Changing Dynamics within U'S' Grain Markets

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Changing Dynamics within U.S. Grain Markets

• Terry Francl, Senior Economist
• American Farm Bureau Federation
• Kansas Farm Bureau
• Crops Advisory Committee Meeting
• February 5, 2007

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The Global Setting Tight World Coarse Grain
Stocks
of total use
2006/07 12
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Crop Year
Source Keith Collins, USDA
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Source Illinois Farm Bureau
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What an Average Ethanol Plant Can Pay for Corn
Source Keith Collins, USDA
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VEETC Volumetric Ethanol Excise Tax Credit
Source Amani Elobeid, CARD Briefing Paper 06-BP
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Source Federal Reserve Bank of Kansas City
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Ethanol and Corn Prices Changing economics
/ gallon
Source Keith Collins, USDA
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U.S. Biodiesel ProductionOur View
Mil. gal.
Source Keith Collins, USDA
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Cellulosic Ethanol Forecast
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Twenty In Ten Strengthening America's Energy
Security   Tonight, President Bush Will Ask
Congress And America's Scientists, Farmers,
Industry Leaders, And Entrepreneurs To Join Him
In Pursuing The Goal Of Reducing U.S. Gasoline
Usage By 20 Percent In The Next Ten Years
Twenty In Ten.  For too long, our Nation has been
dependent on oil.  America's dependence leaves us
more vulnerable to hostile regimes, and to
terrorists who could cause huge disruptions of
oil shipments, raise the price of oil, and do
great harm to our economy.   America Will Reach
The President's Twenty In Ten Goal By   -
Increasing The Supply Of Renewable And
Alternative Fuels By Setting A Mandatory Fuels
Standard To Require 35 Billion Gallons Of
Renewable And Alternative Fuels In 2017 Nearly
Five Times The 2012 Target Now In Law.  In 2017,
this will displace 15 percent of projected annual
gasoline use.   Source  White House Press
release.
Source The Wall Street Journal
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Source Illinois Farm Bureau
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Source Illinois Farm Bureau
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Summary

• A shift in the demand curve
• 3-5 per bushel trading range
• Likely to last 3-5 years
• Impact is far ranging
• Acreage reallocation
• Land values and rents
• Prices of inputs, both capital and supply
• Livestock and poultry sector
• May be a close analogy to the mid-70s

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Terry Francl, Senior Economist

• 600 Maryland Avenue SW, Suite 1000W
• Washington, DC 20024
• (202) 406 3621
• terry_at_fb.org