Grain Market & Economic Outlook

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1 DEC 2014 Corn Contract Grain Market & Economic Outlook DEC 2014 $5.15/bu. Stephen R. Koontz Professor & extension economist Department of Agricultural & Resource Economics Colorado State University Stephen.Koontz@ColoState.Edu Colorado Commodity Classic Loveland, CO December, 2014 DEC 2014 $3.20/bu. 1

2 Daily S&P 500 Contract 2

3 The Economy Is Consumer Spending (C) Business Investment (I) Government Spending & Investment (G) Net Exports or Exports less Imports (X M) Total Economic Output (Y) Is Y = C + I + G + (X M) 3

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5 12/9/2014 Clear picture of future Fed actions on interest rates. Federal funds rate: Zero now. 50:50 will be 0.25% May Will be 0.25% by Jul Will be 0.5% by Nov

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7 Weekly S&P 500 Index Contract Commodity Market Outlook Summary Corn Excellent crop, returning demand, & future acreages. Hay Quality story supplies & needs. Wheat Larger U.S. & world stocks. Oilseeds Gigantic crop & stocks. Cattle Demand & supply. Dairy Also supply & demand. Inputs Modest changes except land. 7

8 Price Forecasts & 90% Confidence Intervals Commodity 2014/ /16 Corn $4.00/bu. $4.35/bu. $3.75 $4.25 $3.50 $5.00 Soybeans Wheat $9.75/bu. $9.00 $10.00 $5.90/bu. $5.65 $6.15 $11.00/bu. $8.00 $13.00 $5.25/bu. $4.85 $6.50 What to follow? Corn for 2014 below some break evens. Return to other crops. Corn acres for 2015? Storage? Specific acres to soybeans, wheat, & hay? Weather outlook? Demand for feedgrains & meat margins? Trade and exports? Percent of Normal Rainfall Year to Date 8

9 Percent of Normal Rainfall 90 Days Percent of Normal Rainfall 30 Days Percent of Normal Rainfall 7 Days 9

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11 Weekly Corn Contract $8.00 $5.00 The trading range for corn is $3.00-$4.50/bu. Except 11

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13 Weekly Crude Oil Contract Weekly Gasoline Contract $150 $80-$110 $35 13

14 Weekly Ethanol Contract 14

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16 DEC 2015 Corn Contract Corn Outlook Forecast $ /bu Was over sold going into harvest. Acreage next year? Rotation or fallow? Leverage, debt & recent purchases? Demand? Storage? Price outlook $3.75 $4.25/bu. And we ve had the two big crops. $ /bu. Depending on acres. 16

17 Data Source: USDA-NASS, Compiled & Forecasts by LMIC G-NP-20 Livestock Marketing Information Center 10/31/14 Data Source: USDA-NASS, Compiled & Forecasts by LMIC G-NP-22 Data Source: USDA-NASS, Compiled & Forecasts by LMIC G-NP-21 Livestock Marketing Information Center 10/31/14 Livestock Marketing Information Center 10/31/14 17

18 PERCENT CHANGE MAY 1 HAY STOCKS ( ) PERCENT CHANGE ALL HAY ACRES ( ) -3% U.S. Total: 35.5% 27% 2% 10% 13% -7% -17% 10% -10% -3% -19% U.S. Total: 4% 20% 9% 10% -2% -3% 3% 14% 0% 11% -2% -8% -4% 11% -13% -8% VT -3% NH -4% -3% MA 22% -11% RI 0% -3% CT -19% 2% NJ -8% -6% -5% DE 13% 9% MD 10% 8% -8% 30% 16% 0% -6% 4% -100% to -7% -7% to -3% -3% to 4% 4% to 13% 13% to 31% Data Source: USDA NASS 5/20/2014 Data Source: USDA NASS 1/10/2014 Livestock Marketing Information Center Livestock Marketing Information Center GL_GR310 Greeley, CO Thu Oct 30, 2014 USDA-CO Dept of Ag Market News Colorado Hay Report Compared to last week: Hay movement is slow this week with steady prices. Fourth cutting of hay is testing above 180 RFV and most buyers are paying a dollar a point for the RFV. Cow hay is still hard to move due to abundance. All prices reported FOB the stack or barn unless otherwise noted. Prices reflect load lots of hay. Northeast Colorado Areas Alfalfa Large Squares: Supreme Delivered; Good ; Fair Ground and Delivered: Small Squares: Premium (7.00 to 8.00 per bale). Alfalfa/Grass Large Squares: Premium Grass Small Bales: Premium (7.00 to 8.00 per bale). Corn Stalks Large Squares: Delivered. No reported quotes for other classes of hay. Southeast Colorado Areas Alfalfa Large Squares: Premium ; Fair Grass Small Squares: Premium ( per bale). Wheat Straw Large Squares: Good No reported quotes for other classes of hay. Forage Outlook Hay price will follow corn. Anticipated weaker hay prices this year but North v. South... East v. West... High priced excellent hay: >$175 $200/T. Low priced low quality hay: <$75 $125/T. San Luis Valley Area Alfalfa Large Squares: Premium ; Fair Grass Large Squares: Premium No reported quotes for other classes of hay. 18

19 Weekly KC Wheat Contract 19

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22 JUL 2015 KC Wheat Contract Forecast $ /bu. 22

23 Wheat Outlook Weekly Soybean Contract Uncertainty about U.S. & world crop. Expansions in U.S. acreage? Strong but weakening demand. Graze out? Weakening prices & basis mainly downside potential. Forecasts JUL $5.50 with range $ /bu. Weekly Soybean Meal Contract Weekly Soybean Oil Contract 23

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27 NOV 2014 Soybean Contract NOV 2015 Soybean Contract DEC 2014 Soybean Meal Contract Forecast $ /bu. 27

28 DEC 2014 Soybean Oil Contract Oilseeds Outlook World production & consumption of oilseeds grows. Foreign production & trade of oilseeds grows. U.S. stocks are abundant. Strong soybean meal and weak soybean oil. Low and lower prices. How many acres in 2015? Into storage? $10.00 $12.00/bu. soybeans. And volatility with the most downside risk 28

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30 Outlook Summary Corn: $ /bu. for 2014/15 & $3.50 $5.00/bu. for 2015/16. Hay: $100 $150/T through winter. Soybeans: $9.00 $10.00/bu. for 2014/15 & $10.00 $12.00/bu. for 2015/16. Wheat: $5.65 $6.15/bu. for 2014/15 & $4.85 $6.25/bu. for 2015/16. Contact and Link Information 30