1. Soybean Complex Outlook: 2003/04 Dr. Matthew C. Roberts The Ohio State University Midwest, Great Plains, and Western Outlook Conference Indianapolis, IN August 14-15, 2003

2. 2002/03 Highlights: Domestic Soybean Production Yields (-7.2% v. trend; -4.5% v. 2001) Excellent yields in WCB Poor yields in ECB Avg/Below Avg Yields in South Acreage 73.76m Planted 1.6m Abandoned Improved Prices Soybeans: $5.45 (+23% v. 2001)

3. 2002/03 Highlights: World Production World Bean Production +6.2% US Production -5.5% South American Production +19.7% Acreage +17% Chinese Production +7.1% World Oilseed Production +5.5%

4. 2002/03 Highlights: Domestic Bean Use Meal Use -2.8% Lower hog numbers Increased DDG competition Oil Use +0.8%

5. 2002/03 Highlights: Bean Complex Exports Beans -3%, Meal -21%, Oil -14% Large S. Am. crop and high US prices dampened demand.

6. 2003 US Crop US Plantings: -0.5m acres Abandonment vs. Corn Shift in ECB? Currently 72.7m acres for harvest, +0.5m Nationwide, yield prospects very good: Crop development late Crop conditions quite good.

7. 2003 S. Am. Crop Plantings: +6% acres Prices lower than last year, weaker $

8. World Oilseed Ending Stocks Million Metric Tons Year 27.2 16.4 42.35 15.7 26.8 33.86

9. World Oilseed Supply & Demand Million Metric Tons Production 352 Use 347

10. World Soybean Supply & Demand Production 207 Use 204 Million Metric Tons Stocks-to-Use Ratio (%)

11. U.S. Soybeans Use 2.78 Stocks-to-Use Ratio (%) Production 2.89

12. U.S. Soybeans: Domestic Use Year Million Bushels 898 1204 1285 1820

13. U.S. Soybeans: Exports Year Million Bushels 539 929 804 838 1000 589 527 1070

14. Price: $/bu. Stocks to use ratio 82 85 86 87 83 84 92 88 90 89 91 94 93 95 96 1982-1990 1991-1997 97 98 99 Soybeans: Stocks-Price Relationship 00 01 02 03 1998-2003

15. WAOB Projections for 2003/04

16. Currency Changes R$/USD

17. Short-term risks/surprises Late crop development: more uncertainty about final yields? Meal competition from ethanol by- products Chinese demand Reduced Brazilian competition due to USD weakness Current level of Brazilian stocks?

18. WAOB Projections for 2003/04

19. Soybean Futures Term Structure Sep03$5.53 Nov$5.50 Mar04$5.54 May$5.51 Jul $5.53 Nov$5.37 Updated 14 August 2003

20. Futures Prices Currently imply national average price of $5.00 - $5.15 Where is the risk: Doing the right thing too late? Doing the wrong thing too early?

21. Marketing LDP’s are gone for now…will they return? Volatility is very high. Small carryovers leave door open for big moves. Look to sell at and above $5.50 @ CBOT. or….

22. “The Commission Hedge” Sell an Nov ATM (5.50) straddle at ~45 (?) Sell equal number of Nov futures:

23. Long-term Brazil: how fast can they expand soybean production? What is the price elasticity of demand? How will China evolve? Is RR on the cusp of approval in Brazil? If so, what does this mean for the US?

24. Soybean Basis

25. Updated Copies: Available at http://aede.osu.edu/people/roberts.628 http://aede.osu.edu/people/roberts.628 email: roberts.628@osu.edu