GRAIN OUTLOOKGRAIN OUTLOOK

Kansas Commodity ClassicKansas Commodity Classic 20062006

Mike WoolvertonMike Woolverton

Kansas State UniversityKansas State Universitymikewool@agecon.ksu.edumikewool@agecon.ksu.edu

WHEATWHEAT

PRODUCTION PROJECTIONS, PRODUCTION PROJECTIONS, U.S., 2006/07U.S., 2006/07

All Wheat – 1.812 bil. Bu. – down 14%All Wheat – 1.812 bil. Bu. – down 14%

Hard Winter – 682 mil. Bu. – down 27%Hard Winter – 682 mil. Bu. – down 27% Hard Spring – 432 mil. Bu. – down 7%Hard Spring – 432 mil. Bu. – down 7% Soft Red – 390 mil. Bu. – up 26%Soft Red – 390 mil. Bu. – up 26% White – 254 mil. Bu. – down 15%White – 254 mil. Bu. – down 15% Durum – 53 mil. Bu. - down 48%Durum – 53 mil. Bu. - down 48%

PRODUCTION PROJECTIONS, PRODUCTION PROJECTIONS, MAJOR WHEAT EXPORTERS, MAJOR WHEAT EXPORTERS,

2006/07 2006/07 (MMT)(MMT)

2006/072006/07 2005/062005/06 EU-25EU-25 117.24 117.24 (-4%)(-4%) 122.59 122.59 United StatesUnited States 49.32 49.32 (-14%)(-14%) 57.28 57.28 CanadaCanada 26.3 26.3 (+1%)(+1%) 25.98 25.98 AustraliaAustralia 10.5 10.5 (-57%)(-57%) 24.5 24.5 ArgentinaArgentina 13.25 13.25 (+6%)(+6%) 12.5 12.5

Total World Prod.Total World Prod. 586.81 586.81 (-6%)(-6%) 621.86621.86

WORLD WHEAT CARRYOVER 2002 TO 2007 est. (MMT)

0

20

40

60

80

100

120

140

160

180

2002/03 2003/04 2004/05 2005/06 2006/07 est

YEAR

MM

T

Wheat Balance SheetWheat Balance Sheet04-05 04-05 05-06 05-06 06-0706-07

Plant A. (mil.)Plant A. (mil.) 59.7 59.7 57.2 57.2 57.3 57.3

Harvest A. (mil.)Harvest A. (mil.) 50.0 50.0 50.1 50.1 46.8 46.8

Bu./A. Bu./A. 43.2 43.2 42.0 42.0 38.7 38.7

ProductionProduction 2,158 2,158 2,105 2,105 1,8121,812

ImportsImports 71 71 82 82 105 105

Carryover Carryover 546 546 540 540 571 571

Total Supply Total Supply 2,775 2,775 2,727 2,727 2,4882,488

Utilization:Utilization:

Feed and ResidualFeed and Residual 201 201 200 200 145 145

FoodFood 895 895 915 915 920 920

Seed Seed 79 79 78 78 80 80

ExportsExports 1,060 1,060 1,009 1,009 925 925

Total UtilizationTotal Utilization 2,235 2,235 2,155 2,155 2,0702,070CarryoverCarryover 540 540 (24%)(24%) 571 571 (26%)(26%) 418 418

(20%)(20%)

U.S. Farm PriceU.S. Farm Price $3.40 $3.42 $4.15-$4.55 $3.40 $3.42 $4.15-$4.55

Current Market Influences - WheatCurrent Market Influences - Wheat

Low CarryoverLow Carryover Australian Drought Australian Drought (-57%) (-57%)

Winter Wheat Plantings Winter Wheat Plantings

CORNCORN

Corn Estimates, USDA, Corn Estimates, USDA, Nov. 2006Nov. 2006

YieldYield BushelsBushels

U.S.U.S. 151.2151.2 10.7 bil.10.7 bil.

KansasKansas 123.0123.0 387 mil.387 mil. (135.0)(135.0) (465.8 mil.)(465.8 mil.)

Corn Balance SheetCorn Balance Sheet04-05 04-05 05-06 05-06 06-0706-07

Plant A. (mil.)Plant A. (mil.) 80.9 80.9 81.8 81.8 78.6 78.6

Harvest A. (mil.)Harvest A. (mil.) 73.6 73.6 75.1 75.1 71.0 71.0

Bu./A. Bu./A. 160.4 160.4 147.9 147.9 151.2 151.2

Production 11,807Production 11,807 11,112 11,112 10,745 10,745

ImportsImports 11 11 9 9 10 10

Beginning Carryover Beginning Carryover 958 958 2,114 2,114 1,971 1,971

Total Supply Total Supply 12,776 12,776 13,23513,235 12,725 12,725

Utilization:Utilization:

Feed and ResidualFeed and Residual 6,162 6,136 6,162 6,136 6,050 6,050 Food, seed, industrialFood, seed, industrial 2,686 2,686 2,981 2,981 3,540 3,540 Ethanol Ethanol

for fuelfor fuel 1,323 1,323 (12%) (12%) 1,603 1,603 (14%)(14%) 2,150 2,150 (18%)(18%)

ExportsExports 1,814 1,814 2,147 2,200 2,147 2,200

Total UtilizationTotal Utilization 10,662 10,662 11,26411,264 11,790 11,790

Ending CarryoverEnding Carryover 2,114 2,114 (20%)(20%) 1,971 1,971 (17%)(17%) 935 935 (8%)(8%)

U.S. Farm PriceU.S. Farm Price $2.06 $2.00 $2.80-$3.20 $2.06 $2.00 $2.80-$3.20

Current Market Influences - CornCurrent Market Influences - Corn

Demand from ethanol Demand from ethanol producersproducers

Competition for acresCompetition for acres Strong export demand Strong export demand Slow harvest in Eastern Corn Slow harvest in Eastern Corn BeltBelt

GRAIN SORGHUMGRAIN SORGHUM

Sorghum Estimates, USDA, Sorghum Estimates, USDA, Nov. 2006Nov. 2006

YieldYield ProductionProduction

U.S.U.S. 54.254.2288.5 mil.288.5 mil.

KansasKansas 55.055.0132.0 mil.132.0 mil.(75.0)(75.0) (195.0 mil.) (195.0 mil.)

Sorghum Balance SheetSorghum Balance Sheet04-05 04-05 05-06 05-06 06-0706-07

Plant A. (mil.)Plant A. (mil.) 7.5 7.5 6.5 6.5 6.3 6.3

Harvest A. (mil.)Harvest A. (mil.) 6.5 6.5 5.7 5.7 5.3 5.3

Bu./A. Bu./A. 69.9 69.9 68.7 68.7 54.2 54.2

Production 454 Production 454 394 394 288 288

ImportsImports 0 0 0 0 0 0

Beginning Carryover Beginning Carryover 34 34 57 57 65 65

Total Supply Total Supply 487 487 451 451 354 354

Utilization:Utilization:

Feed and ResidualFeed and Residual 191 141 191 141 95 95

Food, seed, industrialFood, seed, industrial 55 55 50 50 55 55

ExportsExports 184 184 195 195 150 150

Total UtilizationTotal Utilization 430 430 386 386 315 315

Ending CarryoverEnding Carryover 57 57 (13%)(13%) 65 65 (17%)(17%) 39 39(12%)(12%)

U.S. Farm PriceU.S. Farm Price $1.79 $1.86 $2.80-$3.20 $1.79 $1.86 $2.80-$3.20

Current Market Influences – Current Market Influences – Grain SorghumGrain Sorghum

Demand from ethanol Demand from ethanol producersproducers

Demand from livestock Demand from livestock feedersfeeders

Export demand – Mexico and Export demand – Mexico and Spain Spain

SOYBEANSSOYBEANS

Soybean Estimates, USDA, Soybean Estimates, USDA, Nov. 2006Nov. 2006

YieldYield ProductionProduction

U.S.U.S. 43.043.03.204 bil.3.204 bil.

KansasKansas 31.031.093 mil.93 mil.(37.0)(37.0) (105.5 mil.)(105.5 mil.)

Soybean Balance SheetSoybean Balance Sheet04-05 04-05 05-06 05-06 06-0706-07

Plant A. (mil.)Plant A. (mil.) 75.2 75.2 72.0 72.0 75.6 75.6 Harvest A. (mil.)Harvest A. (mil.) 74.0 74.0 71.3 71.3 74.5 74.5Bu./A. Bu./A. 42.2 42.2 43.0 43.0 43.0 43.0ProductionProduction 3,124 3,124 3,063 3,063

3,2043,204 ImportsImports 6 6 3 3 4 4 Beginning Carryover Beginning Carryover 112 112 256 256 449 449

Total Supply Total Supply 3,242 3,242 3,322 3,322 3,6573,657

Utilization:Utilization: Crushings Crushings 1,696 1,696 1,739 1,739

1,7801,780 Seed Seed 88 88 93 91 93 91 ExportsExports 1,103 1,103 947 947 1,145 Residual 1,145 Residual

99 99 95 95 75 75 Total UtilizationTotal Utilization 2,986 2,986 2,874 2,874 3,091 3,091

Ending CarryoverEnding Carryover 256 256 (9%)(9%) 449 449 (16%)(16%) 565 565 (18%)(18%)

U.S. Farm PriceU.S. Farm Price $5.74 $5.74 5.66 $5.40-$6.40 5.66 $5.40-$6.40

Current Market Influences - Current Market Influences - SoybeansSoybeans

Competition for acres Competition for acres Large CarryoverLarge Carryover Bio-diesel potentialBio-diesel potential Brazilian plantingsBrazilian plantings

Corn Acreage CalculationCorn Acreage CalculationCorn Demand 07/08Corn Demand 07/0811 13,999 mil. Bu.13,999 mil. Bu.Supply with DDG creditSupply with DDG credit22 -1,953-1,953Needed corn productionNeeded corn production 12,046 mil. Bu.12,046 mil. Bu.Acres needed to plantAcres needed to plant33 86.2 mil. A. 86.2 mil. A.(Trend line yield 147.5 bpa)(Trend line yield 147.5 bpa)

Acres planted in 06/07Acres planted in 06/07 78.678.6 mil. mil.Additional acres in 07/08 7.6 mil.Additional acres in 07/08 7.6 mil.1 1 Assumes all uses except ethanol production remain the same as 06/07. Assumes all uses except ethanol production remain the same as 06/07.

Includes one billion bushels of carryover stocks.Includes one billion bushels of carryover stocks.22 Assumes DDGs retain 30% of the feed value of corn and all DDGs are used Assumes DDGs retain 30% of the feed value of corn and all DDGs are used

for livestock feed. for livestock feed. 3 3 Assumes the percentage of acres planted to acres harvested remains at Assumes the percentage of acres planted to acres harvested remains at

91%. Need to harvest 78.41 million acres.91%. Need to harvest 78.41 million acres.

Land in CropsLand in Crops (Millions of acres, Most recent three year average)(Millions of acres, Most recent three year average)

CornCorn 78.678.6SoybeansSoybeans 75.675.6HayHay 63.463.4WheatWheat 57.357.3CottonCotton 15.315.3Grain SorghumGrain Sorghum 6.3 6.3

TotalTotal 296.5 296.5

Total crop land in the United States – 348.7 million acresTotal crop land in the United States – 348.7 million acres

Crop Price RelationshipsCrop Price Relationships

11/10/0611/10/06 Ratio Ratio If normalRatio Ratio If normal

10 yr. ave10 yr. ave. . 11/10/0611/10/06 relationshiprelationship

Corn Corn $3.435$3.435 - - - - - -

SoybeansSoybeans $6.5125 $6.5125 2.49 1.9 $8.55 2.49 1.9 $8.55

WheatWheat $5.0875 1.44 1.48 $4.95$5.0875 1.44 1.48 $4.95