1. University Extension/Department of Economics Risk Environment for Agriculture Agricultural Credit School Ames, Iowa June 8, 2010 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

2. University Extension/Department of Economics Brief List General economic conditions Food, feed, and energy demand Agricultural, energy, and trade policy Input and output pricing Production / crop progress

3. University Extension/Department of Economics World Real GDP, 2008 Projections Sources: International Financial Statistics, Global Insight

4. University Extension/Department of Economics World Real GDP Projections Sources: International Financial Statistics, Global Insight

5. University Extension/Department of Economics World Real GDP Projections Sources: International Financial Statistics, Global Insight

6. University Extension/Department of Economics Government Deficits Source: Congressional Budget Office, Mar. 2010

7. University Extension/Department of Economics Government Debt Source: Congressional Budget Office, Mar. 2010

8. University Extension/Department of Economics Source: Center for Budget and Policy Priorities

9. University Extension/Department of Economics Source: Congressional Budget Office, Jan. 2010

10. University Extension/Department of Economics Source: U.S. Census Bureau, 2009

11. University Extension/Department of Economics Population 2010 2020 2050 (billion) World6.831World7.558World9.202 China1.330China1.385India1.657 India1.173India1.326China1.304 U.S.0.310U.S.0.341U.S.0.439 Indonesia0.243Indonesia0.268Indonesia0.313 Brazil0.201Brazil0.223Ethiopia0.278 Pakistan0.177Pakistan0.204Pakistan0.276 Bangladesh0.158Nigeria0.182Nigeria0.264 Nigeria0.152Bangladesh0.181Brazil0.260 Russia0.139Russia0.132Bangladesh0.234 Japan0.127Mexico0.125Congo0.189 Source: U.S. Bureau of the Census, International Data Base

12. University Extension/Department of Economics Change in Per Capita Meat Consumption Source: FAPRI

13. University Extension/Department of Economics In 2020, we will use 26 billion bushels of wheat, 36 billion bushels of corn, and 11 billion bushels of soybeans. World Consumption Growth Sources: USDA, FAPRI In 2000, we used 21.5 billion bushels of wheat, 24 billion bushels of corn, and 6 billion bushels of soybeans.

14. University Extension/Department of Economics Liquid Fuel Usage 200720152020202520302035 (Million Barrels Oil Equivalent per Day)(Percent of 2007 Value) United States20.698%100%102%104%107% Canada2.396% 100%104% Mexico2.1105%110%129% 138% Europe15.392%88% 89%90% Japan5.084%86% 84%82% China7.6132%153%178%201%222% India2.8114%129%139%154%168% Africa3.1113%116%126%135%148% Central and South America6.0110%112%117%125%133% World86.1103%107%113%121%128% Source: Energy Information Administration

15. University Extension/Department of Economics Crude Oil Prices Source: Energy Information Administration

16. University Extension/Department of Economics Price Movements Since 2007

17. University Extension/Department of Economics Price Movements in 2010

18. University Extension/Department of Economics Ethanol Margins Source: ISU, CARD

19. University Extension/Department of Economics Ethanol Blending Advantage

20. University Extension/Department of Economics Renewable Fuels Standard (RFS)

21. University Extension/Department of Economics CARB Fuel Carbon Values Source: CA Air Resources Board, April 2009

22. University Extension/Department of Economics Countries Pursuing Biofuels  US  Brazil  Argentina  Colombia  Paraguay  Canada  Uruguay  Mexico  Thailand  New Zealand  South Africa  South Korea  Philippines  Indonesia  Pakistan  China  India  Malaysia  Australia  Japan  EU  Russia  Not a complete list

23. University Extension/Department of Economics Farm Bill Titles I. CommoditiesIX. Energy II. ConservationX. Hort. & Organic Ag. III. TradeXI. Livestock IV. NutritionXII. Crop Insurance V. CreditXIII. Commodity Futures VI. Rural DevelopmentXIV. Miscellaneous VII. ResearchXV. Trade & Taxes VIII. Forestry

24. University Extension/Department of Economics Farm Bill Projected Spending Projected Spending 2008-2013 $297 Billion

25. University Extension/Department of Economics World Trade Organization Ongoing negotiations for WTO agriculture agreement Targeting changes in domestic support, tariffs, tariff quotas, and export subsidies Both general and product-specific guidelines for agricultural policy changes

26. University Extension/Department of Economics U.S. Corn Emergence Source: USDA, Crop Progress

27. University Extension/Department of Economics U.S. Soybean Planting Source: USDA, Crop Progress

28. University Extension/Department of Economics Input Costs Source: USDA, Agricultural Prices, May 28, 2010

29. University Extension/Department of Economics Changing Basis Patterns

30. University Extension/Department of Economics Basis Two Years Ago

31. University Extension/Department of Economics Basis This Year

32. University Extension/Department of Economics Corn

33. University Extension/Department of Economics Soy

34. University Extension/Department of Economics Iowa Corn Prices vs. Costs Right now, about a nickel under breakeven with USDA about 9 cents under breakeven with futures

35. University Extension/Department of Economics Iowa Soybean Prices vs. Costs Right now, 7 cents over breakeven with USDA at breakeven with futures

36. University Extension/Department of Economics Thank you for your time! Any questions? My web site: http://www.econ.iastate.edu/faculty/hart/ Iowa Farm Outlook: http://www.econ.iastate.edu/outreach/agriculture/periodicals/ifo/ Ag Decision Maker: http://www.extension.iastate.edu/agdm/