1. Department of Economics Current Feed Situation and Outlook Iowa Egg Industry Symposium Ames, Iowa November 5, 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 -167 -50 -66 +0.05 $4.70$4.75 -50 $5.50

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

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

5. Department of Economics U.S. Soybean Supply and Use Source: USDA-WAOB, Oct. 2008 -45 -30 +0.10 $10.35$10.45 -1.1 -15 +2.2 +85 $12.35

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

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

8. Department of Economics U.S. Soybean Meal Supply and Use Source: USDA-WAOB, Oct. 2008 -600 -70 $360$290

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

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

11. 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

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

13. Department of Economics Relative Feed Costs (Jan. 2005 = 1) Source: USDA, ERS, Feed Grains Database

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

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

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

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

18. Department of Economics Input Costs Source: USDA, Agricultural Prices, Oct. 2008

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

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

21. 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

22. 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

23. 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%

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

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

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

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

28. 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 indications are pointing to 2008 season- average prices of $3.80-4.20 for corn and $275-300 for soybean meal

29. 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 $290 for soybean meal

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