1. Department of Economics Crop Market Outlook B.E.S.T. Peer Group West Des Moines, Iowa October 23, 2008 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

2. Department of Economics U.S. Corn Supply and Use Source: USDA-WAOB, Oct. 2008 +1.7 +128 +150 +136 -0.80 $5.50$4.70 -100

3. Department of Economics Source: USDA-NASS, Oct. 2008

4. Department of Economics U.S. Soybean Supply and Use Source: USDA-WAOB, Oct. 2008 -0.5 +65 +49 -25 +50 -2.00 $12.35$10.35 +2.2

5. Department of Economics Source: USDA-NASS, Oct. 2008

6. Department of Economics Source: USDA-NASS, Oct. 2008

7. Department of Economics World Corn Production Source: USDA-WAOB, Oct. 2008

8. Department of Economics World Soybean Production Source: USDA-WAOB, Oct. 2008

9. Department of Economics Sources: CARD, Iowa State; IA Dept. of Ag. Crop Basis Patterns

10. Department of Economics Source: ISU, Dr. John Lawrence Livestock Returns

11. Department of Economics Sources: Various USDA-NASS reports Livestock Adjustments Sows farrowing: Sept-Nov 2008 3.01 million, down 5% from last year Dec-Feb 2009 2.98 million, down 3% from last year Broiler-type eggs set: 195 million, down 8% from last year Broiler chicks placed: 168 million, down 4% from last year Feedlot placements: 2.06 million, down 3% from last year (2 nd lowest since 1996)

12. Department of Economics Ethanol Margins Source: ISU, CARD

13. Department of Economics Biodiesel Margins Source: ISU, CARD

14. Department of Economics Renewable Fuels Standard (RFS) Calendar Year Billion Bushels 20093.75 20104.29 20114.50 Crop Year Billion Bushels 20083.57 20094.11 20104.43

15. Department of Economics U.S. Blended Motor Gasoline Consumption Source: Energy Information Administration

16. Department of Economics Outside Influences (Jan. 2007 = 1)

17. Department of Economics Outside Influences (Sept. 2008 = 1)

18. Department of Economics Corn & Soybean Area Growth rate of 1.55 million acres per year

19. Department of Economics CRP Expiring Contracts Source: USDA-FSA

20. Department of Economics CRP Expiring Acres by State Source: USDA-FSA 20081000 acres 20091000 acres 20101000 acres 20111000 acres ND137TX778TX669TX684 IA136CO718KS615KS531 SD123KS429CO452MT498 MN98ND237MT383ND389 TX88SD236ND258CO345 MT76MT187OK210MO198 WI64OK161NE180OK191 MO48NE154WA172NM164 NE45IA114ID155NE152 IL42WA106SD148MN128

21. Department of Economics Input Costs Source: USDA, Agricultural Prices, Sept. 2008

22. Department of Economics The Rise and Fall of Fertilizer Prices Source: http://www.fertilizerworks.com/html/market/ TheMarket.pdf

23. Department of Economics Urea Prices Source: http://www.fertilizerworks.com/html/market/ TheMarket.pdf

24. Department of Economics DAP Prices Source: http://www.fertilizerworks.com/html/market/ TheMarket.pdf

25. Department of Economics Ammonia Prices Source: http://www.fertilizerworks.com/html/market/ TheMarket.pdf A quote from “The Market: Fertilizer News and Analysis” October 16, 2008

26. Department of Economics Historical Iowa Corn Production Costs Source: Duffy and Smith, http://www.extension.iastate.edu/agdm/crops/pdf/a1-21.pdf

27. Department of Economics Historical Iowa Soybean Production Costs Source: Duffy and Smith, http://www.extension.iastate.edu/agdm/crops/pdf/a1-21.pdf

28. Department of Economics Iowa Corn Prices vs. Costs Source: USDA-NASS and Duffy and Smith, http://www.extension.iastate.edu/agdm/crops/pdf/a1-21.pdf

29. Department of Economics Iowa Soybean Prices vs. Costs Source: USDA-NASS and Duffy and Smith, http://www.extension.iastate.edu/agdm/crops/pdf/a1-21.pdf

30. Department of Economics Crop Costs for Central Illinois Source: Schnitkey, July 2008 CornSoybeans 20082009 % Change 20082009 % Change ($/acre) Fertilizer11821582%Fertilizer4598118% Fuel and Oil192637%Crop Ins.81250% Crop Ins.202735%Utilities3433% Seed627826%Seed425326% Utilities4525%Fuel and Oil 182222% Total Non- land Costs 38852936%Total Non- land Costs 23932134%

31. Department of Economics Rough Estimates for 2009 Iowa Corn Non-land Cost Land Cost Total Cost Expected Yield Cost per Bushel ($/acre)(bu/acre)($/bu) 513.05190.00703.051654.26 513.05225.00738.051654.47 December 2009 Corn Futures = $4.65 (10/21/08)

32. Department of Economics Rough Estimates for 2009 Iowa Soybeans Non-land Cost Land Cost Total Cost Expected Yield Cost per Bushel ($/acre)(bu/acre)($/bu) 268.10190.00458.10499.35 268.10225.00493.104910.06 November 2009 Soybean Futures = $9.47 (10/21/08)

33. Department of Economics Crop Exports Source: USDA, PSD

34. Department of Economics Population 2008 2020 2050 (billion) World6.678World7.601World9.393 China1.330China1.431India1.808 India1.148India1.362China1.424 U.S.0.304U.S.0.336U.S.0.420 Indonesia0.238Indonesia0.268Nigeria0.357 Brazil0.192Brazil0.212Indonesia0.313 Pakistan0.168Pakistan0.204Bangladesh0.280 Bangladesh0.154Bangladesh0.190Pakistan0.278 Russia0.141Nigeria0.184Brazil0.228 Nigeria0.138Russia0.132Congo0.189 Source: U.S. Bureau of the Census, International Data Base

35. Department of Economics Real GDP Sources: International Financial Statistics, Global Insight

36. Department of Economics Per Capita Meat Consumption Source: FAPRI

37. Department of Economics Exchange Rate Ratios (Jan. 2007 = 1) Source: OANDA.com

38. Department of Economics U.S. Stocks-to-Use Ratios

39. Department of Economics World Stocks-to-Use Ratios

40. Department of Economics Thoughts for 2008  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  Energy demand  Higher energy prices did constrain demand  Will it recover?  Most important ag. statistic: Crude oil price or Dow Jones Index  Current futures are indicating 2008 season-average prices of $3.80-4.20 for corn and $8.50-9.00 for soybeans

41. Department of Economics Thoughts for 2009 and Beyond  Many of the storylines from the past few years will continue  Tight stocks for both corn and soybeans  The competition for acreage  Ethanol’s buildout & livestock’s adjustment  Energy price & general economy concerns  Market volatility will remain high  Link to the energy markets  More market players with different trading objectives  Given current factors, the 2009 outlook is for crop prices around $4.50 for corn and $9.25 for soybeans

42. Department of Economics Thank you for your time! Any questions?