Assistant Professor/Grain Markets Specialist Crop Outlook in 2011 Chariton, Iowa June 16, 2011 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 90.7 Yield (bu./acre) 153.9 164.7 152.8 158.7 Production (mil. bu.) 12,092 13,092 12,447 13,200 Beg. Stocks 1,624 1,673 1,708 730 Imports 14 8 25 20 Total Supply 13,729 14,774 14,180 13,950 Feed & Residual 5,182 5,140 5,150 5,000 Ethanol 3,709 4,568 5,050 Food, Seed, & Other 1,316 1,371 1,400 1,405 Exports 1,849 1,987 1,900 1,800 Total Use 12,056 13,066 13,450 13,255 Ending Stocks 695 Season-Average Price ($/bu.) 4.06 3.55 5.35 6.50 Big adjustments are in acreage, reduction of 1.5 million acres in planted and 1.9 million acres in harvested. Results in a drop of 305 million bushels in production, down to 13.2 billion bushels. Feed demand was lowered 100 million bushels, but ethanol and export demand were held steady. So ending stocks fell 205 million to 695 million bushels, 35 million below the estimate for the 2010 crop. With the ever increasing tightness in the corn market, the midpoint of the range for the 2011 season-average price moved up to $6.50 per bushel. 2 2

U.S. Soybean Supply and Use 2008 2009 2010 2011 Area Planted (mil. acres) 75.7 77.5 77.4 76.6 Yield (bu./acre) 39.7 44.0 43.5 43.4 Production (mil. bu.) 2,967 3,359 3,329 3,285 Beg. Stocks 205 138 151 180 Imports 13 15 Total Supply 3,185 3,512 3,495 3,480 Crush 1,662 1,752 1,650 1,655 Seed & Residual 106 108 125 115 Exports 1,279 1,501 1,540 1,520 Total Use 3,047 3,361 3,315 3,290 Ending Stocks 190 Season-Average Price ($/bu.) 9.97 9.59 11.40 14.00 All of the action here is in the export numbers. Exports for 2010 were lowered 10 million bushels, but it’s still a record. Exports for 2011 were lowered 20 million bushels. The changes add 30 million bushels to ending stocks, but the market is still very tight. With the continued tightness in the soybean market, the 2011 season-average price estimate is centered on $14 per bushel, up $1 from last month. 3 3

Corn Planting Progress With the slow planting progress in the eastern Corn Belt and Northern Plains, USDA has already pulled 1.5 million acres out of intended corn plantings. Source: USDA-NASS

Corn Area Source: USDA-NASS

Comparison to 2008 Source: USDA-NASS

Soybean Planting Progress Source: USDA-NASS

Soybean Area Source: USDA-NASS

World Corn Production Source: USDA 9 9

Corn – Argentina & Brazil In the world market, we expect more corn production from South America and China. Source: USDA 10 10

World Soybean Production Source: USDA 11 11

Soybeans – Argentina & Brazil South American soybeans are also looking to record production this coming year. Source: USDA 12 12

Population 2010 2030 2050 (billion) World 6.852 8.249 9.256 China   2030 2050 (billion) World 6.852 8.249 9.256 China 1.330 India 1.461 1.657 1.173 1.391 1.304 U.S. 0.310 0.374 0.439 Indonesia 0.243 0.289 0.313 Brazil 0.201 Pakistan 0.291 0.184 0.240 Ethiopia 0.278 Bangladesh 0.156 Nigeria 0.212 0.264 0.152 0.211 0.261 Russia 0.139 0.162 0.250 Source: U.S. Bureau of the Census, International Data Base

Exchange Rates (Jan. 2003 = 1) Source: USDA, ERS

Corn Export Sales Source: USDA, FAS

Soybean Export Sales Source: USDA, FAS

Export Pace vs. Last Year Source: USDA, FAS

Corn Export Shifts Source: USDA, FAS

Corn Advance Export Sales Source: USDA, FAS

Soybean Export Shifts Source: USDA, FAS

Soy Advance Export Sales Source: USDA, FAS

Nearby Futures (Jan. 3, 2011 = 1) 22 22

Ethanol Margin Source: CARD

Ethanol Blending Advantage

Corn Grind for Ethanol

Ethanol Stocks

Projected Ethanol Margin Source: CARD

Proj. Ethanol Blending Advantage

Projected 2011 Season-Average Corn Price

Projected 2011 Season-Average Soy Price

Projected Harvest Time Crop Margins

Corn Prices vs. Costs

Soybean Prices vs. Costs

Input Costs Source: USDA, Agricultural Prices, May 31, 2011

Thoughts for 2011 and Beyond General economic conditions Continued worldwide economic recovery is a major key for crop prices Energy prices limiting recovery US job recovery, European financial concerns, Chinese inflation Supply/demand concerns Prevented planting and flooding taking out corn area Biofuel growth and energy demand Will supply be able to keep pace with demand? 2010/11: USDA: Corn $5.35, Soy $11.40 2011/12: USDA: Corn $6.50, Soy $14.00 Futures (as of 6/15/2011): Corn $6.49, Soy $13.24

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/