What s Ahead for Agricultural Land Values. Remarks by Mark Pearson Federal Reserve Bank of Chicago Chicago, Illinois November 15, 2011

Transcription

1 What s Ahead for Agricultural Land Values Remarks by Mark Pearson Federal Reserve Bank of Chicago Chicago, Illinois November 15, 2011

2 Farm Real Estate, Average Value Source: NASS

3 Cropland, Average Value per Acre Source: NASS

4 Farm Sector Business Debt Source: ERS, USDA

5 Farm Sector Equity d Source: ERS, USDA

6 Farm Sector Debt Ratios Source: ERS, USDA

7 Repayment Capacity d Source: ERS, USDA

8 Gross Fed. Debt FY-1900 to FY-2016 Source: usgovernmentspending.com

9 U.S. National Debt Source: U.S. Treasury, CBO

10 Country Sovereign Ratings Source: Reuters

11 Thoughts on the World Economy $71.25 trillion Global GDP $14.89 trillion EU GDP $14.72 trillion U.S. GDP $9.87 trillion China GDP $4.33 trillion Japan GDP $4.04 trillion India GDP Source: 2010 CIA Factbook

12 U.S. GDP FY2004-FY2014 Source: usgovernmentspending.com

13 World Real GDP Growth Source: Int l Monetary Fund

14 U.S. Consumer Confidence Source: Market Harmonics

15 New Housing Starts Source: U.S. Census of Bureau

16 U.S. Industrial Production Source: Federal Reserve

17 10-Year Prime Rate Source: MoneyCafe.com

18 DJIA Five-Year Performance Source: finance.yahoo.com

19 10-Year Treasury Note Yield Source: finance.yahoo.com

20 Five-Year U.S. Dollar Index Source: NYBOT

21 Five-Year Gold Prices Source: kitco.com

22 Light Sweet Crude Oil Source: NYMEX

23 Crude Oil Prices 1970-Oct.2011 Source: WTR Economics

24 Crude Oil Prices 1970-Oct.2011 Source: WTRG Economics

25 China s Total Primary Energy Consumption,

26 China s Demand for Oil Imports

27 Projected Oil Consumption Trends in Key Countries Through 2025 Source: IEA, EIA

28 Vital Maritime Chokepoints Source: EIA

29 10-Year Corn Prices Source: NASS

30 Corn Use: Fuel versus Food Bushels 6 Feed Ethanol Source: USDA

31 U.S. Corn Ending Stocks as Percentage of Use Compliments of PHI Marketing

32 World Corn Ending Stocks As Percentage of Use Compliments of PHI Marketing

33 USDA Corn Supply and Use 2010/11 est. (11/9/11) 2011/2012 proj. Area Planted Area Harvested Yield Beginning Stocks 1,708 1,128 Production 12,447 12,310 Imports Supply, Total 14,182 13,453 Feed & Residual 4,792 4,600 Food, Seed & Industrial 6,428 6,410 Domestic Use, Total 11,220 11,010 Exports 1,835 1,600 Use, Total 13,054 12,610 Ending Stocks Average Farm Price $5.18 $6.20-$7.20 Compliments of PHI Marketing

34 World Corn Supply and Use (est.) (proj.) Beginning Stocks Production Imports Feed Total Exports Ending Stocks Million Metric Tons Compliments of PHI Marketing

35 December 11 Corn Source: CBOT

36 March 12 Corn Source: CBOT

37 10-Year Soybean Prices Source: NASS

38 Projected World Population 2050

39 Brazil s Big Ag Expansion % 60% 50% 40% 30% 20% 10% 0% 24% 46% 36% 39% 48% 68% Coffee Soybeans Cotton Production Exports Source: DTN

40 World Population Density

41 World Population Growth Rate Source: CIA Factbook

42 Youth Bulge Population Impact Millions Afghanistan Iran Pakistan Source: Stanford Center for Longevity

43 Median Age in Mideast Hot Spots 41 Afghanistan Iran Pakistan Source: Stanford Center for Longevity

44 Median Age Global Hot Spots A L G E R I A M O R O C C O 24.2 L I B Y A 24.0 E G Y P T 21.6 S A U D I 20.6 I R A Q 18.0 AF GH AN IS TAN 17.6 SO MA LIA 16.4 YEM EN 15.0 U G A N D A Source: CIA World Factbook

45 Median Age BRICs, PIIGS & More J A P A N 44.2 I T A L Y 43.7 G E R M A N Y 42.2 G R E E C E 41.5 S P A I N 39.7 P O R T U G A L 38.5 R U S S I A 35.4 I R E L A N D 28.9 B R A Z I L 25.9 I N D I A Source: CIA World Factbook

46 Solid as a BRIC? Brazil, Russia, India, China to be among four most dominant economies by 2050 ; 25 percent of world s land mass; 40 percent of global population; $18.48 trillion in combined GDP 41 percent of world s market capitalization by Source: Goldman Sachs

47 How BRIC Stacks Up Part II Middle class in all four countries could reach 200 million by 2025; India alone has 10 of world s 30 fastest-growing urban centers; 700 million to move to cities by 2050; Forbes: March 2011, BRIC has more billionaires than Europe for first time. Source: Goldman Sachs

48 U.S. Soybean Ending Stocks As % of Use Compliments of PHI Marketing

49 World Soybean Ending Stocks as Percentage of Use Compliments of PHI Marketing

50 USDA Soybean Supply and Use 2010/11 Est. (11/9/11) 2011/2012 Projected Area Planted Area Harvested Yield (bushels per acre) Beginning Stocks Production 3,329 3,046 Imports Supply, Total 3,495 3,275 Crush 1,648 1,635 Exports 1,501 1,325 Seed Residual Use, Total 3,280 3,080 Ending Stocks Average Farm Price $11.30 $11.60-$13.60 Compliments of PHI Marketing

51 World Soybean Supply and Use 2009/ /11 (est.) 2011/2012(Proj.) Beginning Stocks Production Imports Crush Total Exports Ending Stocks Million Metric Tons Compliments of PHI Marketing

52 November 11 Soybeans Source: CBOT

53 March 12 Soybeans Source: CBOT

54 10-Year Wheat Prices Source: NASS

55 USDA Wheat Supply and Use 2010/11 (11/9/11) 2011/2012 Projected Area Planted Area Harvested Yield (bushels per acre) Beginning Stocks Production 2,207 1,999 Imports Supply, Total 3,279 2,982 Food Seed Feed & Residual Exports 1,289 1,178 Use, Total 2,417 2,153 Ending Stocks Average Farm Price $5.70 $7.05-$7.75 Compliments of PHI Marketing

56 World Wheat Supply and Use 2009/ /11(est.) 2011/2012 (Proj.) Beginning Stocks Production Imports Feed Total Exports Ending Stocks Million Metric Tons Compliments of PHI Marketing

57 U.S. Wheat Ending Stocks As % of Use Compliments of PHI Marketing

58 World Wheat Ending Stocks as a Percentage of Use Compliments of PHI Marketing

59 December 11 Chicago Wheat Source: CBOT

60 March 12 Chicago Wheat Source: CBOT

61 10-Year Cotton Prices Source: NASS

62 10-Year Cattle Prices Source: NASS

63 10-Year Hog Prices Source: NASS

64

65 Globally Local World: What s Ahead Recovering economy Demographics will drive ag/food product demand Next world industrial expansion: Africa U.S. continues to be ag technology leader U.S., China will drive African development Infrastructure build-out continues in South America Youth bulge means growth in Middle East, but destabilized environment What s this mean for you: Continued strong demand for U.S. agricultural commodities and land values