1. Associate Professor/Grain Markets Specialist
U.S. Crop Update
Pork Alliance Meeting
Des Moines, Iowa
Oct. 24, 2012
Chad Hart
Associate Professor/Grain Markets Specialist 1 1

2. U.S. Corn Supply and Use 2008 2009 2010 2011 2012 Area Planted
(mil. acres)
86.0
86.4
88.2
91.9
96.9
Yield
(bu./acre)
153.9
164.7
152.8
147.2
122.0
Production
(mil. bu.)
12,092
13,092
12,447
12,358
10,706
Beg. Stocks
1,624
1,673
1,708
1,128
988
Imports 14 8 28 75
Total Supply
13,729
14,774
14,182
13,514
11,769
Feed & Residual
5,182
5,125
4,793
4,562
4,150
Ethanol
3,709
4,591
5,021
5,000
4,500
Food, Seed, & Other
1,316
1,370
1,407
1,421
1,350
Exports
1,849
1,980
1,835
1,543
1,150
Total Use
12,056
13,066
13,055
12,526
11,150
Ending Stocks
619
Season-Average Price
($/bu.)
4.06
3.55
5.18
6.22
7.80
These are the latest numbers from USDA. Record production and demand is gone and was replaced by record prices. All sectors of demand took major cuts. Ending stocks are projected to be at pipeline levels.
Source: USDA-WAOB 2 2

3. U.S. Soybean Supply and Use
2008
2009
2010
2011
2012
Area Planted
(mil. acres)
75.7
77.5
77.4
75.0
77.2
Yield
(bu./acre)
39.7
44.0
43.5
41.9
37.8
Production
(mil. bu.)
2,967
3,359
3,329
3,094
2,860
Beg. Stocks
205
138
151
215
169
Imports 13 15 14 16 20
Total Supply
3,185
3,512
3,495
3,325
3,050
Crush
1,662
1,752
1,648
1,703
1,540
Seed & Residual
106
110
130 92
115
Exports
1,279
1,499
1,501
1,360
1,265
Total Use
3,047
3,361
3,280
3,155
2,920
Ending Stocks
Season-Average Price
($/bu.)
9.97
9.59
11.30
12.50
15.25
For soybeans, a tight market continues to get tighter. USDA ratcheted down demand for the new crop to hold 2012/13 ending stocks at 130 million bushels. As with corn, all sectors of demand took a big cut.
Source: USDA-WAOB 3 3

4. Prices
Prices have risen and fallen with the temperatures.

5. Crop Conditions Source: USDA-NASS
But dry conditions have weakened the crops, as the crop conditions show. The USDA update reflects the scale of yield loss as they have taken over 40 bushels from corn and nearly 8 bushels from soybeans.
Source: USDA-NASS

6. Projected Corn Yields
These are based on conditions around Sept. 1.

7. Objective Corn Yield Data
USDA crop adjusters found grain weights well below those for the last 8 years.
Source: USDA-NASS

8. Projected Soybean Yields
These are based on conditions around Sept. 1.

9. Objective Soybean Yield Data
USDA crop adjusters found pod numbers well below those for the last 8 years.
Source: USDA-NASS

10. World Corn Production Source: USDA-WAOB
Global corn production took a hit last month, with Canada and Europe seeing reductions in potential corn production.
Source: USDA-WAOB 10 10

11. World Soybean Production
Soybean prices have spurred on increased soybean plantings worldwide. South America will lead the charge.
Source: USDA-WAOB 11 11

12. 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
Projected hog margins are well south of breakeven.
Source: ISU Extension

13. Cattle Crush Margin
The Crush Margin is the return after the feeder steer and corn costs.
Live weight: pounds Feeder weight: 750 pounds
Corn: 50 bushels per head
Cattle returns look better next year, but feed costs remain a major concern.
Source: ISU Extension

14. U.S. Meat Production & Prices
Higher feed costs have led to lower meat production projections.
Source: USDA-WAOB 14 14

15. Corn Export Sales Source: USDA-FAS
Corn exports for the 2012 crop have started even slower than 2011.
Source: USDA-FAS

16. Soy Export Sales Source: USDA-FAS
2012 soybean exports have rebounded to around 2010 levels. The key market here is China and they have purchased a lot of soybeans recently.
Source: USDA-FAS

17. Corn Grind for Ethanol
Negative margins at some ethanol plants have dragged down production.

18. Ethanol Stocks Source: DOE-EIA
And stocks have built up in recent weeks, weakening price projections.
Source: DOE-EIA

19. U.S. Blended Gasoline Consumption
7.6 bil. gal.
But the industry still faces blend wall issues as fuel consumption has dropped with the economy and the E-10 market is basically full.
7.4 bil. gal.
Source: DOE-EIA, via USDA-ERS

20. Projected 2012 Season-Average Corn Price
The drought has brought in some very strong and profitable prices, but harvest rolls along and the yield story seems to be improving, prices have fallen.

21. Projected 2012 Season-Average Soy Price
The same is true for soybeans.

22. Prices
Prices have risen and fallen with the temperatures.

23. Early Prices for 2013 Crops
2013 crop prices are still strong to entice acreage to remain in production.

24. Current Corn Futures 7.05 5.98 5.63 Source: CME Group, 10/23/2012
Based on current futures prices, national season-average cash price estimates for corn are $7.05 for the 2012 crop, $5.98 for 2013, and $5.63 for 2014.
5.63
Source: CME Group, 10/23/2012

25. Current Soybean Futures
14.62
For soybeans, the estimates are $14.62 for the 2012 crop, $12.71 for 2013, and $12.29 for 2014.
12.71
12.29
Source: CME Group, 10/23/2012

26. Total Acreage Shift Source: USDA-NASS
We brought back a lot of acres in Can we hold them in 2013?
Source: USDA-NASS

27. Acreage Shift by State Top: Planted in 2012 Bottom: Change from 2011
Weather was great for planting in 2012 (just not for producing). To hold acreage we will need great planting weather again.
Top: Planted in 2012
Bottom: Change from 2011
Units: 1,000 acres
Source: USDA-NASS

28. Acreage Shift by Crop Acreage change from 2011 Units: 1,000 acres
Cotton will likely give up acreage again. But with crop prices strong across the board, the acreage battle could be interesting in 2013.
Source: USDA-NASS

29. Thoughts for 2013 and Beyond
Supply/demand concerns
Soil moisture
South America gets 1st chance to respond to drought pricing
Will supply be able to keep pace with demand?
Drought pulled supply down, but some better yield reports are coming in
High prices are diminishing demand
General economic conditions
Continued worldwide economic recovery is a key for crop prices
US job recovery, European financial concerns, China?
2012/13: USDA: Corn $7.80; Soy $15.25
Futures (as of 10/23/12): Corn $7.05; Soy $14.62
2013/14: Futures Corn $5.98; Soy $12.71
2014/15: Futures Corn $5.63; Soy $12.29

30. Thank you for your time. Any questions. My web site: http://www. econ
Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker: