Department of Economics Marketing Outlook and Tools for 2010 Wall Lake Crop Fair Wall Lake, Iowa Feb. 22, 2010 Chad Hart Assistant Professor/Grain Markets Specialist

Department of Economics U.S. Corn Supply and Use Source: USDA Area Planted(mil. acres) Yield(bu./acre) Production(mil. bu.)13,03812,09213,15113,160 Beg. Stocks(mil. bu.)1,3041,6241,6731,719 Imports(mil. bu.) Total Supply(mil. bu.)14,36213,72914,83414,894 Feed & Residual(mil. bu.)5,9135,2465,5505,350 Ethanol(mil. bu.)3,0493,6774,3004,500 Food, Seed, & Other(mil. bu.)1,3381,2761,2651,290 Exports(mil. bu.)2,4371,8582,0002,100 Total Use(mil. bu.)12,73712,05613,11513,240 Ending Stocks(mil. bu.)1,6241,6731,7191,654 Season-Average Price($/bu.)

Department of Economics U.S. Soybean Supply and Use Source: USDA Area Planted(mil. acres) Yield(bu./acre) Production(mil. bu.)2,6772,9673,3613,260 Beg. Stocks(mil. bu.) Imports(mil. bu.) Total Supply(mil. bu.)3,2613,1853,5073,478 Crush(mil. bu.)1,8031,6621,7201,655 Seed & Residual(mil. bu.) Exports(mil. bu.)1,1591,2831,4001,325 Total Use(mil. bu.)3,0563,0473,2973,147 Ending Stocks(mil. bu.) Season-Average Price($/bu.)

Department of Economics Storage Issues Source: Hurburgh and Elmore, ICM News, 10/15/09

Department of Economics World Corn Production Source: USDA

Department of Economics Corn – Argentina & Brazil Source: USDA

Department of Economics World Soybean Production Source: USDA

Department of Economics Soybeans – Argentina & Brazil Source: USDA

Department of Economics Smaller Livestock Numbers Source: USDA, NASS, various reports

Department of Economics Hog Returns vs. Corn Prices Sources: ISU Extension, Farrow-to-Finish; USDA-NASS

Department of Economics Cattle Returns vs. Corn Prices Sources: ISU Extension, Yearling Steers; USDA-NASS

Department of Economics Hog Crush Margin Source: Dr. John Lawrence, ISU Extension The Crush Margin is the return after the pig, corn and soybean meal costs. Carcass weight: 200 poundsPig price: 50%of 5 mth out lean hog futures Corn: 10 bushels per pigSoybean meal: 150 pounds per pig

Department of Economics Cattle Crush Margin Source: Dr. John Lawrence, ISU Extension The Crush Margin is the return after the feeder steer and corn costs. Live weight: 1250 poundsFeeder weight: 750 pounds Corn: 50 bushels per head

Department of Economics Exchange Rates (Jan = 1) Source: USDA, ERS

Department of Economics Corn Export Sales Source: USDA, FAS

Department of Economics 2009 U.S. Corn Exports Source: USDA, FAS

Department of Economics Soybean Export Sales Source: USDA, FAS

Department of Economics 2009 U.S. Soybean Exports Source: USDA, FAS

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

Department of Economics Ethanol Margins Source: ISU, CARD

Department of Economics Crude Oil Prices Sources: EIA, NYMEX

Department of Economics Ethanol Blending Advantage

Department of Economics Outside Influences (Jan = 1)

Department of Economics Corn

Department of Economics Corn

Department of Economics Soybeans

Department of Economics Corn Futures Trade Source: CFTC

Department of Economics Soybean Futures Trade Source: CFTC

Department of Economics Iowa Crop Basis

Department of Economics Projected 2009 Season-Average Corn Price

Department of Economics Projected 2009 Season-Average Soy Price

Department of Economics Corn Futures Source: CBOT, 2/19/10

Department of Economics Soybean Futures Source: CBOT, 2/19/10

Department of Economics Ratio: Nov Soy/Dec Corn Source: CBOT

Department of Economics Input Costs Source: USDA, Agricultural Prices, Jan. 29, 2010

Department of Economics Iowa Corn Prices vs. Costs

Department of Economics Iowa Soybean Prices vs. Costs

Department of Economics Thoughts for 2009/10 and Beyond  General economic conditions  Projected economic recovery is a major key for crop prices  Weakness in the dollar helps exports, but dollar may fight back  Nearby crude oil prices floating in mid to upper $70’s  Supply/demand concerns  Livestock numbers continue to decline  South America: Record soybean crop and large corn crop  2009/10:USDA:Corn $3.70, Soy $9.45 Futures:Corn $3.49, Soy $9.30  2010/11:USDA:Corn $3.60, Soy $8.80 Futures:Corn $3.82, Soy $8.93

Department of Economics Acres Insured in 2008 Corn and Soybeans--Iowa Source: Dr. William Edwards, ISU Extension

Department of Economics Acres Insured in 2009 Corn and Soybeans--Iowa Source: Dr. William Edwards, ISU Extension

Department of Economics February and Harvest Prices 2009 Source: Dr. William Edwards, ISU Extension

Department of Economics Indemnity Prices: Corn (revenue insurance) Source: Dr. William Edwards, ISU Extension

Department of Economics Indemnity Prices: Soybeans (revenue insurance) Source: Dr. William Edwards, ISU Extension

Department of Economics Lower Indemnity Prices in 2010? CornAPH (Yield)Revenue 2009$4.00$ $3.90? Soybeans 2009$9.90$ $9.15? Source: Dr. William Edwards, ISU Extension

Department of Economics Coverage level Basic Unit subsidy rate New rate for Enterprise Units New rate for Whole Farm Units 60% 64% 80% not avail. 65% 59% 80% 70% 59% 80% 75% 55% 77%80% 48% 68%71% 85% 38% 53%56% Premium Subsidy Rates Source: Dr. William Edwards, ISU Extension

Department of Economics Source: Dr. William Edwards, ISU Extension

Department of Economics Biotech Endorsement (BE) Available in the entire Corn Belt. Must be at least 75% of the acres in the insurance unit. Still need 20% as refuge acres (EPA). Less documentation this year. Lack of compliance penalty is loss of premium discount only. Discount available on yield (APH) or revenue (RA, CRC) but not on group policies Estimated at 10-15% discount, overall. Source: Dr. William Edwards, ISU Extension

Department of Economics Eligible Hybrids Monsanto YieldGard® Plus with Roundup Ready® Corn 2, YieldGard® VT Triple, and YieldGard® VT Triple PRO hybrids Pioneer and Dow AgroSciences Herculex® Xtra and Herculex® Xtra RR2® hybrids Syngenta Agrisure® CB and RW stacked and Agrisure® 3000GT Source: Dr. William Edwards, ISU Extension

Department of Economics Key Points for SURE and ACRE do not reduce the need for crop insurance. 2.Indemnity prices will be a little lower. 3.Compare RA and CRC premiums. 4.Higher enterprise unit subsidy allows higher coverage levels. 5.Biotech endorsement expanded. 6.Specialty soybeans can be insured separately. Source: Dr. William Edwards, ISU Extension

Department of Economics Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker: