AG OUTLOOK 2004

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AG OUTLOOK 2004
Purdue Cooperative Extension Service March 10,
2004
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Mortgage Rates Hit BOTTOM in June _at_ 5.23. Still
5.64 in February 04
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Economy Ready for a Positive Burst????
2001 1st - .6 2nd - 1.6
3rd .3 4th 2.7 2002
1st 5.0 2nd 1.3
3rd 4.0 4th 1.4 2003 1st
1.4 2nd 3.1 3rd
8.2 4th 4.1
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Prime rate dropped from 9.5 at start of 2001 to
4.00 currently. Lowest since 1958/1959
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Forecast for 2004
Last 12 Months Next 12 Months
GDP (Real) 3.3 Yearly 4.4 to 4.8
CPI 2.1 Yearly 1.6-2.4
Unemployment 5.7 (December 03) 5.6 July 04 5.4 Dec 04
3 Month Treasury .90 (December 03) 1.2 July 04 1.5 Dec 04
10 Year Treasury 4.27 (December 03) 4.5 July 04 4.9 Dec 04
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Whats Different

• Asian Financial Crisis 1997---Finally over
• Stable U.S. Weather 1996-2001 is Over
• World Income Growth
• Foreign Currencies are Stronger
• Grains and soybeans are not high priced in
  foreign countries
• U.S. Dollar will Continue to Weaken
• World Surplus is Gone
• World Basic Food Stocks are Dangerously Short
• U.S. Inflation Will Move Up
• Recovering Era for U.S. Exporters
• Farmers
• Manufactures
• China is our Ag Market KingThey Economy is
  BOOMING
• S. America is still a growing thorn.

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Dollar Index -28 since Feb 2001 In 2003 -Euro
22 -Yen 11 -Canadian 18
-Brazilian Real 18
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Why? Higher Volume corn and wheat exports with
tight world stocks. Beef??
Exports 59.5B UP 4.0B or 7.2
Surging Imports Up 7.5B in two years. Why? Hort
imports, fruits, veg. apple and orange juice,
wine, coffee, cocoa, malting barley, wheat
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Implications

• Much more volatile prices
• Marketing decisions are more important
• Risk management is heightened
• Livestock sector forced to adjust
• Layers, Beef cattle, Broilers
• Hogs and Dairy (still to adjust)
• Government expenditures to Ag are reduced
• Dependency on Government is reduced
• Record HIGH farm income 2003, 2004?
• Farmers as BUYERS?????
• Large Incentive to seed BEANS in 04
• Land values continue to increase
• Costs of production bid higher
• Boomlet/Bustlet Cycle 2004-2008??????

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• Dropped to 146

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      Corn            
      3/10/2004 3/10/2004          
      98/99 99/00 00/01 01/02 02/03 03/04 04/05
      Million Bushels Million Bushels          
Carryin Carryin Carryin 1,308 1,787 1,718 1,899 1,596 1,086 901
Production Production Production 9,759 9,431 9,915 9,507 9,008 10,114 10,410
Total Supply Total Supply Total Supply 11,085 11,232 11,639 11,416 10,619 11,211 11,321
Feed Residual Feed Residual Feed Residual 5,496 5,664 5,836 5,877 5,642 5,800 5,725
Food,Seed,Ind Food,Seed,Ind Food,Seed,Ind 1,822 1,913 1,967 2,054 2,299 2,510 2,675
Export Export Export 1,981 1,937 1,937 1,889 1,592 2,000 2,100
Total Use Total Use Total Use 9,299 9,514 9,740 9,820 9,533 10,310 10,500
Ending Stocks Ending Stocks Ending Stocks 1,786 1,718 1,899 1,596 1,086 901 821
US Farm Price US Farm Price US Farm Price 1.94 1.82 1.85 1.97 2.32 2.35-2.55 2.60
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Dec 2002 2.60 - 2.96
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Dec 043.00
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      Soybeans USDA Soybeans USDA Soybeans USDA        
      3/10/2004 3/10/2004          
      98/99 99/00 00/01 01/02 02/03 03/04 04/05
      Million Bushels Million Bushels        
Carryin Carryin Carryin 200 348 289 248 208 178 125
Production Production Production 2,741 2,654 2,758 2,891 2,749 2,418 2,930
Total Supply Total Supply Total Supply 2,944 3,006 3,052 3,141 2,962 2,604 3,060
Seed Residual Seed Residual Seed Residual 205 165 165 171 124 124 155
Crush Crush Crush 1,590 1,579 1,641 1,700 1,615 1,465 1,635
Exports Exports Exports 801 973 998 1,063 1,045 890 1,060
Total Use Total Use Total Use 2,596 2,717 2,804 2,933 2,784 2,479 2,850
Ending Stock Ending Stock Ending Stock 348 289 248 208 178 125 210
Farm Price Farm Price Farm Price 4.93 4.63 4.54 4.38 5.53 7.15-7.55 5.90
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11.00
9.50
9.00
7.50
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10.50
May Futures
How High???? -S.Amer. Crop not as small as
expected -Exports seem to be rationed -Imports of
oil and meal likely -But can S.Amer. load out the
volume??? -Can we cut domestic crush?????
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July 97 Futures
7 to 9 in January - April
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What About New Crop? Nov 1997 Futures
6.50 to 7.50 Jan to March
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Nov 2004 High--7.61
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      Wheat USDA Wheat USDA Wheat USDA        
      3/10/2004 3/10/2004          
      98/99 99/00 00/01 01/02 02/03 03/04 04/05
                   
Carryin Carryin Carryin 722 946 950 876 777 491 534
Carryin Carryin Carryin 2,547 2,299 2,232 1,958 1,619 2,337 2,120
Total Supply Total Supply Total Supply 3,373 3,339 3,271 2,941 2,473 2,903 2,729
Feed Residual Feed Residual Feed Residual 401 284 298 193 126 225 250
Other Domestic Other Domestic Other Domestic 984 1,017 1,036 1,010 1,002 984 988
Exports Exports Exports 1,042 1,090 1,061 961 854 1,150 950
Total Use Total Use Total Use 2,427 2,391 2,395 2,164 1,982 2,359 2,188
End Stocks End Stocks End Stocks 946 950 876 777 491 544 541
Farm Price Farm Price Farm Price 2.65 2.48 2.62 2.78 3.56 3.30-3.40 3.35
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2004 Crop Budget 2004 Crop Budget 2004 Crop Budget 10-Mar-04 10-Mar-04    
  Central Indiana Central Indiana        
    Corn Soybeans Wheat    
Futures   2.97 7.49 3.75    
ExpectBasis ExpectBasis -0.25 -0.25 -0.30    
ExpectCash ExpectCash 2.72 7.24 3.45    
Loan 2.02 5.14 2.50    
             
  Corn 2.72 Soybeans 7.24 Wheat 3.45
  bu./acre /acre bu.acre /acre bu/acre /acre
Low 114.6 172 37.1 172 61.0 130
Ave 141.9 215 46.0 227 68.6 149
High 174.6 277 56.6 297 76.0 166
  Budget Purdue Id-166 Budget Purdue Id-166        
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• Last Fall

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• Today

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Normal Temps/Prec. Mrch/April/May
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Warm Summer but Normal Precip July/Aug/Sept