1. Crop Outlook Pro Ag Fall 2011 Outlook Seminar Fort Dodge, Iowa
Nov. 9, 2011
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
146.7
Production
(mil. bu.)
12,092
13,092
12,447
12,310
Beg. Stocks
1,624
1,673
1,708
1,128
Imports 14 8 28 15
Total Supply
13,729
14,774
14,182
13,453
Feed & Residual
5,182
5,125
4,792
4,600
Ethanol
3,709
4,591
5,021
5,000
Food, Seed, & Other
1,316
1,370
1,407
1,410
Exports
1,849
1,980
1,835
1,600
Total Use
12,056
13,066
13,054
12,610
Ending Stocks
843
Season-Average Price
($/bu.)
4.06
3.55
5.18
6.70
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
41.3
Production
(mil. bu.)
2,967
3,359
3,329
3,046
Beg. Stocks
205
138
151
215
Imports 13 15 14
Total Supply
3,185
3,512
3,495
3,275
Crush
1,662
1,752
1,648
1,635
Seed & Residual
106
110
130
120
Exports
1,279
1,499
1,501
1,325
Total Use
3,047
3,361
3,280
3,080
Ending Stocks
195
Season-Average Price
($/bu.)
9.97
9.59
11.30
12.60
Source: USDA-WAOB 3 3

4. Projected Corn Yields Source: USDA-NASS
Iowa yields look to be better than last year, but nationwide yields are down.
Source: USDA-NASS

5. With the dry conditions over the past couple of months, harvest has progressed quickly. Normally, that would pressure the market downward. But with the still relatively tight supplies, corn prices have held.
Source: USDA-NASS

6. Projected Soybean Yields
For soybeans, Iowa yields are down slightly and national yields are even more.
Source: USDA-NASS

7. Source: USDA-NASS

8. World Corn Production
Source: USDA-WAOB 8 8

9. World Soybean Production
Source: USDA-WAOB 9 9

10. Corn vs. Wheat Source: CME Group, 11/8/2011
In feed markets, corn has become a high-priced feed product. Wheat and other feed materials have filled in some of corn’s traditional role in feeds as they are competitively priced. This affects not only domestic feed markets, but also international demand for corn.
Source: CME Group, 11/8/2011

11. 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
And hogs.
Source: Shane Ellis, ISU Extension

12. Corn Export Sales Source: USDA-FAS
With the price drop in September, importers came back into the corn market.
Source: USDA-FAS

13. Corn Export Shifts Source: USDA-FAS
Corn export demand is lower in our biggest market, Japan, as they recover from the triple whammy of earthquake, tsunami, and nuclear disaster. Egypt is also lower as wheat replaces corn in feed rations. China’s forays in the corn markets on lower price dips have supported some growth in export demand, but it is price sensitive.
Source: USDA-FAS

14. Soybean Export Sales Source: USDA-FAS
The September price drop did not stir a similar rebound in soybeans.
Source: USDA-FAS

15. Soy Export Shifts Source: USDA-FAS
With China heading to South America for new supplies, export demand has been very soft.
Source: USDA-FAS

16. Renewable Fuels Standard (RFS)
Crop
Year
Billion Bushels
2011
4.64
2012
4.86
2013
5.07
2014
5.29
While the Renewable Fuels Standard would indicate increasing demand for corn through ethanol, the industry has already raced to over 5 billion bushels of corn demand. 16 16

17. Corn Grind for Ethanol Source: DOE-EIA
Corn grind for ethanol has been fairly steady over the past year and expectations are that it will remain in the 5 billion bushel range.
Source: DOE-EIA

18. Ethanol Margins
Margins remain solid for ethanol plants.
Source: CARD

19. Ethanol Blending Advantage
And blenders continue to see positive returns from ethanol as well. But the loss of the tax credit will squeeze those returns.

20. Projected 2011 Season-Average Corn Price
But despite the weaker demand picture, there is still over 12.5 billion bushels of corn demand out there (that’s still a lot of demand). And prices over the last month have settled in at the $6.20 range for the 2011/12 season-average price.

21. Projected 2011 Season-Average Soy Price
Similar story for soybeans. Relative to USDA, futures are indicating a weaker price outlook, in the $11.80 range for the 2011/12 season-average price.

22. Projected 2012 Season-Average Corn Price
For 2012, corn prices are a little weaker, in the $5.90 range, as the market balances general economic concerns (mainly Europe) on the downside with drought prospects on the upside.

23. Projected 2012 Season-Average Soy Price
Similar story to corn.

24. Iowa Corn Prices vs. Costs
While costs are increasing, margins are still strongly positive for corn.

25. Iowa Soybean Prices vs. Costs
The gap is much smaller for soybeans.

26. Principal Crop Area Source: USDA-NASS
Both crops would like additional area, and it is available if Mother Nature allows.
Source: USDA-NASS

27. States with Room to Grow
The Dakotas, the lower Mississippi, and the Southern Plains have the room to grow, but that is also where the floods and drought hit. So while the land is available, it may not be assessable.
Number is the difference in planted acres between 2008 and 2011

28. Iowa Crop Margins
Corn holds a sizable return advantage over soybeans again (roughly the same as last year). But will yield drag on continuous corn limit corn’s ability to get more acres?

29. Soil moisture is a major issue as we plan for the 2012 crop
Soil moisture is a major issue as we plan for the 2012 crop. We will need a recharge soon.

30. The near-term weather outlook shows some improvement in NW Iowa, but dry conditions holding in central and SE Iowa.

31. 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 $12.60
Futures (as of 11/8/11): Corn $6.32; Soy $11.71
2012/13:
Futures (as of 11/8/11): Corn $5.95; Soy $11.85

32. 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: