FSA-EPAS

GRAINS AND OILSEEDS OUTLO

2013 Agricultural Outlook Forum

Pete Riley

Economic and Policy Analysis Staff

USDA/Farm Service Agency

Washington, DC 20250

202-720-7787

Pete.Riley@wdc.usda.gov

February 22, 2013
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Today’s Presentation

Acreage, including CRP UpdateYields and ProductionHighlights of Supply and Demand Balance SCorn and Soybean Yield Scenarios Under 

Alternative Weather Assumptions
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2012 Principal Crop Plantings were 326.3 m

Acres, the Highest Since 2002

305310315320325330 Mil.acres • Year to year increase 

million acres, the larg1996.

• Very strong price ince

and favorable (dry) plconditions account for gain.

• Acreage for every prin

crop except cotton shoincrease over 2011.

• Principal crops include all 

crops, hay, minor oilseeds, dry beans, tobacco, sugarcabeets, peas and lentils, mill
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Since 2008, Corn and Soybeans Have Acco

for More than Half of Principal Acres

6065707580859095

100

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Mil. acres

The Big Story is the Increase in

Corn Planted Area

6065707580859095

100

2000

2001

2002

2003

2004

2005

2006

2007

Mil. acres

Soybean Area Se

2009, and Rem
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Losing Acreage: Wheat and Hay

Trending Down

505254565860626466

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Mil. acres

2010 Wheat Plantings 

Were the Lowest Since 1970 

505254565860626466

2000

2001

2002

2003

2004

2005

2006

2007

2008

Mil. acres

2011 All Hay Harves

Were the Lowest on 

Alfalfa acres (included in totahit a 64-year low in 2012

* Records date from 
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Conservation Reserve Program (CRP

Acres Are Declining

05

10152025303540

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

Mil. acres

CRP enrolled acres • CRP conserves soil, w

wildlife resources by environmentally sensiout of crop production10-15 year contracts.

• Land is planted to lon

conserving covers, magrass and trees.

• Current total enrolled 

million acres, down 9from 2007 peak.

• 2008 Farm Bill lower

acres from 39.2 milliomillion.
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CRP Acres: Concentrated in the Plain
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What Land Left the CRP in 2012?

6.5 million acres expired, but about 3.4 million was reenrolled and some new acres wer

State 1000 acres

1 North Dakota 583

2 Montana 4833 Minnesota 1524 Kansas 1495 Missouri 1466 South Dakota 130

7 Iowa 1138 Nebraska 959 Colorado 94

10 Texas 69

Other 439

United States 2,455

Will the land be cropped 

• Some will go into corn a

given high prices, but littconsidered prime land.

• While most CRP acres w

the land still needs prepacrops can be planted.

• Traditionally, a large sha

in grass immediately aftereflecting both its locatioand costs to prepare for c

• Net expired acres availab

cropping total nearly 2.5 
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2013 Acreage Projections: Slight Decline 

Corn, Small Gains in Soybeans and Wh

2011 2012 2013 F

Wheat 54.4 55.7 56.0Soybeans 75.0 77.2 77.5Corn 91.9 97.2 96.5

3 crops 221.3 230.1 230.0

Another year of large plasupported by strong new-• Corn down slightly fryear’s 75-year high on mspring planting weather.• Despite favorable priincentives, HRW area dodrought. SRW acres are spring wheat expected to • Soybeans increase witprices relative to year ago to corn, more double croppotential, and decline in c

Million acres
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Corn and Soybean Yields and Productio

Rebound with Normal Weather

Yields

Bushels/acre 2011 2012 2013 F

Wheat 43.7 46.3 45.2Soybeans 41.9 39.6 44.5Corn 147.2 123.4 163.6

Production

Mil. bushels 2011 2012 2013 F

Wheat 1,999 2,269 2,100Soybeans 3,094 3,015 3,405Corn 12,360 10,780 14,530

• Wheat yield (based on 

down from 2012 reco

• Harvested HRW acres 

poor weather .

• Wheat crop projected 

lower.

• Soybean production p

rise 13 percent as yielfrom drought.*

• Corn production proje

jump 35 percent as yiby 40 bushels per acre

*Corn and soybean yields based on 
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Wheat Supplies to Fall on Lower

Beginning Stocks and Smaller Crop

0

500

1,0001,5002,0002,5003,0003,500 Mil. Bu. Wheat supplies

Production Begin stocks Imports

• Wheat supplies projec

7 percent, lowest sinc2007/08.

• Beginning stocks for 2

expected to slip under million bushels for the time in 4 years.

• 2013 production of 2.

bushels would be just previous 3-year avera
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Wheat Exports Expected to Decline a

Competitor Production Rebounds 

0

200400600800

1,0001,2001,400 Mil. Bu.

U.S. exports • While U.S. supply fal

competing exporters aprojected to have largled by the Black Sea rthe EU.

• There will be good op

for U.S. exports in thof the marketing yearcrop winter wheat is hbefore the main compcrops.

• However, the longer t

downtrend in U.S. expshare is expected to co
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Wheat Ending Stocks Projected to Decl

But Outlook is Far from Tight

0

200400600800

1,0001,200

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 F

Mil. Bu.

Wheat ending stocks • Stocks are projected a

million bushels, the losince 2007/08.

• Total use projected to 

percent from 2012/13declines in exports andomestic use.

• The ratio of stocks-to-

projected at 28 percenjust marginally from tpercent forecast for 20
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Soybean Supply Expected to be

the Highest in 7 Years 

0

500

1,0001,5002,0002,5003,0003,5004,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 F

Mil. Bu.

Soybean supply

production begin stocks imports

.

• Despite very low begi

stocks, bigger crop wisupply 11 percent and the second highest eve

• 2013 production proje

slightly eclipse prior rhigh of 2009.
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Soybean Crush Projected to Increase 3 Pe

1,3501,4001,4501,5001,5501,6001,6501,7001,7501,8001,850 Mil. Bu. Soybean crush • 2013/14 crush reboun

9- year low.

• Soybean meal feeding 

increase modestly on prices and some expanpoultry and pork. 

• Despite increased cru

soybean oil supplies aprojected to decline fofourth straight year--tlowest since 2004/05-low carryin stocks.
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Soybean Exports to Grow on Continue

Strong Import Demand by China

0

200400600800

1,0001,2001,4001,600

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 F

Mil. Bu.

Exports

.

• U.S. exports projected 

percent, matching prerecord highs.

• China’s growth driven 

strong demand for vegfood and improved feusing more protein me

• Despite supply gains a

prices, export competremain intense as SouAmerican production from last year’s poor c
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Soybean Ending Stocks Projected

to Double in 2013/14

0

100200300400500600700

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 F

Mil. Bu.

Ending stocks • Soybean ending stock

projected at 250 milliobushels, double the leforecast for 2012/13, highest since 2006/07

• The stocks-to-use rati

rise to 7.6 percent, comwith the historically loof 4.1 percent forecas2012/13. 
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2013 Corn Supply Expected to be Record L

0

2,0004,0006,0008,000

10,00012,00014,00016,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 F

Mil. Bu.

Corn supply

production begin stocks imports

.

• Despite the lowest for

carryin stocks since 1corn supply projected percent to 15.2 billion 

• Although planted area 

expected to fall slightharvested area is expethe highest since 1933

• Area of corn cut for si

abandoned will decreabetter growing conditi
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Feed and Residual Use to Increase in 201

On Larger Corn Supply and Lower Pri

• Feeding to increase w

feed costs and growth poultry and pork prod

• Sharp increase in resid

disappearance with huincrease in the crop.

• Beef sector prospects 

by drought impacts ancattle supplies.

• Any recovery in forag

supplies will also influgrain feeding. 

• Small expansion in fe

distillers’ grains expecmore ethanol producti

0

1,0002,0003,0004,0005,0006,0007,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 F

Mil. Bu.

Corn feed and residual
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Only Modest Rebound in Ethanol in 201

Reflects Decline in Gasoline Use and “Blend Wall”

• Potential market for e

constrained by declinigasoline consumption

• The “blend wall” refe

market saturated at thpercent blend (E10).

• Ethanol exports are no

expected to recover to highs, with higher proin Brazil and EU trade 

• Imports of sugarcane 

from Brazil are increa

• No significant expans

expected for E15 or E

0

1,0002,0003,0004,0005,0006,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 F

Mil. Bu.

Corn used for ethanol
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Falling Gasoline Use Constrains

Ethanol Expansion

120130140150160170180

2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Bil. Gal.

2007 Gasoline Consumption Projections (Guiding 

the 2007 Energy Bill) vs. Actual /Current Forecast

Gap between actual and projected was 16 billion gallons in 2012

2012: 134.0 bil. gal2013 F: 133.8 bil .gal
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What Accounts for Declining

Gasoline Consumption? 

Fewer Miles Driven Efficiency Gain

• Virtually all new vehic

more miles per gallon. 

• For example, the Ford 

pick up (the top selling over the last decade), gfor 2013, up from 16 i12.5 percent improvem

*Example of 6-cylinder automati

• Vehicle miles driven peaked in 

2007.

• Recession explains initial decline, 

but there are other factors: 

- High gasoline prices.- Aging baby boomers.- Teenagers delaying driving.- Population shifts to urban 

areas.
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Corn Export Recovery Limited

As Competition Remains Strong

• Exports for the curren

year are forecast at jumillion bushels, the losince 1971/72.

• U.S. shipments are pr

to rise, but stay relativat 1,500 million bushe

• The recent downtrend 

very high U.S. prices of market share, as farworldwide have respohigh price signals. 

0

500

1,0001,5002,0002,5003,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 F

Mil. Bu.

Corn exports

.
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High Prices Trigger Sharp Increase in C

Exports by Non-Traditional Exporter

05

101520253035404550

2000 2002 2004 2006 2008 2010 2012 F

Mil. Bu.

Corn exports, selected

exporters, 2000-2012

 Brazil Ukraine India Paraguay Russia Serbia

• Record high corn pric

triggered a strong proresponse in the rest of world.

• Foreign export gains h

led by Brazil and Ukr

• Much of Brazil’s gain

winter corn productiodoes not directly comsoybeans.

• Some countries norma

competitive due to higand/or quality concernstepped up shipments
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U.S. Market Share Plummets While Glo

Corn Trade is Near Record High 

0

20406080

100120

Mil. MT World corn trade and U.S. market share, 1970-2012 

Market s

Trade
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Corn Ending Stocks to Build as Suppl

Gain Outpaces Increase in Use

0

500

1,0001,5002,0002,500

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 F

Mil. Bu.

Corn ending stocks • Stocks projected to m

triple from 2012/13, t2.2 billion bushels, slihigher than 1992/93 a2004/05.

• Total use is projected 

billion bushels, up 16 from sharply curtailed 2012/13, but still slighrecord use of earlier y

• Stocks build as sharp 

competition, the plateethanol, and the declinherd limit a full rebou
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2013 Prices Will Decline with Record Co

Supply and Increase in Soybean Crop 

2011 2012 2013 F

Wheat $7.24 $7.90 $7.00Soybeans $12.50 $14.30 $10.50Corn $6.22 $7.20 $4.80

• Wheat price decline m

large share marketed dsummer months when will still be high.

• The soybean price exp

the lowest since 2009heavy pressure from tmarket.

• Corn prices expected 

from the 2012/13 recodramatic production in

• While harvest-time ca

could fall toward $4.0forward sales will supprice at a higher level

Prices received by farmers

$ per bushel
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Risks Around the Forecasts

• Uncertain transition from the very tight old crop situation:

– South American crop production.– Brazil export logistics.– Degree and duration of the new crop risk premium.– Timing/availability of new-crop supplies.

• Actual planted acreage for 2013.• Volatility in oil and energy markets.• Foreign producers’ response to falling prices.• China:

– Will it continue to increase soybean buying?– Will China ramp up corn imports as prices become more attrac

• Weather.
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Yield Scenarios From Weather Mode

Assume Plus or Minus One Standard Deviation* for Rainfall

and Temperature in Most Critical Growing Period

Corn Soybeans

•Average July rain = 3.87 in.•Average July temp. = 73.9 F. Low Yield: 154.0 bu./ac.•Rain 2.67 in.•Temp. 76.4 F.High yield: 170.1 bu./ac.•Rain 5.08 in.•Temp. 71.4 F.

•Average July-Aug. rain = •Average July-Aug. temp. = Low yield: 42.9 bu./ac.•Rain 3.08 in.•Temp. 75.2 F.High yield: 45.6 bu./ac.•Rain 4.52 in.•Temp.71.1 F.

* Standard deviation = 1.21in. (rain), 2.5 degrees (temp). * Standard deviation = 0.72 in. (rain), 2.0 degre
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Corn Yield Scenario Balance Sheets

Low Trend H

Yield (bu./ac.) 154.0 163.6 

‐‐‐‐‐mil. bu.‐‐‐‐‐

Production 13,630 14,530 Feed and residual 5,100 5,400 

Ethanol 4,575 4,675 Exports 1,350 1,500 Total use 12,460 13,010 

Ending stocks 1,827 2,177 Price ($/bu.) $5.80 $4.80 
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Corn Yield Scenarios

Supply• Low yield production of 13.6 billion bu. would still beat 200

high of 13.1 billion bu. by 500 million.

• High yield case pushes production to 15.1 billion bu., 2 billio

higher than the old record. 

Utilization• Most response seen in feed and residual in either case.• In the low case, there would also be little or no pasture recov• Ethanol expansion constrained by blend wall.• Export potential similarly constrained by large foreign supplEnding Stocks and Price• Big stocks increase even in low yield scenario will push pric

sharply.
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Soybean Yield Scenario Balance Sheet

Low Trend H

Yield (bu./ac.) 42.9 44.5 4

‐‐‐‐‐mil. bu.‐‐‐‐‐

Production 3,285 3,405 3,Crush 1,635 1,660 1,Exports 1,435 1,500 1,Total use 3,205 3,295 3,

Ending stocks 220 250 2Price ($/bu.) $11.60 $10.50 $
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Soybean Yield Scenarios

Supply• Low yield production of 3.3 billion bu. would still result in a 

year increase of 270 million bu.

• The high yield scenario would increase the potential record s

crop by 90 million bu. from the trend yield.

Utilization• Strong domestic demand for protein limits adjustment in cru• Crush also supported by mandated biodiesel use. • Export effects muffled by strong demand by China.Ending Stocks and Price• Impact is modest in both cases, with much of the price effect 

by corn.