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Evolving Agricultural Landscape: Impacts of Global Market Trends and Weather Patterns

The agricultural sector is undergoing significant changes due to various global factors. The Asian financial crisis is behind us, and U.S. weather patterns have stabilized. Meanwhile, world income growth and stronger foreign currencies are affecting grain prices. U.S. inflation is set to rise, marking a recovery for exporters and farmers. However, basic food stocks are dangerously short, requiring smarter marketing and heightened risk management. As South America’s agricultural landscape evolves, farmers are positioned as buyers in a volatile market, with increased production costs and rising land values.

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Evolving Agricultural Landscape: Impacts of Global Market Trends and Weather Patterns

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  1. AG OUTLOOK 2004 Purdue Cooperative Extension Service March 10, 2004

  2. What’s Different • Asian Financial Crisis 1997---Finally over • Stable U.S. Weather 1996-2001 is Over • World Income Growth • Foreign Currencies are Stronger • Grains and soybeans are not high priced in foreign countries • U.S. Dollar will Continue to Weaken • World Surplus is Gone • World Basic Food Stocks are Dangerously Short • U.S. Inflation Will Move Up • Recovering Era for U.S. Exporters • Farmers • Manufactures • China is our Ag Market King—They Economy is BOOMING • S. America is still a growing thorn……….

  3. Dollar Index -28% since Feb 2001 In 2003 -Euro +22% -Yen +11% -Canadian $ +18% -Brazilian Real +18%

  4. Why? Higher Volume corn and wheat exports with tight world stocks. Beef?? Exports $59.5B: UP $4.0B or 7.2% Surging Imports: Up $7.5B in two years. Why? Hort imports, fruits, veg. apple and orange juice, wine, coffee, cocoa, malting barley, wheat

  5. Implications • Much more volatile prices • Marketing decisions are more important • Risk management is heightened • Livestock sector forced to adjust: • Layers, Beef cattle, Broilers • Hogs and Dairy (still to adjust) • Government expenditures to Ag are reduced • Dependency on Government is reduced • Record HIGH farm income 2003, 2004? • Farmers as BUYERS????? • Large Incentive to seed BEANS in 04 • Land values continue to increase • Costs of production bid higher • Boomlet/Bustlet Cycle 2004-2008??????

  6. Dropped to 146

  7. Dec 2002 $2.60 - $2.96

  8. Dec 04…$3.00

  9. $11.00 $9.50 $9.00 $7.50

  10. $10.50 MayFutures How High????: -S.Amer. Crop not as small as expected -Exports seem to be rationed -Imports of oil and meal likely -But can S.Amer. load out the volume??? -Can we cut domestic crush?????

  11. July 97 Futures $7 to $9 in January - April

  12. What About New Crop? Nov 1997 Futures $6.50 to $7.50 Jan to March

  13. Nov 2004 High--$7.61

  14. Last Fall

  15. Today

  16. Normal Temps/Prec. Mrch/April/May

  17. Warm Summer but Normal Precip: July/Aug/Sept

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