agriculture economic drivers in 2013 and beyond

Steven L. ElmoreDirector of Global Market Intelligence – DuPont Pioneerand Chief Agricultural Economist

MARCH 13, 2013

Agriculture Economic Drivers in 2013 and Beyond

Pioneer Global Economics© 2013 DuPont Pioneer2

Jan-

90M

ar-9

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2$100.00

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$1,200.00

$1,400.00

$1,600.00

$1,800.00

Corn NearbySoybeans Nearby

Why did prices go high in 2012?CBOT Nearby Weekly Prices

Corn ($/Bushel) Soybeans ($/Bushel)


Price

Production

Price

Production

SUPPLY SHOCKWhen production goes down, prices increase.*

DEMAND SHOCKBoth Price and Production

Go Up*

* The converse is true.

Supply Demand

Why did prices go high in 2012? Supply or Demand & Outlook for 2013…


Why did prices go high in 2012?Drought?

This started in the previous year as Argentina and Brazil had lower production. The US &

Canada needed to produce a big crop to rebuild world stocks. Then the drought hit…


U.S. Nominal Corn Price – 1866-201218

6618

7218

7818

8418

9018

9619

0219

0819

1419

2019

2619

3219

3819

4419

5019

5619

6219

6819

7419

8019

8619

9219

9820

0420

10

$0$1$2$3$4$5$6$7$8

$/Bushel

1911-1939Average = $0.73

1940-1969Average = $1.20

1970-2005Average = $2.30

2006-2012Average = $4.78

1866-1910Average = $0.44

We had droughts before, but never these price levels.

It has to be

something more…a DEMAND SHOCK?


1800

1850

1900

1950

1975

2000

2010

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

World Income – GDP

1800

1850

1900

1950

1975

2000

2025

0100020003000400050006000700080009000

World population

Are Income & Population Driving High Prices?

Population and Income have been going up for a long time, why are prices now going up?

Trillion Billion


Agriculture Growth Periods in the past 50 years

Europe 90Japan 17FSU 55Mex.& S.Am 105Middle East 41China 142U.S. Ethanol 87

North America 204South America 106Black Sea 49

China 90India 74

2010s

GRAIN SELF SUFFICIENCY COUNTRIES

Growth (MMT)

Growth (MMT)1960s 1970s 1980s 1990s 2000s 2010s

GRAIN EXPORT SUPPLY HUBS

GRAIN POLITICAL DRIVEN DEMAND CENTERS1960s 1970s 1980s 1990s 2000s

Political Demand Shocks With Economic Consequences for the Global Grain Complex


World Population: A Closer View

1950

1970

1990

2010

2030

2050

2070

2090

0

2000000

4000000

6000000

8000000

10000000

World population

More developed regions Less developed regions

1970 2000 2030 20500

2000

4000

6000

8000

10000

Food Consumption (kcal/day)

Developed >3000 2700-30002500-2700 2200-2500 <2200

Billion People

Income changes in the developing word are improving people’s diets on a global basis.

Billion


Dynamics of Food Demand Growth1.4 billion people live on less that $1.25/day ($456/yr)• 1 billion cannot afford 1,800 calories per day. 2.6 billion people live on less than $2.00/day ($730/yr)• At $2.00 per day most hunger (calorie) problems solved, but 1 billion still

suffer nutritional deficiencies.As their incomes rise from about $2 to $10 per day, people eat more meat, dairy products, eggs, edible oils, fruits & vegetables causing rapid growth in raw ag commodity demand. ($730-$3,650/yr)After about $10 per day, people buy more processing, services, packaging, variety, and luxury forms, but not more raw ag commodities. (>$3,650/yr)


US & World Real Per Capita GDP ($/person)20

0720

0820

0920

1020

1120

1220

1320

1420

15

39,00040,00041,00042,00043,00044,00045,00046,000

USA

2007

2008

2009

2010

2011

2012

2013

2014

2015

6,6006,8007,0007,2007,4007,6007,8008,0008,2008,400

World

In aggregate, it appears the world is above the income level where diets change.


China’s Middle Class Impact19

9519

9719

9920

0120

0320

0520

0720

0920

1120

1320

15

0%

5%

10%

15%

Growth Rate

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

01,0002,0003,0004,0005,000

Real Per Capita GDP

China is an example of an economy that is improving dramatically. As more of their population moves to the middle class, the world commodity sectors have been

changed forever.

U.S. Dollars


1985

1987

1989

1991

1993

1995

$0$50,000

$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000

BalanceExportsImports

China’s Trade with the United StatesBillion $

Exports to the world fueled

China’s growth in income.


1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

$0$50,000

$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000

BalanceExportsImports

China’s Trade with the United StatesBillion $

Exports to the world fueled

China’s growth in income.


1980

1982

1984

1986

1988

1990

1992

1994

-6

-5

-4

-3

-2

-1

0

1

-60

-50

-40

-30

-20

-10

0

10

Crude (Mil BBL/Day)

Soybeans (MMT)

China’s Growing Middle Class – Driving from an Exporter to an Importer in Major Commodities

Crude Oil Trade(Mil BBL/Day)

Soybean Trade(MMT/Year)

Policy changes in the mid 1990s changed China

from a net exporter to

importer of crude oil and soybeans.


1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

-6

-5

-4

-3

-2

-1

0

1

-60

-50

-40

-30

-20

-10

0

10

Crude (Mil BBL/Day)

Soybeans (MMT)

China’s Growing Middle Class – Driving from an Exporter to an Importer in Major Commodities

Crude Oil Trade(Mil BBL/Day)

Soybean Trade(MMT/Year)

Policy changes in the mid 1990s changed China

from a net exporter to

importer of crude oil and soybeans.


Jan-

90M

ar-9

1M

ay-9

2Ju

l-93

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94No

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97M

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ay-9

9Ju

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Sep-

01No

v-02

Jan-

04M

ar-0

5M

ay-0

6Ju

l-07

Sep-

08No

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Jan-

11M

ar-1

2$0

$25

$50

$75

$100

$125

$150

Crude Oil Nearby

Crude Oil Nearby Weekly Prices

Higher crude oil prices caused reverberations

around the world.

$/BBL


1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

120

125

130

135

140

145

150

155

129

130

132 13

613

7 140

140

142

142

138

138

138

134

5.9 8.1 9.1

13.3

134

134

134

132

131

131

130

129

128

14.8

15.7

16.5

19.2

21.0

21.5

22.1

2007f vs. 2013f2007f vs. ActualEIA 2013 AEOActual2007 Forecast

Source: DOE-Energy Information Administration, Annual Energy Outlook (AEO).

U.S. Department of Energy ForecastsU.S. Blended Motor Gasoline Consumption

Billion GallonsThe RFS was set in the environment of the 2007 forecast.

Because of the economic slowdown, fewer miles have been driven, and the newer cars are more fuel efficient. In 2007 they forecast 149.5 bil gal would be consumed in 2013; the current forecast is 133.8 or a difference of 15.7 bil gal.

This implies that the 10% level (E10) is also reduced by 1.57 bil gal. Translated to ethanol production (2.7 gal/1 bu) it equates to 580 mil bushels of corn. [~800 mil bu at the end of the forecast.]


2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

0.00

1.00

2.00

3.00

4.00

5.00

6.00

0

100

200

300

400

500

600

Prices

Sao Paulo Anhydrous Ethanol

Omaha Rack Ethanol

Caribbean Raw Sugar Price

Ethanol Price ($/gal) Sugar Price ($/MT)

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

020,00040,00060,00080,000

100,000120,000140,000160,000180,000

148,

552

142,

487

140,

734

144,

303

164,

458

163,

536

143,

888

153,

517

161,

762

172,

148

172,

310

Sugar ProductionMMT

Global Sugar & Ethanol Situation

As a result of policy actions, the corn and soybean markets are tied to the volatility in the sugar market and

the crude oil markets.


Brazil Sugar Situation19

97

1999

2001

2003

2005

2007

2009

2011

2013

0

100

200

300

400

500

600

700 For EthanolFor Sugar

MMT

1997

1999

2001

2003

2005

2007

2009

2011

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

50

55

60

65

70

75

80Area (Mil HA)Yield (MT/HA)

Yield (MT/HA)Area (Mil HA)

Sugar Cane Production Sugar Cane Area & Yield

When sugar cane yields rebound, prices will entice more ethanol made from sugar.


EU Biodiesel Policy Implications - Biodiesel Production by Source

2006

2007

2008

2009

2010

2011

2012

0

2,000

4,000

6,000

8,000

10,000

12,000

30%

35%

40%

45%

50%

55%

60%

Other Soy OilRapeseed OilPercent Imported

MMTRapeseed (Canola)

Oil is the main source for biodiesel

in Europe. Their primary biofuel.


2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

02,0004,0006,0008,000

10,00012,00014,00016,000

Exports Domestic Use

MMT

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

0.0500.0

1,000.01,500.02,000.02,500.03,000.03,500.0

Exports Domestic Use

MMTCanada Canola Utilization

Canola area in Canada is 2.2x as big as it was in 2001. The EU biofuel policy is a key driver.

EU Biodiesel Policy Implications – Canada Canola Impacts

Canola Oil Utilization


China’s Economic Growth from 2000-2010 Driving the Agricultural Demand

Population

+5.8%

1.27 bil to 1.34 bil

Income (Real GDP)

+174%

$1.4 tril to $3.9 tril(Indexed to 2005)

Per Cap Income (Real GDP)

+159%

$1,118 to $2,890 (Indexed to 2005)

Per Cap Meat Consumption

+21%

43 kg/yr to 52 kg/yr(Beef, Pork, Chicken)

Crop Consumption

+26%(Soybeans +191%,

Corn+50%, Wheat +0.2%, Rice+1%, Cotton +96%)

Per Cap Dairy Consumption

+212%

7 kg/yr to 22 kg/yr(Fluid and Manufacturing)

The magnitude of the growth on a per capita basis is phenomenal.


World Consumption of Ag Products

1996

1998

2000

2002

2004

2006

2008

2010

2012

0

50

100

150

200

250

300

0

23

45

68

91

113

136

Major Crops

Corn Wheat Rice Soybeans

Lbs per Capita Kgs per Capita

1996

1998

2000

2002

2004

2006

2008

2010

2012

1517192123252729313335

6.87.78.69.510.411.312.213.214.115.015.9

Major Livestock

Pork Beef Chicken

Lbs per Capita Kg per Capita

Diets are changing. This is easy to see in per capita meat consumption. This could underestimate the impact, because fish is not included.


China Meat Production & Feed Use

020406080

100120140160180200

Soymeal Corn

2002

2004

2006

2008

2010

2012

01020304050607080

Chicken Beef Pork

Meat Production Feed Use

The growth the past decade is a prime example of the growing income per person driving demand of agricultural

products.

MMT MMT


1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

0%

20%

40%

60%

80%

100%

120%

CornWheatRiceSoybeans

China Self-Sufficiency

They are holding to their stated

policy and soybeans are

supplied by the world...the Americas!


World Ending Stocks-to-Use19

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

12e10%

15%

20%

25%

30%

35%

40%

CornWheatSoybeansRice

Data Source: USDA WASDE February 2013

World consumption did not only impact

soybeans, but all major crops.


Recent global consumption increases of Soybeans are coming from China, Argentina and Brazil

All other; 15%

China; 72%

Brazil; 16%

Argentina; 20%

Change in Consumption of Soybeans2004 to 2012e

Consumption of Soybeans –2004 to 2012e

MMT

2004

2005

2006

2007

2008

2009

2010

2011

2012

050,000

100,000150,000200,000250,000300,000

All other U.S. China Brazil Argentina

China accounts for 2/3 of the growth in domestic crush.

U.S. : -8%


2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

e05000

100001500020000250003000035000

Domestic Use Exports

Soybean Meal For Argentina and Brazil

Mil MT

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

e05000

100001500020000250003000035000

Domestic Use Exports

Mil MTBrazilArgentina

Argentina and Brazil have two different policy assumptions around the domestic crush growth.


2006 2007 2008 2009 2010 2011 20120

500,000

1,000,000

1,500,000

2,000,000

2,500,000

All other China India U.S. Corn Ethanol

Recent global consumption increases of 5 major grains are coming from India, China and Biofuels

All other increases

in grain use40%

China34%

India7%

U.S. corn ethanol

19%

Change in Consumption of 5 Major Grains2006 to 2012e

Consumption of 5 Major Grains –2006 to 2012e

MMT

Note: The five major grains are: corn, wheat, rice, sorghum, and barley

High crude oil prices, and biofuel policy, drove more corn to ethanol However, in 2012 it is estimated that U.S. ethanol only accounts for 4.8% of the total.


Meat Per Capita Consumption19

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

12

30405060708090

100110120

US Canada

Brazil Argentina

EU China

Kg/person

China’s meat consumption growth was

phenomenal AND there is room to

grow.


China Corn Production & Consumption91

/92

93/9

4

95/9

6

97/9

8

99/0

0

01/0

2

03/0

4

05/0

6

07/0

8

09/1

0

11/1

2-1,000,0000

1,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,0008,000,0009,000,000

-25,401025,40150,80276,203101,604127,005152,406177,807203,208228,609

ProductionConsumptionEnding StocksNet Exports

Billion Bushels Lester R. Brown’s book,

Who Will Feed China? A Wake-Up Call for A Small Planet, was released in 1995.

Since that time, people have speculated that the new corn demand will create a tight global supply-demand balance and drive up prices.

However, China has been an exporter of corn more years than an net importer.

Million MT


Corn Self-SufficiencySelf-Sufficient = 1 and above

Above 1.751.25 to 1.751 to 1.250.75 to 10 to 0.75

Geographical Mismatch in Agriculture Production and Consumption

It varies by agricultural product, but generally N. America, S, America and the Black Sea Regions are net exporters (black ovals) and developing Asia and Africa (red ovals) are net importers. Disparity in the global supply and demand balance is forecast to continue as income and population are forecast to rise in those regions of the world that are currently importers.


CHANGE FROM 2002 to 2012Mil HA % Change

+4 +11%

+4 +10%

-12 -8%

+11 +8%

+4 +2%

+13 +57%

+27 +34%

+37 +27%

Total +89 +11%

Global Area Harvested by Crop 2002-201220

02

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

0100,000200,000300,000400,000500,000600,000700,000800,000900,000 Cotton

Other Oilseeds

Other Grains

Rice

Wheat

Rapeseed

Soybeans

Corn

Million Hectares

Farmers responded to the positive economics by increasing area in highly demanded crops.


China

Cotton Situation and Outlook

2005

2006

2007

2008

2009

2010

2011

2012

0

2,000

4,000

6,000

8,000

Exports Domestic Use Ending Stocks

MMT

2005

2006

2007

2008

2009

2010

2011

2012

01,0002,0003,0004,0005,0006,0007,000 MMT

2005

2006

2007

2008

2009

2010

2011

2012

02,0004,0006,0008,000

10,00012,00014,000

Imports ProductionDomestic Use Ending Stocks

MMT

2005

2006

2007

2008

2009

2010

2011

2012

01,0002,0003,0004,0005,0006,0007,000

MMT

India

United StatesBrazil


CHANGE FROM 2002 to 2012Mil HA % Change

+40 +9%

+10 +10%

+6 +7%

+11 +30%

+8 +30%

+8 +8%

+5 +27%

Total +89 +11%

Global Area Harvested by Area 2002-201220

02

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

0100,000200,000300,000400,000500,000600,000700,000800,000900,000 Other

China

FSU

Brazil

Argentina

United States

Canada

Million Hectares

Farmers responded to the positive economics by increasing area.


1995

1997

1999

2001

2003

2005

2007

2009

2011

05000

10000150002000025000300003500040000

Exports Production

The Other Supplier to the World Corn Market?

Mil MTUkraineBlack Sea

Can the Black Sea be a pressure relief valve in terms of world production? Black Sea Countries = Bulgaria, Georgia, Kazakhstan, Moldova, Romania, Russia, Turkey and Ukraine

1995

1997

1999

2001

2003

2005

2007

2009

2011

05000

10000150002000025000300003500040000

Exports Production

Mil MT


World Soybean Situation

0

20000

40000

60000

80000

100000 Argentina ExportsBrazil ExportsUS ExportsChina Imports

2010 2011 2012Area harvested (Mil HA)

U.S.A. 31.0 29.9 30.8Brazil 24.2 25.0 27.5Argentina 18.3 17.6 19.5All other 29.5 30.4 31.1World total 103.0 102.9 108.9

Production (Th MT)U.S.A. 90,605 84,192 82,055Brazil 75,500 66,500 83,500Argentina 49,000 40,100 53,000All other 48,484 47,933 50,944World total 263,589 238,725 269,499

World Stocks: Use 27.8% 21.6% 22.9%

MMT

The Western Hemisphere has benefitted from the China demand.

2011 Argentina and Brazil production set the stage for the high prices.


Current Crop Situation (Production)2009 2010 2011

Low USDA High

Argentina 25,000 25,200 21,000 25,000 27,500 28,000Brazil 56,100 57,400 73,000 66,000 70,000 72,000Canada 9,561 12,043 11,359United States 332,549 316,165 313,918Other 398,818 420,550 462,472World 822,028 831,358 881,749 842,589 849,089 851,589Stocks-to-Use 17.8% 14.9% 15.2% 12.8% 13.6% 13.9%

Argentina 54,500 49,000 41,000 55,000 55,000 58,000Brazil 69,000 75,300 66,500 79,000 81,000 82,000Canada 3,581 4,445 4,298United States 91,417 90,605 84,192Other 41,747 44,239 43,635World 260,245 263,589 239,625 265,717 267,717 271,717Stocks-to-Use 25.5% 27.8% 21.9% 22.2% 22.9% 24.5%

4,93080,85845,929

2012

CORN (TH MT)

SOYBEANS (TH MT)

13,060272,432466,097

The production estimates in South America indicate

bigger crops coming.

However, the Northern

Hemisphere also needs to produce

a big crop to increase ending

stocks.


1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

100,000

Rest of WorldMexicoKorea, SouthJapanEuropean UnionEgyptChinaCanada

Million Metric Tons

Leading Corn ImportersCorn Demand is increasing from many parts of the globe.

Unlike soybeans, China is not the only driver.


1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

0

20,000

40,000

60,000

80,000

100,000

All OtherBrazilChinaArgentinaUnited States

Million Metric Tons

Leading Corn Exporters China is no longer a big net exporter. That has centered the world market on the traditional suppliers of U.S. and Argentina.

Brazil has become a bigger player since the turn of the century.

Who is the other emerging exporter?


2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

0%

10%

20%

30%

40%

50%

60%

Percent of Production in a Given Category

United States (Corn Ethanol)

Argentina (Soybean Exports)

Brazil (Soybean Exports)

U.S. (Soybean Exports)

Canada (Canola Exports)

World Area is Encumbered to a Degree

The corn, soybean and canola markets are going to have volatility as major

portions of the markets are locked down with policy

decisions.


Global Crop SituationPerspective on Ending Stocks Level (Days of Additional Use)

Crop Wheat Corn Rice Soybeans Cotton2007/08 76 62 69 83 1872008/09 96 69 77 72 2082009/10 112 65 80 94 1452010/11 110 55 81 103 1562011/12 104 56 85 80 2452012/13 (May) 100 60 82 80 2702012/13 (Jan) 95 49 80 84 281

Corn is still king. The world, again, needs a good crop to provide a pressure relief valve for the ag commodities complex.


2012/13 Was an Anomaly in Corn!

120 130 140 150 160 170 180 190$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

U.S. yield in bushels per acre

Average of 500 outcomesYield: 162.1 bu./a.Price: $4.81/bu.

Only 2 of 500 outcomesYield: 124.6 bu./a.Price: $7.20/bu.

(Source: FAPRI, University of Missouri stochastic baseline, prepared in February 2012)

$/Bushel


Global Impact of the Drought

2012/13 Rank in History: Corn 2nd highest production ever, Cotton: 3rd, Soybean: 1st, Rice: 1st, Wheat: 5th, Sugar is also projected to be a new record.

World Ag Production (MMT) – Cotton in Mil BalesCrop Wheat Corn Rice Soybeans Cotton

2007/08 611.9 794.6 432.9 219.6 119.62008/09 682.8 800.0 448.7 211.6 107.32009/10 686.5 822.0 441.0 260.2 102.22010/11 652.2 831.4 449.3 263.5 116.42011/12 696.4 881.7 465.0 239.6 124.32012/13 (May) 677.6 945.8 466.5 271.4 116.72012/13 (Feb) 653.6 854.4 465.8 269.5 118.9


Corn & Soybean Futures Prices

2012

...

May

13

Jul 1

3

Aug

13

Sept

13

Nov

13

Jan

14

Mar

14

$11.00

$12.00

$13.00

$14.00

$15.00

$16.00

$17.00

$18.00

17.9

4

14.5

2

14.3

5

13.9

2

13.1

7

12.5

9

12.6

3

12.6

5

Soybean Futures Forward Prices

2012

...

May

13

Jul 1

3

Sept

13

Dec

13

Mar

14

May

14

$5.00

$5.50

$6.00

$6.50

$7.00

$7.50

$8.00

$8.50

8.44

7.03

6.85

5.83

5.57 5.67 5.74

Corn Futures Forward Prices

Corn Record High posted on Aug. 10, 2012

Soybean Record High posted on Sept. 4, 2012


Drought Severity IndexJuly: 1934, 1935 & 1936

Historically, droughts do not

reverse in a year.




reverse in a year.


Drought Does Not Look to Be Over

What will be the impact on plantings and yields?


U.S. Corn Commodity Prices:CBOT (Weekly), Farm Level (Monthly, Annual)

Sep-

09No

v-09

Jan-

10M

ar-1

0M

ay-1

0Ju

l-10

Sep-

10No

v-10

Jan-

11M

ar-1

1M

ay-1

1Ju

l-11

Sep-

11No

v-11

Jan-

12M

ar-1

2M

ay-1

2Ju

l-12

Sep-

12No

v-12

Jan-

13M

ar-1

3$2.50

$3.50

$4.50

$5.50

$6.50

$7.50

$8.50

Monthly CBOT USDA - Forecast of Annual

Dollars/Bushel

Source: USDA/NASS & CBOT


U.S. Soybean Commodity Prices:CBOT (Weekly), Farm Level (Monthly, Annual)

Jan-

10M

ar-1

0M

ay-1

0Ju

l-10

Sep-

10No

v-10

Jan-

11M

ar-1

1M

ay-1

1Ju

l-11

Sep-

11No

v-11

Jan-

12M

ar-1

2M

ay-1

2Ju

l-12

Sep-

12No

v-12

Jan-

13M

ar-1

3$8.00$9.00

$10.00$11.00$12.00$13.00$14.00$15.00$16.00$17.00$18.00

Monthly CBOT USDA - Forecast of Annual

Dollars/Bushel

Source: USDA/NASS & CBOT


Soybean-to-Corn Price Ratio based on the “New Crop” Futures Prices

May

June

July

Aug

Sept

Oct

Nov

Dec Jan

Feb

Mar

Apr

May

1.80

1.90

2.00

2.10

2.20

2.30

2.40

2.50

2.60

2.70

2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14

FavorsCorn

FavorsSoybeans


Yield Scenarios From Weather Models

CORN•Average July rain = 3.87 in•Average July temp. = 73.9 F.

•Low Yield: 154.0 bu/ac• Rain: 2.67 in.• Temp.: 76.4 F.

•High Yield: 170.1 bu/ac• Rain: 5.08 in.• Temp.: 71.4 F.

*Standard deviation = 1.21 in. (rain), 2.5 degrees (temp)

Assume Plus or Minus One Standard Deviation* for Rainfall and Temperature in Most Critical Growing Period

SOYBEANS•Average Jul-Aug rain = 3.80 in/month•Average Jul-Aug temp. = 73.1 F.

•Low Yield: 42.9 bu/ac• Rain: 3.08 in.• Temp.: 75.2 F.

•High Yield: 45.6 bu/ac• Rain: 4.52 in.• Temp.: 71.1 F.

*Standard deviation = 0.72 in. (rain), 2.0 degrees (temp)

Source: USDA Agricultural Outlook Forum – Feb 2013 (Pete Riley , USDA-FSA)


U.S. Corn Supply & Use Scenario ENGLISH UNITS

10/11 11/12 12/13Area (Mil Ac) Planted 88.2 91.9 97.2 92.7 92.6 92.6 Harvested 81.4 84.0 87.4 86.0 88.0 90.0Yield (Bu/Ac) 152.8 147.2 123.4 154.0 163.6 170.1Supply (Mil Bu)Production 12,447 12,358 10,780 13,630 14,530 15,140 Total Supply 13,515 13,508 11,869 14,282 15,152 15,752 Use (Mil Bu)Feed and Residual 4,795 4,550 4,450 5,100 5,400 5,600 Fuel Alcohol 5,019 5,011 4,500 4,575 4,675 4,725 Exports 1,834 1,543 950 1,350 1,500 1,600 Total Use 13,055 12,527 11,267 12,460 13,010 13,360 Ending Stocks 1,128 988 602 1,827 2,177 2,437 Stocks/Use 8.6% 7.9% 5.3% 14.7% 16.7% 18.2%Farm Price/bu. 5.18$ 6.22$ 7.40$ 5.80 4.80 4.20

USDA Outlook Forum - February 2013

2013/14Scenarios



Corn Yield ScenariosSupply• Low yield production of 13.6 billion bushels would still beat 2009 record

high of 13.1 billion bushels by 500 million.• High yield case pushes production to 15.1 billion bushels, 2 billion

bushels higher than the old record.Utilization• Most response seen in feed and residual in either case.• In the low case, there would also be little or now pasture recovery.• Ethanol expansion constrained by blend wall.• Export potential similarly constrained by large foreign supplies.Ending Stocks & Price• Big stocks increase even in low yield scenario will push price down

sharply.



U.S. Soybean Supply & Use Scenario ENGLISH UNITS

10/11 11/12 12/13Area (Mil Ac) Planted 77.4 75.0 77.2 76.6 76.5 76.6 Harvested 76.6 73.8 76.1 75.4 75.4 75.5Yield (Bu/Ac) 43.5 41.9 39.6 42.9 44.5 45.6Supply (Mil Bu)Production 3,329 3,094 3,015 3,285 3,405 3,495 Total Supply 3,495 3,325 3,204 3,435 3,555 3,645 Use (Mil Bu)Crush 1,648 1,703 1,605 1,635 1,660 1,680 Exports 1,501 1,362 1,345 1,435 1,500 1,545 Total Use 3,280 3,155 3,070 3,205 3,295 3,360 Ending Stocks 215 169 135 220 250 275 Stocks/Use 6.6% 5.4% 4.4% 6.9% 7.6% 8.2%Prices Farm Price/bu. 11.30$ 12.50$ 14.90$ 11.60$ 10.50$ 9.75$ Soybean Oil c/lb. 53 52 53 Soybean Meal $/s.t. 345.52 393.53 470.00

2013/14Scenarios

USDA Outlook Forum - February 2013



Soybean Yield ScenariosSupply• Low yield production of 3.3 billion bushels would still result in a year to

year increase of 270 million bushels.• The high yield scenario would increase the potential record size of the

crop by 90 million bushels from the trend yield.Utilization• Strong domestic demand for protein limits adjustment in crush.• Crush also supported by mandated biodiesel use.• Export effects muffled by strong demand by ChinaEnding Stocks & Price• Impact is modest in both cases, with much of the price effect driven by

corn.



Demand AND Supply factors drove to the higher prices in 2012.The long term demand drivers will keep prices at historically higher levels.When supply is built, the market will adjust to a longer run sustainable price.The market is more volatile than ever: We have fewer choices of suppliers. The new supplier has had historically variable production. We have tied ag commodities to outside markets.

High political uncertainty has major ramifications in the market.Weather…

Thoughts for 2013 and Beyond…

All the Best to You & Your Family in 2013!

agriculture economic drivers in 2013 and beyond

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