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Gregg Doud Chief Economist National Cattlemen’s Beef Association

Gregg Doud Chief Economist National Cattlemen’s Beef Association. El Ethanino. Are not anti-ethanol Don’t believe in ethanol subsidies Don’t believe we “NEED” a larger mandate Were told “NO” when we asked for an “off-ramp” if there was a short corn crop

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Gregg Doud Chief Economist National Cattlemen’s Beef Association

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  1. Gregg DoudChief EconomistNational Cattlemen’s Beef Association El Ethanino

  2. Are not anti-ethanol Don’t believe in ethanol subsidies Don’t believe we “NEED” a larger mandate Were told “NO” when we asked for an “off-ramp” if there was a short corn crop Want the VEETC and tariff eliminated over time Are asking for the ability to compete on a level playing field with the ethanol industry for that bushel of corn Food inflation? We’re just getting warmed up. Is this what America wants? Cattlemen

  3. World Corn Production

  4. World Corn Exports

  5. Increase in World Corn Usage02/03 To 07/08 Marketing Years Source: USDA

  6. World Trade

  7. Monthly Nearby CBOT Wheat Futures/ Nearby Corn Futures June 04, 2008 SRW at the Gulf is $5.90 and corn is $6.47 (SRW at 57 cents below corn). SRW at St. Louis is $5.23 (truck) and corn is $6.01 (SRW at 78 cents below corn). CBOT WN is $7.58 and CN is $6.20 (SRW at $1.38 over corn). Do you think that ethanol plants in parts of Cornbelt (IL, MO, OH, IN) would consider switching their feedstock to SRW? All-time low was 93% in Jun 1996

  8. Aug 2006 = 4,301 mln. glns Aug 2006 = 5,388 mln. glns. Aug 2007 = 7,091 mln. glns. Aug 2008 = 11,432 mln. glns. Aug 2009 = 14,688 mln. glns. Sources : RFA, press reports, company filings, and interviews with industry contacts.

  9. Sources : RFA, press reports, company filings, and interviews with industry contacts.

  10. The Global “Credit Crisis” Stopped Ethanol Expansion The global “credit crisis” came at just the right time to stop the US ethanol industry from seriously overbuilding capacity relative to the widely referenced “market share”/2007 RFS mandate of 10% of US gasoline supply/15 bln glns RFS. In early-Aug 2007, the industry was well on its way to overbuilding the US ethanol industry much as the US biodiesel industry has already done (and continues to do so even today – biodiesel capacity utilization is less than 25%).

  11. We are now seeing “Cost-Push” crop price pressures that are being added to the “Demand-Pull” forces that are already at work in the market.

  12. US went from being the world’s largest exporter of nitrogen fertilizer in the 1980s to becoming the largest importer in the 1990s. US production declined during the 1990s as the price of domestic natural gas increased. Imports of nitrogen—mainly from Trinidad and Tobago, Canada, and Russia, all with lower natural gas prices—quickly filled the gap. About 62% of nitrogen and 88% of potash consumed in the US in 2006 was from imports. Because of limited domestic production capacity, increased fertilizer demand will have to be met largely by imports. http://www.ers.usda.gov/Data/FertilizerTrade/Summary.htm

  13. Russia placed a 9% export tax on fertilizer. 90% of mineral fertilizers are exported. 20 years ago, only 20% exported (Reuters Mar 6, 2008). China virtually shut down its urea exports by raising the export tax to 135% (it was 35%). (Dow Jones Apr 17, 2008). China capped prices of fertilizers and alos on the “spread” between producer and retail prices. (Reuters May 8). Brazil threatens to nationalize fertilizer mines in order to “bring down costs”. (Reuters May 20). Bunge will invest US$1.96 bln to expand phosphorous output in Brazil. (Reuters May 26). India expects to spend $US 22.5 bln (about 2.5% of GDP) on subsiding fertilizer for55 mln farmers. Costs are approaching what the government spends on its military. (Bloomberg May 21). Pakistan’s wheat crop down due to declining application of high priced fertilizer. (International Business Times Apr 08)

  14. CONTACT Bill Tierney, PhD - wtierney@lmc-dc.com Head LMC North American Research LMC International Ltd. 888 16th St., NW, Suite 800 Washington, DC   20006 (202) 349-9860 - - Office LMC International Ltd (www.lmc.co.uk) is an independent economic and business consulting firm providing economic research and consulting services for a broad range of industries related to agricultural commodities, foods, biofuels, industrial materials, and their end-markets.  Founded in 1980, LMC is entirely independent and does not trade, broker, offer finance, or produce any commodity.  This insures that the firm’s analysis and advice is objective. www.lmc.co.uk (to see more information about the firm)

  15. Prices for the 2010 crop? Prices for the 2009 crop? From 2006 to 2007 the fertilizer price index increased 18% Prices where most farmers bought their fertilizer for the 2008 crops CALENDAR YEAR AVERAGES MONTHLY AVERAGES From 1973-75 the fertilizer price index increased 112% Source: http://www.ers.usda.gov/Data/FertilizerUse/Tables/Table8.xls

  16. Year-by-Year Renewable Fuels Standard(in billion gallons)

  17. Global Soybean Consumption1990 – 2006 & Trend to 2016Additional Brazilian Crop Needed in a Decade World demand likely to grow by 65 mmt (2.39 bil. bu.) in 10 years. Strong demand will require ever increasing production of soybeans and boost world trade of soybeans (and/or soy products). If US cuts bean area 10 mln. ac. by 2010, Brazil will have to increase area by 27 mln. ac.(50%) to make up for lost US production and meet projected increased demand. China and India’s economies are growing at the fastest pace in over 15 years!!

  18. Brazilian Real Has Gained 140% Against the $US Since Nov The Brazilian Real has gained relative to the US$. This means that although US soybean futures have increased $8.35 since the Fall of 2002, Brazilian farmers have seen a price increase of only $3.60/bu over that same time period.

  19. Cellulosic

  20. May Corn Futures Corn = >$6/bushel New Energy Bill Signed May Feeder Cattle

  21. Breakeven Purchase Price 750 lb Steer Corn Price $/bu Fed Price 3.50 4.00 4.50 5.00 $540/hd 566 592 618 644 669 $490/hd 516 542 568 594 620 $638/hd 664 690 716 742 768 $589/hd 615 641 667 693 719 80.00 82.00 84.00 86.00 88.00 90.00 $50 $49 $49 $26 $26 $26 $26 $26

  22. Livestock Marketing Information Center

  23. United States Feedyards > 16,000 Head January 1, 2006

  24. United States Packers > 1,000 Head January 1, 2004

  25. CHANGE IN BEEF COW NUMBERSJANUARY 1, 1999 TO JANUARY 1, 2008(1000 Head) Alaska Hawaii US Total Livestock Marketing Information Center Data Source: USDA/NASS

  26. Livestock Marketing Information Center

  27. Livestock Marketing Information Center Data Source: USDA/NASS

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