1. Ag Marketing for Beginning Farmers
7th Annual Beginning Farmers Conference
Ames, Iowa
Feb. 11, 2012
Chad Hart
Assistant Professor/Grain Markets Specialist 1 1

2. U.S. Corn Supply and Use 2008 2009 2010 2011 Area Planted (mil. acres)
86.0
86.4
88.2
91.9
Yield
(bu./acre)
153.9
164.7
152.8
147.2
Production
(mil. bu.)
12,092
13,092
12,447
12,358
Beg. Stocks
1,624
1,673
1,708
1,128
Imports 14 8 28 20
Total Supply
13,729
14,774
14,182
13,506
Feed & Residual
5,182
5,125
4,793
4,600
Ethanol
3,709
4,591
5,021
5,000
Food, Seed, & Other
1,316
1,370
1,407
1,405
Exports
1,849
1,980
1,835
1,700
Total Use
12,056
13,066
13,055
12,705
Ending Stocks
801
Season-Average Price
($/bu.)
4.06
3.55
5.18
6.20
Source: USDA-WAOB 2 2

3. U.S. Soybean Supply and Use
2008
2009
2010
2011
Area Planted
(mil. acres)
75.7
77.5
77.4
75.0
Yield
(bu./acre)
39.7
44.0
43.5
41.5
Production
(mil. bu.)
2,967
3,359
3,329
3,056
Beg. Stocks
205
138
151
215
Imports 13 15 14
Total Supply
3,185
3,512
3,495
3,286
Crush
1,662
1,752
1,648
1,615
Seed & Residual
106
110
130
120
Exports
1,279
1,499
1,501
1,275
Total Use
3,047
3,361
3,280
3,011
Ending Stocks
275
Season-Average Price
($/bu.)
9.97
9.59
11.30
11.70
Source: USDA-WAOB 3 3

4. World Corn Production
Source: USDA-WAOB 4 4

5. World Soybean Production
Source: USDA-WAOB 5 5

6. Corn vs. Wheat
Source: CME Group, 2/10/2012

7. 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
Source: Shane Ellis, ISU Extension

8. Corn Export Shifts
Source: USDA-FAS

9. Soy Export Shifts
Source: USDA-FAS

10. Corn Grind for Ethanol
Source: DOE-EIA

11. Ethanol Blending Advantage

12. Projected 2011 Season-Average Corn Price

13. Projected 2011 Season-Average Soy Price

14. Projected 2012 Season-Average Corn Price

15. Projected 2012 Season-Average Soy Price

16. Iowa Corn Prices vs. Costs

17. Iowa Soybean Prices vs. Costs

18. Principal Crop Area
Source: USDA-NASS

19. Iowa Crop Margins

21. 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
Supply/demand concerns
Worries about dry conditions in South America and in U.S.
Biofuel growth and energy demand
Corn has the upper hand in the acreage competition
Will supply be able to keep pace with demand?
2011/12: USDA: Corn $6.20; Soy $11.70
Futures (as of 2/10/12): Corn $5.92; Soy $11.77
2012/13:
Futures (as of 2/10/12): Corn $5.43; Soy $11.95

22. Pre-Harvest Strategies
56%
52%
52%
52%
72%
68%
68%
68%
With strong prices for 2011 crops, pre-harvest price opportunities are great right now. And pre-harvest strategies generally work well as the graph shows. Some years they do not pan out (see for example 2010), but 2011 looks to be a good year.
72%
68%
Source: Farm Futures magazine

23. Seasonal Pricing Patterns
Source: USDA, NASS, Monthly Price Data

24. Decision Chart Futures Increase Basis Contract
Sell Cash and Buy Futures
Call Options
Minimum Price Contract, Fixed Basis
Store & Wait to Price
Delayed Price Contract
Minimum Price Contract, Variable Basis
Basis
Weakens
Expected
Change
Basis
Strengthens
Hedge
Hedge to Arrive
Put Options
Cash Sale
Forward Contract
Futures
Decrease

25. Ego
Greed
Fear

26. Government Programs Farm Bill support programs Marketing loans
Beginning farmers programs and loans
Crop insurance

27. Marketing Plan
To avoid fear, greed, and ego dominating your marketing, have a plan and stick to it.
A marketing plan outlines your market strategy and your marketing objectives.
It should examine marketing opportunities before and after harvest.

28. Iowa Soybean Prices vs. Costs

29. 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: