Matthew C. Robertshttp://aede.osu.edu/people/roberts.628
12/7/2015
www.matthewcroberts.com 1
2016 Grains & Oilseeds Outlook
Matthew C. [email protected]
The global outlook remains positive.
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Matthew C. Robertshttp://aede.osu.edu/people/roberts.628
12/7/2015
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Chinese Meat Consumption 90-15
5
0102030405060708090
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
Million Metric
Tonn
es
CATTLE SWINE BROILER
Chinese Oilseed Consumption Growing by 9.8%/yr since 1990
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020406080
100120140160
1990/1991
1991/1992
1992/1993
1993/1994
1994/1995
1995/1996
1996/1997
1997/1998
1998/1999
1999/2000
2000/2001
2001/2002
2002/2003
2003/2004
2004/2005
2005/2006
2006/2007
2007/2008
2008/2009
2009/2010
2010/2011
2011/2012
2012/2013
2013/2014
2014/2015
Cottonseed Peanut Rapeseed
Sunflowerseed Soybean
Chinese Grain Consumption Climbing by 4%/year since 2006.
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0
100
200
300
400
500
600
1990/1991
1991/1992
1992/1993
1993/1994
1994/1995
1995/1996
1996/1997
1997/1998
1998/1999
1999/2000
2000/2001
2001/2002
2002/2003
2003/2004
2004/2005
2005/2006
2006/2007
2007/2008
2008/2009
2009/2010
2010/2011
2011/2012
2012/2013
2013/2014
2014/2015
Rice, Milled Wheat Corn
But demand isn’t everything.• Chinese de-stocking of corn?• Argentine de-stocking of grains?• Two years of very good SouthAm weather.
– Strongest El Nino on record…
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Matthew C. Robertshttp://aede.osu.edu/people/roberts.628
12/7/2015
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Crude & Nat Gas Markets Remain Very Weak
• Strong US production growth outstripping demand growth.
• Saudi Arabia is unwilling to act.• But drilling has declined substantially
– US oil production declined in Sept vs. Oct.
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Global Oil Consumption Continues to Climb
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Forecast
-2
-1
0
1
2
3
4
5
6
7
8
9
767880828486889092949698
2008 2009 2010 2011 2012 2013 2014 2015 2016
World Liquid Fuels Consumptionmillion barrels per day (MMbbl/d)
Change in U.S. consumption (right axis)
Change in China consumption (right axis)
Change in other consumption (right axis)
Total world consumption (left axis)
annual change (MMbbl/d)
Source: Short-Term Energy Outlook, October 2015.
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-0.5
0.0
0.5
1.0
1.5
2.0
2.5
2014 2015 2016
OPEC countries North America Russia and Caspian Sea
Latin America North Sea Other Non-OPEC
World Crude Oil and Liquid Fuels Production Growthmillion barrels per day
Source: Short-Term Energy Outlook, October 2015.
Forecast
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12/7/2015
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Forecast
275
300
325
350
375
400
425
450
475
500
Jan 2010 Jan 2011 Jan 2012 Jan 2013 Jan 2014 Jan 2015 Jan 2016
U.S. Commercial Crude Oil Stocksmillion barrels
Source: Short-Term Energy Outlook, October 2015.
Note: Colored band around storage levels represents the range between the minimum and maximum from Jan. 2010 - Dec. 2014.
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Forecast
60
80
100
120
140
160
180
200
220
240
260
Jan 2010 Jan 2011 Jan 2012 Jan 2013 Jan 2014 Jan 2015 Jan 2016
U.S. Gasoline and Distillate Inventoriesmillion barrels
Source: Short-Term Energy Outlook, October 2015.
Note: Colored bands around storage levels represent the range between the minimum and
Total motor gasoline inventory
Total distillate fuel inventory
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Matthew C. Robertshttp://aede.osu.edu/people/roberts.628
12/7/2015
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Oil Prices will remain weak• ME uncertainty now generally away from
oil-producing areas.• Declines in US production will start to be
felt in 2/3Q2016– Prices to $50-60 only.
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2015 EPA Rulemaking Has Smaller CutsCalendarYear
Total Convent’lBiofuel
(min20%GHG reducafter2010)
AdvancedBiofuel
(min50%GHGreduction)
CellulosicBiofuel
(min60%GHGreduction)
BiobasedDiesel
2009 11.10 10.50 0.60 ‐ 0.50
2010 12.95 12.00 0.95 0.10 0.65
2011 13.95 12.60 1.35 0.25 0.80
2012 15.20 13.20 2.00 0.50 1.00
2013 16.55 13.80 2.75 1.00 1.28
2014 18.15 14.40 3.75 1.75 1.28
2015 20.50 15.00 5.50 3.00 1.28
2016 20.50 15.00 5.50 3.00 1.28
2017 20.50 15.00 5.50 3.00 1.2819
0.006
0.0332.6716.28 13.61
0.003
0.001
0.001
14.05
14.5016.93
18.11
2.88
3.61
0.123
0.230
1.63
1.73
1.90
2.00n/an/an/a n/a
Ethanol Production Has Always Exceeded Mandates
Matthew C. Roberts, AED Economics 20
0500
10001500200025003000350040004500500055006000
'00 '05 '10 '15
5175
Million Bushels
Year
Matthew C. Robertshttp://aede.osu.edu/people/roberts.628
12/7/2015
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How Fast Will Feed Use Grow?
30003500400045005000550060006500700075008000 Million Bushels
Year
5537
6150
3876 3941
5563 5300
6335
6646
Corn Exports
0
500
1000
1500
2000
2500
3000
70 75 80 85 90 95 '00 '05 '10 '15
Mill
ion
Bus
hels
2420
1220 1328
2350
700
Year
510
2436
1800
2013-2015: Three Highest Production Years, Yet…
02468101214
0102030405060708090
100
Bill
ion
Bus
hels
Percent
Year
Production 13.66
Use 13.66
Stocks-to-Use Ratio (%)
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Matthew C. Robertshttp://aede.osu.edu/people/roberts.628
12/7/2015
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Corn Prices Can’t Catch a Break.
• Best hope for higher prices is continued S.Am weather declines.
• De-stocking creates huge uncertainty…– Temporarily
• Storage gains are best opportunities• 2016/17—strong demand remains in
place.
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Soybeans Domestic Demand Flat
0
500
1,000
1,500
2,000
2,500
1970 1975 1980 1985 1990 1995 '00 '05 '10 '15Year
Mill
ion
Bus
hels 2003
1956
Soy exports off 130m.
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1970 1975 1980 1985 1990 1995 '00 '05 '10 '15
Million Bushels
929804 885
589527
1063
1715
Record Soybean Production, Weak Exports Leave Large Stocks
28.0
21.0
15.0
11.0
13.0 18
.013
.613
.410
.7 14.0
7.8
5.4 7.6 13
.410
.78.
87.
16.
44.
4 8.6 15
.6 18.6
6.7
4.5
4.5 6.6
5.4
4.5
2.6 4.9 12
.4
1
1.5
2
2.5
3
3.5
4
0102030405060708090
100
Bn
Bus
hels
Perc
ent
Year
Production 3.92
Use 3.7
Stocks-to-Use Ratio (%)
Matthew C. Robertshttp://aede.osu.edu/people/roberts.628
12/7/2015
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Global Soybean Production & Use Remains Incredible
1925
1919182019171714
1813
91516171817
21202325
2823
192527
2323272627
50
100
150
200
250
300
350
0
10
20
30
40
50
60
70Percent
Year
Production 320
Use 310
Million Metric Tons
Stocks-to-Use Ratio (%)
Soybeans have staged small rally into December
• The EPA taketh away and the EPA giveth.• Brazilian weather continues to decline
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Corn Competition Bites into US Wheat Demand
0
0.5
1
1.5
2
2.5
3
0102030405060708090
100Billion
BushelsPercent
Year
Production 2.05
Use 2.02
Stocks-to-Use Ratio (%)
Plan on low prices…• $3.50 corn• $9.00 soybeans• $5.00 wheat
• Build working capital– Pay taxes.– Lower land costs.– Fix interest rates.
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Matthew C. Robertshttp://aede.osu.edu/people/roberts.628
12/7/2015
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Matt Roberts(614) 688-8686
[email protected]://aede.osu.edu/people/roberts.628
Twitter: @YourEconProf
Questions?