Extension and Outreach/Department of Economics

Crop Outlook for 2012

Ackley State Bank Ag SeminarIowa Falls, IowaDec. 14, 2011

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

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

Extension and Outreach/Department of Economics

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

Extension and Outreach/Department of Economics

Projected Corn Yields

Source: USDA-NASS

Extension and Outreach/Department of Economics

Projected Soybean Yields

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

Corn vs. Wheat

Source: CME Group, 12/13/2011

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

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 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%

Extension and Outreach/Department of Economics

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%

Extension and Outreach/Department of Economics

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

Extension and Outreach/Department of Economics

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

Extension and Outreach/Department of Economics

Corn Grind for Ethanol

Source: DOE-EIA

86

88

90

92

94

96

98

100

102

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

Mill

ion

bush

els

Extension and Outreach/Department of Economics

Ethanol Margins

Source: CARD

Extension and Outreach/Department of Economics

-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

7/3

/20

07

1/3

/20

08

7/3

/20

08

1/3

/20

09

7/3

/20

09

1/3

/20

10

7/3

/20

10

1/3

/20

11

7/3

/20

11

1/3

/20

12

7/3

/20

12

1/3

/20

13

7/3

/20

13

1/3

/20

14

7/3

/20

14

$ p

er

ga

llon

Ethanol Blending Advantage

Extension and Outreach/Department of Economics

Biodiesel Production

Source: DOE-EIA

0

10

20

30

40

50

60

70

80

90

Mill

ion

ga

llon

s

Extension and Outreach/Department of Economics

Biodiesel Margins

Source: CARD

Extension and Outreach/Department of Economics

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

Extension and Outreach/Department of Economics

Projected 2011 Season-Average Soy Price

8.509.009.50

10.0010.5011.0011.5012.0012.5013.0013.5014.0014.50

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

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

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

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

$ p

er

bu

she

l

Futures USDA

Extension and Outreach/Department of Economics

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

Extension and Outreach/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

12.00

13.00

14.00

$ p

er

bush

el

Season-average Price Cost per Bushel

Extension and Outreach/Department of Economics

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

Extension and Outreach/Department of Economics

States with Room to Grow

Number is the difference in planted acres between 2008 and 2011

Extension and Outreach/Department of Economics

Iowa Crop Margins

-50

0

50

100

150

200

250

300

350

400

$ p

er

acr

e

Corn Soy

Extension and Outreach/Department of Economics

Extension and Outreach/Department of Economics

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 12/13/11): Corn $5.74; Soy $11.14

2012/13:Futures (as of 12/13/11): Corn $5.39; Soy $11.05

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/