OUTLOOK FOR GRAINS AND OILSEEDS—THE US PERSPECTIVE Joseph W. Glauber Chief Economist US Department of Agriculture 2 March 2014 Source: UN, 2011 growth rate millions World Population projections by region Asian economic growth Source: IMF, World Economic Outlook Global consumption of grains and oilseeds at record levels MMT Source: USDA PSD database MMT Global trade million metric tons 250 Soybeans and products 200 150 Wheat 100 Coarse Grains 50 Source: USDA Agricultural Projections to 2023 2022 2020 2018 2016 2014 2012 2010 2008 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 0 US corn used in ethanol to grow modestly Bil bu 6 5 Ethanol corn use 4 Ethanol share of corn use (%) 3 Percent 40 35 30 25 20 15 10 5 0 2 1 2022/23f 2020/21f 2018/19f 2016/17f 2012/13 2010/11 2008/09 2014/15f Source: USDA Agricultural Projections to 2023 2006/07 2004/05 2002/03 2000/01 1998/99 0 Short run outlook for grains and oilseeds Global grain ending stocks remain tight Crop Wheat Corn Rice Soybeans Cotton 2000-03 Avg 120 89 115 74 193 Source: USDA, PSD database 2007/08 76 62 69 83 187 2008/09 96 69 77 71 208 2009/10 2010/11 Days of use 112 65 79 93 144 111 55 81 102 160 2011/12 105 56 83 76 261 2012/13 93 56 84 83 305 2013/14 96 61 81 99 322 Global wheat supply and use Mil MT February 10, 2014 World wheat supply and use 2012/13 estimate 2013/14 forecast Million Tons Beginning stocks Production Total Supply Feed use Total use Trade Ending Stocks 198.9 656.3 855.3 136.5 679.4 137.4 175.8 175.8 711.9 887.7 135.0 704.0 159.4 183.7 Change from January Change from 2012/13 Percent Percent -0.2 -0.1 -0.1 -1.0 0.1 0.5 -0.9 -11.6 8.5 3.8 -1.1 3.6 16.0 4.5 Projected wheat exports MMT Global rice supply and use Mil MT February 10, 2014 World rice supply and use 2012/13 estimate 2013/14 forecast Million Tons, milled Beginning stocks Production Total Supply Total use Trade Ending Stocks 104.4 469.5 573.9 467.1 38.7 106.8 106.8 471.5 578.4 473.3 40.4 105.0 Change from January Change from 2012/13 Percent Percent -0.3 0.1 0.0 0.1 0.6 -0.1 2.3 0.4 0.8 1.3 4.5 -1.7 Projected global rice exports MMT Global corn supply and use Mil MT February 10, 2014 World Corn Supply and Use 2012/13 estimate 2013/14 forecast Million Tons Beginning stocks Production Total Supply Feed use Total use Trade Ending Stocks 132.8 862.8 995.6 515.7 861.6 94.5 134.0 134.0 966.6 1,100.6 573.5 943.3 114.4 157.3 Change from January Change from 2012/13 Percent Percent 0.8 0.0 0.1 0.7 0.4 2.8 -1.8 0.9 12.0 10.5 11.2 9.5 21.1 17.4 Global industrial use of corn MMT Annual increase in corn industrial use 2000-10 2010-13 US 12.5% --China 6.3% 4.9% ROW 2.7% 2.1% Projected global coarse grain trade MMT Growth in corn imports Selected countries where imports are projected to grow MMT 1/ excludes Japan, S. Korea, Taiwan, China, Indonesia, and Malaysia. Growth in corn exports Global soybean supply and use Mil MT Global soybean supply and use 2012/13 Beginning stocks 2013/14 Percent change 53.42 58.65 9.8% Production 268.27 287.69 7.2% Domestic crush 228.94 240.36 5.0% Domestic total 258.48 270.92 4.8% Ending stocks 58.65 72.33 23.3% Growth of South America soybean exports MMT Projected growth in soybean imports MMT Projected growth in soy exports MMT Projected US plantings for 2014 Crop 2008 2009 2010 2011 2012 2013 Percent change 2014F Corn 34.8 35.0 35.7 37.2 39.3 38.6 34.8 -3.5% Soybeans 30.6 31.4 31.3 30.4 31.2 31.0 30.6 3.9% Wheat 25.6 24.0 21.7 22.0 22.5 22.7 25.6 -1.2% All cotton Minor feed grains 3.8 3.7 4.5 5.9 5.0 4.2 3.8 10.5% 6.4 5.5 4.6 4.2 5.1 5.9 6.4 -14.8% Rice 1.2 1.3 1.5 1.1 1.1 1.0 1.2 16.5% 102.4 100.7 99.2 100.9 104.3 103.4 102.4 -0.7% 14.0 13.6 12.7 12.6 11.9 10.8 14.0 -3.1% 116.4 114.4 111.9 113.5 116.2 114.2 116.4 -0.9% Total 8 crops CRP 8 crops + CRP Million hectares Source: USDA-World Ag Outlook Board Corn, wheat, and soybean prices expected to fall from recent high levels 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15F Wheat 249 179 209 266 285 250 195 Corn 160 140 204 245 271 177 154 Soybeans 366 352 415 459 529 467 355 Rice 370 317 280 320 328 353 351 Season average price paid to U.S. farmers; red denotes record levels. Source: USDA-NASS, Feb 2014 WASDE, and USDA-World Ag Outlook Board Implications • Strong global production for grains and oilseeds has led to sharply lower prices following years of relatively tight supplies. • Long term growth in agricultural demand will continue to be driven emerging developing markets • Where will export growth occur? • How vulnerable is world economy to downturn? • Importance of resolving trade barriers and distortions • After rapid growth, biofuel sector facing challenges • E10 blendwall and declining motor fuel consumption • Long run relationship of biofuels to fossil fuels • Implications for price volatility • Stocks remain tight • Wheat—more dependent on FSU • Soybeans—more balance between N. and S. Hemispheres