Crop Outlook and Farm Programs Farm Management InService

Crop Outlook and Farm Programs Farm Management In-Service Ames, Iowa May 11, 2010 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. 5 88. 8 Area Planted (mil. acres) Yield (bu. /acre) 150. 7 153. 9 164. 7 163. 5 Production (mil. bu. ) 13, 038 12, 092 13, 110 13, 370 Beg. Stocks (mil. bu. ) 1, 304 1, 624 1, 673 1, 738 Imports (mil. bu. ) 20 14 10 10 Total Supply (mil. bu. ) 14, 362 13, 729 14, 793 15, 118 Feed & Residual (mil. bu. ) 5, 913 5, 205 5, 375 5, 350 Ethanol (mil. bu. ) 3, 049 3, 677 4, 400 4, 600 Food, Seed, & Other (mil. bu. ) 1, 338 1, 316 1, 330 1, 350 Exports (mil. bu. ) 2, 437 1, 858 1, 950 2, 000 Total Use (mil. bu. ) 12, 737 12, 056 13, 055 13, 300 Ending Stocks (mil. bu. ) 1, 624 1, 673 1, 738 1, 818 4. 20 4. 06 3. 60 3. 50 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 78. 1 Yield (bu. /acre) 41. 7 39. 7 44. 0 42. 9 Production (mil. bu. ) 2, 677 2, 967 3, 359 3, 310 Beg. Stocks (mil. bu. ) 574 205 138 190 Imports (mil. bu. ) 10 13 15 10 Total Supply (mil. bu. ) 3, 261 3, 185 3, 512 3, 510 Crush (mil. bu. ) 1, 803 1, 662 1, 735 1, 640 Seed & Residual (mil. bu. ) 93 102 133 154 Exports (mil. bu. ) 1, 159 1, 283 1, 455 1, 350 Total Use (mil. bu. ) 3, 056 3, 047 3, 323 3, 144 Ending Stocks (mil. bu. ) 205 138 190 365 10. 10 9. 97 9. 50 8. 75 Season-Average Price ($/bu. ) University Extension/Department of Economics Source: USDA

Corn Planting Progress University Extension/Department of Economics Source: USDA

Soy Planting Progress University Extension/Department of Economics Source: USDA

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

Corn – Argentina & Brazil University Extension/Department of Economics Source: USDA

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

Soybeans – Argentina & Brazil University Extension/Department of Economics Source: USDA

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 month out lean hog futures Corn: 10 bushels per pig Soybean meal: 150 pounds per pig University Extension/Department of Economics Source: 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: ISU Extension

Exchange Rates (Jan. 2003 = 1) University Extension/Department of Economics Source: USDA, ERS

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

2009 U. S. Corn Exports University Extension/Department of Economics Source: USDA, FAS

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

2009 U. S. Soybean Exports University Extension/Department of Economics Source: USDA, FAS

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 Pricing University Extension/Department of Economics

Ethanol Blending Advantage University Extension/Department of Economics

Crude Oil Prices Sources: EIA, NYMEX University Extension/Department of Economics

Corn University Extension/Department of Economics

Soy University Extension/Department of Economics

Projected 2009 Season-Average Corn Price University Extension/Department of Economics

Projected 2009 Season-Average Soy Price 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

Iowa Corn Prices vs. Costs Right now, about a nickel under breakeven with USDA about 15 cents over breakeven with futures University Extension/Department of Economics

Iowa Soybean Prices vs. Costs Right now, 7 cents over breakeven with USDA 32 cents over breakeven with futures University Extension/Department of Economics

Using Latest USDA Corn Projections Ø 2009 ACRE revenue guarantee = $635. 61/acre Ø $4. 13/bu. * 171. 0 bu. /acre * 90% Ø 2009 Proj. ACRE actual revenue = $655. 20/acre Ø $3. 60/bu. * 182. 0 bu. /acre Ø No payments under this scenario Ø Would need price to fall to $3. 49 to trigger payments Ø Current futures (5/10/10) point to a season-average price of $3. 53 University Extension/Department of Economics

Using Latest USDA Soy Projections Ø 2009 ACRE revenue guarantee = $456. 32/acre Ø $10. 04/bu. * 50. 5 bu. /acre * 90% Ø 2009 Proj. ACRE actual revenue = $479. 75/acre Ø $9. 50/bu. * 50. 5 bu. /acre Ø No payments under this scenario Ø Would need price to fall to $9. 03 to trigger payments Ø Current futures (5/10/10) point to a season-average price of $9. 46 University Extension/Department of Economics

ACRE Set-up for 2010 Iowa Corn Year Yield per Planted Acre (bu. /acre) Year Season-average Price ($/bu. ) 2005 173. 0 2008 4. 06 2006 166. 0 2009 3. 60 2007 171. 0 2008 169. 0 Averag e 3. 83 2009 182. 0 Olympic Average 171. 0 The 2009 yields and prices are USDA’s May 2010 estimates. Projected 2010 ACRE Revenue Guarantee = $589. 44 (’ 09 = $635. 61) University Extension/Department of Economics

ACRE Payment Rate Matrix ($/acre) Price $2. 70 Yield $2. 90 $3. 10 $3. 30 $3. 50 $3. 70 $3. 90 $4. 10 $4. 30 155 147. 36 139. 94 108. 94 77. 94 46. 94 15. 94 0. 00 159 147. 36 128. 34 96. 54 64. 74 32. 94 1. 14 0. 00 163 147. 36 116. 74 84. 14 51. 54 18. 94 0. 00 167 138. 54 105. 14 71. 74 38. 34 4. 94 0. 00 171 127. 74 93. 54 59. 34 25. 14 0. 00 175 116. 94 81. 94 46. 94 11. 94 0. 00 179 106. 14 70. 34 34. 54 0. 00 183 95. 34 58. 74 22. 14 0. 00 187 84. 54 47. 14 9. 74 0. 00 For Iowa corn in 2010, based on May 2010 price and yield projections University Extension/Department of Economics

ACRE Set-up for 2010 Iowa Soybeans Year Yield per Planted Acre (bu. /acre) Year Season-average Price ($/bu. ) 2005 52. 0 2008 9. 97 2006 50. 5 2009 9. 50 2007 52. 0 2008 46. 5 Averag e 9. 74 2009 50. 5 Olympic Average 51. 0 The 2009 yields and prices are USDA’s May 2010 estimates. Projected 2010 ACRE Revenue Guarantee = $447. 07 University Extension/Department of Economics (’ 09 = $456. 32)

ACRE Payment Rate Matrix ($/acre) Price $7. 95 Yield $8. 15 $8. 35 $8. 55 $8. 75 $8. 95 $9. 15 $9. 35 $9. 55 47. 0 73. 42 64. 02 54. 62 45. 22 35. 82 26. 42 17. 02 7. 62 0. 00 48. 0 65. 47 55. 87 46. 27 36. 67 27. 07 17. 47 7. 87 0. 00 49. 0 57. 52 47. 72 37. 92 28. 12 18. 32 8. 52 0. 00 50. 0 49. 57 39. 57 29. 57 19. 57 0. 00 51. 0 41. 62 31. 42 21. 22 11. 02 0. 82 0. 00 52. 0 33. 67 23. 27 12. 87 2. 47 0. 00 53. 0 25. 72 15. 12 4. 52 0. 00 54. 0 17. 77 6. 97 0. 00 0. 00 55. 0 9. 82 0. 00 0. 00 For Iowa soybeans in 2010, based on May 2010 price and yield projections University Extension/Department of Economics

SURE Prices 2008 Corn Soy 2009 Corn Soy 2010 Corn Soy ($ per bushel) Revenue 5. 40 13. 36 4. 04 8. 80 3. 99 9. 23 APH 4. 75 11. 50 4. 00 9. 90 3. 90 9. 15 GRP 3. 75 8. 70 4. 00 9. 90 3. 55 8. 55 Season. Avg. Price 4. 06 9. 97 3. 60 9. 50 3. 50 8. 75 University Extension/Department of Economics

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