Crop and Feed Outlook for 2012

Extension and Outreach/Department of Economics

Crop and Feed Outlook for 2012

Farmers Elevator Coop MeetingSioux Falls, South Dakota

Dec. 12, 2011

Chad HartAssistant Professor/Grain Markets Specialist

[email protected]


Livestock Marketing Information CenterData Source: USDA-NASS, Compiled & Analysis by LMIC

COMMERCIAL MEAT & POULTRY PRODUCTION

By Type of Meat, Annual

0

10

20

30

40

50

60

70

80

90

100

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Bil. Pounds

Turkey

Chicken

Lamb &Veal

Pork

Beef

Extension and Outreach/Department of EconomicsSource: USDA

U.S. Meat Production & Prices


Cattle and Hog Prices

Source: CME Group

70

80

90

100

110

120

130

140

150

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Nov-12

Dec-12

Price

($/c

wt)

Lean Hogs Feeder Cattle Live Cattle


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



COMMERCIAL PORK PRODUCTIONQuarterly

5.0

5.2

5.4

5.6

5.8

6.0

6.2

6.4

6.6

JAN-MAR APR-JUN JUL-SEP OCT-DEC

Bil. Pounds

Avg.2006/010

2011

2012

2013


Livestock Marketing Information CenterData Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC

U S PORK EXPORTSCarcass Weight, Annual

0.0

1.0

2.0

3.0

4.0

5.0

1988 1991 1994 1997 2000 2003 2006 2009 2012

Bil. Pounds


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



COMMERCIAL BEEF PRODUCTIONQuarterly

5.6

5.8

6.0

6.2

6.4

6.6

6.8

7.0


Bil. Pounds

Avg.2006/010

2011

2012

2013



U S BEEF AND VEAL EXPORTSCarcass Weight, Annual

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1988 1991 1994 1997 2000 2003 2006 2009 2012

Bil. Pounds



RTC BROILER PRODUCTIONQuarterly

8.0

8.4

8.8

9.2

9.6


Bil. Pounds

Avg.2006/010

2011

2012

2013



U S BROILER EXPORTSRTC, Annual

0

1

2

3

4

5

6

7

8

1988 1991 1994 1997 2000 2003 2006 2009 2012

Bil. Pounds


U.S. Meat Trade



U S RED MEAT & POULTRY CONSUMPTIONPer Capita, Retail Weight, Annual

0

50

100

150

200

1988 1991 1994 1997 2000 2003 2006 2009 2012

Pounds

Turkey

TotalChicken

Pork

Beef



MILK PRODUCTION vs. MILK COW INVENTORY

Average Annual Inventory, U.S.

8.8

9.2

9.6

10.0

10.4

10.8

11.2

1985 1988 1991 1994 1997 2000 2003 2006 2009

Mil. Head

135

145

155

165

175

185

195

205Bil. Pounds


U.S. Milk Production & Prices


Class III Milk Prices

Source: CME Group

16.70

16.75

16.80

16.85

16.90

16.95

17.00

17.05

17.10

17.15

17.20

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Nov-12

Dec-12

Price

($/c

wt)


Thoughts for 2012 and BeyondContinued economic recovery is a major key for livestock prices

Meat demand is recovering

Meat supplies tightened up with smaller herds/flocks

Feed costs have kept margins tight

The combination implies livestock expansion will take awhile

Poultry is currently backing off, Hogs are expanding slightly, and Cattle will not start expanding for a few years


U.S. Corn Supply and Use2008 2009 2010 2011

Area Planted (mil. acres) 86.0 86.4 88.2 91.9

Yield (bu./acre) 153.9 164.7 152.8 146.7

Production (mil. bu.) 12,092 13,092 12,447 12,310

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

Imports (mil. bu.) 14 8 28 15

Total Supply (mil. bu.) 13,729 14,774 14,182 13,453

Feed & Residual (mil. bu.) 5,182 5,125 4,792 4,600

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

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

Exports (mil. bu.) 1,849 1,980 1,835 1,600

Total Use (mil. bu.) 12,056 13,066 13,054 12,605

Ending Stocks (mil. bu.) 1,673 1,708 1,128 848

Season-Average Price ($/bu.) 4.06 3.55 5.18 6.40

Source: USDA-WAOB


U.S. Soybean Supply and Use2008 2009 2010 2011

Area Planted (mil. acres) 75.7 77.5 77.4 75.0

Yield (bu./acre) 39.7 44.0 43.5 41.3

Production (mil. bu.) 2,967 3,359 3,329 3,046

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

Imports (mil. bu.) 13 15 14 15

Total Supply (mil. bu.) 3,185 3,512 3,495 3,275

Crush (mil. bu.) 1,662 1,752 1,648 1,625

Seed & Residual (mil. bu.) 106 110 130 120

Exports (mil. bu.) 1,279 1,499 1,501 1,300

Total Use (mil. bu.) 3,047 3,361 3,280 3,045

Ending Stocks (mil. bu.) 138 151 215 230

Season-Average Price ($/bu.) 9.97 9.59 11.30 11.70

Source: USDA-WAOB


Projected Corn Yields

Source: USDA-NASS


Projected Soybean Yields

Source: USDA-NASS


U.S. DDG Supply and Use2008 2009 2010 2011

Production (mil. metric tons) 28.6 35.4 38.7 38.6

Imports (mil. metric tons) 0.3 0.4 0.4 0.3

Total Supply (mil. metric tons) 28.9 35.8 39.2 38.9

Domestic (mil. metric tons) 23.9 27.5 30.9 32.1

Exports (mil. metric tons) 5.0 8.3 8.3 6.8

Total Use (mil. metric tons) 28.9 35.8 39.1 38.9

Average Price ($/ton) 122 113 179 207

My estimates, so take with a grain (or pound) of salt


U.S. Soybean Meal Supply and Use2009 2010 2011

Production (thou. short tons) 41,707 39,251 38,685

Beg. Stocks (thou. short tons) 235 302 350

Imports (thou. short tons) 160 179 165

Total Supply (thou. short tons) 42,101 39,731 39,200

Domestic (thou. short tons) 30,640 30,277 30,100

Exports (thou. short tons) 11,160 9,104 8,800

Total Use (thou. short tons) 41,800 39,381 38,900

Ending Stocks (thou. short tons) 302 350 300

Season-Average Price ($/short ton) 311.27 345.52 295.00

Source: USDA-WAOB


World Corn Production

Source: USDA-WAOB


World Soybean Production

Source: USDA-WAOB


Feed Pricing

Source: USDA-AMS

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2.2

Jan-0

7

Apr-

07

Jul-07

Oct

-07

Jan-0

8

Apr-

08

Jul-08

Oct

-08

Jan-0

9

Apr-

09

Jul-09

Oct

-09

Jan-1

0

Apr-

10

Jul-10

Oct

-10

Jan-1

1

Apr-

11

Jul-11

Oct

-11

Jan

. 2007 =

1

Corn DDGs


Corn vs. Wheat

Source: CME Group, 12/9/2011

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


Corn Export Shifts

Source: USDA-FAS

Japan

Mexico

Taiwan

Egypt

Unknown

OtherSouth Korea

Total

China

-60

-40

-20

0

20

40

60

80

100

Mill

ion b

ush

els

-18.6%

39.4%

-28.8%

-21.9%

-79.9%

2.7%

-17.7% -3.0%

746.4%


Soy Export Shifts

Source: USDA-FAS

China

EUJapan Mexico Taiwan

Total

Unknown

Indonesia

Other

-450

-400

-350

-300

-250

-200

-150

-100

-50

0

Mill

ion b

ush

els

-25.5%

-75.1% -17.4% -11.4% -42.0%

-72.5%

-43.0%

-34.0%

-27.2%


Change of Export Pace

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

9/1 9/8 9/15 9/22 9/29 10/6 10/1310/2010/27 11/3 11/1011/1711/24 12/1

Corn Soy


DDG Exports

Source: USDA-FAS

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11

1,0

00 m

etr

ic t

on

s

China Mexico Canada TurkeyVietnam South Korea Thailand EUIndonesia Japan Others


Soybean Meal Export Sales

Source: USDA-FAS

0

1

2

3

4

5

6

7

8

9

10

10/7

11/7

12/7

1/7

2/7

3/7

4/7

5/7

6/7

7/7

8/7

9/7

Date

Mil.

Metr

ic T

ons

2009 2010 2011


5

7

9

11

13

15

17

2011 2012 2013

Bill

ion g

allo

ns

Conventional Biofuels Cellulosic Biofuels

Biodiesel Additional Advanced Biofuels

Renewable Fuels Standard (RFS)

CropYear

Billion Bushels

2011 4.64

2012 4.86

2013 5.07

2014 5.29


Corn Grind for Ethanol

Source: DOE-EIA

86

88

90

92

94

96

98

100

Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11

Mill

ion

bu

she

ls


Ethanol Margins

Source: CARD


-0.04

-0.02

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

1/3

/2007

7/3

/2007

1/3

/2008

7/3

/2008

1/3

/2009

7/3

/2009

1/3

/2010

7/3

/2010

1/3

/2011

7/3

/2011

1/3

/2012

7/3

/2012

1/3

/2013

7/3

/2013

1/3

/2014

7/3

/2014

$ p

er

gallo

nEthanol Blending Advantage


Biodiesel Production

Source: DOE-EIA

0

10

20

30

40

50

60

70

80

90

Mill

ion

ga

llon

s


Biodiesel Margins

Source: CARD


Projected 2011 Season-Average Corn Price

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

$ p

er

bush

el

Futures USDA


Projected 2011 Season-Average Soy Price

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

$ p

er

bu

she

l

Futures USDA


Projected 2012 Season-Average Corn Price

4.50

5.00

5.50

6.00

6.50

7.00

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

$ p

er

bush

el

Futures USDA


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

$ p

er

bush

el

Futures USDA


Iowa Corn Prices vs. Costs

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00$ p

er

bush

el

Season-average Price Cost per Bushel


Iowa Soybean Prices vs. Costs

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

11.00

12.00

13.00

14.00

$ p

er

bush

el

Season-average Price Cost per Bushel


Principal Crop Area

Source: USDA-NASS

315

317

319

321

323

325

327

329

331

333

335

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

Mill

ion

acr

es


States with Room to Grow

Number is the difference in planted acres between 2008 and 2011


Iowa Crop Margins

-50

0

50

100

150

200

250

300

350

400

$ p

er

acr

e

Corn Soy


Thoughts for 2012 and BeyondGeneral economic conditions

Continued worldwide economic recovery is a major key for crop pricesUS job recovery, European financial concerns

Supply/demand concernsSmaller than anticipated U.S. crops, worries about dry conditionsBiofuel growth and energy demandCorn has the upper hand in the acreage competitionWill supply be able to keep pace with demand?

2011/12: USDA: Corn $6.40; Soy $11.70Futures (as of 12/9/11): Corn $5.73; Soy $11.06

2012/13:Futures (as of 12/9/11): Corn $5.36; Soy $10.99


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/

Crop and Feed Outlook for 2012

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