Department of Economics

Crop Marketing Outlook for 2010

Welton, IowaJanuary 25, 2010

Chad HartAssistant Professor/Grain Markets Specialist

chart@iastate.edu515-294-9911

Department of Economics

U.S. Corn Supply and Use

Source: USDA

2007 2008 2009

Area Planted (mil. acres) 93.5 86.0 86.5

Yield (bu./acre) 150.7 153.9 165.2

Production (mil. bu.) 13,038 12,092 13,151

Beg. Stocks (mil. bu.) 1,304 1,624 1,673

Imports (mil. bu.) 20 14 10

Total Supply (mil. bu.) 14,362 13,729 14,834

Feed & Residual (mil. bu.) 5,913 5,246 5,550

Ethanol (mil. bu.) 3,049 3,677 4,200

Food, Seed, & Other (mil. bu.) 1,338 1,276 1,270

Exports (mil. bu.) 2,437 1,858 2,050

Total Use (mil. bu.) 12,737 12,056 13,070

Ending Stocks (mil. bu.) 1,624 1,673 1,764

Season-Average Price ($/bu.) 4.20 4.06 3.70

Department of Economics

U.S. Soybean Supply and Use

Source: USDA

2007 2008 2009

Area Planted (mil. acres) 64.7 75.7 77.5

Yield (bu./acre) 41.7 39.7 44.0

Production (mil. bu.) 2,677 2,967 3,361

Beg. Stocks (mil. bu.) 574 205 138

Imports (mil. bu.) 10 13 8

Total Supply (mil. bu.) 3,261 3,185 3,507

Crush (mil. bu.) 1,803 1,662 1,710

Seed & Residual (mil. bu.) 93 101 177

Exports (mil. bu.) 1,159 1,283 1,375

Total Use (mil. bu.) 3,056 3,047 3,262

Ending Stocks (mil. bu.) 205 138 245

Season-Average Price ($/bu.) 10.10 9.97 9.65

Department of Economics

Storage Issues

Source: Hurburgh and Elmore,ICM News, 10/15/09

Department of Economics

World Corn Production

Source: USDA

Department of Economics

World Soybean Production

Source: USDA

Department of Economics

Soybeans – Argentina & Brazil

Source: USDA

65

75

85

95

105M

illio

n a

cres

2700

3150

3600

4050

4500

Mill

ion b

ush

els

Area Harvested Production

Department of Economics

Corn Export Sales

Source: USDA, FAS

0

500

1,000

1,500

2,000

2,500

Week

Mill

ion

bu

she

ls

2007 2008 2009

Department of Economics

Soybean Export Sales

Source: USDA, FAS

0

150

300

450

600

750

900

1,050

1,200

1,350

Week

Mill

ion

bu

she

ls

2007 2008 2009

Department of Economics

0

20

40

60

80

100

120

140

Jan-8

6

Jan-8

8

Jan-9

0

Jan-9

2

Jan-9

4

Jan-9

6

Jan-9

8

Jan-0

0

Jan-0

2

Jan-0

4

Jan-0

6

Jan-0

8

Jan-1

0

Jan-1

2

Jan-1

4

Jan-1

6

Jan-1

8

$ p

er

barr

el

Crude Oil Prices

Sources: EIA, NYMEX

Department of Economics

Renewable Fuels Standard (RFS)

0

2

4

6

8

10

12

14

16

2009 2010 2011

Bill

ion g

allo

ns

Additional Advanced Biofuels Biodiesel

Cellulosic Biofuels Conventional Biofuels

CropYear

Billion Bushels

2008 3.57

2009 4.11

2010 4.43

2011 4.64

Department of Economics

Ethanol Margins

Source: ISU, CARD

Department of Economics

Outside Influences (Jan. 2007 = 1)

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

2.31/3

/2007

3/3

/2007

5/3

/2007

7/3

/2007

9/3

/2007

11/3

/2007

1/3

/2008

3/3

/2008

5/3

/2008

7/3

/2008

9/3

/2008

11/3

/2008

1/3

/2009

3/3

/2009

5/3

/2009

7/3

/2009

9/3

/2009

11/3

/2009

1/3

/2010

Corn Soybeans Ethanol Gasoline

Department of Economics

2007/082008/09May

June

July

AugSept Oct

JanNov Dec

1.50

2.00

2.50

3.00

3.50

4.00

4.50

0% 5% 10% 15% 20% 25% 30%

Stocks-to-use ratio

Pric

e ($

per

bus

hel)

Corn

Department of Economics

Corn Futures

Source: CBOT, 1/22/10

3.60

3.65

3.70

3.75

3.80

3.85

3.90

3.95

4.00

Mar-

10

Apr-

10

May-

10

Jun-1

0

Jul-10

Aug

-10

Sep

-10

Oct

-10

No

v-10

De

c-10

$ p

er

bu

sh

el

0.11

0.21

0.27

Department of Economics

Soybean Futures

Source: CBOT, 1/22/10

9.30

9.40

9.50

9.60

9.70

Mar-

10

Apr-

10

May-

10

Jun-1

0

Jul-10

Aug

-10

Sep

-10

Oct

-10

No

v-10

$ p

er

bu

sh

el 0.08

0.13

0.07

-0.07

Department of Economics

Iowa Corn Prices vs. Costs

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

$ pe

r B

ushe

l

Season-average Price Cost per Bushel

Department of Economics

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

$ pe

r B

ushe

l

Season-average Price Cost per Bushel

Department of Economics

Thoughts for 2009/10 and BeyondGeneral economic conditions

Recession: Are we done yet?Projected economic recovery is a major key for crop prices for the 2009 and 2010 marketing yearsWeakness in the dollar helping exports, but dollar may fight back

Supply/demand concernsLivestock numbers continue to declinePossible record South American soybean crop

USDA is indicating 2009 season-average prices in the neighborhood of $3.70 for corn and $9.65 for soybeans

Futures Jan. 22: Corn $3.51, Soy $9.332010/11 based on futures Jan. 22: Corn $3.81, Soy $9.01

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/