Droughts, Markets, Fuel, & Food 2nd Annual Farmers Coop Society Elite Crop Meeting Sioux City, Iowa Dec. 11, 2012 Chad Hart Associate Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911 1 1

U.S. Corn Supply and Use 2008 2009 2010 2011 2012 Area Planted (mil. acres) 86.0 86.4 88.2 91.9 96.9 Yield (bu./acre) 153.9 164.7 152.8 147.2 122.3 Production (mil. bu.) 12,092 13,092 12,447 12,358 10,725 Beg. Stocks 1,624 1,673 1,708 1,128 988 Imports 14 8 28 29 100 Total Supply 13,729 14,774 14,182 13,515 11,814 Feed & Residual 5,182 5,125 4,795 4,547 4,150 Ethanol 3,709 4,591 5,019 5,011 4,500 Food, Seed, & Other 1,316 1,370 1,407 1,426 1,367 Exports 1,849 1,980 1,834 1,543 1,150 Total Use 12,056 13,066 13,055 12,527 11,167 Ending Stocks 647 Season-Average Price ($/bu.) 4.06 3.55 5.18 6.22 7.40 Source: USDA-WAOB 2 2

U.S. Soybean Supply and Use 2008 2009 2010 2011 2012 Area Planted (mil. acres) 75.7 77.5 77.4 75.0 77.2 Yield (bu./acre) 39.7 44.0 43.5 41.9 39.3 Production (mil. bu.) 2,967 3,359 3,329 3,094 2,971 Beg. Stocks 205 138 151 215 169 Imports 13 15 14 16 20 Total Supply 3,185 3,512 3,495 3,325 3,160 Crush 1,662 1,752 1,648 1,703 1,570 Seed & Residual 106 110 130 90 116 Exports 1,279 1,499 1,501 1,362 1,345 Total Use 3,047 3,361 3,280 3,155 3,031 Ending Stocks Season-Average Price ($/bu.) 9.97 9.59 11.30 12.50 14.55 Source: USDA-WAOB 3 3

Prices

Crop Conditions Source: USDA-NASS

Projected Corn Yields

Projected Soybean Yields

World Corn Production Source: USDA-WAOB 8 8

World Soybean Production Source: USDA-WAOB 9 9

World Weather Source: USDC and USDA 10 10

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: 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 Source: ISU Extension

U.S. Meat Production & Prices Source: USDA-WAOB 13 13

U.S. Pork Projections Source: FAPRI-MO

U.S. Beef Projections Source: FAPRI-MO

U.S. Per-Capita Meat Consumption Source: FAPRI-MO

Food Price Projections Source: FAPRI-MO

Food Dollar Source: USDA-ERS

Corn Export Shifts Source: USDA-FAS

Soy Export Shifts Source: USDA-FAS

Population 2010 2020 2050 (billion) World 6.831 7.558 9.202 China   2020 2050 (billion) World 6.831 7.558 9.202 China 1.330 1.385 India 1.657 1.173 1.326 1.304 U.S. 0.310 0.341 0.439 Indonesia 0.243 0.268 0.313 Brazil 0.201 0.223 Ethiopia 0.278 Pakistan 0.177 0.204 0.276 Bangladesh 0.158 Nigeria 0.182 0.264 0.152 0.181 0.260 Russia 0.139 0.132 0.234 Japan 0.127 Mexico 0.125 Congo 0.189 Source: U.S. Census Bureau, International Data Base

10 Largest Economies (GDP Rank) 2020 2030 2040 2050 US China Japan India Germany Brazil France Russia UK Mexico Italy Indonesia Canada Source: PwC, The World in 2050, January 2011

Corn Grind for Ethanol

Ethanol Stocks Source: DOE-EIA

U.S. Blended Gasoline Consumption 7.6 bil. gal. 7.4 bil. gal. Source: DOE-EIA, via USDA-ERS

Renewable Fuels Standard (RFS) 26 26

Projected 2012 Season-Average Corn Price

Projected 2012 Season-Average Soy Price

Current Corn Futures 6.75 5.98 5.59 Source: CME Group, 12/10/2012

Current Soybean Futures 13.95 12.70 12.32 Source: CME Group, 12/10/2012

Total Acreage Shift Source: USDA-NASS

Acreage Shift by Crop Acreage change from 2011 Units: 1,000 acres Source: USDA-NASS

Acreage Shift by State Top: Planted in 2012 Bottom: Change from 2011 Units: 1,000 acres Source: USDA-NASS

Thoughts for 2012 and Beyond Supply/demand concerns Soil moisture issues Biofuel and export strength Worldwide response to drought-induced pricing 2012/13 USDA Futures (12/10/12) 2013/14 Corn $7.40 $6.75 $5.98 Soybeans $14.55 $13.95 $12.70 Risk management Crop insurance Price protection

Thank you for your time. Any questions. My web site: http://www. econ 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/