commodities study mba ( michael toney , mike toney )
TRANSCRIPT
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US COMMODITIES (CORN)
JJ, Boone, and Mike Toney , Michael Toney
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History of Corn:
Colonists vs. Native Americans Midwestern Expansion Technological Changes of the 1940’s
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Technology changes the landscape
Today US Corn Yield is 20% higher than any other country in the world!HOWEVER – beware of volatility!
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World Corn Trade
Corn accounts for 75% of total grain crops traded in the world and the US accounts for almost 60% of total world production.
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Domestic Corn Use 60% of the total world production, only
15% of what the US produces is exported 3 major uses for corn in the US
Food Feed Industrial Uses
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Domestic Corn Use, % of Total
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What Affects the Price of Corn? Futures Price Weather- 8 states = 76% of corn International
- 12% of Agricultural Export Value- We set the Price that that rest of the world
(Asia) pays- only 15% vs. 60%- S. America
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The United States & USDA “Corn/Fed”
Expected Acres-Based on baseline projections
Expected Yield - Since 1960- Steadily increasing
Subsidies- Keeps prices artificially low- Sauk Valley Farms $4m ‘95-’12
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Gasoline, Affects and is Affected
Ethanol Producers-Energy Independence and Security
Act-If corn supplies limited, ethanol
industry will pay any price needed to meet quota
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What do corn prices affect? Farmers
-Incentivized by price of corn to grow more/less corn- Subsidies Livestock producers / Dairy-2009 Dairy Cattle alone consumed 30.5 million metric tons of corn-based feed = 3.8m bushels-Rule of thumb: Every 10-cent change in price / bu changes feeder cattle prices by $1-Livestock can quickly turn from beings profitable to unprofitable Meat prices -If corn price increases, meat price initially decreases and then increases later
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What else do corn prices affect? Corn-sumers
-3/4 products in supermarket contain some form of corn-Price takers-Foreign consumers also subject to changing corn prices
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The Future of Corn Positive America will maintain dependence on
corn-Steady price (weather)-Grain stocks strengthening
Increasing foreign demand Renewable fuel mandates decreasing
-However, demand from other markets will make up for this
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Dedicated to Nick
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Questions?