Markets, Policy, and Outlook

Extension and Outreach/Department of Economics

Markets, Policy, and Outlook

Iowa Corn GrowersCoralville, IowaSept. 7, 2012

Chad HartAssociate Professor/Grain Markets Specialist

[email protected]


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

Area Planted (mil. acres) 86.0 86.4 88.2 91.9 96.4

Yield (bu./acre) 153.9 164.7 152.8 147.2 123.4

Production (mil. bu.) 12,092 13,092 12,447 12,358 10,779

Beg. Stocks (mil. bu.) 1,624 1,673 1,708 1,128 1,021

Imports (mil. bu.) 14 8 28 25 75

Total Supply (mil. bu.) 13,729 14,774 14,182 13,511 11,875

Feed & Residual (mil. bu.) 5,182 5,125 4,793 4,550 4,075

Ethanol (mil. bu.) 3,709 4,591 5,021 5,000 4,500

Food, Seed, & Other (mil. bu.) 1,316 1,370 1,407 1,390 1,350

Exports (mil. bu.) 1,849 1,980 1,835 1,550 1,300

Total Use (mil. bu.) 12,056 13,066 13,055 12,490 11,225

Ending Stocks (mil. bu.) 1,673 1,708 1,128 1,021 650

Season-Average Price ($/bu.) 4.06 3.55 5.18 6.25 8.20

Source: USDA-WAOB


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


Yield (bu./acre) 39.7 44.0 43.5 41.5 36.1


Beg. Stocks (mil. bu.) 205 138 151 215 145

Imports (mil. bu.) 13 15 14 15 20


Crush (mil. bu.) 1,662 1,752 1,648 1,690 1,515

Seed & Residual (mil. bu.) 106 110 130 101 116

Exports (mil. bu.) 1,279 1,499 1,501 1,350 1,110

Total Use (mil. bu.) 3,047 3,361 3,280 3,141 2,742

Ending Stocks (mil. bu.) 138 151 215 145 115


Source: USDA-WAOB


Prices

4.50

5.00

5.50

6.00

6.50

7.00

7.50

8.00

5/2

1/2

01

2

6/4

/20

12

6/1

8/2

01

2

7/2

/20

12

7/1

6/2

01

2

7/3

0/2

01

2

8/1

3/2

01

2

8/2

7/2

01

2

$ p

er

bu

she

l

11.50

12.25

13.00

13.75

14.50

15.25

16.00

16.75

$ p

er

bu

she

l

Corn Soybeans


Crop Conditions

Source: USDA-NASS

20253035404550556065707580

% G

oo

d to

Exc

elle

nt

Corn Soybeans


Corn Harvested Acre Adjustments


Projected Corn Yields


Objective Corn Yield Data

Source: USDA-NASS


World Corn Production

Source: USDA-WAOB


World Soybean Production

Source: USDA-WAOB


Hog Crush Margin

Source: 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


Cattle Crush Margin

Source: 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


U.S. Meat Production & Prices

Source: USDA-WAOB


Corn Exports

Source: USDA-FAS

0

500

1,000

1,500

2,000

2,500

9/1 10/1 11/1 12/1 1/1 2/1 3/1 4/1 5/1 6/1 7/1 8/1

Mill

ion

bu

sh

els

Week

2009 2010 2011


Soy Exports

Source: USDA-FAS

0

400

800

1,200

1,600

9/1 10/1 11/1 12/1 1/1 2/1 3/1 4/1 5/1 6/1 7/1 8/1

Mill

ion

bu

sh

els

Week

2009 2010 2011


Corn Advance Export Sales

Source: USDA-FAS

Japan19%

Mexico28%

South Korea3%

Taiwan1%Egypt

0%

China10%

Unknown33%

Other6%


Soy Advance Export Sales

Source: USDA-FAS

China64%

EU1%

Japan1%

Mexico3%

Taiwan1%

Indonesia1%

Unknown26%

Other3%


Corn Grind for Ethanol

84

86

88

90

92

94

96

98

100

102

104

Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12

Mill

ion

bush

els


Ethanol Stocks

Source: DOE-EIA

650

700

750

800

850

900

950

1000

Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12

Mill

ion

gallo

ns


U.S. Blended Gasoline Consumption

Source: DOE-EIA, via USDA-ERS

7.6 bil. gal.

7.4 bil. gal.


Projected 2012 Season-Average Corn Price

4.50

5.00

5.50

6.00

6.50

7.00

7.50

8.00

8.50

12

/14

/20

10

2/1

4/2

01

1

4/1

4/2

01

1

6/1

4/2

01

1

8/1

4/2

01

1

10

/14

/20

11

12

/14

/20

11

2/1

4/2

01

2

4/1

4/2

01

2

6/1

4/2

01

2

8/1

4/2

01

2

$ p

er

bu

she

l

Futures USDA


Projected 2012 Season-Average Soy Price

10.5011.0011.5012.0012.5013.0013.5014.0014.5015.0015.5016.0016.50

12

/14

/20

10

2/1

4/2

01

1

4/1

4/2

01

1

6/1

4/2

01

1

8/1

4/2

01

1

10

/14

/20

11

12

/14

/20

11

2/1

4/2

01

2

4/1

4/2

01

2

6/1

4/2

01

2

8/1

4/2

01

2

$ p

er

bu

she

l

Futures USDA


Prices

4.50

5.00

5.50

6.00

6.50

7.00

7.50

8.00

5/2

1/2

01

2

6/4

/20

12

6/1

8/2

01

2

7/2

/20

12

7/1

6/2

01

2

7/3

0/2

01

2

8/1

3/2

01

2

8/2

7/2

01

2

$ p

er

bu

she

l

11.50

12.25

13.00

13.75

14.50

15.25

16.00

16.75

$ p

er

bu

she

l

Corn Soybeans


5.80

6.00

6.20

6.40

6.60

6.80

7.00

7.20

7.40

7.60

7.80

8.00

8.20

Sep

-12

Dec

-12

Mar

-13

Jun-

13

Sep

-13

Dec

-13

Mar

-14

Jun-

14

Sep

-14

Dec

-14

Mar

-15

Jun-

15

Sep

-15

Dec

-15

$ pe

r bu

shel

Current Corn Futures

Source: CME Group, 9/6/2012

7.44

6.24

5.64


12.50

13.00

13.50

14.00

14.50

15.00

15.50

16.00

16.50

17.00

17.50

Sep

-12

Dec

-12

Mar

-13

Jun-

13

Sep

-13

Dec

-13

Mar

-14

Jun-

14

Sep

-14

Dec

-14

Mar

-15

Jun-

15

Sep

-15

$ pe

r bu

shel

Current Soybean Futures

Source: CME Group, 9/6/2012

16.23

13.1712.44


Early Prices for 2013 Crops

4.50

5.00

5.50

6.00

6.50

5/1

/20

12

5/1

5/2

01

2

5/2

9/2

01

2

6/1

2/2

01

2

6/2

6/2

01

2

7/1

0/2

01

2

7/2

4/2

01

2

8/7

/20

12

8/2

1/2

01

2

9/4

/20

12

$ p

er

bu

she

l

10.50

11.20

11.90

12.60

13.30

$ p

er

bu

she

l

Corn Soybeans


Total Acreage Shift

Source: USDA-NASS


Acreage Shift by State

Source: USDA-NASS

Top: Planted in 2012Bottom: Change from 2011Units: 1,000 acres


Acreage Shift by Crop

Source: USDA-NASS

Acreage change from 2011Units: 1,000 acres


Thoughts for 2013 and BeyondSupply/demand concerns

Soil moistureSouth America gets 1st chance to respond to drought pricingWill supply be able to keep pace with demand?

Drought is pulling supply downBut high prices are diminishing demand

General economic conditionsContinued worldwide economic recovery is a key for crop pricesUS job recovery, European financial concerns, China?

2012/13: USDA: Corn $8.20; Soy $16.00Futures (as of 9/6/12): Corn $7.44; Soy $16.23

2013/14: Futures Corn $6.24; Soy $13.172014/15: Futures Corn $5.64; Soy $12.44


Total Cost Expected Yield bu/A Cost Per Bushel

Corn After Corn

Corn After Beans

Beans After Corn

2013 Crop Cost Estimates

$832

$778

$567

165

180

50

$5.04

$4.32

$11.34

Source: ISU Extension Economics, July 2012


Corn Projections

Source: FAPRI-MO

2013 2014 2015 2016 2017


Yield (bu./acre) 163.2 165.7 167.9 170.2 172.4


Beg. Stocks (mil. bu.) 645 1,510 1,675 1,766 1,789

Imports (mil. bu.) 25 25 25 25 25


Feed & Residual (mil. bu.) 4,852 4,855 4,964 5,022 5,082

Ethanol (mil. bu.) 5,386 5,649 5,665 5,643 5,657

Food, Seed, & Other (mil. bu.) 1,435 1,460 1,473 1,472 1,490

Exports (mil. bu.) 1,890 2,055 2,186 2,322 2,445

Total Use (mil. bu.) 13,546 14,020 14,288 14,470 14,675

Ending Stocks (mil. bu.) 1,510 1,675 1,766 1,789 1,815



Soybean Projections

Source: FAPRI-MO

2013 2014 2015 2016 2017


Yield (bu./acre) 43.8 44.5 44.9 45.5 46.0


Beg. Stocks (mil. bu.) 110 182 186 180 177

Imports (mil. bu.) 15 15 15 15 15


Crush (mil. bu.) 1,683 1,719 1,740 1,762 1,780

Seed & Residual (mil. bu.) 128 131 133 136 138

Exports (mil. bu.) 1,460 1,494 1,533 1,578 1,609

Total Use (mil. bu.) 3,270 3,344 3,406 3,476 3,526

Ending Stocks (mil. bu.) 182 186 180 177 176



Land Allocation

Source: FAPRI-MO


U.S. Per-Capita Meat Consumption

Source: FAPRI-MO


U.S. Pork Projections

Source: FAPRI-MO


U.S. Beef Projections

Source: FAPRI-MO


Food Price Projections

Source: FAPRI-MO


Senate Proposal, 2013-2017

Source: FAPRI-MO

$ per acre


House Proposal, 2013-2017

Source: FAPRI-MO

$ per acre


Planted Acres, 2013-2017

Source: FAPRI-MO

Million acres


Prices, 2013-2017

Source: FAPRI-MO


Gov. Expenditures, 2013-2017

Source: FAPRI-MO

$ million


Change in Expenditures, 2013-2017

Source: FAPRI-MO


Payments as a Share of Receipts

Source: FAPRI-MO

Extension and Outreach/Department of EconomicsSource: Babcock, ISU


Iowa Corn Yields

Source: USDA-NASS

0

20

40

60

80

100

120

140

160

180

200

Bu

she

ls p

er

acr

e


Land Value & Cash Rental Rate Trends

Source: ISU Extension Economics


Positive Factors for Land Values


Negative Factors for Land Values


Grain Transportation

Source: USDA-AMS


Lock Breakdowns

Source: Steven Stockton


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/

Markets, Policy, and Outlook

Documents

Transcript of Markets, Policy, and Outlook