Department of Economics Feed Price Outlook Mandatory Country of Origin Labeling Webcast Ames, Iowa August 25, 2008 Chad Hart Assistant Professor/Grain Markets Specialist

Department of Economics Corn Supply and Use Source: USDA-WAOB, Aug $6.00$5.40

Department of Economics Soybean Meal Supply and Use Source: USDA-WAOB, Aug. 2008

Department of Economics Source: USDA-NASS & USDA-ERS, Aug Hay Data Harvested AcresYieldProduction (million acres)(tons/acre)(million tons) Alfalfa Iowa U.S Other Iowa U.S Prices: Alfalfa $138/ton Other $120/ton 2008 Alfalfa Prices: May $177/ton June $172/ton

Department of Economics Source: USDA-NASS, Aug. 2008

Department of Economics Source: CARD, Iowa State Crop Basis Patterns

Department of Economics Renewable Fuels Standard (RFS) Calendar Year Billion Bushels Crop Year Billion Bushels

Department of Economics Exchange Rate Ratios (Jan = 1) Source: CME futures

Department of Economics Corn & Soybean Area Growth rate of 1.5 million acres per year

Department of Economics Input Costs Source: USDA, Agricultural Prices, July 2008

Department of Economics Stocks-to-Use Ratios

Department of Economics Thoughts for 2008  Looking for a later than average frost  Wet spring/flooding impacts will likely show up in yields  Markets are primed to move higher on weather concerns  How about the dollar?  Weaker dollar has helped hold up crop and livestock exports  Strengthening dollar could help lower feed costs  Most important ag. statistic: Crude oil price

Department of Economics Thoughts for 2009 and Beyond  Many of the storylines from the past few years will continue  Tight stocks for both corn and soybeans  The competition for acreage  Ethanol’s buildout & livestock’s adjustment  Energy price & general economy concerns  Market volatility will remain high  Link to the energy markets  More market players with different trading objectives  Given current factors, the 2009 outlook is for feed prices to be in the neighborhood of 2008 prices