4- US Grain Production and Marketing System - Jay.pdf

8/2/2019 4- US Grain Production and Marketing System - Jay.pdf

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U.S. Production System for Corn

and Other Grains

Presented by

Jay ONeil

Senior Agricultural Economists

International Grains ProgramKansas State May 2010


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Number of Farms Decreasing, Size of Farms Increasing


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Distribution of Farms & Farm Product Sales

Farms Product Sales

Individl/Fam. 85.9% 54.1%

Partnerships 9.7 18.0

Corp.: Family 3.4 21.1

Corp.: Other 0.4 6.0

Other 0.6 0.7

99%


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2008-09 U.S. CROP LAND FOR GRAIN

ACRES

SOYBEANS, 75.7

32%

WHEAT, 63.1

27%

CORN, 86.0

36%

BARLEY, 4.2

2%SORGHUM, 8.3

3%

CORN

SOYBEANS

WHEAT

SORGHUM

BARLEYTotal 237.3 million acres or 96.0 million HA

Corn = 35.2 mil. HA = 35%

Soybeans = 31.4 mil. HA. = 32 %

Wheat = 24.2 mil. HA = 24 %

Sorghum = 7.0 mil. HA = 7 %

Barley = 1.7 mil HA = 2 %

TOTAL = 99.5 mil HA


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BushelPrice

Bushels/Acre

Metric ton/Hectare

Revenue/Acre

Corn $3.90 154 9.67 $600.60

Soybeans $9.25 39.6 2.663 $366.30

Sorghum $3.20 65.0 4.08 $208.00

Wheat $6.80 44.9 3.02 $305.32

Average Yield Data 2008-09

Based on USDA estimates as of 11February 2009

$153.53 mt

$339.87 mt

$125.98 mt

$249.85 mt

$1,484.63 HA

$905.07 HA

$514.00 HA

$754.55 HA

CZ09 = $4.05, SN09 = $8.92, KWN09 = $5.92 per bushel on 13 February 2009


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Wheat


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Overview of the

U.S. DISTRIBUTIONSYSTEM


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FLOW of GRAIN

Farmer to Market


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West Central Co-Op Templeton, IA


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AgMark Co-Op Concordia, KS 4.75 million Bushels = 120,656 mt storage capacity


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2008 U.S. Grain Export Movement by Vessel

Wheat

Corn

Soybean

Sorghum

Pacific Northwest

32.202 mt (33 %)

Interior Shipments

to Mexico

Texas

11.341 (11.5 %)

Mississippi River50.780 ( 52 %)

Atlantic Coast2.06 ( 2 %)

Great Lakes

1.44 (1.5 %)


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U.S. RIVER SYSTEM

Barge Rates per short ton @ 100 % Tariff


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Mississippi River Barges Carrying 1,400 mt of Grain


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RIVER BARGES


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Grain Shipments in Barges


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Barge RatesAs of 7 August 2009

Illinois River @ 315 % of Tariff = $16.11mt (.41/bu for Corn or .44/bu for Soybeans)

Mid-Mississippi @ 315 % of tariff = $18.47 mt (.47/bu corn and .50/bu Soybeans)

Upper Mississippi @ 340 % of Tariff = $23.20 mt ($0.59/bu Corn - $0.63/bu Soybeans)

* Ocean Freight from the U.S. Gulf to Japan or Korea is $57.00/mt


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Barge Freight Costs


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RAIL TRANSPORTATION


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Union Pacific Rail Road SYSTEM MAP


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Railroad Volume2006

10,0249,533

7,7797,299

4,600

2,683

1,055 819

BNSF UP NS CSX CN CP KCS TFM

Volume Ag

Volume by Railroad and % of Ag volume Units in Thousands

9% 9%6% 6% 9% 13% 9% 17%

Source BNSF


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100-110 CAR SHUTTLE TRAIN

10,000 12,100 MT of CORN CARGO


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Western US Railroads state that approximately 55 % of their

Domestic Grain business moves by Shuttle Train. An estimated 90

% of Western US corn is transported by shuttle train.

98 % of all Export business to the Ports moves by Shuttle andclose to 75 % of the Grain movement to Mexico is done via

Shuttle Trains.


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BNSFs Mid and Short-Term Leased Fleet

Shuttles are more efficient than

unit/singles

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2001 2002 2003 2004 2005

Tons/Shuttle Car Tons/Unit/Single Cars

Tons/year delivered

Source BNSF


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RAIL FREIGHT RATES

UPRR Rates : Bayard, IA to Hereford, TX,Fall 2008

1-50 Cars @ $3,847 per car ($42.75/mt)

110 Cars @ $2,960 per car ($32.89 mt if 90 tons or $ 26.910/mt. if 110 tons)

Difference between 50 and 110 car shipment = $887 per car or $9.85/mt

Shuttle Train incentives can add $200-$300 of additional savings or $2.22 to$3.33/mt to the above.

Potential savings for Shuttle Train vs. 50 Car shipments = $1,087 - $1,187/caror $12.00 - $13.00/mt on domestic shipments to feed yards up to $1,430 percar or $13.00/mt on export shipments to Mexico.


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Ruff Bros. Grain Co. Ruff, IL 6 million bushels = 152,0000 mt storage

capacity


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Secondary Rail Freight Market


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Ocean Freight


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Vessel Loading


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LDC Houston, TX

S b D B lk T d b


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Seaborne Dry Bulk Trade by

Commodity, 2008

Iron ore

27%

Cokingcoal

8%

Steel

9%Thermal

coal20%

Forestry8%

Other

5%

Agribulks

6%

Grains

14%

Steel RMs

3%

Total trade 2.3

billion tonnes

Steel sector 45%of total

10 % or less in 2007-08


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OCEAN FREIGHT RATES

2010 Calendar YearU.S. Gulf to Japan = $61.00/mt

PNW to Japan = $71.00/ mt

Gulf Range for year 2009: Low = $22.00 /tonne

High = $72.00 /tonne

7 April 2010

Baltic Dry-Bulk Ocean Freight Index- US Gulf- Japan


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$-

$10.00

$20.00

$30.00

$40.00

$50.00$60.00

$70.00

$80.00

$90.00

$100.00

$110.00

$120.00

$130.00

$140.00

$150.00

9/4/2003

10/22/2003

12/12/2003

2/20/2004

4/6/2004

5/26/2004

7/19/2004

9/3/2004

10/18/2004

12/6/2004

1/28/2005

3/16/2005

5/4/2005

6/20/2005

8/1/2005

9/14/2005

11/2/2005

12/14/2005

2/8/2006

3/22/2006

5/8/2006

6/21/2006

8/3/2006

9/15/2006

10/27/2006

12/8/2006

2/22/2007

5/17/2007

7/5/2007

8/17/2007

10/1/2007

12/6/2007

5/21/2008

10/10/2008

4/17/2009

11/20/2009

USD/Mt

Date

Baltic Dry Bulk Ocean Freight Index US Gulf Japan

$67.00


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Year to Year Market Changes

The laws of Supply and Demand greatly affect Transportationmarkets.

There's an old saying you cant build a church for Easter

This applies to transportation infrastructure too.

High freight markets motivate investors to build. After they

build, and over build, we often get a shift in supply ofbarges or rail cars or ships verses the demand.


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CONTAINER SHIPMENTS


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DDGS SHIPPING ECONOMICS

Barge Freight at 325% Tariff = $ 16.62/ tonne

Fobbing Charge Barge to Vessel = $ 6.00 / tonne

Panamax Ocean Freight = $ 40.00 / tonne

Total Transportation Cost to Korea = $ 62.62/ tonne ($154.40 in August 2008)

Verses

Container Freight from USA = $900 = $39.13 ($2,300= $100/mt in August2008).

13 March 2009


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THANK YOU

QUESTIONS ?

4- US Grain Production and Marketing System - Jay.pdf

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