University Extension/Department of Economics

Crop Outlook and Farm Programs

Farm Management In-ServiceAmes, Iowa

May 11, 2010

Chad HartAssistant Professor/Grain Markets Specialist

chart@iastate.edu515-294-9911

University Extension/Department of Economics

U.S. Corn Supply and Use

Source: USDA

2007 2008 2009 2010

Area Planted (mil. acres) 93.5 86.0 86.5 88.8

Yield (bu./acre) 150.7 153.9 164.7 163.5

Production (mil. bu.) 13,038 12,092 13,110 13,370

Beg. Stocks (mil. bu.) 1,304 1,624 1,673 1,738

Imports (mil. bu.) 20 14 10 10

Total Supply (mil. bu.) 14,362 13,729 14,793 15,118

Feed & Residual (mil. bu.) 5,913 5,205 5,375 5,350

Ethanol (mil. bu.) 3,049 3,677 4,400 4,600

Food, Seed, & Other (mil. bu.) 1,338 1,316 1,330 1,350

Exports (mil. bu.) 2,437 1,858 1,950 2,000

Total Use (mil. bu.) 12,737 12,056 13,055 13,300

Ending Stocks (mil. bu.) 1,624 1,673 1,738 1,818

Season-Average Price ($/bu.) 4.20 4.06 3.60 3.50

University Extension/Department of Economics

U.S. Soybean Supply and Use2007 2008 2009 2010

Area Planted (mil. acres) 64.7 75.7 77.5 78.1

Yield (bu./acre) 41.7 39.7 44.0 42.9

Production (mil. bu.) 2,677 2,967 3,359 3,310

Beg. Stocks (mil. bu.) 574 205 138 190

Imports (mil. bu.) 10 13 15 10

Total Supply (mil. bu.) 3,261 3,185 3,512 3,510

Crush (mil. bu.) 1,803 1,662 1,735 1,640

Seed & Residual (mil. bu.) 93 102 133 154

Exports (mil. bu.) 1,159 1,283 1,455 1,350

Total Use (mil. bu.) 3,056 3,047 3,323 3,144

Ending Stocks (mil. bu.) 205 138 190 365

Season-Average Price ($/bu.) 10.10 9.97 9.50 8.75

Source: USDA

University Extension/Department of Economics

Corn Planting Progress

0

20

40

60

80

100

4/1 4/8 4/15 4/22 4/29 5/6 5/13 5/20 5/27 6/3

% P

lant

ed

Maximum since 1980 Minimum since 1980

2010 2009

5-yr Average (2005-2009)

Source: USDA

University Extension/Department of Economics

Soy Planting Progress

Source: USDA

0

20

40

60

80

100

4/22 4/29 5/6 5/13 5/20 5/27 6/3 6/10 6/17 6/24 7/1

% P

lant

ed

Maximum since 1980 Minimum since 1980

2010 2009

5-yr Average (2005-2009)

University Extension/Department of Economics

World Corn Production

Source: USDA

University Extension/Department of Economics

Corn – Argentina & Brazil

Source: USDA

35

38

41

44

47

50

Mill

ion

acr

es

1800

2100

2400

2700

3000

3300

Mill

ion

bu

she

ls

Area Harvested Production

University Extension/Department of Economics

World Soybean Production

Source: USDA

University Extension/Department of Economics

Soybeans – Argentina & Brazil

Source: USDA

65

75

85

95

105M

illio

n a

cre

s

2700

3150

3600

4050

4500

Mill

ion

bu

she

ls

Area Harvested Production

University Extension/Department of Economics

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 month out lean hog futuresCorn: 10 bushels per pig Soybean meal: 150 pounds per pig

University Extension/Department of Economics

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

University Extension/Department of Economics

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Canada Mexico Brazil EU China South KoreaJapan Australia

Exchange Rates (Jan. 2003 = 1)

Source: USDA, ERS

University Extension/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

University Extension/Department of Economics

2009 U.S. Corn Exports

Source: USDA, FAS

Other24%

Taiwan7%

South Korea16%

Egypt5%

Mexico18%

Japan30%

University Extension/Department of Economics

Soybean Export Sales

Source: USDA, FAS

0

300

600

900

1,200

1,500

Week

Mill

ion

bu

she

ls

2007 2008 2009

University Extension/Department of Economics

2009 U.S. Soybean Exports

Source: USDA, FAS

Mexico6%

Japan5%

Other21%

EU8%

China60%

University Extension/Department of Economics

0

2

4

6

8

10

12

14

16

2010 2011 2012

Bill

ion

ga

llon

s

Conventional Biofuels Cellulosic Biofuels

Biodiesel Additional Advanced Biofuels

Renewable Fuels Standard (RFS)

CropYear

Billion Bushels

2009 4.11

2010 4.43

2011 4.64

2012 4.86

University Extension/Department of Economics

Ethanol Margins

Source: ISU, CARD

University Extension/Department of Economics

Ethanol Pricing

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

1/3

/20

07

4/3

/20

07

7/3

/20

07

10

/3/2

00

7

1/3

/20

08

4/3

/20

08

7/3

/20

08

10

/3/2

00

8

1/3

/20

09

4/3

/20

09

7/3

/20

09

10

/3/2

00

9

1/3

/20

10

4/3

/20

10

$ p

er

ga

llon

Ethanol Gasoline

University Extension/Department of Economics

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

00

7

1/3

/20

08

4/3

/20

08

7/3

/20

08

10

/3/2

00

8

1/3

/20

09

4/3

/20

09

7/3

/20

09

10

/3/2

00

9

1/3

/20

10

4/3

/20

10

$ p

er

ga

llon

University Extension/Department of Economics

0

20

40

60

80

100

120

140

Ja

n-8

6

Ja

n-8

8

Ja

n-9

0

Ja

n-9

2

Ja

n-9

4

Ja

n-9

6

Ja

n-9

8

Ja

n-0

0

Ja

n-0

2

Ja

n-0

4

Ja

n-0

6

Ja

n-0

8

Ja

n-1

0

Ja

n-1

2

Ja

n-1

4

Ja

n-1

6

Ja

n-1

8

$ p

er

ba

rre

lCrude Oil Prices

Sources: EIA, NYMEX

University Extension/Department of Economics

2007/082008/09

2009/102010/11

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

University Extension/Department of Economics

2007/082008/09

2010/11

2009/10

4

5

6

7

8

9

10

11

0% 5% 10% 15% 20%

Stocks-to-use Ratio

Pric

e ($

per

bus

hel)

Soy

University Extension/Department of Economics

Projected 2009 Season-Average Corn Price

2.50

3.00

3.50

4.00

4.50

5.00

5/1

/20

09

6/1

/20

09

7/1

/20

09

8/1

/20

09

9/1

/20

09

10

/1/2

00

9

11

/1/2

00

9

12

/1/2

00

9

1/1

/20

10

2/1

/20

10

3/1

/20

10

4/1

/20

10

5/1

/20

10

$ p

er

bu

she

l

Futures USDA

University Extension/Department of Economics

Projected 2009 Season-Average Soy Price

8.00

8.50

9.00

9.50

10.00

10.50

5/1

/20

09

6/1

/20

09

7/1

/20

09

8/1

/20

09

9/1

/20

09

10

/1/2

00

9

11

/1/2

00

9

12

/1/2

00

9

1/1

/20

10

2/1

/20

10

3/1

/20

10

4/1

/20

10

5/1

/20

10

$ p

er

bu

she

l

Futures USDA

University Extension/Department of Economics

Projected 2010 Season-Average Corn Price

3.00

3.50

4.00

4.50

6/8

/20

09

7/8

/20

09

8/8

/20

09

9/8

/20

09

10

/8/2

00

9

11

/8/2

00

9

12

/8/2

00

9

1/8

/20

10

2/8

/20

10

3/8

/20

10

4/8

/20

10

5/8

/20

10

$ p

er

bu

she

l

Futures USDA

University Extension/Department of Economics

Projected 2010 Season-Average Soy Price

8.00

8.50

9.00

9.50

10.00

10.50

6/8

/20

09

7/8

/20

09

8/8

/20

09

9/8

/20

09

10

/8/2

00

9

11

/8/2

00

9

12

/8/2

00

9

1/8

/20

10

2/8

/20

10

3/8

/20

10

4/8

/20

10

5/8

/20

10

$ p

er

bu

she

l

Futures USDA

University Extension/Department of Economics

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

$ pe

r B

ushe

l

Season-average Price Cost per Bushel

Iowa Corn Prices vs. Costs

Right now, about a nickel under breakeven with USDAabout 15 cents over breakeven with futures

University Extension/Department of Economics

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

Iowa Soybean Prices vs. Costs

Right now, 7 cents over breakeven with USDA32 cents over breakeven with futures

University Extension/Department of Economics

Using Latest USDA Corn Projections 2009 ACRE revenue guarantee = $635.61/acre

$4.13/bu. * 171.0 bu./acre * 90%

2009 Proj. ACRE actual revenue = $655.20/acre$3.60/bu. * 182.0 bu./acre

No payments under this scenarioWould need price to fall to $3.49 to trigger paymentsCurrent futures (5/10/10) point to a season-average

price of $3.53

University Extension/Department of Economics

Using Latest USDA Soy Projections 2009 ACRE revenue guarantee = $456.32/acre

$10.04/bu. * 50.5 bu./acre * 90%

2009 Proj. ACRE actual revenue = $479.75/acre$9.50/bu. * 50.5 bu./acre

No payments under this scenarioWould need price to fall to $9.03 to trigger paymentsCurrent futures (5/10/10) point to a season-average

price of $9.46

University Extension/Department of Economics

ACRE Set-up for 2010 Iowa CornYear Yield per Planted Acre

(bu./acre)

2005 173.0

2006 166.0

2007 171.0

2008 169.0

2009 182.0

Olympic Average 171.0

Year Season-average Price ($/bu.)

2008 4.06

2009 3.60

Average 3.83

The 2009 yields and prices are USDA’s May 2010 estimates.

Projected 2010 ACRE Revenue Guarantee = $589.44 (’09 = $635.61)

University Extension/Department of Economics

ACRE Payment Rate Matrix ($/acre)$2.70 $2.90 $3.10 $3.30 $3.50 $3.70 $3.90 $4.10 $4.30

155 147.36 139.94 108.94 77.94 46.94 15.94 0.00 0.00 0.00

159 147.36 128.34 96.54 64.74 32.94 1.14 0.00 0.00 0.00

163 147.36 116.74 84.14 51.54 18.94 0.00 0.00 0.00 0.00

167 138.54 105.14 71.74 38.34 4.94 0.00 0.00 0.00 0.00

171 127.74 93.54 59.34 25.14 0.00 0.00 0.00 0.00 0.00

175 116.94 81.94 46.94 11.94 0.00 0.00 0.00 0.00 0.00

179 106.14 70.34 34.54 0.00 0.00 0.00 0.00 0.00 0.00

183 95.34 58.74 22.14 0.00 0.00 0.00 0.00 0.00 0.00

187 84.54 47.14 9.74 0.00 0.00 0.00 0.00 0.00 0.00

PriceYield

For Iowa corn in 2010, based on May 2010 price and yield projections

University Extension/Department of Economics

ACRE Set-up for 2010 Iowa SoybeansYear Yield per Planted Acre

(bu./acre)

2005 52.0

2006 50.5

2007 52.0

2008 46.5

2009 50.5

Olympic Average 51.0

Year Season-average Price ($/bu.)

2008 9.97

2009 9.50

Average 9.74

The 2009 yields and prices are USDA’s May 2010 estimates.

Projected 2010 ACRE Revenue Guarantee = $447.07 (’09 = $456.32)

University Extension/Department of Economics

ACRE Payment Rate Matrix ($/acre)$7.95 $8.15 $8.35 $8.55 $8.75 $8.95 $9.15 $9.35 $9.55

47.0 73.42 64.02 54.62 45.22 35.82 26.42 17.02 7.62 0.00

48.0 65.47 55.87 46.27 36.67 27.07 17.47 7.87 0.00 0.00

49.0 57.52 47.72 37.92 28.12 18.32 8.52 0.00 0.00 0.00

50.0 49.57 39.57 29.57 19.57 9.57 0.00 0.00 0.00 0.00

51.0 41.62 31.42 21.22 11.02 0.82 0.00 0.00 0.00 0.00

52.0 33.67 23.27 12.87 2.47 0.00 0.00 0.00 0.00 0.00

53.0 25.72 15.12 4.52 0.00 0.00 0.00 0.00 0.00 0.00

54.0 17.77 6.97 0.00 0.00 0.00 0.00 0.00 0.00 0.00

55.0 9.82 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

PriceYield

For Iowa soybeans in 2010, based on May 2010 price and yield projections

University Extension/Department of Economics

SURE Prices2008 2009 2010

Corn Soy Corn Soy Corn Soy

($ per bushel)

Revenue 5.40 13.36 4.04 8.80 3.99 9.23

APH 4.75 11.50 4.00 9.90 3.90 9.15

GRP 3.75 8.70 4.00 9.90 3.55 8.55

Season-Avg. Price 4.06 9.97 3.60 9.50 3.50 8.75

University Extension/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/