1. Feed and Livestock Prices
Managing Margins: Risk Management for Pork Producers
Sheldon, Nashua, and Iowa City, Iowa
Dec. 6-8, 2011
Chad Hart
Assistant Professor/Grain Markets Specialist 1 1

2. Livestock Marketing Information Center
Data Source: USDA-NASS, Compiled & Analysis by LMIC 2

3. Source: USDA

4. Hog Prices
Source: CME Group, 12/5/11

5. 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
Source: Shane Ellis, ISU Extension

6. Livestock Marketing Information Center
Data Source: USDA-NASS, Compiled & Analysis by LMIC 6

7. Livestock Marketing Information Center
Data Source: USDA-NASS, Compiled & Analysis by LMIC 7

8. Source: USDA

9. Livestock Marketing Information Center
Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC 9

10. Thoughts for 2012 and Beyond
Continued economic recovery is a major key for livestock prices
Meat demand is recovering
Meat supplies tightened up with smaller herds/flocks
Feed costs have kept margins tight
The combination implies livestock expansion will take awhile
Poultry is currently backing off, Hogs are expanding slightly, and Cattle will not start expanding for a few years

11. 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 11 11

12. U.S. DDG Supply and Use
2008
2009
2010
2011
Production
(mil. metric tons)
28.6
35.4
38.7
38.6
Imports
0.3
0.4
Total Supply
28.9
35.8
39.2
38.9
Domestic
23.9
27.5
30.9
32.1
Exports
5.0
8.3
6.8
Total Use
39.1
Average Price
($/ton)
122
113
179
207
My estimates, so take with a grain (or pound) of salt 12 12

13. 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 13 13

14. U.S. Soybean Meal Supply and Use
2009
2010
2011
Production
(thou. short tons)
41,707
39,658
38,835
Beg. Stocks
235
302
350
Imports
160
190
165
Total Supply
42,101
40,150
39,350
Domestic
30,640
30,750
30,500
Exports
11,160
9,050
8,550
Total Use
41,800
39,800
39,050
Ending Stocks
300
Season-Average Price
($/short ton)
311.27
347.50
375.00
Source: USDA-WAOB 14 14

15. Feed Pricing
Source: USDA-AMS

16. Corn vs. Wheat
Source: CME Group, 12/5/2011

17. Change of Export Pace

18. DDG Exports
Source: USDA-FAS

19. Soybean Meal Export Sales
Source: USDA-FAS

20. Renewable Fuels Standard (RFS)
Crop
Year
Billion Bushels
2011
4.64
2012
4.86
2013
5.07
2014
5.29 20 20

21. Corn Grind for Ethanol
Source: DOE-EIA

22. Projected 2011 Season-Average Corn Price

23. Projected 2011 Season-Average Soy Price

24. Projected 2012 Season-Average Corn Price

25. Projected 2012 Season-Average Soy Price

26. Iowa Corn Prices vs. Costs

27. Iowa Soybean Prices vs. Costs

28. Principal Crop Area
Source: USDA-NASS

29. States with Room to Grow
Number is the difference in planted acres between 2008 and 2011

30. Iowa Crop Margins

32. 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, worries about dry conditions
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 $6.70; Soy $12.60
Futures (as of 12/5/11): Corn $5.71; Soy $11.18
2012/13:
Futures (as of 12/5/11): Corn $5.38; Soy $11.13

33. 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: