Department of Economics Global Grain Markets Global Agriculture Conference Spencer, Iowa February 26, 2009 Chad Hart Assistant Professor/Grain Markets Specialist

Department of Economics U.S. Corn Supply and Use Source: USDA-WAOB, Feb $

Department of Economics U.S. Soybean Supply and Use Source: USDA-WAOB, Feb $9.00$

Department of Economics Source: USDA-WAOB, Feb Drought in South America

Department of Economics Source: Dow Jones Newswires Argentine Drought Impacts (Early Reports) 2007 Production Corn20.9 million tons Soybeans46.2 million tons January 2009 USDA Estimates Corn16.5 million tons-21% Soybeans49.5 million tons+7% Current USDA Estimates Corn13.5 million tons-35% Soybeans43.8 million tons-5% January Estimates from Buenos Aires Cereal Exchange (BACE) Corn12.3 to 13.7 million tons-35 to -41% Soybeans34.5 to 38.2 million tons-17 to -25% Feb. Estimate from BACESoy40 million tons-13%

Department of Economics Chinese Corn Production Source: USDA-WAOB, Jan. 2009

Department of Economics Soybeans in China Source: USDA-PSD, Jan. 2009

Department of Economics Sources: Various USDA-NASS reports Livestock Adjustments Sows farrowing: Sept-Nov million, 6% from last year Dec-Feb million, 3% from last year Mar-May million, 2% from last year Broiler-type eggs set: 204 million, 7% from last year Broiler chicks placed: 167 million, 6% from last year Cattle and calves on feed: 11.3 million, 6% from last year

Department of Economics Ethanol Margins Source: ISU, CARD

Department of Economics Biodiesel Margins Source: ISU, CARD

Department of Economics Renewable Fuels Standard (RFS) Crop Year Billion Bushels

Department of Economics U.S. Blended Motor Gasoline Consumption Source: Energy Information Administration

Department of Economics Outside Influences (Jan = 1)

Department of Economics Outside Influences (Sept = 1)

Department of Economics Corn & Soybean Area Growth rate of 1.55 million acres per year

Department of Economics CRP Expiring Contracts Source: USDA-FSA

Department of Economics Input Costs Source: USDA, Agricultural Prices, Jan. 2009

Department of Economics Ammonia Prices Source: TheMarket.pdf

Department of Economics Iowa Corn Prices vs. Costs Source: USDA-NASS and Duffy and Smith,

Department of Economics Iowa Soybean Prices vs. Costs Source: USDA-NASS and Duffy and Smith,

Department of Economics Estimates for 2009 Iowa Costs Non-land Cost Land Cost Total Cost Expected Yield Cost per Bushel ($/acre)(bu/acre)($/bu) Corn Soybean December 2009 Corn Futures = $ (2/25/09) November 2009 Soy Futures = $8.38 (2/25/09) Source: Duffy and Smith,

Department of Economics Exchange Rates (Jan = 1) Source: USDA, ERS

Department of Economics Exchange Rates (Jan = 1) Source: USDA, ERS

Department of Economics 2007 World Corn Exports Source: USDA, FAS Drought issues for 2008 crops

Department of Economics 2007 World Soybean Exports Source: USDA, FAS Drought issues for 2008 crops

Department of Economics Pace of Corn Export Sales Source: USDA, FAS

Department of Economics 2008 U.S. Corn Exports Source: USDA, FAS

Department of Economics Pace of Soybean Export Sales Source: USDA, FAS

Department of Economics 2008 U.S. Soybean Exports Source: USDA, FAS

Department of Economics U.S. Stocks-to-Use Ratios

Department of Economics World Stocks-to-Use Ratios

Department of Economics Finishing Out the 2008 Crop Year  General economic conditions  A lot of recent market trade has been tied to reaction to the financial crisis and the world’s response  Economic slowdown raises concern about export and energy demand  Most important ag. statistic: Exchange rates or South American production  Current futures are indicating 2008 season-average prices of $ for corn and $ for soybeans  Stress on South American crops has provided some support for prices

Department of Economics Thoughts for 2009 and Beyond  Many of the storylines from 2008 will continue  Tight stocks for corn (worldwide) and soybeans (U.S.)  The competition for acreage  Ethanol’s buildout & livestock’s adjustment  Energy price & general economy concerns  Market volatility will remain high  Link to the energy markets  More market players with different trading objectives  Given current factors, the 2009 outlook is for crop prices around $3.75 for corn and $ for soybeans  Key factor: Economic growth returns by mid 2010

Department of Economics Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker: