1. Extension and Outreach/Department of Economics Ethanol, Grain Marketing, and Risk Management 25 th Annual Tri-State Agricultural Lender’s Seminar Dubuque, Iowa Oct. 26, 2011 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

2. Extension and Outreach/Department of Economics Oil Prices Source: EIA for history, NYMEX for future

3. Extension and Outreach/Department of Economics Population 2011 2030 2050 (billion) World6.946World8.323World9.441 China1.337India1.461India1.657 India1.189China1.391China1.304 U.S.0.311U.S.0.366U.S.0.423 Indonesia0.246Indonesia0.289Nigeria0.402 Brazil0.203Nigeria0.264Indonesia0.313 Pakistan0.187Pakistan0.243Pakistan0.291 Nigeria0.166Brazil0.240Ethiopia0.278 Bangladesh0.159Bangladesh0.211Brazil0.261 Russia0.139Ethiopia0.162Bangladesh0.250 Japan0.127Philippines0.138Philippines0.172 Source: U.S. Bureau of the Census, International Data Base

4. Extension and Outreach/Department of Economics Liquid Fuel Usage 200720152020202520302035 (Million Barrels Oil Equivalent per Day)(Percent of 2007 Value) United States20.698%100%102%104%107% Canada2.396% 100%104% Mexico2.1105%110%114%129%138% Europe15.392%88% 89%90% Japan5.084%86% 84%82% China7.6132%153%178%201%222% India2.8114%129%139%154%168% Africa3.1113%116%126%135%148% Central and South America6.0110%112%117%125%133% World86.1103%107%113%121%128% Source: Energy Information Administration

5. Extension and Outreach/Department of Economics Ethanol Production Source: EIA, 2011 Projection by Hart

6. Extension and Outreach/Department of Economics Nearby Futures (Jan. 3, 2011 = 1)

7. Extension and Outreach/Department of Economics Corn Grind for Ethanol Source: DOE-EIA

8. Extension and Outreach/Department of Economics Ethanol Margins Source: CARD

9. Extension and Outreach/Department of Economics Ethanol Margins Source: CARD

10. Extension and Outreach/Department of Economics Ethanol Blending Advantage

11. Extension and Outreach/Department of Economics RFS Coverage

12. Extension and Outreach/Department of Economics Gasoline Consumption Source: EIA, Annual Energy Outlook

13. Extension and Outreach/Department of Economics U.S. Corn Supply and Use 2008200920102011 Area Planted(mil. acres)86.086.488.291.9 Yield(bu./acre)153.9164.7152.8148.1 Production(mil. bu.)12,09213,09212,44712,433 Beg. Stocks(mil. bu.)1,6241,6731,7081,128 Imports(mil. bu.)1482715 Total Supply(mil. bu.)13,72914,77414,18213,576 Feed & Residual(mil. bu.)5,1825,1254,8034,700 Ethanol(mil. bu.)3,7094,5915,0205,000 Food, Seed, & Other(mil. bu.)1,3161,3701,3951,410 Exports(mil. bu.)1,8491,9801,8351,600 Total Use(mil. bu.)12,05613,06613,05312,710 Ending Stocks(mil. bu.)1,6731,7081,128866 Season-Average Price($/bu.)4.063.555.186.70 Source: USDA-WAOB

14. Extension and Outreach/Department of Economics U.S. Soybean Supply and Use 2008200920102011 Area Planted(mil. acres)75.777.577.475.0 Yield(bu./acre)39.744.043.541.5 Production(mil. bu.)2,9673,3593,3293,060 Beg. Stocks(mil. bu.)205138151215 Imports(mil. bu.)1315 Total Supply(mil. bu.)3,1853,5123,4953,290 Crush(mil. bu.)1,6621,7521,6481,635 Seed & Residual(mil. bu.)106110132120 Exports(mil. bu.)1,2791,4991,5001,375 Total Use(mil. bu.)3,0473,3613,2803,130 Ending Stocks(mil. bu.)138151215160 Season-Average Price($/bu.)9.979.5911.3013.15 Source: USDA-WAOB

15. Extension and Outreach/Department of Economics Projected Corn Yields Source: USDA-NASS

16. Extension and Outreach/Department of Economics Projected Soybean Yields Source: USDA-NASS

17. Extension and Outreach/Department of Economics World Corn Production Source: USDA-WAOB

18. Extension and Outreach/Department of Economics World Soybean Production Source: USDA-WAOB

19. Extension and Outreach/Department of Economics Corn vs. Wheat Source: CME Group, 10/25/2011

20. Extension and Outreach/Department of Economics Hog Crush Margin Source: Shane Ellis, 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

21. Extension and Outreach/Department of Economics Corn Export Sales Source: USDA-FAS

22. Extension and Outreach/Department of Economics Corn Export Shifts Source: USDA-FAS

23. Extension and Outreach/Department of Economics Soybean Export Sales Source: USDA-FAS

24. Extension and Outreach/Department of Economics Soy Export Shifts Source: USDA-FAS

25. Extension and Outreach/Department of Economics Projected 2011 Season-Average Corn Price

26. Extension and Outreach/Department of Economics Projected 2011 Season-Average Soy Price

27. Extension and Outreach/Department of Economics Projected 2012 Season-Average Corn Price

28. Extension and Outreach/Department of Economics Projected 2012 Season-Average Soy Price

29. Extension and Outreach/Department of Economics Iowa Corn Prices vs. Costs

30. Extension and Outreach/Department of Economics Iowa Soybean Prices vs. Costs

31. Extension and Outreach/Department of Economics Iowa Crop Margins

32. Extension and Outreach/Department of Economics 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, Chinese inflation  Supply/demand concerns  Smaller than anticipated U.S. crops  Biofuel growth and energy demand  Corn still has the upper hand in the acreage competition  Will supply be able to keep pace with demand?  2011/12:USDA:Corn $6.70; Soy $13.15 Futures (as of 10/25/11):Corn $6.32; Soy $11.97  2012/13: Futures (as of 10/25/11):Corn $5.90; Soy $11.92

33. Extension and Outreach/Department of Economics 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/