2012 crop year impacts and future agricultural outlook...2012 crop year impacts and future...

2012 Crop Year Impacts and Future Agricultural Outlook

18 February Fluid Fertilizer Forum

Matthew C. Roberts

[email protected]

Where Have We Been, Where are We Going?

• 1990-2012: Strong Global Demand For Grains

• 2010-2012: Poor US Yields

• 2008-2012: Growing Global Grain Acreage

• 2008-2012: High Prices

• 2013: Short Term Outlook for Prices & Yields

• 2013-2020: Long Term Outlook for Production & Prices

• 2013-2020: Outlook for US Ag

www.matthewcroberts.com 2

1990-2012: STRONG GLOBAL DEMAND FOR GRAINS


Chinese Meat Consumption 90-13


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Chinese Oilseed Consumption Growing by 9.8%/yr since 1990


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Chinese Grain Consumption Climbing by 4%/year since 2006.


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Barley Millet Rice, Milled Sorghum Wheat Corn

The real currency of agriculture is land.

• Chinese soybean imports in 2011 are about 1.9bn bushels, or 45m acres.

– In 2001, about 600m bu, or 15m acres.

• US Ethanol usage is 5bn bu, net of DGS is about 3.4bn bu, or 22m acres

– In 2002, about 500m bu, or 2m acres.

• Plus Chinese feed grains, Indian demand, etc.,


The real currency of agriculture is land.

• Global Soybean Production Has Increased by 90mmt since 2001:

– That is 3.3bn bushels—more than US annual production!

• Global Corn Production Has Increased by 280mmt (11bn bushels!) since 2001.

• Global Wheat Production Has Increased by 110mmt (4.3bn bushels!) since 2001.


1990-2012: GLOBAL GRAIN ACREAGE


Soybean

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Soybean Corn Wheat

Global Soy & Corn Area Harvested Continues to Increase


2010-2012: WEAK US YIELDS


3/4/2013 13

2012 Was 3rd Consecutive Year of Poor Corn Yields


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Soybeans Have Also Had 3 Disappointing Years of Yields


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Domestic Soybean Demand Declining?

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2008-2012: HIGH PRICES


2013: SHORT TERM OUTLOOK


World Wheat Supplies Far Better Situation than ’07/08

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100MMT Percent

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Production 651

Use 675

Stocks-to-Use Ratio (%)

Source: WOAB, USDA

Global Soybean Inventories are VERY tight.

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Production 268

Use 261

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Global Corn Inventories Very Low

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Production 840

Use 854


Very tight soybean inventories are the new normal.

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100Bn Bushels Percent

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Production 3.02

Use 3.07


Corn Inventories are Incredibly Tight.

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Billion Bushels Percent

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Production 10.78

Use 11.27



CORN 2010/11 2011/12 2012/13 Proj. 2012/13 Proj. 13/14

Jan Feb MCR Proj

Million Acres

Area Planted 88.2 91.9 97.2 97.2 97

Area Harvested 81.4 84 87.4 87.4 90

Bushels

Yield per Harvested Acre 152.8 147.2 123.4 123.4 160

Million Bushels

Beginning Stocks 1708 1128 989 989 632

Production 12447 12358 10780 10780 14400

Imports 28 29 100 100 25

Supply, Total 14182 13515 11869 11869 15057

Feed and Residual 4795 4547 4450 4450 5000

Food, Seed & Industrial 2/ 6426 6437 5867 5887 6450

Ethanol & by-products 3/ 5019 5011 4500 4500 5050

Domestic, Total 11221 10984 10317 10337 11450

Exports 1834 1543 950 900 1950

Use, Total 13055 12527 11267 11137 13400

Ending Stocks 1128 989 602 632 1657

CCC Inventory 0 0 0 0

Free Stocks 1128 989 602 632

Outstanding Loans 48 41 50 50

Avg. Farm Price ($/bu) 4/ 5.18 6.22 6.80 – 8.00 6.75 – 7.65 5.00


SOYBEANS 2010/11 2011/12 Est. 2012/13 Proj. 2012/13 Proj. 2013/14

Jan Feb MCR Filler

Filler Filler Filler Filler

Million Acres

Area Planted 77.4 75 77.2 77.2 78.2

Area Harvested 76.6 73.8 76.1 76.1 77 Filler

Bushels

Yield per Harvested Acre 43.5 41.9 39.6 39.6 43

Million Bushels

Beginning Stocks 151 215 169 169 125

Production 3329 3094 3015 3015 3311

Imports 14 16 20 20 15

Supply, Total 3495 3325 3204 3204 3451

Crushings 1648 1703 1605 1615 1650

Exports 1501 1362 1345 1345 1500

Seed 87 90 89 89 90

Residual 43 1 30 30 30

Use, Total 3280 3155 3070 3080 3270

Ending Stocks 215 169 135 125 181

Avg. Farm Price ($/bu) 2/ 11.3 12.5 13.50 – 15.00 13.55 – 15.05 11.45 Total

LONG TERM OUTLOOK


Last Week, USDA Released Their 10 Year Baseline


What if we have 2 years of 160+/42+ Yields?

• $4.00 corn and $10 soybeans.

• What does this do to:

– Land Prices?

– Plantings?

– Solvency?


What can producers do?

• Build capital:

– Current assets should be at least one years’ land payment above working capital needs.

– 1.5 years if you want to keep it in stocks and bonds.

– (Near) Cash is the only way to ultimately manage risk.

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What can retailers do?

• Monitor Credit Risk:

– Clients, especially those with large, rented, landbases, are very vulnerable.

– Other Firms may not manage as well: watch them, too.

• How will you approach clients when corn is $4?

33


What could possibly go wrong?

What are the unknown unknowns?



Matt Roberts

(614) 688-8686

[email protected]

http://aede.osu.edu/people/roberts.628

Twitter: @YourEconProf

Questions?

mailto:[email protected]



2012 crop year impacts and future agricultural outlook...2012 crop year impacts and future...

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