1. Department of Economics Global Grain Markets Global Agriculture Conference Spencer, Iowa February 26, 2009 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

2. Department of Economics U.S. Corn Supply and Use Source: USDA-WAOB, Feb. 2009 $3.90 -638 -686 +574

3. Department of Economics U.S. Soybean Supply and Use Source: USDA-WAOB, Feb. 2009 -35 $9.00$9.25 +50 +0.25

4. Department of Economics Source: USDA-WAOB, Feb. 2009 Drought in South America

5. Department of Economics Source: Dow Jones Newswires Argentine Drought Impacts (Early Reports) 2007 Production Corn20.9 million tons Soybeans46.2 million tons January 2009 USDA Estimates Corn16.5 million tons-21% Soybeans49.5 million tons+7% Current USDA Estimates Corn13.5 million tons-35% Soybeans43.8 million tons-5% January Estimates from Buenos Aires Cereal Exchange (BACE) Corn12.3 to 13.7 million tons-35 to -41% Soybeans34.5 to 38.2 million tons-17 to -25% Feb. Estimate from BACESoy40 million tons-13%

6. Department of Economics Chinese Corn Production Source: USDA-WAOB, Jan. 2009

7. Department of Economics Soybeans in China Source: USDA-PSD, Jan. 2009

8. Department of Economics Sources: Various USDA-NASS reports Livestock Adjustments Sows farrowing: Sept-Nov 2008 2.99 million, 6% from last year Dec-Feb 2009 2.97 million, 3% from last year Mar-May 2009 3.01 million, 2% from last year Broiler-type eggs set: 204 million, 7% from last year Broiler chicks placed: 167 million, 6% from last year Cattle and calves on feed: 11.3 million, 6% from last year

9. Department of Economics Ethanol Margins Source: ISU, CARD

10. Department of Economics Biodiesel Margins Source: ISU, CARD

11. Department of Economics Renewable Fuels Standard (RFS) Crop Year Billion Bushels 20083.57 20094.11 20104.43

12. Department of Economics U.S. Blended Motor Gasoline Consumption Source: Energy Information Administration

13. Department of Economics Outside Influences (Jan. 2007 = 1)

14. Department of Economics Outside Influences (Sept. 2008 = 1)

15. Department of Economics Corn & Soybean Area Growth rate of 1.55 million acres per year

16. Department of Economics CRP Expiring Contracts Source: USDA-FSA

17. Department of Economics Input Costs Source: USDA, Agricultural Prices, Jan. 2009

18. Department of Economics Ammonia Prices Source: http://www.fertilizerworks.com/html/market/ TheMarket.pdf

19. Department of Economics Iowa Corn Prices vs. Costs Source: USDA-NASS and Duffy and Smith, http://www.extension.iastate.edu/agdm/crops/pdf/a1-21.pdf

20. Department of Economics Iowa Soybean Prices vs. Costs Source: USDA-NASS and Duffy and Smith, http://www.extension.iastate.edu/agdm/crops/pdf/a1-21.pdf

21. Department of Economics Estimates for 2009 Iowa Costs Non-land Cost Land Cost Total Cost Expected Yield Cost per Bushel ($/acre)(bu/acre)($/bu) Corn 486.61205.00691.611604.32 Soybean 285.60205.00490.60509.81 December 2009 Corn Futures = $4.0375 (2/25/09) November 2009 Soy Futures = $8.38 (2/25/09) Source: Duffy and Smith, http://www.extension.iastate.edu/agdm/crops/pdf/a1-20.pdf

22. Department of Economics Exchange Rates (Jan. 2003 = 1) Source: USDA, ERS

23. Department of Economics Exchange Rates (Jan. 2003 = 1) Source: USDA, ERS

24. Department of Economics 2007 World Corn Exports Source: USDA, FAS Drought issues for 2008 crops

25. Department of Economics 2007 World Soybean Exports Source: USDA, FAS Drought issues for 2008 crops

26. Department of Economics Pace of Corn Export Sales Source: USDA, FAS

27. Department of Economics 2008 U.S. Corn Exports Source: USDA, FAS

28. Department of Economics Pace of Soybean Export Sales Source: USDA, FAS

29. Department of Economics 2008 U.S. Soybean Exports Source: USDA, FAS

30. Department of Economics U.S. Stocks-to-Use Ratios

31. Department of Economics World Stocks-to-Use Ratios

32. Department of Economics Finishing Out the 2008 Crop Year  General economic conditions  A lot of recent market trade has been tied to reaction to the financial crisis and the world’s response  Economic slowdown raises concern about export and energy demand  Most important ag. statistic: Exchange rates or South American production  Current futures are indicating 2008 season-average prices of $3.75-4.25 for corn and $8.75-9.25 for soybeans  Stress on South American crops has provided some support for prices

33. Department of Economics Thoughts for 2009 and Beyond  Many of the storylines from 2008 will continue  Tight stocks for corn (worldwide) and soybeans (U.S.)  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 crop prices around $3.75 for corn and $8.00-8.25 for soybeans  Key factor: Economic growth returns by mid 2010

34. Department of Economics Thank you for your time! Any questions? My web site: http://www.econ.iastate.edu/faculty/hart/ Iowa Farm Outlook: http://www.econ.iastate.edu/outreach/agriculture/periodicals/ifo/ Ag Decision Maker: http://www.extension.iastate.edu/agdm/