University Extension/Department of Economics Grain Marketing in 2011 Boone Crop Fair Boone, Iowa Feb. 18, 2011 Chad Hart Assistant Professor/Grain Markets

University Extension/Department of Economics

Grain Marketing in 2011

Boone Crop FairBoone, Iowa

Feb. 18, 2011

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 86.4 88.2

Yield (bu./acre) 150.7 153.9 164.7 152.8

Production (mil. bu.) 13,038 12,092 13,092 12,447

Beg. Stocks (mil. bu.) 1,304 1,624 1,673 1,708

Imports (mil. bu.) 20 14 8 20

Total Supply (mil. bu.) 14,362 13,729 14,774 14,175

Feed & Residual (mil. bu.) 5,913 5,182 5,140 5,200

Ethanol (mil. bu.) 3,049 3,709 4,568 4,950

Food, Seed, & Other (mil. bu.) 1,338 1,316 1,371 1,400

Exports (mil. bu.) 2,437 1,849 1,987 1,950

Total Use (mil. bu.) 12,737 12,056 13,066 13,500

Ending Stocks (mil. bu.) 1,624 1,673 1,708 675

Season-Average Price ($/bu.) 4.20 4.06 3.55 5.40


U.S. Soybean Supply and Use2007 2008 2009 2010

Area Planted (mil. acres) 64.7 75.7 77.5 77.4

Yield (bu./acre) 41.7 39.7 44.0 43.5

Production (mil. bu.) 2,677 2,967 3,359 3,329

Beg. Stocks (mil. bu.) 574 205 138 151

Imports (mil. bu.) 10 13 15 15

Total Supply (mil. bu.) 3,261 3,185 3,512 3,495

Crush (mil. bu.) 1,803 1,662 1,752 1,655

Seed & Residual (mil. bu.) 93 106 108 110

Exports (mil. bu.) 1,159 1,279 1,501 1,590

Total Use (mil. bu.) 3,056 3,047 3,361 3,355

Ending Stocks (mil. bu.) 205 138 151 140

Season-Average Price ($/bu.) 10.10 9.97 9.59 11.70

Source: USDA


World Corn Production

Source: USDA


World Soybean Production

Source: USDA


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


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


Corn Export Sales

Source: USDA, FAS

0

500

1,000

1,500

2,000

2,500

Week

Mill

ion

bush

els

2008 2009 2010


2010 U.S. Corn Exports

Source: USDA, FAS

Unknown9%

Other22%

China1%

Taiwan5%

SouthKorea

7%

Egypt7%

Mexico16%

Japan28%


Corn 2011 Export Sales

Source: USDA, FAS

0

100

200

300

400

500

600

700

12/3

0

1/13

1/27

2/10

2/24

3/10

3/24 4/7

4/21 5/5

5/19 6/2

6/16

6/30

7/14

7/28

8/11

8/25

Mill

ion

bush

els

2011 Crop 2010 Crop


Soybean Export Sales

Source: USDA, FAS

0

400

800

1,200

1,600

Week

Mill

ion

bush

els

2008 2009 2010


2010 U.S. Soybean Exports

Source: USDA, FAS

Unknown7%

Other10%

Indonesia2%

Mexico6%

Japan4%

Taiwan3%

EU6%

China62%


Soy 2011 Export Sales

Source: USDA, FAS

0

100

200

300

400

500

600

700

12/3

0

1/13

1/27

2/10

2/24

3/10

3/24 4/7

4/21 5/5

5/19 6/2

6/16

6/30

7/14

7/28

8/11

8/25

Mill

ion

bush

els

2011 Crop 2010 Crop


0

2

4

6

8

10

12

14

16

2010 2011 2012

Bill

ion

gallo

ns

Conventional Biofuels Cellulosic BiofuelsBiodiesel Additional Advanced Biofuels

Renewable Fuels Standard (RFS)

CropYear

Billion Bushels

2009 4.112010 4.432011 4.642012 4.86


Ethanol Margins

Source: ISU, CARD


Ethanol Margins

Source: ISU, CARD


-0.04

-0.02

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

1/3/

2007

4/3/

2007

7/3/

2007

10/3

/200

7

1/3/

2008

4/3/

2008

7/3/

2008

10/3

/200

8

1/3/

2009

4/3/

2009

7/3/

2009

10/3

/200

9

1/3/

2010

4/3/

2010

7/3/

2010

10/3

/201

0

1/3/

2011

$ pe

r gal

lon

Ethanol Blending Advantage


0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

1/3/

2007

4/3/

2007

7/3/

2007

10/3

/200

7

1/3/

2008

4/3/

2008

7/3/

2008

10/3

/200

8

1/3/

2009

4/3/

2009

7/3/

2009

10/3

/200

9

1/3/

2010

4/3/

2010

7/3/

2010

10/3

/201

0

1/3/

2011

$ pe

r gal

lon

Ethanol Gasoline

Fuel Prices


Projected 2010 Season-Average Corn Price

3.00

3.50

4.00

4.50

5.00

5.50

6.006/

8/20

09

8/8/

2009

10/8

/200

9

12/8

/200

9

2/8/

2010

4/8/

2010

6/8/

2010

8/8/

2010

10/8

/201

0

12/8

/201

0

2/8/

2011

$ pe

r bus

hel

Futures USDA


Projected 2010 Season-Average Soy Price

8.00

8.50

9.00

9.50

10.00

10.50

11.00

11.50

12.00

12.50

6/8/

2009

8/8/

2009

10/8

/200

9

12/8

/200

9

2/8/

2010

4/8/

2010

6/8/

2010

8/8/

2010

10/8

/201

0

12/8

/201

0

2/8/

2011

$ pe

r bus

hel

Futures USDA


Projected 2011 Season-Average Corn Price

3.503.754.004.254.504.755.005.255.505.756.006.25

$ pe

r bus

hel

Futures USDA


Projected 2011 Season-Average Soy Price

8.50

9.00

9.50

10.00

10.50

11.00

11.50

12.00

12.50

13.00

13.50

12/1

4/20

09

1/14

/201

0

2/14

/201

0

3/14

/201

0

4/14

/201

0

5/14

/201

0

6/14

/201

0

7/14

/201

0

8/14

/201

0

9/14

/201

0

10/1

4/20

10

11/1

4/20

10

12/1

4/20

10

1/14

/201

1

2/14

/201

1

$ pe

r bus

hel

Futures USDA


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

$ pe

r Bus

hel

Season-average Price Cost per Bushel


Iowa Soybean Prices vs. Costs

2.003.004.005.006.007.008.009.00

10.0011.0012.0013.0014.00

$ pe

r Bus

hel

Season-average Price Cost per Bushel


Principal Crop Area

Source: USDA-NASS

315

317

319

321

323

325

327

329

331

333

335M

illio

n ac

res


States with Room to GrowState Million acres Competing CropsNorth Dakota 2.249 Wheat, corn, soySouth Dakota 1.400 Wheat, corn, soyMissouri 0.930 Rice, cotton, soyArkansas 0.715 Rice, cotton, soyIllinois 0.535 Wheat, corn, soyTexas 0.466 Cotton, corn, soyGeorgia 0.395 Cotton, corn, soyMississippi 0.284 Cotton, rice, soyNorth Carolina 0.284 Cotton, corn, soyLouisiana 0.283 Rice, cotton, soy


New Crop Futures Price Movements

Wheat Corn Soybeans CottonMGE Sept. CME Dec. CME Nov. ICE Dec.

($/bu.) ($/bu.) ($/bu.) ($/lb.)June 1 5.81 4.04 9.22 0.75Feb. 17 10.03 6.15 13.74 1.33Change 73% 52% 49% 77%


Projected Crop Margins

140

160

180

200

220

240

260

280

300

320

$ pe

r acr

e

Corn Margin Per Acre Soy Margin Per Acre


Thoughts for 2011 and BeyondGeneral economic conditions

Continued economic recovery is a major key for crop pricesFears of Chinese inflation and credit tightening have hit the marketsLong-term oil prices are now in the $100 range

Supply/demand concernsSouth America: La Niña impacts (Argentina , Brazil )Biofuels: E10, E12, or E15; Ethanol & Biodiesel tax credits renewedWill supply be able to keep pace with demand?

2010/11: USDA: Corn $5.40, Soy $11.70Futures (as of 2/17/2011): Corn $5.67, Soy $12.112011/12:Futures (as of 2/17/2011): Corn $5.99, Soy $13.18


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/

Documents

University Extension/Department of Economics Grain Marketing in 2011 Boone Crop Fair Boone, Iowa Feb. 18, 2011 Chad Hart Assistant Professor/Grain Markets