2011 Crop Market Outlook Northwest Iowa Farm Business

2011 Crop Market Outlook Northwest Iowa Farm Business Association Meeting Sheldon, Iowa Mar. 28, 2011 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate. edu 515 -294 -9911 University Extension/Department of Economics

U. S. Corn Supply and Use 2007 2008 2009 2010 93. 5 86. 0 86. 4 88. 2 Area Planted (mil. acres) Yield (bu. /acre) 150. 7 153. 9 164. 7 152. 8 Production (mil. bu. ) 13, 038 12, 092 13, 092 12, 447 Beg. Stocks (mil. bu. ) 1, 304 1, 624 1, 673 1, 708 Imports (mil. bu. ) 20 14 8 20 Total Supply (mil. bu. ) 14, 362 13, 729 14, 774 14, 175 Feed & Residual (mil. bu. ) 5, 913 5, 182 5, 140 5, 200 Ethanol (mil. bu. ) 3, 049 3, 709 4, 568 4, 950 Food, Seed, & Other (mil. bu. ) 1, 338 1, 316 1, 371 1, 400 Exports (mil. bu. ) 2, 437 1, 849 1, 987 1, 950 Total Use (mil. bu. ) 12, 737 12, 056 13, 066 13, 500 Ending Stocks (mil. bu. ) 1, 624 1, 673 1, 708 675 4. 20 4. 06 3. 55 5. 40 Season-Average Price ($/bu. ) University Extension/Department of Economics Source: USDA

U. S. Soybean Supply and Use 2007 2008 2009 2010 Area Planted (mil. acres) 64. 7 75. 7 77. 5 77. 4 Yield (bu. /acre) 41. 7 39. 7 44. 0 43. 5 Production (mil. bu. ) 2, 677 2, 967 3, 359 3, 329 Beg. Stocks (mil. bu. ) 574 205 138 151 Imports (mil. bu. ) 10 13 15 15 Total Supply (mil. bu. ) 3, 261 3, 185 3, 512 3, 495 Crush (mil. bu. ) 1, 803 1, 662 1, 752 1, 655 Seed & Residual (mil. bu. ) 93 106 108 110 Exports (mil. bu. ) 1, 159 1, 279 1, 501 1, 590 Total Use (mil. bu. ) 3, 056 3, 047 3, 361 3, 355 Ending Stocks (mil. bu. ) 205 138 151 140 10. 10 9. 97 9. 59 11. 60 Season-Average Price ($/bu. ) University Extension/Department of Economics Source: USDA

World Corn Production University Extension/Department of Economics Source: USDA

World Soybean Production University Extension/Department of Economics Source: USDA

La Niña Winter El Niño Neutral La Niña University Extension/Department of Economics Source: NOAA

Hog Crush Margin The Crush Margin is the return after the pig, corn and soybean meal costs. Carcass weight: 200 pounds Pig price: 50% of 5 mth out lean hog futures Corn: 10 bushels per pig Soybean meal: 150 pounds per pig University Extension/Department of Economics Source: Shane Ellis, ISU Extension

Cattle Crush Margin The Crush Margin is the return after the feeder steer and corn costs. Live weight: 1250 pounds Feeder weight: 750 pounds Corn: 50 bushels per head University Extension/Department of Economics Source: Shane Ellis, ISU Extension

Corn Export Sales University Extension/Department of Economics Source: USDA, FAS

2010 U. S. Corn Exports University Extension/Department of Economics Source: USDA, FAS

Corn Export Shifts University Extension/Department of Economics Source: USDA, FAS

University Extension/Department of Economics

Corn Advance Export Sales University Extension/Department of Economics Source: USDA, FAS

Soybean Export Sales University Extension/Department of Economics Source: USDA, FAS

2010 U. S. Soybean Exports University Extension/Department of Economics Source: USDA, FAS

Soy Export Shifts University Extension/Department of Economics Source: USDA, FAS

Soy Advance Export Sales University Extension/Department of Economics Source: USDA, FAS

Value of the Dollar University Extension/Department of Economics

Renewable Fuels Standard (RFS) Crop Year Billion Bushels 2009 4. 11 2010 4. 43 2011 4. 64 2012 4. 86 University Extension/Department of Economics

Ethanol Margins Source: ISU, CARD University Extension/Department of Economics

Ethanol Margins Source: ISU, CARD University Extension/Department of Economics

Ethanol Blending Advantage University Extension/Department of Economics

Fuel Prices University Extension/Department of Economics

Projected 2010 Season-Average Corn Price University Extension/Department of Economics

Projected 2010 Season-Average Soy Price University Extension/Department of Economics

Projected 2011 Season-Average Corn Price University Extension/Department of Economics

Projected 2011 Season-Average Soy Price University Extension/Department of Economics

Corn University Extension/Department of Economics

Iowa Corn Prices vs. Costs University Extension/Department of Economics

Iowa Soybean Prices vs. Costs University Extension/Department of Economics

Principal Crop Area University Extension/Department of Economics Source: USDA-NASS

States with Room to Grow State North Dakota South Dakota Missouri Million acres 2. 249 1. 400 0. 930 Competing Crops Wheat, corn, soy Rice, cotton, soy Arkansas Illinois Texas Georgia Mississippi North Carolina Louisiana 0. 715 0. 535 0. 466 0. 395 0. 284 0. 283 Rice, cotton, soy Wheat, corn, soy Cotton, rice, soy Cotton, corn, soy Rice, cotton, soy University Extension/Department of Economics

New Crop Futures Price Movements June 1 Mar. 25 Change Wheat Corn Soybeans MGE Sept. CME Dec. CME Nov. ($/bu. ) 5. 81 4. 04 9. 22 8. 96 54% University Extension/Department of Economics 6. 10 51% 13. 50 46% Cotton ICE Dec. ($/lb. ) 0. 75 1. 28 69%

Projected Crop Margins University Extension/Department of Economics

Thoughts for 2011 and Beyond ØGeneral economic conditions ØContinued economic recovery is a major key for crop prices ØJapanese earthquake and tsunami have shaken those prospects ØSupply/demand concerns Ø 92 million acres of corn and 78 million acres of soybeans? ØSouth America: La Niña impacts (Argentina , Brazil ) ØBiofuels: E 15; Ethanol & Biodiesel tax credits renewed ØWill supply be able to keep pace with demand? Ø 2010/11: USDA: Futures (as of 3/25/2011): Corn $5. 40, Soy $11. 60 Corn $5. 38, Soy $11. 66 Ø 2011/12: Futures (as of 3/25/2011): Corn $5. 93, Soy $13. 00 University Extension/Department of Economics

Thank you for your time! Any questions? My web site: http: //www. econ. iastate. edu/~chart/ Iowa Farm Outlook: http: //www. econ. iastate. edu/ifo/ Ag Decision Maker: http: //www. extension. iastate. edu/agdm/ University Extension/Department of Economics