Assistant Professor/Grain Markets Specialist 2012 Agricultural Outlook Iowa Corn Crop Fair Fayette, Iowa Jan. 25, 2012 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911 1 1
U.S. Corn Supply and Use 2008 2009 2010 2011 Area Planted (mil. acres) 86.0 86.4 88.2 91.9 Yield (bu./acre) 153.9 164.7 152.8 147.2 Production (mil. bu.) 12,092 13,092 12,447 12,358 Beg. Stocks 1,624 1,673 1,708 1,128 Imports 14 8 28 15 Total Supply 13,729 14,774 14,182 13,501 Feed & Residual 5,182 5,125 4,793 4,600 Ethanol 3,709 4,591 5,021 5,000 Food, Seed, & Other 1,316 1,370 1,407 1,405 Exports 1,849 1,980 1,835 1,650 Total Use 12,056 13,066 13,055 12,655 Ending Stocks 846 Season-Average Price ($/bu.) 4.06 3.55 5.18 6.20 Source: USDA-WAOB 2 2
U.S. Soybean Supply and Use 2008 2009 2010 2011 Area Planted (mil. acres) 75.7 77.5 77.4 75.0 Yield (bu./acre) 39.7 44.0 43.5 41.5 Production (mil. bu.) 2,967 3,359 3,329 3,056 Beg. Stocks 205 138 151 215 Imports 13 15 14 Total Supply 3,185 3,512 3,495 3,286 Crush 1,662 1,752 1,648 1,615 Seed & Residual 106 110 130 120 Exports 1,279 1,499 1,501 1,275 Total Use 3,047 3,361 3,280 3,011 Ending Stocks 275 Season-Average Price ($/bu.) 9.97 9.59 11.30 11.70 Source: USDA-WAOB 3 3
2011 Corn Yields Source: USDA-NASS
2011 Soybean Yields Source: USDA-NASS
World Corn Production Source: USDA-WAOB 6 6
World Soybean Production Source: USDA-WAOB 7 7
Iowa Corn Prices vs. Costs
Iowa Soybean Prices vs. Costs
Principal Crop Area Source: USDA-NASS
Thoughts for 2012 and Beyond General economic conditions Continued worldwide economic recovery is a major key for crop prices US job recovery, European financial concerns Supply/demand concerns Smaller than anticipated U.S. crops, worries about dry conditions Biofuel growth and energy demand Corn has the upper hand in the acreage competition Will supply be able to keep pace with demand? 2011/12: USDA: Corn $6.20; Soy $11.70 Futures (as of 1/24/12): Corn $5.86; Soy $11.62 2012/13: Futures (as of 1/24/12): Corn $5.46; Soy $11.72
Crop Insurance Two big changes for 2012 Re-rating for corn and soybeans Trend adjustment option for APH yields Both will impact Iowa producers
Average Corn Premium Rate Changes Source: RMA
Average Soybean Premium Rate Changes Source: RMA
Trend Adjusted APH Yields Source: Dr. William Edwards, ISU
Farm Bill With the super committee’s failure, the farm bill returns to its normal timeline and method of deliberation However, a few nuggets have leaked out about possible farm bill directions None of these may make it into the final bill, but we know they have been proposed
Farm Bill Proposals Eliminate direct payments, counter-cyclical payments, ACRE, and SURE Create Ag Risk Coverage (ARC) program to protect against low prices and/or yields 87% of producer’s 5-year Olympic average revenue Max. payment of 12% of revenue Has price-only option Payment limits of $105,000 for ARC and no payments for producers with a AGI over $950,000
Farm Bill Proposals Complete overhaul of dairy programs Gradually reduce CRP to 25 million acres Tighten requirements on some nutrition programs Continue many bioenergy programs
The following slides are land values and rents are from Dr. Mike Duffy His slides, my interpretation
Land Summary Land values are at record levels Increases have been strong but will be affected as fundamentals change Land ownership will become more dispersed and land management will become more concentrated Odds of farmland experiencing a collapse similar to the 1980s or the urban real estate market are not high Farmland is a good long term investment and will likely remain that way for the foreseeable future Farmers are the majority of land purchasers; they buy land to own it, not to sell it
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/