1. Grain, Oilseed, and Biofuel Outlook Chad Hart Center for Agricultural and Rural Development Iowa State University E-mail: chart@iastate.edu January 18, 2008 Pro Ag Outlook Harlan, Iowa

2. Nearby Corn Futures

3. Corn Futures As Of 1/16/2008

4. Corn Market Factors Domestic demand changes Livestock feed Biofuels South American plantings Export competition Competition for acreage Corn vs. soybeans vs. wheat Tighter stocks More sensitivity to weather shocks

5. U.S. Corn Supply and Demand Source: USDA

8. Corn Utilization

9. Exchange Rates

10. Exchange Rate Futures

11. World Corn Production Source: USDA

12. South American Corn Area

13. WMO data indicate that temperatures were not high enough to cause significant widespread damage to corn advancing through the tasseling and silking stages. Source: USDA Temperatures in Argentina

14. Corn Production Costs - National Source: USDA-ERS

15. Basis in 2006

16. Basis in 2007

17. Basis in 2008

18. Nearby Soybean Futures

19. Soybean Futures As Of 1/16/2008

20. Soybean Market Factors Domestic demand changes Livestock feed Biofuels South American plantings Export competition Competition for acreage Corn vs. soybeans vs. wheat Tighter stocks More sensitivity to weather shocks

21. U.S. Soybean Supply and Demand Source: USDA

22. #

24. Soybean Meal Futures as of 1/16/2008

25. Soybean Oil Futures as of 1/16/2008

26. Exchange Rates

27. World Soybean Production Source: USDA

28. South American Soybean Area

29. Brazil Crop Weather Summary January 10, 2008 Significant late start to the rainy season in most major soybean areas; Seasonal showers still sporadic in portions of the central interior (beans flowering – pod-filling); Near-normal precipitation in southern growing areas. Erratic Showers Normal rains Favorable Source: USDA Precipitation in Brazil

30. Corn-Soybean Price Ratio

31. Soybean Production Costs - National Source: USDA-ERS

32. Source: USDA

33. Price Summary 2006/07 estimate 2007/08 forecast (midpoint) Change from last month Change from last year Crops and products Wheat ($/bu)4.266.653.956.1 Rice ($/cwt)9.7411.150.014.5 Corn ($/bu)3.044.009.631.6 Soybeans ($/bu)6.4310.406.761.7 Soybean oil (¢/lb)31.0247.5010.553.1 Soybean meal ($/s.t.)205.44320.0014.355.8 Cotton (¢/lb)46.5051.50* *Average price for August-November 2007. USDA is prohibited by law from publishing cotton price projections. Percent Source: USDA

34. Biofuel Factors Feedstock costs and competition High corn prices High soybean oil prices Vegetable oil demand in Southeast Asia Energy markets High oil and gas prices Continued government support Passage of the 2007 Energy Act Efforts to extend biofuel tax credits Consumer demand for biofuels Southeast U.S.

35. Ethanol Expansion Source: Renewable Fuels Association

36. Biodiesel Growth Source: National Biodiesel Board

37. Renewable Fuels Standard

38. RFS by Fuel

39.  Current ethanol capacity: 137 plants, 7.63 billion gallons/year  Total capacity under construction and expansion: 5.74 billion gallons/year  63 new ethanol plants and 7 expansion projects underway U.S. Ethanol Industry  2.1 billion bushels of corn were used in producing fuel ethanol in 2006/2007 marketing year.  3.2-3.5 billion bushels of corn are expected to be used in producing fuel ethanol for 2007/2008 marketing year.

40. Oil Futures As Of 1/16/2008

41. Historical Ethanol Margins

42. Projected Ethanol Margins

43. Plant Location

44. Comparing Futures Prices

45. A Quick Look at Ethanol Blending January 2007November 2007 UnleadedE-10UnleadedE-10 ($/gallon) Gasoline1.4901.3412.5202.268 Ethanol0.2260.208 Price before Taxes 1.4901.5672.5202.476 Fed. Gas Tax0.184 Ethanol Tax Credit -0.051 Price after Fed. Taxes 1.6741.7002.7042.609 Gasoline and ethanol prices are monthly average rack prices for Omaha

46. Ethanol Usage - 2004 (latest available)

47. RFS by Fuel

48.  Current biodiesel capacity: 165 plants, 1.85 billion gallons/year  Total capacity under construction and expansion: 1.35 billion gallons/year  80 new plants underway U.S. Biodiesel Industry  2.8 billion pounds of soybean oil was used in producing biodiesel in 2006/2007 marketing year.  3.8 billion pounds of soybean oil are expected to be used in producing biodiesel for 2007/2008 marketing year.

49. Biodiesel Growth Source: National Biodiesel Board

50. Biodiesel Internationally EU Biofuel targets:5.75% by 2010 10% by 2020 Argentina Biodiesel mandate:5% by 2010 Brazil Biodiesel mandate:2% in 2008 5% by 2010 Many U.S. producers have targeted the EU market

51. Biodiesel Price Ratios

52. Thanks for your time! Any questions?