1. Assistant Professor/Grain Markets Specialist
Feed Price Outlook
Ames, Iowa
February 16, 2009
Chad Hart
Assistant Professor/Grain Markets Specialist 1

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

3. Brief Comparison 2006/07 2007/08 2008/09 Corn Feed 5591 5938 5300
2006/ / /09
Corn Feed
Price
Wheat Feed
Price
Sorghum Feed
Price
Note: Feed in million bushels, Price in $/bushel
Source: USDA-WAOB, Feb. 2009

4. Soybean Meal Supply and Use
$285
For the 2008/09 marketing year, production and total use are down 7.7%
Source: USDA-WAOB, Feb. 2009

5. Monthly Price Ratios
Data:
USDA-NASS

6. Corn Price Ratios (Jan. 2007 = 1)
$4.15/bu

7. Hay Price Ratios (Jan. 2007 = 1)
All Hay Price
$136/ton

8. Drought in South America
Source: USDA-WAOB, Feb. 2009

9. Exchange Rates (Jan = 1)
Source: USDA, ERS

10. Renewable Fuels Standard (RFS)
Crop
Year
Billion Bushels
2008
3.57
2009
4.11
2010
4.43
Corn-based ethanol goes in as conventional biofuel. The tables show the amounts of corn needed to meet the conventional biofuel portion of the RFS with corn-grain ethanol. The Renewable Fuels Association lists current ethanol production capacity at billion gallons, with another 2.8 billion gallons under construction. So ethanol capacity is large enough to meet the RFS for the next few years is the 1st year for the biodiesel portion of the RFS, with 500 million gallons of biodiesel needed to meet the mandate. In 2007, we produced roughly 450 million gallons. And the U.S. has enough biodiesel capacity on the ground today to produce over 2 billion gallons of biodiesel from a variety of sources. 10 10

11. Corn & Soybean Area Growth rate of 1.55 million acres per year
While total land devoted to crop production has been fairly steady over the past few years, the amount of land planted to corn and soybeans has been on the rise. Minor feed grains and cotton have been giving up ground.

12. Input Costs Source: USDA, Agricultural Prices, Jan. 2009
Input costs have risen dramatically, especially over the past year.
Source: USDA, Agricultural Prices, Jan. 2009

13. 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 $ for corn and $ for soybean meal
Stress on South American crops has provided some support for prices

14. Thoughts for 2009 and Beyond
Watch 2009 plantings
Early surveys show crop producers leaning to soybeans
Could see record soybean plantings (2008 was a record)
Crop production costs are a major issue
Biofuel follow-through
Energy markets are down, how fast will they recover?
There are ways to temporary get around the RFS
Given current factors, the 2009 outlook is for crop prices around $4.00 for corn and $ for soybean meal
Key factor: Economic growth returns by early 2010

15. 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: