2012 Grain Market Outlook 2012 Weather Market Outlook

2012 Grain Market Outlook 2012 Weather & Market Outlook Seminars Cedar Rapids and Iowa City, Iowa Feb. 22, 2012 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate. edu 515 -294 -9911 Extension and Outreach/Department of Economics

U. S. Corn Supply and Use 2008 2009 2010 2011 86. 0 86. 4 88. 2 91. 9 Area Planted (mil. acres) Yield (bu. /acre) 153. 9 164. 7 152. 8 147. 2 Production (mil. bu. ) 12, 092 13, 092 12, 447 12, 358 Beg. Stocks (mil. bu. ) 1, 624 1, 673 1, 708 1, 128 Imports (mil. bu. ) 14 8 28 20 Total Supply (mil. bu. ) 13, 729 14, 774 14, 182 13, 506 Feed & Residual (mil. bu. ) 5, 182 5, 125 4, 793 4, 600 Ethanol (mil. bu. ) 3, 709 4, 591 5, 021 5, 000 Food, Seed, & Other (mil. bu. ) 1, 316 1, 370 1, 407 1, 405 Exports (mil. bu. ) 1, 849 1, 980 1, 835 1, 700 Total Use (mil. bu. ) 12, 056 13, 066 13, 055 12, 705 Ending Stocks (mil. bu. ) 1, 673 1, 708 1, 128 801 4. 06 3. 55 5. 18 6. 20 Season-Average Price ($/bu. ) Source: USDA-WAOB Extension and Outreach/Department of Economics

U. S. Soybean Supply and Use 2008 2009 2010 2011 Area Planted (mil. acres) 75. 7 77. 5 77. 4 75. 0 Yield (bu. /acre) 39. 7 44. 0 43. 5 41. 5 Production (mil. bu. ) 2, 967 3, 359 3, 329 3, 056 Beg. Stocks (mil. bu. ) 205 138 151 215 Imports (mil. bu. ) 13 15 14 15 Total Supply (mil. bu. ) 3, 185 3, 512 3, 495 3, 286 Crush (mil. bu. ) 1, 662 1, 752 1, 648 1, 615 Seed & Residual (mil. bu. ) 106 110 130 120 Exports (mil. bu. ) 1, 279 1, 499 1, 501 1, 275 Total Use (mil. bu. ) 3, 047 3, 361 3, 280 3, 011 Ending Stocks (mil. bu. ) 138 151 215 275 9. 97 9. 59 11. 30 11. 70 Season-Average Price ($/bu. ) Source: USDA-WAOB Extension and Outreach/Department of Economics

2011 Corn Yields Source: USDA-NASS Extension and Outreach/Department of Economics

2011 Soybean Yields Source: USDA-NASS Extension and Outreach/Department of Economics

World Corn Production Source: USDA-WAOB Extension and Outreach/Department of Economics

World Soybean Production Source: USDA-WAOB Extension and Outreach/Department of Economics

Corn vs. Wheat Source: CME Group, 2/21/2012 Extension and Outreach/Department of Economics

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 Source: Shane Ellis, ISU Extension and Outreach/Department of Economics

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 Source: Shane Ellis, ISU Extension and Outreach/Department of Economics

Corn Export Shifts Source: USDA-FAS Extension and Outreach/Department of Economics

Soy Export Shifts Source: USDA-FAS Extension and Outreach/Department of Economics

Change of Export Pace Extension and Outreach/Department of Economics

Renewable Fuels Standard (RFS) Crop Year Billion Bushels 2011 4. 64 2012 4. 86 2013 5. 07 2014 5. 29 Extension and Outreach/Department of Economics

Corn Grind for Ethanol Source: DOE-EIA Extension and Outreach/Department of Economics

Ethanol Blending Advantage Extension and Outreach/Department of Economics

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

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

Projected 2012 Season-Average Corn Price Extension and Outreach/Department of Economics

Projected 2012 Season-Average Soy Price Extension and Outreach/Department of Economics

Iowa Corn Prices vs. Costs Extension and Outreach/Department of Economics

Iowa Soybean Prices vs. Costs Extension and Outreach/Department of Economics

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

States with Room to Grow Number is the difference in planted acres between 2008 and 2011 Extension and Outreach/Department of Economics

2012 Crop Prices Extension and Outreach/Department of Economics

Iowa Crop Margins Extension and Outreach/Department of Economics

Extension and Outreach/Department of Economics

Current Corn Futures 5. 92 5. 47 5. 30 5. 23 Source: CME Group, 2/21/2012 Extension and Outreach/Department of Economics

Current Soybean Futures 12. 14 11. 91 11. 63 11. 48 Source: CME Group, 2/21/2012 Extension and Outreach/Department of Economics

Thoughts for 2012 and Beyond ØGeneral economic conditions ØContinued worldwide economic recovery is a major key for crop prices ØUS job recovery, European financial concerns ØSupply/demand concerns ØWorries about dry conditions in South America and in U. S. ØBiofuel growth and energy demand ØCorn has the upper hand in the acreage competition ØWill supply be able to keep pace with demand? Ø 2011/12: USDA: Corn $6. 20; Soy $11. 70 Futures (as of 2/21/12): Corn $5. 92; Soy $11. 91 Ø 2012/13: Futures (as of 2/21/12): Corn $5. 47; Soy $12. 14 Extension and Outreach/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/ Extension and Outreach/Department of Economics