Grain Marketing and Risk Management Update 28th Annual Tri-State Agricultural Lenders Seminar Dubuque, Iowa Oct. 29, 2014 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate.edu 515-294-9911 1 1

U.S. Corn Supply and Use 2010 2011 2012 2013 2014 Area Planted (mil. acres) 88.2 91.9 97.2 95.4 90.9 Yield (bu./acre) 152.8 147.2 123.4 158.8 174.2 Production (mil. bu.) 12,447 12,360 10,780 13,925 14,475 Beg. Stocks 1,708 1,128 989 821 1,236 Imports 28 29 162 36 25 Total Supply 14,182 13,517 11,932 14,782 15,736 Feed & Residual 4,795 4,557 4,329 5,125 5,375 Ethanol 5,019 5,000 4,648 5,130 Food, Seed, & Other 1,407 1,428 1,403 1,374 1,405 Exports 1,834 1,543 731 1,917 1,750 Total Use 13,055 12,528 11,111 13,546 13,655 Ending Stocks 2,081 Season-Average Price ($/bu.) 5.18 6.22 6.89 4.46 3.40 Source: USDA-WAOB, with adjustments for stocks 2 2

U.S. Soybean Supply and Use 2010 2011 2012 2013 2014 Area Planted (mil. acres) 77.4 75.0 77.2 76.8 84.2 Yield (bu./acre) 43.5 41.9 39.8 44.0 47.1 Production (mil. bu.) 3,329 3,094 3,034 3,358 3,927 Beg. Stocks 151 215 169 141 92 Imports 14 16 36 72 15 Total Supply 3,495 3,325 3,239 3,570 4,034 Crush 1,648 1,703 1,689 1,734 1,770 Seed & Residual 130 88 90 98 113 Exports 1,501 1,365 1,320 1,647 1,700 Total Use 3,280 3,155 3,099 3,478 3,583 Ending Stocks 450 Season-Average Price ($/bu.) 11.30 12.50 14.40 13.00 10.00 Source: USDA-WAOB, with adjustments for stocks 3 3

Projected Corn Yields Top: 2014 Yield Bottom: Change from last month Units: Bu/acre Source: USDA-NASS

Corn Objective Yield Data Source: USDA-NASS

Projected Soybean Yields Top: 2014 Yield Bottom: Change from last month Units: Bu/acre Source: USDA-NASS

Soybean Objective Yield Data Source: USDA-NASS

Corn Stocks Source: USDA-NASS

Soybean Stocks Source: USDA-NASS

World Corn Production Source: USDA-WAOB 10 10

World Soybean Production Source: USDA-WAOB 11 11

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 14 14

Corn Export Shifts Source: USDA-FAS

Corn Export Sales Source: USDA-FAS

Soybean Export Sales Source: USDA-FAS

Soy Export Shifts Source: USDA-FAS

Corn Grind for Ethanol

Current Corn Futures 3.81 3.47 Source: CME Group, 10/24/2014

Current Soybean Futures 9.63 9.44 Source: CME Group, 10/24/2014

2014/15 Crop Margins

2015/16 Crop Margins

Thoughts for 2015 and Beyond Supply/demand concerns Projected record corn and soybean crops Markets have adjusted downward to absorb projected supplies Projected negative margins for 2014 and 2015 crops Cool, wet conditions may hamper harvest and impact crop quality 2013/14 USDA 2014/15 Futures (10/24/14) 2015/16 Corn $4.46 $3.40 $3.47 $3.81 Soybeans $13.00 $10.00 $9.63 $9.44

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/