 Sorghum Silage returns over variable cost for various yields & prices Yield:
12
16
21
26
30
tons
Price $/cwt
Returns over Variable Costs ($)
25
(147.94)
(83.14)
(2.14)
78.86
143.66
30
(87.94)
(3.14)
102.86
208.86
293.66
36
(15.94)
92.86
235.86
364.86
473.66
40
32.06
156.86
312.86
468.86
593.66
45
92.06
236.86
417.86
589.86
743.66
Estimated Costs and Returns for 2015 Primary Dryland Crops in Texas High Plains
Cotton
Sorghum
Wheat
Sunflowers
400 lbs
25 cwt
20 bu
10 cwt
$0.58 / 160
$7.00
$6.02
$17.30
Grazing Income
-
-
$36.50
-
Gross Returns
$280.29
$175.00
$156.90
$173.00
Variable Costs
$305.42
$144.09
$136.41
$161.68
Returns Above VC
($25.13)
$30.91
$20.49
$11.32
Production/Ac Price
2015 Feed Grain Fundamentals
World Days of Use on Hand, 12/10/2014 140
140
120
120
100
100
80
72
80
60
60
40
40
20
20
Corn
0
0
Days of Use
20-yr avg
140
140
120
120 100
80
60
60
40
40
0
10-yr avg
75
20
Wheat
20-yr avg
100
80
20
Soybeans
Days of Use
10-yr avg
100
115
Rice
0
Days of Use
20-yr avg
10-yr avg
Days of Use
Cotton: 350 day supply
20-yr avg
10-yr avg
World Per Capita Grain Use
kg
400 390 380 370 360 350 340 330 320 310 300
barley, corn, millet, mixed grains, oats, rice , rye, sorghum, soybeans, and wheat USDA, Foreign Agricultural Service, PSD, 12/18/2014
384
Global Economic Growth Percent Change
10 8 6 4 2 0 -2
-6
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
-4
World
Advanced Economies
World Economic, Outlook, October 2014: http://www.imf.org
Emerging Market and Developing Economies
Million Bushels
7000 6000 5000 4000 3000 2000 1000 0 80/81 81/82 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15
U.S. Corn: Disappearance Feed & Residual
Fuel
Exports
Source: Feed Yearbook, USDA/ERS, WASDE, USDA 2013/14 preliminary; 2014/15 projected
FSI Minus Fuel
Corn U.S. Supply/Demand (million bushels) Supply Beginning Stks Production Total Supply Disappearance Domestic Use Exports Total Use Ending Stks Carryover/Use (%) Avg. Farm Price
2010/11
2011/12
2012/13
2013/14
2014/15
1,708 12,447
1,128 12,360
989 10,755
821 13,925
1,331 14,216
14,182
13,517
11,904
14,782
15,547
11,221 1,834
10,985 1,543
10,353 730
11,629 1,917
11,920 1,750
13,055
12,528
11,083
13,546
13,670
1,128 8.64 5.18
989 7.90 6.22
821 7.41 6.89
1,236 9.13 4.46
1,877 13.73 3.65
Corn, SAFP and Stocks to Use Ratio 1969/70-2014/15 8 7
2012 2011
6
2010
5
2007
4
2009
2013 2008 2014
3 2 1 0 0
10
20
30
40
50
60
70
Sorghum U.S. Supply/Demand (million bushels) Supply Beginning Stks Production Total Supply Disappearance Domestic Use Exports Total Use Ending Stks Carryover/Use (%) Avg. Farm Price
2010/11
2011/12
2012/13
2013/14
2014/15
41 346
27 214
23 248
15 389
34 408
387
242
280
404
442
208 152
156 63
189 76
158 212
175 230
359
219
265
370
405
27 7.52 5.02
23 10.51 5.99
15 5.66 6.33
34 9.19 4.28
37 9.14 3.50
Feed Use
Feed and Residual Use GCAU mil
mt/GCAU
Year to Year Change: GCAU: +2.7% Feed/GCAU: +3.5%
100
2.5
90 80
2.0
70 60
1.5
50 40
1.0
30 20
0.5
10 0
0.0 19751977197919811983198519871989199119931995199719992001200320052007200920112013 Dairy Poultry
Cattle on Feed Other Livestock
Other Cattle Feed per GCAU
Hogs Plus DDGs
USDA Feed Grain Database and Agricultural Marketing Resource Center, December 19, 2014
37% Cattle 28% Pork 34% Poultry
Cattle on Feed 1,000+ capacity feedlots
Latest Data: October 2014
Iowa State Hog Inventory & Price Projections
Ethanol Demand
One gallon = 3.87 liters
Ethanol Profitability per gallon Agricultural Marketing Resource Center, Iowa State University http://www.agmrc.org/renewable_energy/ $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00
Corn
Natural Gas
Other VC
FC
Revenue
Oct 2014 revenue and prices (change from previous month): profit $0.03/gal (-91%); ethanol $1.56/gallon (-15%); corn $3.26/bu (-2%); natural gas $7.94/1000 ft3 (-0%); ddgs $103/ton (-15%)
U.S. Ethanol Production
“144 countries have defined renewable energy targets” http://www.ren21.net/REN21Activities/GlobalStatusReport.aspx
2014 U.S. Ethanol Exports US ethanol exports in November reached 344 million liters (90.8 million gallons), the highest volume seen so far in 2014 and the highest since December 2011, when more than 600 million liters left the country, US Census Bureau data showed Wednesday.
Exports
Corn Production Million bu
30,000 25,000 20,000 15,000 10,000 5,000 0
US WASDE 11/8/2013
Foreign
Corn Exports as % of World Share 1972 - 2014 100 U.S. Share Percent
80 60 40 20
EU-27 Share
0 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
Note: From 1972/73 – 1998/99 is EU-15. USDA revised to EU-27 in 1999/00. USDA revised to EU-28 in 2014/15.
Corn: Major Exporters 2013/14 and 2014/15 (million metric tons) Brazil 21.50
S. Africa 3.00
Brazil 19.50
S. Africa 2.20
U.S. 48.70 Other 16.79
U.S. 44.45 Other 14.35
Argentina 15.50
Argentina 12.00
24.65 FSU-12
2013/14 (estimated) Total = 130.14
19.84 FSU-12
2014/15 (projected) Total = 112.34
Sorghum: Major Importers 2013/14 and 2014/15 (million metric tons) Other 2.175
Sudan 0.075
Chile 0.150 Mexico 0.162
Sudan 0.200
Other 1.390 Chile 0.250 Mexico 0.100
Japan 1.003 Columbia 0.104
2013/14 (estimated) Total = 7.830
China 4.161
China 5.000
Japan 1.200 Columbia 0.250
2014/15 (projected) Total = 8.390
1980/1981 1981/1982 1982/1983 1983/1984 1984/1985 1985/1986 1986/1987 1987/1988 1988/1989 1989/1990 1990/1991 1991/1992 1992/1993 1993/1994 1994/1995 1995/1996 1996/1997 1997/1998 1998/1999 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015
Corn and Soybean Harvested Area in Brazil and Argentina Combined
Million acres
200 180 160 140 120 100 80 60 40 20 0
Soybeans
PSD, 9/24/2014
Corn
2014/15—combined all time record high; soybeans +4 mil (+3.2%), corn -2 mil (-4.5%)
U.S. Corn Export Sales Commitments, 2014/15 MY
U.S. Sorghum Export Sales Commitments, 2014/15 MY
U.S. Dollar Index 1-23-15
Up 17%
2015 Feedgrain Production Possibilities
Sorghum: Area Planted and Harvested, 2006 – 2014 (1,000 acres) Planted 1/
Harvested
2006
2007
2008
2009
2010
2011
2012
2013
2014
2006
2007
2008
2009
2010
2011
2012
2013
2014
2750
2800
3000
2700
2350
2600
2500
3100
2850
2500
2650
2800
2550
2250
2000
2100
2800
2650
370
350
270
210
140
130
120
285
170
240
240
210
135
80
90
60
140
120
Texas
2000
2750
3500
2700
1900
1550
2350
3000
2600
1300
2450
3050
2050
1700
1150
1900
2300
2100
U.S
6522
7712
8404
6599
5369
5451
6259
8061
7213
4937
6792
7312
5502
4806
3945
4995
6530
6174
Kansas Nebraska
1/ Includes area planted in preceding fall. 2013 estimated, 2014 forecasted; 2014 intended planting as indicated by reports from farmers. Source: USDA Planted Acreage Report, 6/30/14; Prospective Plantings 3/28/14; WASDE and Crop Production, 12/10/14, Annual Crop Production, January 2014
Corn: Area Planted and Harvested, 2007 – 2014 (1,000 acres) Planted 1/ 2007
2008
2009
2010
2011
Harvested 2012
2013
2014
2007
2008
2009
2010
2011
2012
2013
2014
12800
13300
13050
13700
13700
13100
13200
11900
11800
12400
12400
12250
11800
11700
3630
3860
4650
4200
3950
4000
3700
8550
8850
8850
9600
9100
9550
8750
2030
1960
2080
1470
1550
2000
1930
78570
79490
81446
83879
87365
87668
83097
1390 0 Iowa
14200
13300
13600
13400
14100
14200
13600
13600
Illinois
13200
12100
12000
12600
12600
12800
12000
11900
1305 0 3680
Kansas
3900
3850
4100
4850
4900
4700
4300
4050 9200
Nebraska
9400
8800
9150
9150
9850
10000
9950
9300
Texas
2150
2300
2350
2300
2050
1850
2350
2250
93527
85982
86382
88192
91936
97291
95365
90885
1970
U.S
1/ Includes area planted in preceding fall. 2013 estimated, 2014 forecasted; 2014 intended planting as indicated by reports from farmers.
Source: USDA Planted Acreage Report, 6/30/14; Prospective Plantings 3/28/14; WASDE and Crop Production, 12/10/14, Annual Crop Production, January 2014
8652 0
U.S. Corn Acres Average USDA:FSA =101%
100,000,000
103%
80,000,000 60,000,000 40,000,000 20,000,000 0 2006
2007
2008
2009
2010
FSA Planted, Failed, Prevented
2011
2012
USDA Planted
2013 Dec-14
Corn: 88 million, down 3.2% Soybeans: 84 million, down 0.2% Wheat: 56 million, -1.4% Cotton: 9.8 million, -9.3% Sorghum: 7.5 million, +4.2%
U.S. Planted Acres Million acres
300 250 200 150 100 50 0
Corn USDA, 12/18/2014
Soybeans
Wheat
Cotton
Sorghum
Corn U.S. Supply/Demand Item Planted Acreage (Mil. Acs.) Harvested Acreage (Mil. Acs.) Yield (Bushels)
06/07
07/08
08/09
09/10
10/11
11/12
12/13
13/14
14/15
78.30 70.60 149.10
93.50 86.50 150.70
86.00 78.60 153.90
86.40 79.50 164.70
88.20 81.40 152.80
91.90 84.00 147.20
97.30 87.40 123.10
95.40 87.70 158.80
90.90 83.10 171.00
Supply Beginning Stocks Production Imports
- - - - - - - - - - - - - - - - - - - - - - Million Bushels - - - - - - - - - - - - - - - - - - - - 1,967 10,531 12
1,304 13,038 20
1,624 12,092 14
1,673 13,092 8
1,708 12,447 28
1,128 12,360 29
989 10,755 160
821 13,925 36
1,236 14,216 25
12,510
14,362
13,729
14,774
14,182
13,517
11,904
14,782
15,547
5,591 3,490 2,125
5,913 4,387 2,437
5,182 5,025 1,849
5,125 5,961 1,980
4,795 6,426 1,834
4,557 6,428 1,543
4,315 6,038 730
5,132 6,497 1,917
5,375 6,545 1,750
11,207
12,737
12,056
13,066
13,055
12,528
11,083
13,546
13,670
Ending Stocks
1,304
1,624
1,673
1,708
1,128
989
821
1,236
1,877
Carryover/Use (%)
11.64
12.75
13.88
13.07
8.64
7.90
7.41
9.13
13.73
3.04
4.20
4.06
3.55
5.18
6.22
6.89
4.46
3.65
Total Supply Disappearance Feed and Residual Food, Seed & Industrial Exports Total Use
Average Farm Price ($/Bu.)
2013/14 estimated; 2014/15 projected; numbers may not add due to rounding; SOURCE: USDA/NASS/ERS/WASDE
U.S. Corn Yields Bushels per acre 173.4
180 164.7 160 140 120 100 80 60
Yield WASDE, 12/10/2014
Trend
Corn Yield, % Deviation From Trend 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 WASDE, 12/10/2014
Area and Yield Needed to Produce 13.745 billion bushel crop USDA Long-range projections: December 18, 2014 Bushels per acre 180 178 176 174 172 170 168 166 164 162 160 158 156 154 152 150 148 146 144 142 140
Add to Ending Stocks
-440 mil
Reduce Ending Stocks 85
86
87
88
89
90
91
92
93
94
Planted acres, millions
95
96
97
98
99
100
This and That
Corn to Soybean Price Ratio • Normal or considered neutral 2.5 • Current ratio: 9.60/4.17 = 2.30
El Niño/Southern Oscillation (ENSO) Diagnostic Discussion, 18 December 2014 http://www.cpc.ncep.noaa.gov/products/analysis_monitoring/enso_advisory/
Corn
Dec. 2015 Corn Contract
¢/bu
500
480
460
9/2/2014 9/15/2014 9/26/2014 10/9/2014 10/22/2014 11/4/2014 11/17/2014 12/1/2014 12/12/2014 12/25/2014 1/7/2015 1/20/2015 1/31/2015 2/11/2015 2/24/2015 3/9/2015 3/20/2015 4/2/2015 4/15/2015 4/28/2015 5/11/2015 5/22/2015 5/31/2015 6/9/2015 6/18/2015 6/27/2015 7/6/2015 7/15/2015 7/24/2015 8/2/2015 8/11/2015 8/20/2015 8/29/2015 9/7/2015 9/16/2015 9/25/2015 10/4/2015 10/13/2015 10/22/2015 10/31/2015 11/9/2015 11/18/2015 11/27/2015 12/6/2015 12/15/2015
December Corn Futures and 2015 Marketing Plan 20%
South American crop conditions Battle for Acres Planting Intentions
20% 20%
Planting Intentions Grain Stocks Early season crop conditions Weather outlook
20%
Acreage Report/ Grain Stocks Weather
20%
Tassel and August Crop Report Cash sales at harvest
440
420
400
380
360
340
320
300
2015 Wheat Fundamentals
World Days of Use on Hand, 12/10/2014 140
140
120
120
100
100
80
72
80
60
60
40
40
20
20
Corn
0
0
Days of Use
20-yr avg
140
140
120
120 100
80
60
60
40
40
0
10-yr avg
75
20
Wheat
20-yr avg
100
80
20
Soybeans
Days of Use
10-yr avg
100
115
Rice
0
Days of Use
20-yr avg
10-yr avg
Days of Use
Cotton: 350 day supply
20-yr avg
10-yr avg
Wheat Production, Major Countries mmt
160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0 Argentina
Australia
2010/2011
Canada 2011/2012
USDA, Foreign Agricultural Service, 12/10/2014
China
EU 28 2012/2013
FSU-12
India 2013/2014
Pakistan
US
2014/2015
World Wheat Supply, Use, Ending Stocks, and Exports 2009 - 2014 Million Metric Tons
1000
2009 2010 2011 2012 2013 2014
800 600 400 200 0 Supply
Use
Ending Stocks
Exports
World Wheat Exports 2013/14 - 2014/15 (million metric tons) Other
Other
20.73
FSU-12
FSU-12
37.10
19.78
37.74
Canada
Canada
23.24
Argentina
2.20
23.00 Argentina
6.00
Australia
EU-28
Australia
18.62
31.93
17.50 EU-28
30.00
32.01
25.17
U.S.
U.S.
2013/14 (estimated) Total = 165.83
2014/15 (projected) Total = 159.19
U.S. Wheat Exports, 1980 - 2014 1800
Million Bushels
1600 1400 1200 1000 800 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
International Grain Council – January 22, 2015
Wheat U.S. Supply/Demand (million bushels) 2010/11
2011/12
2012/13
2013/14
2014/15
976 2,207 97
862 1,999 112
743 2,252 123
718 2,135 169
590 2,026 180
3,279
2,974
3,118
3,021
2,796
1,128 1,289
1,180 1,051
1,388 1,012
1,255 1,176
1,184 925
Total Use
2,417
2,231
2,400
2,431
2,109
Ending Stks Carryover/Use (%) Avg. Farm Price
862 35.67 5.70
743 33.31 7.24
718 29.92 7.77
590 24.27 6.87
687 32.58 6.10
Supply Beginning Stks Production Imports Total Supply Disappearance Domestic Use Exports
Wheat: Area Planted and Harvested, 2007 – 2014 (1,000 acres) Planted 1/
Harvested
2007
2008
2009
2010
2011
2012
2013
10400
9600
9300
8400
8800
9400
9500
N. Dakota
8595
9230
8680
8530
6800
7840
Oklahoma
5900
5600
5700
5300
5100
Texas
6200
5800
6400
5700
60460
63193
59168
53593
Kansas
U.S
2014
2007
2008
2009
2010
2011
2012
2013
2014
9600
8600
8900
8800
8000
7900
9000
8450
8800
6105
7960
8405
8640
8415
8400
6590
7765
6025
7490
5400
5600
5300
3500
4500
3500
3900
3200
4300
3400
2800
5300
5700
6300
6000
3800
3300
2450
3750
1900
2900
2350
2250
54409
55294
56236
56822
50999
55699
49893
47619
45705
48758
45332
46381
1/ Includes area planted in preceding fall. 2013 estimated, 2014 forecasted; 2014 intended planting as indicated by reports from farmers.
Source: USDA Planted Acreage Report, 6/30/14; Prospective Plantings 3/28/14; WASDE and Crop Production, 1/12/15, Annual Crop Production, January 2015
U.S. Wheat Yield, 1980 - 2014 50
y = 0.3184x + 33.88 2015 est. = 45.34
Bu./Ac.
45 40 35 30 25 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
Winter Wheat Crop Condition Index
Wheat
July 15 KC Wheat
Wheat, Corn, and Soybeans Speculative Investment
High and Low July KCBT Wheat Prices 1976-2014
# of Occurrences
12
High
Low
10 8 6 4 2 0 Earlier J
J
A
S
O
N
D
J
F
M
A
M
J
J
2015 Cattle Fundamentals
2014 = 29 Million Head -2 Percent
2014 = 9.2 Million Head -0.1 Percent
BEEF COW SLAUGHTER Federally Inspected, Weekly
.Avg -2007 11 2012
T C O
JU L
R
2013 AP
JA
N
Thou. Head 90 85 80 75 70 65 60 55 50 45 40
HEIFER SLAUGHTER Federally Inspected, Weekly Thou. Head 215 205
.Avg -2007 11
195 185 175
2012
165 155 145
2013 T C O
JU L
R AP
JA
N
135
Cattle on Feed Report 1-23-15
Supply Factors • Continued Tight Supplies – Calves, feeder cattle, cows
• Herd Expansion? – Sharply lower beef cow slaughter – Expect more heifers held back – Expect cow herd growth
Demand
Index Value 120 100
RETAIL ALL FRESH BEEF DEMAND INDEX Third Quarter, Using CPI 1990=100
100 99 91 89 86 84
80
75 73 75 77
82 82 83 85
92
87
83 83
87 78
78 79 76 75 74
60 40 20 0 1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
Demand • Surprisingly Strong in 2014 – More than expected
• Aided by High Pork and Poultry Prices • Growing Economy
Interesting Stuff • Feeder Cattle vs Fed Cattle – Feeders too high
• Calf Slaughter – Contribute to more on feed
• Record High Dressed Weights • More Choice • More Formula Pricing
Ag Center Feeder Matrix Projected profitability analysis for feeders being placed on feed January 25th
BEEF GRADED CHOICE As a Percent of Beef Graded, Weekly Percent 68 .Avg -2007 11
66 64
2012
62 60
2013
58
T C O
JU L
R AP
JA
N
56
Percent 100% 90%
STEERS/HEIFERS SOLD BY TRANSACTION Texas, Oklahoma & New Mexico Weekly Negotiated
80% 70% 60%
Negotiated Grid
50% 40%
Formula
30% 20% 10% 0%
Forward Contract
Feed Grains Summary • Abundant carryover stocks both domestically & worldwide will limit upside • Demand is and will be increasing but how much??? – Feed use - - will be up but limited – Ethanol use and exports will be relatively flat due to the strength of the dollar
• • • •
Basis maybe weakening slightly due to lower fuel/oil prices Loss of Direct Farm Program Payments Weather is starting off in a normal pattern Wildcards – Planted acreage – Weather
Wheat Summary • Abundant carryover stocks both domestically & worldwide will limit upside • Demand appears to be at best flat due to dependence on exports and increased feed grain supplies – Increased feed grain supplies worldwide – Strength of the dollar
• Basis maybe Strengthening slightly due to lower fuel/oil prices • Currently crop condition and projected weather patterns suggest normal production
• Really need something good to happen!
Summary & Grain EWAGS • Estimated breakevens – Corn …….. $4.05/bu. – Sorghum…….. Irrigated $4.24/bu. & Dryland $4.42/bu. – Wheat…….. Irrigated - VC $4.42/bu. & Dryland $4.87/bu. Irrigated - TC $6.95/bu. & Dryland $7.46/bu.
• Harvest prices – normal weather – Corn ………. $4.15/bushel – Sorghum….. 90 – 95% the price of corn – Wheat……… $5.50/bushel
• It is going to be a tricky year to make a profit so you need to: – Use a sharp pencil in determining your crop mix – Take advantage of marketing opportunities when they present themselves
Cattle Fundamental Summary • Continued tight supplies • Herd expansion appears to be starting • Beef demand was strong in 2014 supported by high hog and poultry prices • Beef production will fall only slightly in 2015 – Heavier weights & reduced calf slaughter
• Expect increases in swine & poultry production to dampen further increases in beef prices as the year unfolds • May see feeder prices falling somewhat
Projected Prices for 2013-2016 11-1300
7-800
5-600
2013
125.88
150.69
172.15
2014 I
146.34
171.45
201.23
II
147.82
189.72
225.72
III
158.49
217.95
250.76
IV 2015 I
165.59 162-166
229.63 222-228
272.21 266-272
II
162-167
224-230
270-277
III
159-164
223-230
263-272
IV
161-167
218-226
256-265
2016 I
162-168
218-227
260-273
II
162-169
220-230
264-277
III
159-166
218-228
258-272
IV
158-168
212-225
251-266
Texas Combined Auction for 5-600 and 7-800
Farm Program Update
Farm Program Sign-up Timeline August 2014
Oct
Sept
Nov
Dec
Jan
Feb
March
17th
Fix Planted Acres with FSA
April
May
June 2015
31st
Choice Between ARC & PLC
29th
27th
Reallocate Bases & Update Yields
2nd Dairy Margin 28th
Protection Program for 2014 and 2015
Mid
Summer??
Annual Sign-up
Preliminary Decision Aid Results • 348 Farms have been Analyzed • Observations by Major Crops – Corn (124) – Sorghum (251) – Wheat (328) – Other Crops (54)
• Crop Observations by Area – Eastern Panhandle (358) – Western Panhandle (399)
Base Acre Reallocation Results Total Farm Base Acre Reallocation Decision
33%
Yes Reallocate Do Not Reallocate
67%
Yield Analysis Results Texas Panhandle Yield Update Decision for Corn
Update
47% 53%
Do Not Update
Yield Analysis Results Texas Panhandle Yield Update Decision for Sorghum
33%
Update Do Not Update
67%
Yield Analysis Results Texas Panhandle Yield Update Decision for Wheat 27%
Update Do Not Update
73%
Average Payment Per Base Acre Average Payment Per Base Acre $700
$655
$600 $500 Corn Wheat
$400
Sorghum
$300
Soybeans $209
Peanuts
$192
$200
$164
Sunflowers
$133 $84
$100 $27
$43
$47
$50
$71
$31
$0
ARC
PLC
AFPC Decision Aid The tool is available at: https://afpc.tamu.edu or https://usda.afpc.tamu.edu
REMEMBER
• FECES HAPPENS!!
2015 High Plains Crop Spreadsheet Analyzer is Available • High Plains Crop Spreadsheet Analyzer – Includes current crop budgets – Ability to customize budgets to fit your operation – Compares relative profitability of cropping choices – Evaluate crop-share lease agreements – Value of irrigation – Considers Water District Limits ***Project funding provided by the Texas Corn Producers Board***
Educational programs of Texas A&M AgriLife Extension Service are open to all people without regard to race, color, sex, disability, religion, age or national origin.
Presented By: Dr. Steve Amosson Regents Fellow Professor and Extension Economist
Presentation Outline • Input Prices • Cost of Production & Breakeven Prices • Feed grain outlook • Wheat outlook • Cattle fundamentals • Outlook Summary and Closing Comments • Farm Program update
2015 Feed Grains Projected Profitability
Irrigated Corn Costs of Production 2010-2015 (estimated) $210 $200 $190 $180 $170 $160 $150 $140 $130 $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0
Seed (per acre) Fertilizer (per acre) Insecticide (per acre) Herbicide (per acre) Irrigation Labor Cash Rent & Leases
Crop Profitability:
What will work in 2015? • Making the Decision • Returns over Variable Cost • Variable Cost – Out-of-Pocket Expenses Directly Related to Producing a Crop • • • •
Seed Fertilizer Chemicals Irrigation
• Returns over Total Cost • Return on Investment
Estimated Costs and Returns for 2015 Primary Irrigated Crops in Texas High Plains Wheat Soybean
Corn Silage
Sorghum Silage
75 cwt
65 bu
60 bu
27 ton
21 ton
$4.37
$0.58 / 160
$7.00
$6.02
$9.00
$40.30
$36.30
Grazing Income
-
-
-
$68
-
-
-
Gross Returns
$983
$771
$525
$459
$540
$1088
$762
Ac-In Applied*
22
12
14
15
14
20
13
Variable Costs
$718
$624
$409
$369
$385
$868
$527
Returns Over VC
$265
$147
$116
$91
$155
$220
$235
Corn Prod/Ac Price
Cotton
225 bu 1100 lbs
Sorghum
*Ac-In Priced at $4.30/mcf assuming 1 mcf = 1 ac-in
Estimated 2015 Corn returns over variable cost for various yields & prices Yield:
170
200
225
240
260
bushels
Price $/bu
Returns over Variable Costs ($)
3.50
(99.29)
(7.49)
69.01
114.91
176.11
4.00
(14.29)
92.51
181.51
234.91
306.11
4.37
48.61
166.51
264.76
323.71
402.31
4.85
130.21
262.51
372.76
438.91
527.11
5.35
215.21
362.51
485.26
558.91
657.11
Estimated 2015 Sorghum returns over variable cost for various yields & prices Yield: Price $/cwt
45
60
75
90
105
cwt Returns over Variable Costs ($)
5.60
(133.82)
(61.37)
11.08
83.53
155.98
6.40
(97.82)
(13.37)
71.08
155.53
239.98
7.00
(70.82)
22.63
116.08
209.53
302.98
7.80
(34.82)
70.63
176.08
281.53
386.98
8.60
1.18
118.63
236.08
353.53
470.98
Estimated 2015 Cotton returns over variable cost for various yields & prices Yield: Price $ / lb
500
800
1100
1400
1700
lbs Returns over Variable Costs ($)
0.50
(200.31)
(70.87)
58.57
188.00
317.44
0.55
(175.31)
(30.87)
113.57
258.00
402.44
0.58
(160.31)
(6.87)
146.57
300.00
453.44
0.65
(125.31)
49.13
223.57
398.00
572.44
0.70
(100.31)
89.13
278.57
468.00
657.44
Estimated 2015 Wheat returns over variable cost for various yields and prices Yield: Price $/bu
45
55
65
75
85
bushels Returns over Variable Costs ($)
5.00
(63.36)
(19.46)
24.44
68.34
112.24
5.50
(40.86)
8.04
56.94
105.84
154.74
6.02
(17.46)
36.64
90.74
144.84
198.94
6.50
4.14
63.04
121.94
180.84
239.74
7.00
26.64
90.54
154.44
218.34
282.24
Estimated 2015 Corn Silage returns over variable cost for various yields & prices Yield:
18
22
27
32
38
tons
Price $/bu
Returns over Variable Costs ($)
30
(249.09)
(164.29)
(58.29)
47.71
174.91
35
(159.09)
(54.29)
76.71
207.71
364.91
40
(69.09)
55.71
220.71
367.71
554.91
45
20.91
165.71
346.71
527.71
744.91
50
110.91
275.71
481.71
687.71
934.91
Estimated 2015 Sorghum Silage returns over variable cost for various yields & prices Yield:
12
16
21
26
30
tons
Price $/cwt
Returns over Variable Costs ($)
25
(147.94)
(83.14)
(2.14)
78.86
143.66
30
(87.94)
(3.14)
102.86
208.86
293.66
36
(15.94)
92.86
235.86
364.86
473.66
40
32.06
156.86
312.86
468.86
593.66
45
92.06
236.86
417.86
589.86
743.66
Estimated Costs and Returns for 2015 Primary Dryland Crops in Texas High Plains
Cotton
Sorghum
Wheat
Sunflowers
400 lbs
25 cwt
20 bu
10 cwt
$0.58 / 160
$7.00
$6.02
$17.30
Grazing Income
-
-
$36.50
-
Gross Returns
$280.29
$175.00
$156.90
$173.00
Variable Costs
$305.42
$144.09
$136.41
$161.68
Returns Above VC
($25.13)
$30.91
$20.49
$11.32
Production/Ac Price
2015 Feed Grain Fundamentals
World Days of Use on Hand, 12/10/2014 140
140
120
120
100
100
80
72
80
60
60
40
40
20
20
Corn
0
0
Days of Use
20-yr avg
140
140
120
120 100
80
60
60
40
40
0
10-yr avg
75
20
Wheat
20-yr avg
100
80
20
Soybeans
Days of Use
10-yr avg
100
115
Rice
0
Days of Use
20-yr avg
10-yr avg
Days of Use
Cotton: 350 day supply
20-yr avg
10-yr avg
World Per Capita Grain Use
kg
400 390 380 370 360 350 340 330 320 310 300
barley, corn, millet, mixed grains, oats, rice , rye, sorghum, soybeans, and wheat USDA, Foreign Agricultural Service, PSD, 12/18/2014
384
Global Economic Growth Percent Change
10 8 6 4 2 0 -2
-6
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
-4
World
Advanced Economies
World Economic, Outlook, October 2014: http://www.imf.org
Emerging Market and Developing Economies
Million Bushels
7000 6000 5000 4000 3000 2000 1000 0 80/81 81/82 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15
U.S. Corn: Disappearance Feed & Residual
Fuel
Exports
Source: Feed Yearbook, USDA/ERS, WASDE, USDA 2013/14 preliminary; 2014/15 projected
FSI Minus Fuel
Corn U.S. Supply/Demand (million bushels) Supply Beginning Stks Production Total Supply Disappearance Domestic Use Exports Total Use Ending Stks Carryover/Use (%) Avg. Farm Price
2010/11
2011/12
2012/13
2013/14
2014/15
1,708 12,447
1,128 12,360
989 10,755
821 13,925
1,331 14,216
14,182
13,517
11,904
14,782
15,547
11,221 1,834
10,985 1,543
10,353 730
11,629 1,917
11,920 1,750
13,055
12,528
11,083
13,546
13,670
1,128 8.64 5.18
989 7.90 6.22
821 7.41 6.89
1,236 9.13 4.46
1,877 13.73 3.65
Corn, SAFP and Stocks to Use Ratio 1969/70-2014/15 8 7
2012 2011
6
2010
5
2007
4
2009
2013 2008 2014
3 2 1 0 0
10
20
30
40
50
60
70
Sorghum U.S. Supply/Demand (million bushels) Supply Beginning Stks Production Total Supply Disappearance Domestic Use Exports Total Use Ending Stks Carryover/Use (%) Avg. Farm Price
2010/11
2011/12
2012/13
2013/14
2014/15
41 346
27 214
23 248
15 389
34 408
387
242
280
404
442
208 152
156 63
189 76
158 212
175 230
359
219
265
370
405
27 7.52 5.02
23 10.51 5.99
15 5.66 6.33
34 9.19 4.28
37 9.14 3.50
Feed Use
Feed and Residual Use GCAU mil
mt/GCAU
Year to Year Change: GCAU: +2.7% Feed/GCAU: +3.5%
100
2.5
90 80
2.0
70 60
1.5
50 40
1.0
30 20
0.5
10 0
0.0 19751977197919811983198519871989199119931995199719992001200320052007200920112013 Dairy Poultry
Cattle on Feed Other Livestock
Other Cattle Feed per GCAU
Hogs Plus DDGs
USDA Feed Grain Database and Agricultural Marketing Resource Center, December 19, 2014
37% Cattle 28% Pork 34% Poultry
Cattle on Feed 1,000+ capacity feedlots
Latest Data: October 2014
Iowa State Hog Inventory & Price Projections
Ethanol Demand
One gallon = 3.87 liters
Ethanol Profitability per gallon Agricultural Marketing Resource Center, Iowa State University http://www.agmrc.org/renewable_energy/ $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00
Corn
Natural Gas
Other VC
FC
Revenue
Oct 2014 revenue and prices (change from previous month): profit $0.03/gal (-91%); ethanol $1.56/gallon (-15%); corn $3.26/bu (-2%); natural gas $7.94/1000 ft3 (-0%); ddgs $103/ton (-15%)
U.S. Ethanol Production
“144 countries have defined renewable energy targets” http://www.ren21.net/REN21Activities/GlobalStatusReport.aspx
2014 U.S. Ethanol Exports US ethanol exports in November reached 344 million liters (90.8 million gallons), the highest volume seen so far in 2014 and the highest since December 2011, when more than 600 million liters left the country, US Census Bureau data showed Wednesday.
Exports
Corn Production Million bu
30,000 25,000 20,000 15,000 10,000 5,000 0
US WASDE 11/8/2013
Foreign
Corn Exports as % of World Share 1972 - 2014 100 U.S. Share Percent
80 60 40 20
EU-27 Share
0 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
Note: From 1972/73 – 1998/99 is EU-15. USDA revised to EU-27 in 1999/00. USDA revised to EU-28 in 2014/15.
Corn: Major Exporters 2013/14 and 2014/15 (million metric tons) Brazil 21.50
S. Africa 3.00
Brazil 19.50
S. Africa 2.20
U.S. 48.70 Other 16.79
U.S. 44.45 Other 14.35
Argentina 15.50
Argentina 12.00
24.65 FSU-12
2013/14 (estimated) Total = 130.14
19.84 FSU-12
2014/15 (projected) Total = 112.34
Sorghum: Major Importers 2013/14 and 2014/15 (million metric tons) Other 2.175
Sudan 0.075
Chile 0.150 Mexico 0.162
Sudan 0.200
Other 1.390 Chile 0.250 Mexico 0.100
Japan 1.003 Columbia 0.104
2013/14 (estimated) Total = 7.830
China 4.161
China 5.000
Japan 1.200 Columbia 0.250
2014/15 (projected) Total = 8.390
1980/1981 1981/1982 1982/1983 1983/1984 1984/1985 1985/1986 1986/1987 1987/1988 1988/1989 1989/1990 1990/1991 1991/1992 1992/1993 1993/1994 1994/1995 1995/1996 1996/1997 1997/1998 1998/1999 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015
Corn and Soybean Harvested Area in Brazil and Argentina Combined
Million acres
200 180 160 140 120 100 80 60 40 20 0
Soybeans
PSD, 9/24/2014
Corn
2014/15—combined all time record high; soybeans +4 mil (+3.2%), corn -2 mil (-4.5%)
U.S. Corn Export Sales Commitments, 2014/15 MY
U.S. Sorghum Export Sales Commitments, 2014/15 MY
U.S. Dollar Index 1-23-15
Up 17%
2015 Feedgrain Production Possibilities
Sorghum: Area Planted and Harvested, 2006 – 2014 (1,000 acres) Planted 1/
Harvested
2006
2007
2008
2009
2010
2011
2012
2013
2014
2006
2007
2008
2009
2010
2011
2012
2013
2014
2750
2800
3000
2700
2350
2600
2500
3100
2850
2500
2650
2800
2550
2250
2000
2100
2800
2650
370
350
270
210
140
130
120
285
170
240
240
210
135
80
90
60
140
120
Texas
2000
2750
3500
2700
1900
1550
2350
3000
2600
1300
2450
3050
2050
1700
1150
1900
2300
2100
U.S
6522
7712
8404
6599
5369
5451
6259
8061
7213
4937
6792
7312
5502
4806
3945
4995
6530
6174
Kansas Nebraska
1/ Includes area planted in preceding fall. 2013 estimated, 2014 forecasted; 2014 intended planting as indicated by reports from farmers. Source: USDA Planted Acreage Report, 6/30/14; Prospective Plantings 3/28/14; WASDE and Crop Production, 12/10/14, Annual Crop Production, January 2014
Corn: Area Planted and Harvested, 2007 – 2014 (1,000 acres) Planted 1/ 2007
2008
2009
2010
2011
Harvested 2012
2013
2014
2007
2008
2009
2010
2011
2012
2013
2014
12800
13300
13050
13700
13700
13100
13200
11900
11800
12400
12400
12250
11800
11700
3630
3860
4650
4200
3950
4000
3700
8550
8850
8850
9600
9100
9550
8750
2030
1960
2080
1470
1550
2000
1930
78570
79490
81446
83879
87365
87668
83097
1390 0 Iowa
14200
13300
13600
13400
14100
14200
13600
13600
Illinois
13200
12100
12000
12600
12600
12800
12000
11900
1305 0 3680
Kansas
3900
3850
4100
4850
4900
4700
4300
4050 9200
Nebraska
9400
8800
9150
9150
9850
10000
9950
9300
Texas
2150
2300
2350
2300
2050
1850
2350
2250
93527
85982
86382
88192
91936
97291
95365
90885
1970
U.S
1/ Includes area planted in preceding fall. 2013 estimated, 2014 forecasted; 2014 intended planting as indicated by reports from farmers.
Source: USDA Planted Acreage Report, 6/30/14; Prospective Plantings 3/28/14; WASDE and Crop Production, 12/10/14, Annual Crop Production, January 2014
8652 0
U.S. Corn Acres Average USDA:FSA =101%
100,000,000
103%
80,000,000 60,000,000 40,000,000 20,000,000 0 2006
2007
2008
2009
2010
FSA Planted, Failed, Prevented
2011
2012
USDA Planted
2013 Dec-14
Corn: 88 million, down 3.2% Soybeans: 84 million, down 0.2% Wheat: 56 million, -1.4% Cotton: 9.8 million, -9.3% Sorghum: 7.5 million, +4.2%
U.S. Planted Acres Million acres
300 250 200 150 100 50 0
Corn USDA, 12/18/2014
Soybeans
Wheat
Cotton
Sorghum
Corn U.S. Supply/Demand Item Planted Acreage (Mil. Acs.) Harvested Acreage (Mil. Acs.) Yield (Bushels)
06/07
07/08
08/09
09/10
10/11
11/12
12/13
13/14
14/15
78.30 70.60 149.10
93.50 86.50 150.70
86.00 78.60 153.90
86.40 79.50 164.70
88.20 81.40 152.80
91.90 84.00 147.20
97.30 87.40 123.10
95.40 87.70 158.80
90.90 83.10 171.00
Supply Beginning Stocks Production Imports
- - - - - - - - - - - - - - - - - - - - - - Million Bushels - - - - - - - - - - - - - - - - - - - - 1,967 10,531 12
1,304 13,038 20
1,624 12,092 14
1,673 13,092 8
1,708 12,447 28
1,128 12,360 29
989 10,755 160
821 13,925 36
1,236 14,216 25
12,510
14,362
13,729
14,774
14,182
13,517
11,904
14,782
15,547
5,591 3,490 2,125
5,913 4,387 2,437
5,182 5,025 1,849
5,125 5,961 1,980
4,795 6,426 1,834
4,557 6,428 1,543
4,315 6,038 730
5,132 6,497 1,917
5,375 6,545 1,750
11,207
12,737
12,056
13,066
13,055
12,528
11,083
13,546
13,670
Ending Stocks
1,304
1,624
1,673
1,708
1,128
989
821
1,236
1,877
Carryover/Use (%)
11.64
12.75
13.88
13.07
8.64
7.90
7.41
9.13
13.73
3.04
4.20
4.06
3.55
5.18
6.22
6.89
4.46
3.65
Total Supply Disappearance Feed and Residual Food, Seed & Industrial Exports Total Use
Average Farm Price ($/Bu.)
2013/14 estimated; 2014/15 projected; numbers may not add due to rounding; SOURCE: USDA/NASS/ERS/WASDE
U.S. Corn Yields Bushels per acre 173.4
180 164.7 160 140 120 100 80 60
Yield WASDE, 12/10/2014
Trend
Corn Yield, % Deviation From Trend 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 WASDE, 12/10/2014
Area and Yield Needed to Produce 13.745 billion bushel crop USDA Long-range projections: December 18, 2014 Bushels per acre 180 178 176 174 172 170 168 166 164 162 160 158 156 154 152 150 148 146 144 142 140
Add to Ending Stocks
-440 mil
Reduce Ending Stocks 85
86
87
88
89
90
91
92
93
94
Planted acres, millions
95
96
97
98
99
100
This and That
Corn to Soybean Price Ratio • Normal or considered neutral 2.5 • Current ratio: 9.60/4.17 = 2.30
El Niño/Southern Oscillation (ENSO) Diagnostic Discussion, 18 December 2014 http://www.cpc.ncep.noaa.gov/products/analysis_monitoring/enso_advisory/
Corn
Dec. 2015 Corn Contract
¢/bu
500
480
460
9/2/2014 9/15/2014 9/26/2014 10/9/2014 10/22/2014 11/4/2014 11/17/2014 12/1/2014 12/12/2014 12/25/2014 1/7/2015 1/20/2015 1/31/2015 2/11/2015 2/24/2015 3/9/2015 3/20/2015 4/2/2015 4/15/2015 4/28/2015 5/11/2015 5/22/2015 5/31/2015 6/9/2015 6/18/2015 6/27/2015 7/6/2015 7/15/2015 7/24/2015 8/2/2015 8/11/2015 8/20/2015 8/29/2015 9/7/2015 9/16/2015 9/25/2015 10/4/2015 10/13/2015 10/22/2015 10/31/2015 11/9/2015 11/18/2015 11/27/2015 12/6/2015 12/15/2015
December Corn Futures and 2015 Marketing Plan 20%
South American crop conditions Battle for Acres Planting Intentions
20% 20%
Planting Intentions Grain Stocks Early season crop conditions Weather outlook
20%
Acreage Report/ Grain Stocks Weather
20%
Tassel and August Crop Report Cash sales at harvest
440
420
400
380
360
340
320
300
2015 Wheat Fundamentals
World Days of Use on Hand, 12/10/2014 140
140
120
120
100
100
80
72
80
60
60
40
40
20
20
Corn
0
0
Days of Use
20-yr avg
140
140
120
120 100
80
60
60
40
40
0
10-yr avg
75
20
Wheat
20-yr avg
100
80
20
Soybeans
Days of Use
10-yr avg
100
115
Rice
0
Days of Use
20-yr avg
10-yr avg
Days of Use
Cotton: 350 day supply
20-yr avg
10-yr avg
Wheat Production, Major Countries mmt
160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0 Argentina
Australia
2010/2011
Canada 2011/2012
USDA, Foreign Agricultural Service, 12/10/2014
China
EU 28 2012/2013
FSU-12
India 2013/2014
Pakistan
US
2014/2015
World Wheat Supply, Use, Ending Stocks, and Exports 2009 - 2014 Million Metric Tons
1000
2009 2010 2011 2012 2013 2014
800 600 400 200 0 Supply
Use
Ending Stocks
Exports
World Wheat Exports 2013/14 - 2014/15 (million metric tons) Other
Other
20.73
FSU-12
FSU-12
37.10
19.78
37.74
Canada
Canada
23.24
Argentina
2.20
23.00 Argentina
6.00
Australia
EU-28
Australia
18.62
31.93
17.50 EU-28
30.00
32.01
25.17
U.S.
U.S.
2013/14 (estimated) Total = 165.83
2014/15 (projected) Total = 159.19
U.S. Wheat Exports, 1980 - 2014 1800
Million Bushels
1600 1400 1200 1000 800 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
International Grain Council – January 22, 2015
Wheat U.S. Supply/Demand (million bushels) 2010/11
2011/12
2012/13
2013/14
2014/15
976 2,207 97
862 1,999 112
743 2,252 123
718 2,135 169
590 2,026 180
3,279
2,974
3,118
3,021
2,796
1,128 1,289
1,180 1,051
1,388 1,012
1,255 1,176
1,184 925
Total Use
2,417
2,231
2,400
2,431
2,109
Ending Stks Carryover/Use (%) Avg. Farm Price
862 35.67 5.70
743 33.31 7.24
718 29.92 7.77
590 24.27 6.87
687 32.58 6.10
Supply Beginning Stks Production Imports Total Supply Disappearance Domestic Use Exports
Wheat: Area Planted and Harvested, 2007 – 2014 (1,000 acres) Planted 1/
Harvested
2007
2008
2009
2010
2011
2012
2013
10400
9600
9300
8400
8800
9400
9500
N. Dakota
8595
9230
8680
8530
6800
7840
Oklahoma
5900
5600
5700
5300
5100
Texas
6200
5800
6400
5700
60460
63193
59168
53593
Kansas
U.S
2014
2007
2008
2009
2010
2011
2012
2013
2014
9600
8600
8900
8800
8000
7900
9000
8450
8800
6105
7960
8405
8640
8415
8400
6590
7765
6025
7490
5400
5600
5300
3500
4500
3500
3900
3200
4300
3400
2800
5300
5700
6300
6000
3800
3300
2450
3750
1900
2900
2350
2250
54409
55294
56236
56822
50999
55699
49893
47619
45705
48758
45332
46381
1/ Includes area planted in preceding fall. 2013 estimated, 2014 forecasted; 2014 intended planting as indicated by reports from farmers.
Source: USDA Planted Acreage Report, 6/30/14; Prospective Plantings 3/28/14; WASDE and Crop Production, 1/12/15, Annual Crop Production, January 2015
U.S. Wheat Yield, 1980 - 2014 50
y = 0.3184x + 33.88 2015 est. = 45.34
Bu./Ac.
45 40 35 30 25 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
Winter Wheat Crop Condition Index
Wheat
July 15 KC Wheat
Wheat, Corn, and Soybeans Speculative Investment
High and Low July KCBT Wheat Prices 1976-2014
# of Occurrences
12
High
Low
10 8 6 4 2 0 Earlier J
J
A
S
O
N
D
J
F
M
A
M
J
J
2015 Cattle Fundamentals
2014 = 29 Million Head -2 Percent
2014 = 9.2 Million Head -0.1 Percent
BEEF COW SLAUGHTER Federally Inspected, Weekly
.Avg -2007 11 2012
T C O
JU L
R
2013 AP
JA
N
Thou. Head 90 85 80 75 70 65 60 55 50 45 40
HEIFER SLAUGHTER Federally Inspected, Weekly Thou. Head 215 205
.Avg -2007 11
195 185 175
2012
165 155 145
2013 T C O
JU L
R AP
JA
N
135
Cattle on Feed Report 1-23-15
Supply Factors • Continued Tight Supplies – Calves, feeder cattle, cows
• Herd Expansion? – Sharply lower beef cow slaughter – Expect more heifers held back – Expect cow herd growth
Demand
Index Value 120 100
RETAIL ALL FRESH BEEF DEMAND INDEX Third Quarter, Using CPI 1990=100
100 99 91 89 86 84
80
75 73 75 77
82 82 83 85
92
87
83 83
87 78
78 79 76 75 74
60 40 20 0 1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
Demand • Surprisingly Strong in 2014 – More than expected
• Aided by High Pork and Poultry Prices • Growing Economy
Interesting Stuff • Feeder Cattle vs Fed Cattle – Feeders too high
• Calf Slaughter – Contribute to more on feed
• Record High Dressed Weights • More Choice • More Formula Pricing
Ag Center Feeder Matrix Projected profitability analysis for feeders being placed on feed January 25th
BEEF GRADED CHOICE As a Percent of Beef Graded, Weekly Percent 68 .Avg -2007 11
66 64
2012
62 60
2013
58
T C O
JU L
R AP
JA
N
56
Percent 100% 90%
STEERS/HEIFERS SOLD BY TRANSACTION Texas, Oklahoma & New Mexico Weekly Negotiated
80% 70% 60%
Negotiated Grid
50% 40%
Formula
30% 20% 10% 0%
Forward Contract
Feed Grains Summary • Abundant carryover stocks both domestically & worldwide will limit upside • Demand is and will be increasing but how much??? – Feed use - - will be up but limited – Ethanol use and exports will be relatively flat due to the strength of the dollar
• • • •
Basis maybe weakening slightly due to lower fuel/oil prices Loss of Direct Farm Program Payments Weather is starting off in a normal pattern Wildcards – Planted acreage – Weather
Wheat Summary • Abundant carryover stocks both domestically & worldwide will limit upside • Demand appears to be at best flat due to dependence on exports and increased feed grain supplies – Increased feed grain supplies worldwide – Strength of the dollar
• Basis maybe Strengthening slightly due to lower fuel/oil prices • Currently crop condition and projected weather patterns suggest normal production
• Really need something good to happen!
Summary & Grain EWAGS • Estimated breakevens – Corn …….. $4.05/bu. – Sorghum…….. Irrigated $4.24/bu. & Dryland $4.42/bu. – Wheat…….. Irrigated - VC $4.42/bu. & Dryland $4.87/bu. Irrigated - TC $6.95/bu. & Dryland $7.46/bu.
• Harvest prices – normal weather – Corn ………. $4.15/bushel – Sorghum….. 90 – 95% the price of corn – Wheat……… $5.50/bushel
• It is going to be a tricky year to make a profit so you need to: – Use a sharp pencil in determining your crop mix – Take advantage of marketing opportunities when they present themselves
Cattle Fundamental Summary • Continued tight supplies • Herd expansion appears to be starting • Beef demand was strong in 2014 supported by high hog and poultry prices • Beef production will fall only slightly in 2015 – Heavier weights & reduced calf slaughter
• Expect increases in swine & poultry production to dampen further increases in beef prices as the year unfolds • May see feeder prices falling somewhat
Projected Prices for 2013-2016 11-1300
7-800
5-600
2013
125.88
150.69
172.15
2014 I
146.34
171.45
201.23
II
147.82
189.72
225.72
III
158.49
217.95
250.76
IV 2015 I
165.59 162-166
229.63 222-228
272.21 266-272
II
162-167
224-230
270-277
III
159-164
223-230
263-272
IV
161-167
218-226
256-265
2016 I
162-168
218-227
260-273
II
162-169
220-230
264-277
III
159-166
218-228
258-272
IV
158-168
212-225
251-266
Texas Combined Auction for 5-600 and 7-800
Farm Program Update
Farm Program Sign-up Timeline August 2014
Oct
Sept
Nov
Dec
Jan
Feb
March
17th
Fix Planted Acres with FSA
April
May
June 2015
31st
Choice Between ARC & PLC
29th
27th
Reallocate Bases & Update Yields
2nd Dairy Margin 28th
Protection Program for 2014 and 2015
Mid
Summer??
Annual Sign-up
Preliminary Decision Aid Results • 348 Farms have been Analyzed • Observations by Major Crops – Corn (124) – Sorghum (251) – Wheat (328) – Other Crops (54)
• Crop Observations by Area – Eastern Panhandle (358) – Western Panhandle (399)
Base Acre Reallocation Results Total Farm Base Acre Reallocation Decision
33%
Yes Reallocate Do Not Reallocate
67%
Yield Analysis Results Texas Panhandle Yield Update Decision for Corn
Update
47% 53%
Do Not Update
Yield Analysis Results Texas Panhandle Yield Update Decision for Sorghum
33%
Update Do Not Update
67%
Yield Analysis Results Texas Panhandle Yield Update Decision for Wheat 27%
Update Do Not Update
73%
Average Payment Per Base Acre Average Payment Per Base Acre $700
$655
$600 $500 Corn Wheat
$400
Sorghum
$300
Soybeans $209
Peanuts
$192
$200
$164
Sunflowers
$133 $84
$100 $27
$43
$47
$50
$71
$31
$0
ARC
PLC
AFPC Decision Aid The tool is available at: https://afpc.tamu.edu or https://usda.afpc.tamu.edu
REMEMBER
• FECES HAPPENS!!
2015 High Plains Crop Spreadsheet Analyzer is Available • High Plains Crop Spreadsheet Analyzer – Includes current crop budgets – Ability to customize budgets to fit your operation – Compares relative profitability of cropping choices – Evaluate crop-share lease agreements – Value of irrigation – Considers Water District Limits ***Project funding provided by the Texas Corn Producers Board***
Educational programs of Texas A&M AgriLife Extension Service are open to all people without regard to race, color, sex, disability, religion, age or national origin.
