1. University Extension/Department of Economics Crops, Biofuels, and Policy in 2011 Ag Credit School Ames, Iowa June 6, 2011 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

2. University Extension/Department of Economics U.S. Corn Supply and Use 2008200920102011 Area Planted(mil. acres)86.086.488.292.2 Yield(bu./acre)153.9164.7152.8158.7 Production(mil. bu.)12,09213,09212,44713,505 Beg. Stocks(mil. bu.)1,6241,6731,708730 Imports(mil. bu.)1482520 Total Supply(mil. bu.)13,72914,77414,18014,255 Feed & Residual(mil. bu.)5,1825,1405,1505,100 Ethanol(mil. bu.)3,7094,5685,0005,050 Food, Seed, & Other(mil. bu.)1,3161,3711,4001,405 Exports(mil. bu.)1,8491,9871,9001,800 Total Use(mil. bu.)12,05613,06613,45013,355 Ending Stocks(mil. bu.)1,6731,708730900 Season-Average Price($/bu.)4.063.555.256.00

3. University Extension/Department of Economics U.S. Soybean Supply and Use 2008200920102011 Area Planted(mil. acres)75.777.577.476.6 Yield(bu./acre)39.744.043.543.4 Production(mil. bu.)2,9673,3593,3293,285 Beg. Stocks(mil. bu.)205138151170 Imports(mil. bu.)1315 Total Supply(mil. bu.)3,1853,5123,4953,470 Crush(mil. bu.)1,6621,7521,6501,655 Seed & Residual(mil. bu.)106108125115 Exports(mil. bu.)1,2791,5011,5501,540 Total Use(mil. bu.)3,0473,3613,3253,310 Ending Stocks(mil. bu.)138151170160 Season-Average Price($/bu.)9.979.5911.4013.00

4. University Extension/Department of Economics Corn Planting Progress Source: USDA-NASS

5. University Extension/Department of Economics Corn Area Source: USDA-NASS

6. University Extension/Department of Economics Comparison to 2008 Source: USDA-NASS

7. University Extension/Department of Economics Soybean Planting Progress Source: USDA-NASS

8. University Extension/Department of Economics Soybean Area Source: USDA-NASS

9. University Extension/Department of Economics World Corn Production Source: USDA

10. University Extension/Department of Economics Corn – Argentina & Brazil Source: USDA

11. University Extension/Department of Economics World Soybean Production Source: USDA

12. University Extension/Department of Economics Soybeans – Argentina & Brazil Source: USDA

13. University Extension/Department of Economics Population 2010 2030 2050 (billion) World6.852World8.249World9.256 China1.330India1.461India1.657 India1.173China1.391China1.304 U.S.0.310U.S.0.374U.S.0.439 Indonesia0.243Indonesia0.289Indonesia0.313 Brazil0.201Pakistan0.243Pakistan0.291 Pakistan0.184Brazil0.240Ethiopia0.278 Bangladesh0.156Nigeria0.212Nigeria0.264 Nigeria0.152Bangladesh0.211Brazil0.261 Russia0.139Ethiopia0.162Bangladesh0.250 Source: U.S. Bureau of the Census, International Data Base

14. University Extension/Department of Economics In 2000, we used 21.5 billion bushels of wheat, 24 billion bushels of corn, and 6 billion bushels of soybeans. World Consumption Growth Sources: USDA, FAPRI

15. University Extension/Department of Economics Hog Crush Margin Source: Shane Ellis, ISU Extension The Crush Margin is the return after the pig, corn and soybean meal costs. Carcass weight: 200 poundsPig price: 50% of 5 mth out lean hog futures Corn: 10 bushels per pigSoybean meal: 150 pounds per pig

16. University Extension/Department of Economics Cattle Crush Margin Source: Shane Ellis, ISU Extension The Crush Margin is the return after the feeder steer and corn costs. Live weight: 1250 poundsFeeder weight: 750 pounds Corn: 50 bushels per head

17. University Extension/Department of Economics Wheat Crop Condition Source: USDA-NASS

18. University Extension/Department of Economics Exchange Rates (Jan. 2003 = 1) Source: USDA, ERS

19. University Extension/Department of Economics Corn Export Sales Source: USDA, FAS

20. University Extension/Department of Economics Soybean Export Sales Source: USDA, FAS

21. University Extension/Department of Economics Export Pace vs. Last Year Source: USDA, FAS

22. University Extension/Department of Economics Corn Export Shifts Source: USDA, FAS

23. University Extension/Department of Economics Corn Advance Export Sales Source: USDA, FAS

24. University Extension/Department of Economics Soybean Export Shifts Source: USDA, FAS

25. University Extension/Department of Economics Soy Advance Export Sales Source: USDA, FAS

26. University Extension/Department of Economics Nearby Futures (Jan. 3, 2011 = 1)

27. University Extension/Department of Economics Ethanol Margin Source: CARD

28. University Extension/Department of Economics Ethanol Blending Advantage

29. University Extension/Department of Economics Corn Grind for Ethanol

30. University Extension/Department of Economics Ethanol Stocks

31. University Extension/Department of Economics Projected Ethanol Margin Source: CARD

32. University Extension/Department of Economics Proj. Ethanol Blending Advantage

33. University Extension/Department of Economics Liquid Fuel Usage Source: U.S. Dept. of Energy, Energy Information Administration 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%114%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%

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

35. 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

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

37. University Extension/Department of Economics Government Deficits Source: Congressional Budget Office, Apr. 2011

38. University Extension/Department of Economics Government Policies for Biofuels Ethanol  Ad valorem tariff of 2.5%  Import duty of $0.54 per gallon  Volumetric Ethanol Excise Tax Credit (VEETC)  $0.45 per gallon Biodiesel  Biodiesel Mixture Excise Tax Credit  $1.00/0.50 per gallon Cellulosic  Cellulosic Biofuel Producer Tax Credit  $1.01 per gallon

39. University Extension/Department of Economics Cellulosic Biofuel Waiver Provisions  EPA (in consultation with DOE and USDA) can reduce the cellulosic biofuel mandated volume  Waiver trigger based on EIA projections  EPA will also sell cellulosic biofuel credits  Price set at Max($0.25 per gallon, $3.00 – Average wholesale gasoline price per gallon)

40. University Extension/Department of Economics Biomass Crop Assistance Program  To support production of crops for bioenergy and assist with collection, harvest, storage, and transportation of biomass to conversion facilities  Excluded materials  Farm program crops, animal byproducts, food waste, yard waste, algae

41. University Extension/Department of Economics Biomass Crop Assistance Program  Payments are authorized for biomass collection, harvest, storage, and transportation  Matching payments  $1 for each $1 per ton paid by conversion facility, up to $45 per ton, for 2 years

42. University Extension/Department of Economics Projected 2011 Season-Average Corn Price

43. University Extension/Department of Economics Projected 2011 Season-Average Soy Price

44. University Extension/Department of Economics Projected Harvest Time Crop Margins

45. University Extension/Department of Economics Corn Prices vs. Costs

46. University Extension/Department of Economics Soybean Prices vs. Costs

47. University Extension/Department of Economics Input Costs Source: USDA, Agricultural Prices, May 31, 2011

48. University Extension/Department of Economics Thoughts for 2011 and Beyond  General economic conditions  Continued worldwide economic recovery is a major key for crop prices  Energy prices limiting recovery  US job recovery, European financial concerns, Chinese inflation  Supply/demand concerns  Prevented planting and flooding taking out corn area  Biofuel growth and energy demand  Will supply be able to keep pace with demand?  2010/11:USDA: Corn $5.25, Soy $11.40  2011/12:USDA: Corn $6.00, Soy $13.00 Futures (as of 6/3/2011):Corn $6.69, Soy $13.48

49. University Extension/Department of Economics Thank you for your time! Any questions? My web site: http://www.econ.iastate.edu/~chart/ Iowa Farm Outlook: http://www.econ.iastate.edu/ifo/ Ag Decision Maker: http://www.extension.iastate.edu/agdm/