Crop Market Outlook

Department of Economics

Crop Market Outlook

Iowa Bankers Association Ag ConferenceAmes, Iowa

Mar. 22, 2010

Chad HartAssistant Professor/Grain Markets Specialist

[email protected]


U.S. Corn Supply and Use

Source: USDA

2007 2008 2009 2010

Area Planted (mil. acres) 93.5 86.0 86.5 89.0

Yield (bu./acre) 150.7 153.9 164.9 160.9

Production (mil. bu.) 13,038 12,092 13,131 13,160

Beg. Stocks (mil. bu.) 1,304 1,624 1,673 1,719

Imports (mil. bu.) 20 14 10 15

Total Supply (mil. bu.) 14,362 13,729 14,814 14,894

Feed & Residual (mil. bu.) 5,913 5,246 5,550 5,350

Ethanol (mil. bu.) 3,049 3,677 4,300 4,500

Food, Seed, & Other (mil. bu.) 1,338 1,276 1,265 1,290

Exports (mil. bu.) 2,437 1,858 1,900 2,100

Total Use (mil. bu.) 12,737 12,056 13,015 13,240

Ending Stocks (mil. bu.) 1,624 1,673 1,799 1,654

Season-Average Price ($/bu.) 4.20 4.06 3.60 3.60


U.S. Soybean Supply and Use

Source: USDA

2007 2008 2009 2010

Area Planted (mil. acres) 64.7 75.7 77.5 77.0

Yield (bu./acre) 41.7 39.7 44.0 42.9

Production (mil. bu.) 2,677 2,967 3,359 3,260

Beg. Stocks (mil. bu.) 574 205 138 210

Imports (mil. bu.) 10 13 15 8

Total Supply (mil. bu.) 3,261 3,185 3,512 3,478

Crush (mil. bu.) 1,803 1,662 1,730 1,655

Seed & Residual (mil. bu.) 93 101 172 168

Exports (mil. bu.) 1,159 1,283 1,420 1,325

Total Use (mil. bu.) 3,056 3,047 3,322 3,147

Ending Stocks (mil. bu.) 205 138 190 330

Season-Average Price ($/bu.) 10.10 9.97 9.45 8.80


Storage Issues

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


World Corn Production

Source: USDA


Corn – Argentina & Brazil

Source: USDA

35

38

41

44

47

50

Mill

ion

acr

es

1800

2100

2400

2700

3000

3300

Mill

ion

bu

shels

Area Harvested Production


World Soybean Production

Source: USDA


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


Corn Export Sales

Source: USDA, FAS

0

500

1,000

1,500

2,000

2,500

Week

Mill

ion

bush

els

2007 2008 2009


2009 U.S. Corn Exports

Source: USDA, FAS

Other24%

Taiwan7%

South Korea16%

Egypt4%

Mexico17%

Japan32%


Soybean Export Sales

Source: USDA, FAS

0

300

600

900

1,200

1,500

Week

Mill

ion

bush

els

2007 2008 2009


2009 U.S. Soybean Exports

Source: USDA, FAS

Mexico5%

Japan4%

Other19%

EU8%

China64%


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


Ethanol Margins

Source: ISU, CARD


Ethanol Blending Advantage

-0.04

-0.02

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

1/3

/20

07

4/3

/20

07

7/3

/20

07

10

/3/2

007

1/3

/20

08

4/3

/20

08

7/3

/20

08

10

/3/2

008

1/3

/20

09

4/3

/20

09

7/3

/20

09

10

/3/2

009

1/3

/20

10

Ce

nts

pe

r ga

llon


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


1.5

2

2.5

3

3.5

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

Stocks-to-use ratio

Pric

e ($

per

bus

hel)

Corn1990 - 2006


2007/082008/09May

June

July

AugSept Oct

MarNov Dec

JanFeb

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


3.70

3.80

3.90

4.00

4.10

4.20

4.30

May

-10

Jun-

10

Jul-1

0

Aug

-10

Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb

-11

Mar

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Aug

-11

Sep

-11

$ p

er b

ush

el

0.11

0.20

0.11

0.18

0.230.21

Corn Futures

Source: CBOT, 3/16/10


9.40

9.50

9.60

9.70

May

-10

Jun-

10

Jul-1

0

Aug

-10

Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb

-11

Mar

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Aug

-11

Sep

-11

$ p

er b

ush

el

0.08

0.04

-0.100.08

0.16

0.20

0.27

0.21

Soybean Futures

Source: CBOT, 3/16/10


Ratio: Nov. 2010 Soy/Dec. 2010 Corn

Source: CBOT

2

2.1

2.2

2.3

2.4

2.5

2.6

2.71

/2/2

00

9

2/2

/20

09

3/2

/20

09

4/2

/20

09

5/2

/20

09

6/2

/20

09

7/2

/20

09

8/2

/20

09

9/2

/20

09

10

/2/2

009

11

/2/2

009

12

/2/2

009

1/2

/20

10

2/2

/20

10

3/2

/20

10


Input Costs

Source: USDA, Agricultural Prices, Feb. 26, 2010


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


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$

per

Bus

hel

Season-average Price Cost per Bushel


Thoughts for 2009/10 and BeyondGeneral economic conditions

Continued economic recovery is a major key for crop pricesWeakness in the dollar helps exports, but dollar may fight backNearby crude oil prices floating in mid $70’s and lower $80’s

Supply/demand concernsSouth America: Record soybean crop and large corn cropWeather concerns for planting

2009/10: USDA: Corn $3.60, Soy $9.45Futures: Corn $3.55, Soy $9.44

2010/11: USDA: Corn $3.60, Soy $8.80Futures: Corn $3.87, Soy $9.09


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/

Documents

Crop Market Outlook