Kurt M. Guidry Gilbert Durbin Professor LSU AgCenter Department of Agricultural Economics and...

Kurt M. Guidry

Gilbert Durbin Professor

LSU AgCenter

Department of Agricultural Economics and Agribusiness

2010 LSU AgCenter’s Outlook Conference

Outlook For Louisiana’sRow Crop Sector

Brief Review Of 2009

• Lower Prices For Most Commodities

• Early Season Rains Delayed Much of Midwest Production

• Lower Input Costs Lead By Fuel and Fertilizer

• Early Season Drought Followed By Late Season Rains Impacted Much of the Delta

• Two Consecutive Years Of Weather Related Production Difficulties Has Severely Impacted Much Of The Louisiana Row Crop Sector

Where Have We Been?

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Louisiana Crop Acreage

1970-1979 1980-1989 1990-1999 2000-2004 2005-2009 2009 2010- Wheat Only

Source: USDA, National Agricultural Statistics Service

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United States Crop Acreage

1970-1979 1980-1989 1990-1999 2000-2004 2005-2009 2009 "2010-Wheat Only"


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Louisiana Crop Yields

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United States Crop Yields

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United States Season Average Crop Prices

1970-1979 1980-1989 1990-1999 2000-2004 2005-2009 2009

Source: USDA, Economics Research Service

Fundamental Supply and Demand

Situations

U.S. Corn Supply and Demand

5 Year 2008/09 2009/10 Change Change Change

Average Jan-10 Jan-10 Vs 5 YA Vs Last Yr Vs Last Mth

Planted Acres (Million Ac) 84.1 86.0 86.5 2.84% 0.60% 0.12%

Harvested Acres (Million Ac) 76.9 78.6 79.6 3.52% 1.31% 0.38%

Yield (Bu/Ac) 152.4 153.9 165.2 8.41% 7.34% 1.41%

Begin Stocks (Million Bu) 1,593 1,624 1,673 4.99% 3.02% -0.06%

Production (Million Bu) 11,717 12,092 13,151 12.24% 8.76% 1.78%

Total Supply (Million Bu) 13,325 14,834 14,834 11.32% 0.00% 1.57%

Feed & Residual (Million Bu) 5,810 5,246 5,550 -4.48% 5.79% 2.78%

FSI (Million Bu) 3,691 4,953 5,470 48.21% 10.44% -0.18%

Ethanol (Million Bu) 2,354 3,677 4,200 78.44% 14.22% 0.00%

Exports (Million Bu) 2,077 1,858 2,050 -1.30% 10.33% 0.00%

Total Demand (Million Bu) 11,586 12,056 13,070 12.81% 8.41% 1.08%

Ending Stocks (Million Bu) 1,737 1,673 1,764 1.55% 5.44% 5.31%

S-T-U Ratio (Percent) 15.12% 13.88% 13.50% -10.71% -2.74% 4.19%

Price ($/Bu) $3.07 $4.06 $3.70 20.44% -8.87% 4.23%Source: USDA, World Agriculture Supply and Demand Estimates, January 2010

Source: USDA, Foreign Agricultural Service

World Coarse Grain Supply and Demand

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World Corn Supply and Demand

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US Cotton Supply and Demand Situation

5 Year 2008/09 2009/10 % Chg % Chg % Chg


Planted (Million Ac) 12.70 9.47 9.15 -27.93% -3.39% 0.11%

Harvested (Million Ac) 11.53 7.57 7.69 -33.30% 1.60% -0.52%

Yield (Pounds/Ac) 838 813 774 -7.68% -4.80% -1.02%

Begin Stocks (Million Bales) 6.91 10.04 6.34 -8.21% -36.85% 0.00%

Production (Million Bales) 20.15 12.82 12.40 -38.47% -3.28% -1.51%

Imports (Million Bales) 0.02 0.00 0.01 -41.86% N/A 0.00%

Total Supply (Million Bales) 27.08 22.86 18.74 -30.79% -18.02% -1.00%

Domestic Use (Million Bales) 5.14 3.59 3.40 -33.85% -5.29% 0.00%

Exports (Million Bales) 14.39 13.28 11.00 -23.53% -17.17% 0.00%

Total Demand (Million Bales) 19.52 16.86 14.40 -26.24% -14.59% 0.00%

Ending Stocks (Million Bales) 7.48 6.34 4.30 -42.52% -32.18% -4.44%

S-T-U Ratio (Percent) 39.45% 37.60% 29.86% -24.30% -20.59% -4.44%

Price ($/Lb) $0.490 $0.478 $0.605 23.57% 26.57% 0.83%

Source: USDA, World Agriculture Supply and Demand Estimates, January 2010

World Cotton Supply and Demand

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US Rice Supply and Demand Situation

5 Year 2008/09 2009/10 % Chg % Chg % Chg


Planted (Million Ac) 3.07 3.00 3.14 2.45% 4.84% 0.32%

Harvested (Million Ac) 3.05 2.98 3.10 1.75% 4.17% 0.00%

Yield (Pounds/Ac) 6,915 6,846 7,085 2.46% 3.49% 0.67%

Begin Stocks (Million Cwt) 34.6 29.4 30.4 -12.18% 3.40% 0.00%

Production (Million Cwt) 210.3 203.7 219.9 4.57% 7.95% 0.78%

Total Supply (Million Cwt) 263.7 252.4 271.3 2.87% 7.49% 0.59%

Domestic Use (Million Cwt) 125.0 128.4 129.5 3.60% 0.86% 0.00%

Exports (Million Cwt) 102.7 93.6 99.0 -3.64% 5.77% 2.06%

Total Demand (Million Cwt) 227.8 222.0 228.5 0.32% 2.93% 0.88%

Ending Stocks (Million Cwt) 36.0 30.4 42.8 19.02% 40.79% -0.93%

S-T-U Ratio (Percent) 15.79% 13.69% 18.73% 18.61% 36.78% -1.79%

Price ($/Cwt) $10.91 $16.80 $14.15 29.72% -15.77% -1.74%


World Rice Supply and Demand

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U.S. Soybean Supply and Demand

5 Year 2008/09 2009/10 % Chg % Chg % Chg


Planted Acres (Million Ac) 72.6 75.7 77.5 6.68% 2.35% 0.00%

Harvested Acres (Million Ac) 71.7 74.7 76.4 6.51% 2.30% -0.26%

Yield (Bu/Ac) 41.9 39.7 44 4.96% 10.83% 1.62%

Begin Stocks (Million Bu) 319 205 138 -56.77% -32.68% 0.00%

Production (Million Bu) 3,004 2,967 3,361 11.89% 13.28% 1.27%


Domestic Crush (Million Bu) 1,741 1,662 1,710 -1.79% 2.89% 0.88%

Exports (Million Bu) 1,121 1,283 1,375 22.68% 7.17% 2.61%

Total Demand (Million Bu) 3,013 3,047 3,262 8.28% 7.06% 1.62%

Ending Stocks (Million Bu) 324 138 245 -24.46% 77.54% -3.92%

S-T-U Ratio (Percent) 10.82% 4.53% 7.51% -30.59% 65.83% -5.45%

Price ($/Bu) $7.58 $9.97 $9.65 27.31% -3.21% 1.58%



World Soybean Production

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US Sugar Supply and Demand

5 Year 2008/09 2009/10 % Chg % Chg % Chg


Beets

Harvested Acres (Million Ac) 1.22 1.00 1.15 -6.19% 14.02% 0.00%

Yield (Tons/Ac) 24.7 26.8 25.8 4.45% -3.73% 0.00%

Cane

Harvested Acres (Million Ac) 0.85 0.82 0.82 -3.08% -0.11% 0.00%

Yield (Tons/Ac) 31.8 31.8 34.6 8.94% 8.81% 0.00%

Beginning Stocks (1,000 Tons) 1,677 1,660 1,451 -13.49% -12.61% 0.00%

Production (1,000 Tons) 7,871 7,484 7,837 -0.44% 4.72% 1.61%

Imports (1,000 Tons) 2,665 3,082 2,377 -10.81% -22.87% -2.06%

Total Supply (1,000 Tons) 12,213 12,226 11,665 -4.49% -4.59% 0.64%

Exports (1,000 Tons) 245 137 150 -38.73% 9.49% -25.00%

Domestic Use (1,000 Tons) 10,381 10,638 10,375 -0.06% -2.47% 0.00%

Total Demand (1,000 Tons) 10,626 10,775 10,525 -0.95% -2.32% -0.47%

Ending Stocks (1,000 Tons) 1,588 1,451 1,140 -28.21% -21.43% 12.20%

S-T-U Ratio (Percent) 14.96% 13.47% 10.83% -27.57% -19.57% 12.74%

World Sugar Supply and Demand

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U.S. Wheat Supply and Demand

5 Year 2008/09 2009/10 Change Change Change


Planted Acres (Million Ac) 59.6 63.2 59.1 -0.79% -6.48% 0.00%

Harvested Acres (Million Ac) 50.7 55.7 49.9 -1.61% -10.41% 0.00%

Yield (Bu/Ac) 41.8 44.9 44.4 6.27% -1.11% 0.00%

Begin Stocks (Million Bu) 484 306 657 35.77% 114.71% 0.00%

Production (Million Bu) 2,125 2,499 2,216 4.28% -11.32% 0.00%


Food (Million Bu) 927 927 940 1.45% 1.40% 0.00%

Seed (Million Bu) 80 75 72 -10.22% -4.00% -7.69%

Feed & Residual (Million Bu) 147 258 170 15.33% -34.11% -10.53%

Exports (Million Bu) 1,051 1,015 825 -21.52% -18.72% -5.71%

Total Demand (Million Bu) 2,206 2,275 2,007 -9.01% -11.78% -3.65%

Ending Stocks (Million Bu) 506 657 976 92.88% 48.55% 8.44%

S-T-U Ratio (Percent) 23.00% 28.88% 48.63% 111.40% 68.39% 12.55%

Price ($/Bu) 4.87 6.78 4.85 -0.37% -28.47% 0.00%


World Wheat Supply and Demand

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Wheat Corn Soybeans Soybean Meal Soybean Oil Cotton Rice

US Export Performance - Accumulated Sales Week Ending January 7, 2010

5 Year Average 2008/09 2009/10

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US Export Performance - Total Commitments Week Ending January 7, 2010

5 Year Average 2008/09 2009/10

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US Export Performance - Outstanding SalesWeek Ending January 7, 2010

5 Year Average 2008/09 2009/10


Can’t Forget About The Economy:Significant In Influencing Demand ForCommodities But Also For Influencing

Investment In Commodity Markets

Source: Kansas City Federal Reserve

http://research.stlouisfed.org/fred2/graph/?s%5B1%5D%5Bid%5D=RSAFS


http://research.stlouisfed.org/fred2/graph/?s%5B1%5D%5Bid%5D=GPDI


http://research.stlouisfed.org/fred2/graph/?s%5B1%5D%5Bid%5D=TWEXB

Current and Seasonal Price Trends

Commodity Futures Prices, January 20, 2010

Close Price Close Price Close Price

Commodity Contract Month Units Jan. 20, 2010 Last Week Last Year

Corn Sept 2010 Bushel $3.96 $4.12 $4.16

Corn Dec 2010 Bushel $4.03 $4.19 $4.30

Cotton Dec 2010 Pound $0.7276 $0.7460 $0.5226

Rice Sept 2010 Hundredweight $13.63 $13.74 $13.09

Soybeans Nov 2010 Bushel $9.29 $9.75 $9.54

Sugar (World) Mar 2010 Hundredweight $29.11 $28.04 $12.59

Wheat July 2010 Bushel $5.24 $5.61 $5.74

Source: DTN Online

Source: DTN Online

Where Are We Going?

• Continued Acreage Shifts• Corn - ↑• Soybeans - ↑• Rice - ↔, ↑• Cotton - ↔,↑• Wheat - ↓• Sugarcane - ↔

• Short Term – Strong Demand For Many Commodities and Competition For Acres Could Provide Some Support

• Long Term – Increases In Production (Both Domestically and Internationally) Could Limit Price Potential

• Wildcard Continues To Be Economic Recovery

Input Costs

Source: Department of Energy, Energy Information Agency

Estimated and Projected Retail Diesel Prices

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U.S. Fertilizer Prices - (Jan 2009 - Dec 2009)

Source: DTN Online

Summary

• Markets Must Deal With Growing Supplies and Uncertain Demand

• Commodity Prices Still Remain At Historically Strong Levels

• Despite Increases In Fuel Prices, Year to Year Reductions in Fertilizer and Other Input Prices Project Lower Overall Production Costs

• Prospects For Profitability Remains With Returns To “Normal” Production Levels

Thank You

Any Questions?

Kurt M. Guidry Gilbert Durbin Professor LSU AgCenter Department of Agricultural Economics and...

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Transcript of Kurt M. Guidry Gilbert Durbin Professor LSU AgCenter Department of Agricultural Economics and...