Farm Credit Council Annual Meeting

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Cornerstones for the U.S. and Global Agriculture
Economic Outlook (updated for Fed actions through
1/31/08)
Presentation by Terry N. Barr Chief
Economist Natl Council of Farmer
Cooperatives Phone [phone] E-mail
tbarr_at_ncfc.org
Farm Credit Council Annual Meeting January 22,
2008
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There are four volatile cornerstones that form
the foundation for the food, fiber and
agricultural markets in the year ahead
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There are four volatile cornerstones that form
the foundation for the food, fiber and
agricultural markets in the year ahead
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With these cornerstones in place the markets will
remain highly volatile and managing market and
production risk will be strategic!
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Energy Policies?
Production Responses?
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Global Growth?
Very low Stocks?
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Global Rebalancing, Trade and the U.S. Dollar
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?
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Advanced Economies Weakening
(44 world GDP / 13 world population)
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Emerging Asia Lead by China
(30 world GDP / 53 world population)
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U.S. exports more competitive but importers of
U.S. products gain buying power in competition
for available supplies!
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-5?
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China accounts for nearly 85 of growth in world
trade for soybeans and cotton over the last
decade!
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• Export share of
• U.S. production
• Broilers .. 15
• Beef . 7
• Pork 16

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Whats Next for U.S. Economy?
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Consumer holds recession key!
Vulnerable period Recession?
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Credit markets, inflation and employment will
key Fed rate moves!
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Economic Stimulus Package
Timely .. Targeted .Temporary

• 150 bil. package has support of White House and
  House Leadership .. Senate will up the ante!
• Individuals
• 600 or 1200 tax credit 300 credit fro each
  child
• 300 - 600 payment for those over 3,000
• Business
• Increased deduction on some investments
• Increase small business deduction (250,000)
• Fannie Mae and Freddie Mac
• Increased limit on size of mortgages purchased.
  (600,000 from 417,000)

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Energy Markets and Renewable Fuels
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Forecast
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Middle East Uncertainties Add Risk Premium
AFGANISTAN
IRAQ
IRAN
PAKISTAN
SAUDI ARABIA
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2008 avg. 87
2007 avg. 72
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January, 2008 134 ethanol plants 7.2 bil.
gallons 77 Under construction 6.2 bil.
gallons Proposed .. ????? 26 states with
facilities
Note Ethanol tax credit expires 2010 Biodiesel
credit expires Jan. 2009
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Global Stocks
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Global Production Responses Acreage, Technology
Weather
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2008 Crop
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CORN
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Biotechnology will need to continue to enhance
yields as acreages fall and input costs rise!
1970-2005 trend
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12 decline!
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Livestock, Poultry and Dairy Industries Adjust to
Markets
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(Dec. 2005 to Dec. 2007) Feed index .. 47 Hay
prices ... 45 Corn .. 106 Soybeans . 82
(year-earlier) Feed index .. 40 Corn ..
64 Soybeans 34
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Judging response to 2007 crop and 2008
expectations!
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Cornerstones Form Foundation for Markets!
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Commodity Markets are in the Volatile Portions of
the Price Curves
Price per unit

and result in large price movements!


Small changes in demand or supply impact stocks
relative to use .

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Record low level
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2008 Farm Bill and Global Integration
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2008 Farm Bill ?