Extension and Outreach/Department of Economics

2012 Crop Market Outlook

Coleman Research Group PresentationApr. 12, 2012

Chad HartAssistant Professor/Grain Markets Specialist

chart@iastate.edu515-294-9911

Extension and Outreach/Department of Economics

U.S. Corn Supply and Use2008 2009 2010 2011 2012

Area Planted (mil. acres) 86.0 86.4 88.2 91.9 95.9

Yield (bu./acre) 153.9 164.7 152.8 147.2 164.0

Production (mil. bu.) 12,092 13,092 12,447 12,358 14,558

Beg. Stocks (mil. bu.) 1,624 1,673 1,708 1,128 801

Imports (mil. bu.) 14 8 28 20 15

Total Supply (mil. bu.) 13,729 14,774 14,182 13,506 15,374

Feed & Residual (mil. bu.) 5,182 5,125 4,793 4,600 5,200

Ethanol (mil. bu.) 3,709 4,591 5,021 5,000 4,950

Food, Seed, & Other (mil. bu.) 1,316 1,370 1,407 1,405 1,420

Exports (mil. bu.) 1,849 1,980 1,835 1,700 1,900

Total Use (mil. bu.) 12,056 13,066 13,055 12,705 13,470

Ending Stocks (mil. bu.) 1,673 1,708 1,128 801 1,616

Season-Average Price ($/bu.) 4.06 3.55 5.18 6.20 5.00

Source: USDA-WAOB, 2012 Unofficial Projections

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Extension and Outreach/Department of Economics

U.S. Soybean Supply and Use2008 2009 2010 2011 2012

Area Planted (mil. acres) 75.7 77.5 77.4 75.0 73.9

Yield (bu./acre) 39.7 44.0 43.5 41.5 43.9

Production (mil. bu.) 2,967 3,359 3,329 3,056 3,202

Beg. Stocks (mil. bu.) 205 138 151 215 250

Imports (mil. bu.) 13 15 14 15 15

Total Supply (mil. bu.) 3,185 3,512 3,495 3,286 3,467

Crush (mil. bu.) 1,662 1,752 1,648 1,630 1,660

Seed & Residual (mil. bu.) 106 110 130 116 126

Exports (mil. bu.) 1,279 1,499 1,501 1,290 1,550

Total Use (mil. bu.) 3,047 3,361 3,280 3,036 3,335

Ending Stocks (mil. bu.) 138 151 215 250 205

Season-Average Price ($/bu.) 9.97 9.59 11.30 12.25 11.50

Source: USDA-WAOB, 2012 Unofficial Projections

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Extension and Outreach/Department of Economics

U.S. Wheat Supply and Use2008 2009 2010 2011 2012

Area Planted (mil. acres) 63.2 59.2 53.6 54.4 55.9

Yield (bu./acre) 44.9 44.5 46.3 43.7 44.5

Production (mil. bu.) 2,499 2,218 2,207 1,999 2,087

Beg. Stocks (mil. bu.) 306 657 976 862 793

Imports (mil. bu.) 127 119 97 120 120

Total Supply (mil. bu.) 2,932 2,993 3,279 2,982 3,100

Food (mil. bu.) 927 919 926 930 935

Seed (mil. bu.) 78 69 71 79 83

Feed & Residual (mil. bu.) 255 150 132 180 180

Exports (mil. bu.) 1,015 879 1,289 1,000 975

Total Use (mil. bu.) 2,275 2,018 2,417 2,189 2,173

Ending Stocks (mil. bu.) 657 976 862 793 937

Season-Average Price ($/bu.) 6.78 4.87 5.70 7.30 6.30

Source: USDA-WAOB, 2012 Unofficial Projections

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Extension and Outreach/Department of Economics

Principal Crop Area

Source: USDA-NASS

Extension and Outreach/Department of Economics

Crop Shifts

Source: USDA-NASS

Extension and Outreach/Department of Economics

Crop Intentions

Source: USDA-NASS

Extension and Outreach/Department of Economics

Corn Intentions

Source: USDA-NASS

Extension and Outreach/Department of Economics

Soybean Intentions

Source: USDA-NASS

Extension and Outreach/Department of Economics

Winter Wheat Plantings

Source: USDA-NASS

Extension and Outreach/Department of Economics

Durum Wheat Intentions

Source: USDA-NASS

Extension and Outreach/Department of Economics

Spring Wheat Intentions

Source: USDA-NASS

Extension and Outreach/Department of Economics

Historical Performance

Source: USDA-NASS

Extension and Outreach/Department of Economics

World Corn Production

Source: USDA-WAOB

Extension and Outreach/Department of Economics

World Soybean Production

Source: USDA-WAOB

Extension and Outreach/Department of Economics

World Wheat Production

Source: USDA

Extension and Outreach/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 pounds Pig price: 50% of 5 mth out lean hog futuresCorn: 10 bushels per pig Soybean meal: 150 pounds per pig

Extension and Outreach/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 pounds Feeder weight: 750 pounds Corn: 50 bushels per head

Extension and Outreach/Department of Economics

Corn vs. Wheat

Source: CME Group, 4/10/2012

5.40

5.60

5.80

6.00

6.20

6.40

6.60

6.80

7.00

7.20$ p

er

bush

el

Corn Wheat

Extension and Outreach/Department of Economics

Corn Export Shifts

Source: USDA, FAS

Japan

Mexico

Taiwan

EgyptUnknown

Other

South Korea

Total

China

-250

-200

-150

-100

-50

0

50

100

150

200

Mill

ion b

ush

els

-15.6%

37.1%

-21.4% -38.0%

-70.4%

-66.4%

-40.7%

-12.5%

1237.8%

Extension and Outreach/Department of Economics

Soybean Export Shifts

Source: USDA, FAS

China

EU

JapanMexico

Taiwan

Total

Unknown

Indonesia

Other

-350

-300

-250

-200

-150

-100

-50

0

Mill

ion b

ush

els

-17.3%

-68.1%

-23.3% -3.7% -42.0% -20.4%

-28.8%

-21.6%

-0.3%

Extension and Outreach/Department of Economics

Wheat Export Shifts

Source: USDA, FAS

JapanNigeria

Philippines

Egypt

Unknown

Other

Mexico

Total

SouthKorea

-350

-300

-250

-200

-150

-100

-50

0

50

Mill

ion b

ush

els

-1.1% -12.0%

28.9%5.6%

-81.9%

18.1%

-54.2%

-30.9%

-23.7%

Extension and Outreach/Department of Economics

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

9/1 9/22 10/13 11/3 11/24 12/15 1/5 1/26 2/16 3/9 3/30

Corn Soy Wheat

Change of Export Pace

Extension and Outreach/Department of Economics

Corn Grind for Ethanol

86

88

90

92

94

96

98

100

102

104

Sep-10

Nov-10

Jan-11

Mar-11

May-11

Jul-11

Sep-11

Nov-11

Jan-12

Mar-12

Mill

ion b

ush

els

Extension and Outreach/Department of Economics

Ethanol Stocks

Source: DOE, EIA

650

700

750

800

850

900

950

1000

Sep-10

Nov-10

Jan-11

Mar-11

May-11

Jul-11

Sep-11

Nov-11

Jan-12

Mar-12

Mill

ion g

allo

ns

Extension and Outreach/Department of Economics

U.S. Blended Gasoline Consumption

Source: DOE-EIA, via USDA-ERS

7.6 bil. gal.

7.4 bil. gal.

Extension and Outreach/Department of Economics

3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00

7.50

12/1

4/2

009

2/1

4/2

010

4/1

4/2

010

6/1

4/2

010

8/1

4/2

010

10/1

4/2

010

12/1

4/2

010

2/1

4/2

011

4/1

4/2

011

6/1

4/2

011

8/1

4/2

011

10/1

4/2

011

12/1

4/2

011

2/1

4/2

012

$ p

er

bush

el

Futures USDA

Projected 2011 Season-Average Corn Price

Extension and Outreach/Department of Economics

8.509.009.50

10.0010.5011.0011.5012.0012.5013.0013.5014.0014.50

12

/14/2

00

9

2/1

4/2

010

4/1

4/2

010

6/1

4/2

010

8/1

4/2

010

10

/14/2

01

0

12

/14/2

01

0

2/1

4/2

011

4/1

4/2

011

6/1

4/2

011

8/1

4/2

011

10

/14/2

01

1

12

/14/2

01

1

2/1

4/2

012

$ p

er

bu

she

l

Futures USDA

Projected 2011 Season-Average Soy Price

Extension and Outreach/Department of Economics

Projected ‘11 Season-Average Wheat Price

4.50

5.00

5.50

6.00

6.50

7.00

7.50

8.00

8.50

9.00

9.50

4/2

6/2

010

6/2

6/2

010

8/2

6/2

010

10/2

6/2

010

12/2

6/2

010

2/2

6/2

011

4/2

6/2

011

6/2

6/2

011

8/2

6/2

011

10/2

6/2

011

12/2

6/2

011

2/2

6/2

012

$ p

er

bush

el

Futures USDA

Extension and Outreach/Department of Economics

Projected 2012 Season-Average Corn Price

4.50

5.00

5.50

6.00

6.50

7.00

12/1

4/2

01

0

1/1

4/2

011

2/1

4/2

011

3/1

4/2

011

4/1

4/2

011

5/1

4/2

011

6/1

4/2

011

7/1

4/2

011

8/1

4/2

011

9/1

4/2

011

10/1

4/2

01

1

11/1

4/2

01

1

12/1

4/2

01

1

1/1

4/2

012

2/1

4/2

012

3/1

4/2

012

$ p

er

bush

el

Futures USDA

Extension and Outreach/Department of Economics

Projected 2012 Season-Average Soy Price

10.50

11.00

11.50

12.00

12.50

13.00

13.50

14.00

12/1

4/2

010

1/1

4/2

011

2/1

4/2

011

3/1

4/2

011

4/1

4/2

011

5/1

4/2

011

6/1

4/2

011

7/1

4/2

011

8/1

4/2

011

9/1

4/2

011

10/1

4/2

011

11/1

4/2

011

12/1

4/2

011

1/1

4/2

012

2/1

4/2

012

3/1

4/2

012

$ p

er

bush

el

Futures USDA

Extension and Outreach/Department of Economics

Projected ‘12 Season-Average Wheat Price

5.50

6.00

6.50

7.00

7.50

8.00

8.50

9.00

3/3

1/2

011

4/3

0/2

011

5/3

1/2

011

6/3

0/2

011

7/3

1/2

011

8/3

1/2

011

9/3

0/2

011

10/3

1/2

011

11/3

0/2

011

12/3

1/2

011

1/3

1/2

012

2/2

9/2

012

3/3

1/2

012

$ p

er

bush

el

Futures USDA

Extension and Outreach/Department of Economics

Thoughts for 2012 and BeyondGeneral economic conditions

Continued worldwide economic recovery is a major key for crop prices

Supply/demand concernsIntentions vs. plantingsBiofuel growth and energy demandWill supply be able to keep pace with demand?

2011/12

USDA

2011/12

Futures

(4/10/12)

2012/13

Futures

(4/10/12)

Corn $6.20 $5.92 $5.28

Soybeans $12.25 $12.39 $13.09

Wheat $7.30 $7.21 $5.98

Extension and Outreach/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/