1. Department of Economics Crop Situation and Outlook Tri County Ag Marketing Club 2009 Grain Marketing Outlook Workshop Grundy Center, Iowa July 23, 2009 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

2. Department of Economics

3. U.S. Corn Supply and Use Source: USDA 200720082009 Area Planted(mil. acres)93.586.087.0 Yield(bu./acre)150.7153.9153.4 Production(mil. bu.)13,03812,10112,290 Beg. Stocks(mil. bu.)1,3041,6241,770 Imports(mil. bu.)2015 Total Supply(mil. bu.)14,36213,74014,075 Feed & Residual(mil. bu.)5,9385,2505,200 Ethanol(mil. bu.)3,0263,6504,100 Food, Seed, & Other(mil. bu.)1,3371,2701,275 Exports(mil. bu.)2,4361,8001,950 Total Use(mil. bu.)12,73711,97012,525 Ending Stocks(mil. bu.)1,6241,7701,550 Season-Average Price($/bu.)4.204.053.75

4. Department of Economics U.S. Soybean Supply and Use Source: USDA 200720082009 Area Planted(mil. acres)64.775.777.5 Yield(bu./acre)41.739.642.6 Production(mil. bu.)2,6772,9593,261 Beg. Stocks(mil. bu.)574205110 Imports(mil. bu.)101510 Total Supply(mil. bu.)3,2613,1793,380 Crush(mil. bu.)1,8031,6551,680 Seed & Residual(mil. bu.)91154175 Exports(mil. bu.)1,1611,2601,275 Total Use(mil. bu.)3,0563,0703,130 Ending Stocks(mil. bu.)205110250 Season-Average Price($/bu.)10.1010.009.30

5. Department of Economics U.S. Crop Statistics Source: USDA, Crop Progress

6. Department of Economics Source: USDA, Weekly Weather and Crop Bulletin

7. Department of Economics Source: USDA, Weekly Weather and Crop Bulletin

8. Department of Economics Source: USDA, Weekly Weather and Crop Bulletin

9. Department of Economics Source: USDA, Weekly Weather and Crop Bulletin

10. Department of Economics U.S. Crop Conditions Source: USDA, Crop Progress

11. Department of Economics Corn Yield Estimates Source: USDA, World Ag. Outlook Board

12. Department of Economics Hog Returns vs. Corn Prices Sources: ISU Extension, Farrow-to-Finish; USDA-NASS

13. Department of Economics Cattle Returns vs. Corn Prices Sources: ISU Extension, Yearling Steers; USDA-NASS

14. Department of Economics Source: John Lawrence, ISU Extension

15. Department of Economics Exchange Rates (Jan. 2003 = 1) Source: USDA, ERS

16. Department of Economics Exchange Rates (Jan. 2003 = 1) Source: USDA, ERS

17. Department of Economics 2008 U.S. Corn Exports Source: USDA, FAS

18. Department of Economics 2008 U.S. Soybean Exports Source: USDA, FAS

19. Department of Economics 2009 Advance Export Sales Source: USDA, FAS

20. Department of Economics Crude Oil Prices Source: Energy Information Administration

21. Department of Economics Crude Oil Futures Prices Source: NYMEX

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

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

24. Department of Economics Renewable Fuels Standard (RFS) Crop Year Billion Bushels 20083.57 20094.11 20104.43

25. Department of Economics Dept. of Energy Projections Source: Energy Information Administration, Annual Energy Outlook 2009

26. Department of Economics Draft Lifecycle GHG Reductions Source: EPA, May 2009

27. Department of Economics CARB Fuel Carbon Values Source: CA Air Resources Board, April 2009

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

29. Department of Economics Ethanol vs. Gasoline

30. Department of Economics % of Gasoline Blended with Ethanol Source: Energy Information Administration

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

32. Department of Economics Corn 1990 - 2006

33. Department of Economics Corn

34. Department of Economics Corn

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

36. Department of Economics Seasonal Pricing Patterns Source: USDA, NASS, Monthly Price Data 1980-2008

37. Department of Economics Corn Futures Source: CBOT, 7/22/09 2009 Rev. Ins. Price $4.04

38. Department of Economics Soybean Futures Source: CBOT, 7/22/09 2009 Rev. Ins. Price $8.80

39. Department of Economics Basis

40. Department of Economics Climate Change Legislation Source: Congressional Research Service American Clean Energy and Security Act of 2009 (H.R. 2454) Requires utilities to supply an increasing percentage of their demand from a combination of energy efficiency savings and renewable energy (6% in 2012, 9.5% in 2014, 13% in 2016, 16.5% in 2018, and 20% in 2021-2039). Provides for issuing, trading, banking, retiring, and verifying renewable electricity credits. Establishes targets to cap and reduce greenhouse gas (GHG) emissions, annually, so that GHG emissions from capped sources are reduced to 97% of 2005 levels by 2012, 83% by 2020, 58% by 2030, and 17% by 2050; and establish a federal GHG registry. Provides for trading, banking and borrowing, auctioning, selling, exchanging, transferring, holding, or retiring emission allowances.

41. Department of Economics Climate Change Legislation Source: Craig Raysor, Gillon & Associates, PLLC Agriculture provisions in the bill Provides some exemptions from the GHG emission reduction requirements for agriculture and forestry Provides incentive-based approach to GHG emission reduction/capture Allows USDA to help establish eligible GHG offset practices and review of those practices Shifts question on indirect-land-use to an independent panel for study with EPA and USDA to review in the future Allows for a specific exemption for livestock (enteric fermentation from ruminant animals) from uncapped emissions guidelines

42. Department of Economics Climate Change Legislation Source: FAPRI-Missouri, Report #05-09

43. Department of Economics Climate Change Legislation Source: Ben Lieberman, Heritage Foundation, July, 21, 2009 “Since farming is energy intensive, it will be hit hard by Waxman-Markey's energy price hikes. In addition to higher diesel fuel and electricity costs, prices for natural gas-derived fertilizers and other chemicals will also rise. Everything else affecting agriculture, from the cost of constructing farm buildings to the price of tractors and other farm equipment, will also go up. Consequently, farm profits are expected to decline by 28 percent in 2012 and will be an average 57 percent lower from 2012-2035.”

44. Department of Economics Climate Change Legislation Source: USDA, Office of Chief Economist “A Preliminary Analysis of the Effects of HR2454 on U.S. Agriculture”

45. Department of Economics Thoughts for 2009 and Beyond  General economic conditions  Recession concerns still hold significant power in the markets  Projected economic recovery is a major key to steady/higher prices for the 2009 crop year  Most important ag. statistic: Crop yield estimates  USDA is indicating 2009 season-average prices in the neighborhood of $3.75 for corn and $9.30 for soybeans  Current futures Yesterday: Corn $3.00, Soy $8.65

46. 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/