Outlook for Commodity Prices Darrel Good Department of Agricultural and Consumer Economics University of Illinois Executive Summary Corn • Modest sized 2006 crop from reduced acreage and higher yields. • Very strong domestic demand from ethanol production; solid export demand. • Surplus will be used and acreage needs to increase in 2007 and beyond. • Prices will remain high and could become extremely volatile in the spring/summer of 2007. • New price plateau? Soybeans • Record large 2006 U.S. crop will add to surplus. • Solid export demand and growing biodiesel production. • U.S. acreage to decline in 2007, South America to resume expansion in 2007-08. • Prices will likely follow corn to ensure that acreage decline is not too severe. Wheat • Sharp reduction in U.S. and world wheat production in 2006. • Winter wheat seedings increased in the U.S. • SRW acreage may have been limited by wet fall in Indiana and Ohio. • World wheat production to rebound in 2007. • Prices to decline if production recovers. Beef • Expansion phase of cattle cycle to be limited by higher feed costs. • Production will be up in 2007. • Exports to continue to recover. • Prices remain high, but moderating from highs of past two years. Pork • Production steadily increasing as litter size increases. • Export demand to moderate as beef trade recovers. • Uncertainty about impact of higher feed prices on rate of expansion. • Prices trending lower.
Outlook for Commodity Prices Darrel Good 1
US Corn Production 14.0 12.0 Billion Bushels 10.0 8.0 6.0 4.0 2.0 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06* 2
Feed and Residual Use of U.S. Corn 6200 5800 5400 milion bushels 5000 4600 4200 3800 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03* 04* 05* 06* 3
Food and Industrial Use of U.S. Corn 3700 3300 2900 milion bushels 2500 2100 1700 1300 900 500 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03* 04* 05* 06* 4
US Corn Exports 2.8 2.4 Billion Bushels 2.0 1.6 1.2 0.8 0.4 0.0 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02* 03* 04* 05* 06* 5
Ending Stocks of Corn 5000 4400 3800 milion bushels 3200 2600 2000 1400 800 200 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02*03*04*05*06* 6
Average Farm Price of Corn 3.4 3.2 3 2.8 2.6 Prices 2.4 2.2 2 1.8 1.6 1.4 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06* * projected 7
US Corn Acres Planted 88,000 84,000 80,000 1,000 Acres 76,000 72,000 68,000 64,000 60,000 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06* 8
US Corn Yields 170.0 160.0 150.0 B us hels per A c re 140.0 130.0 120.0 110.0 100.0 90.0 80.0 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06* 9
US Soybean Production 3.5 3.0 Billion Bushels 2.5 2.0 1 .5 1 .0 0.5 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03* 04* 05* 06* 10
U.S. Soybean Crush 1800 1700 1600 1500 milion bushels 1400 1300 1200 1100 1000 900 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06* 11
US Soybean Exports 1.2 1.1 1.0 Billion Bushels 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03* 04*05* 06* 12
South American Soybean Production 4000 3750 3500 3250 3000 million bushels 2750 2500 2250 2000 1750 1500 1250 1000 750 500 250 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06* 13
Ending Stocks of Soybeans 600 550 500 450 milion bushels 400 350 300 250 200 150 100 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06* 14
Average Farm Price of Soybeans 8.2 7.9 7.6 7.3 7 6.7 6.4 Prices 6.1 5.8 5.5 5.2 4.9 4.6 4.3 4 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06* 15
US Soybean Acres Planted 76000 73000 70000 1,000 Acres 67000 64000 61000 58000 55000 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06* 16
U.S. Soybean Yields 44.0 40.0 B u s h e ls P e r A c re 36.0 32.0 28.0 24.0 20.0 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06* 17
US Wheat Production 2800 2600 2400 milion bushels 2200 2000 1800 1600 1400 1200 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06* 18
US Wheat Exports 1700 1600 1500 Million Bushels 1400 1300 1200 1100 1000 900 800 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06* 19
Ending Stocks of Wheat 2100 1900 1700 million bushels 1500 1300 1100 900 700 500 300 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06* 20
Average Farm Price of Wheat 4.8 4.4 4 3.6 Prices 3.2 2.8 2.4 2 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06* 21
US Wheat Acres Planted 92,000 88,000 84,000 80,000 1,000 Acres 76,000 72,000 68,000 64,000 60,000 56,000 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06* 22
US Wheat Yield Per Acre 46 44 42 40 Bushels 38 36 34 32 30 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06* 23
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US Commercial Beef Production 28000 27000 26000 Million Pounds 25000 24000 23000 22000 21000 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06*07* 25
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Slaughter Steer Price 90 88 86 84 82 80 78 Cents/Lb 76 74 72 70 68 66 64 62 60 58 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06*07* 27
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US Commercial Pork Production 22000 21000 20000 Million Pounds 19000 18000 17000 16000 15000 14000 13000 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06*07* 30
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Hog Prices (Barrows and Gilts, U.S.) 60 58 56 54 52 50 48 46 44 42 40 38 36 34 32 30 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03*04*05*06*07* 32
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