Crop Market Outlook Northeast ISU Research Farm 2008

Crop Market Outlook Northeast ISU Research Farm 2008 Fall Field Day Nashua, Iowa Sept. 4, 2008 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate. edu 515 -294 -9911 Department of Economics

Corn Supply and Use -0. 3 +0. 4 +6. 6 +573 +100 +150 +300 $6. 00 Department of Economics -0. 60 $5. 40 Source: USDA-WAOB, Aug. 2008

U. S. Soybean Supply and Use +0. 3 +1. 2 -1. 1 -27 -16 $12. 75 Department of Economics -0. 50 $12. 25 Source: USDA-WAOB, Aug. 2008

World Corn (million metric tons) Department of Economics Source: USDA-WAOB, Aug. 2008

World Soybean (million metric tons) Department of Economics Source: USDA-WAOB, Aug. 2008

Department of Economics Source: USDA-NASS, Aug. 2008

Department of Economics Source: USDA-NASS, Aug. 2008

Crop Basis Patterns Department of Economics Source: CARD, Iowa State

Renewable Fuels Standard (RFS) Calendar Year Billion Bushels Crop Year Billion Bushels 2009 3. 75 2008 3. 57 2010 4. 29 2009 4. 11 2011 4. 50 2010 4. 43 Department of Economics

Exchange Ratios (Jan. 2007 = 1) Department of Economics Source: CME futures

Corn & Soybean Area Growth rate of 1. 5 million acres per year Department of Economics

Input Costs Department of Economics Source: USDA, Agricultural Prices, July 2008

Stocks-to-Use Ratios Department of Economics

Thoughts for 2008 ØLooking for a little rain and later than average frost ØWet spring/flooding impacts will likely show up in yields ØRelatively good weather has moved prices lower ØBut the markets are primed to move higher on weather concerns ØHow about the dollar? ØWeaker dollar has helped hold up crop and livestock exports ØMost important ag. statistic: Crude oil price Department of Economics

Thoughts for 2009 and Beyond ØMany of the storylines from the past few years will continue ØTight stocks for both corn and soybeans ØThe competition for acreage ØEthanol’s buildout & livestock’s adjustment ØEnergy price & general economy concerns ØMarket volatility will remain high ØLink to the energy markets ØMore market players with different trading objectives ØGiven current factors, the 2009 outlook is for crop prices to be in the neighborhood of 2008 prices Department of Economics

Thoughts for 2009 and Beyond ØWith input costs moving up, need to protect against downside price risk ØForward contracting ØFutures/options ØRevenue insurance ØKnow your break-even price and defend it ØThe competition for acreage should lead to pricing opportunities pre-planting Department of Economics

Thank you for your time! Any questions? Department of Economics