Assistant Professor/Grain Markets Specialist Grain Market Update Crop Advantage Series Spirit Lake, Iowa Jan. 11, 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) 153.9 164.7 152.8 146.7 Production (mil. bu.) 12,092 13,092 12,447 12,310 Beg. Stocks 1,624 1,673 1,708 1,128 Imports 14 8 28 15 Total Supply 13,729 14,774 14,182 13,453 Feed & Residual 5,182 5,125 4,792 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 1,600 Total Use 12,056 13,066 13,054 12,605 Ending Stocks 848 Season-Average Price ($/bu.) 4.06 3.55 5.18 6.40 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 41.3 Production (mil. bu.) 2,967 3,359 3,329 3,046 Beg. Stocks 205 138 151 215 Imports 13 15 14 Total Supply 3,185 3,512 3,495 3,275 Crush 1,662 1,752 1,648 1,625 Seed & Residual 106 110 130 120 Exports 1,279 1,499 1,501 1,300 Total Use 3,047 3,361 3,280 3,045 Ending Stocks 230 Season-Average Price ($/bu.) 9.97 9.59 11.30 11.70 Source: USDA-WAOB 3 3

Projected Corn Yields Source: USDA-NASS

Projected Soybean Yields Source: USDA-NASS

World Corn Production Source: USDA-WAOB 6 6

World Soybean Production Source: USDA-WAOB 7 7

South American Precipitation Source: USDA-NASS & WAOB 8 8

Corn vs. Wheat Source: CME Group, 1/10/2012

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: Shane Ellis, 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: Shane Ellis, ISU Extension

Corn Export Shifts Source: USDA-FAS

Soy Export Shifts Source: USDA-FAS

Change of Export Pace

Renewable Fuels Standard (RFS) Crop Year Billion Bushels 2011 4.64 2012 4.86 2013 5.07 2014 5.29 15 15

Corn Grind for Ethanol Source: DOE-EIA

Ethanol Margins Source: CARD

Ethanol Blending Advantage

Biodiesel Production Source: DOE-EIA

Projected 2011 Season-Average Corn Price

Projected 2011 Season-Average Soy Price

Projected 2012 Season-Average Corn Price

Projected 2012 Season-Average Soy Price

Iowa Corn Prices vs. Costs

Iowa Soybean Prices vs. Costs

Principal Crop Area Source: USDA-NASS

States with Room to Grow Number is the difference in planted acres between 2008 and 2011

Iowa Crop Margins

Current Corn Futures 6.00 5.70 5.46 5.43 Source: CME Group, 1/10/2012

Current Soybean Futures 11.83 11.73 11.63 11.63 Source: CME Group, 1/10/2012

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 $6.40; Soy $11.70 Futures (as of 1/10/12): Corn $6.00; Soy $11.73 2012/13: Futures (as of 1/10/12): Corn $5.70; Soy $11.83

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/