1. Markets, Policy, and Outlook
Iowa Corn Growers
Coralville, Iowa
Sept. 7, 2012
Chad Hart
Associate Professor/Grain Markets Specialist 1 1

2. U.S. Corn Supply and Use 2008 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
1,624
1,673
1,708
1,128
1,021
Imports 14 8 28 25 75
Total Supply
13,729
14,774
14,182
13,511
11,875
Feed & Residual
5,182
5,125
4,793
4,550
4,075
Ethanol
3,709
4,591
5,021
5,000
4,500
Food, Seed, & Other
1,316
1,370
1,407
1,390
1,350
Exports
1,849
1,980
1,835
1,550
1,300
Total Use
12,056
13,066
13,055
12,490
11,225
Ending Stocks
650
Season-Average Price
($/bu.)
4.06
3.55
5.18
6.25
8.20
These are the latest numbers from USDA. Record production and demand is gone and was replaced by record prices. All sectors of demand took major cuts. Ending stocks are projected to be at pipeline levels.
Source: USDA-WAOB 2 2

3. U.S. Soybean Supply and Use
2008
2009
2010
2011
2012
Area Planted
(mil. acres)
75.7
77.5
77.4
75.0
76.1
Yield
(bu./acre)
39.7
44.0
43.5
41.5
36.1
Production
(mil. bu.)
2,967
3,359
3,329
3,056
2,692
Beg. Stocks
205
138
151
215
145
Imports 13 15 14 20
Total Supply
3,185
3,512
3,495
3,286
2,857
Crush
1,662
1,752
1,648
1,690
1,515
Seed & Residual
106
110
130
101
116
Exports
1,279
1,499
1,501
1,350
1,110
Total Use
3,047
3,361
3,280
3,141
2,742
Ending Stocks
115
Season-Average Price
($/bu.)
9.97
9.59
11.30
12.45
16.00
For soybeans, a tight market continues to get tighter. USDA ratcheted down demand for the new crop to hold 2012/13 ending stocks at 115 million bushels. As with corn, all sectors of demand took a big cut.
Source: USDA-WAOB 3 3

4. Prices
Prices have risen with the temperatures.

5. Crop Conditions Source: USDA-NASS
But dry conditions have weakened the crops, as the crop conditions show. The USDA update reflects the scale of yield loss as they have taken over 40 bushels from corn and nearly 8 bushels from soybeans.
Source: USDA-NASS

6. Corn Harvested Acre Adjustments
USDA has accounted for some loss in corn harvested due to silage chopping and abandonment. Next month’s update will likely show more acres being lost.

7. Projected Corn Yields
These are based on conditions around Aug. 1.

8. Objective Corn Yield Data
USDA crop adjusters found grain weights well below those for the last 8 years.
Source: USDA-NASS

9. World Corn Production Source: USDA-WAOB
Global corn production took a hit last month, with Canada, Europe, and the former Soviet Union all seeing reductions in potential corn production.
Source: USDA-WAOB 9 9

10. World Soybean Production
Soybean prices have spurred on increased soybean plantings worldwide. South America will lead the charge.
Source: USDA-WAOB 10 10

11. Hog Crush Margin
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 futures
Corn: 10 bushels per pig Soybean meal: 150 pounds per pig
Projected hog margins are well south of breakeven.
Source: ISU Extension

12. Cattle Crush Margin
The Crush Margin is the return after the feeder steer and corn costs.
Live weight: pounds Feeder weight: 750 pounds
Corn: 50 bushels per head
Cattle returns look better next year, but feed costs remain a major concern.
Source: ISU Extension

13. U.S. Meat Production & Prices
Higher feed costs have led to lower meat production projections.
Source: USDA-WAOB 13 13

14. Corn Exports Source: USDA-FAS
Corn exports for the 2011 crop have been slow, with only Mexico and China buying more.
Source: USDA-FAS

15. Soy Exports Source: USDA-FAS
2011 soybean exports are also lower, but have been improving for the last few months. The key market here is China and they have purchased a lot of soybeans recently.
Source: USDA-FAS

16. Corn Advance Export Sales
Advance sales have backed off as prices have risen. Mexico and China continue to be our better markets.
Source: USDA-FAS

17. Soy Advance Export Sales
Soybean advance sales have held up better. China is still the key to the soybean market.
Source: USDA-FAS

18. Corn Grind for Ethanol
Negative margins at some ethanol plants have dragged down production.

19. Ethanol Stocks Source: DOE-EIA
But stocks have begun to decline as we are in the heart of the summer driving season.
Source: DOE-EIA

20. U.S. Blended Gasoline Consumption
7.6 bil. gal.
But the industry still faces blend wall issues as fuel consumption has dropped with the economy and the E-10 market is basically full.
7.4 bil. gal.
Source: DOE-EIA, via USDA-ERS

21. Projected 2012 Season-Average Corn Price
The drought has brought in some very strong and profitable prices.

22. Projected 2012 Season-Average Soy Price
The same is true for soybeans.

23. Prices
Prices have risen with the temperatures.

24. Current Corn Futures 7.44 6.24 5.64 Source: CME Group, 9/6/2012
Based on current futures prices, national season-average cash price estimates for corn are $7.44 for the 2012 crop, $6.24 for 2013, and $5.64 for 2014.
5.64
Source: CME Group, 9/6/2012

25. Current Soybean Futures
16.23
For soybeans, the estimates are $16.23 for the 2012 crop, $13.17 for 2013, and $12.44 for 2014.
13.17
12.44
Source: CME Group, 9/6/2012

26. Early Prices for 2013 Crops
2013 crop prices are on the rise to entice acreage to remain in production.

27. Total Acreage Shift Source: USDA-NASS
We brought back a lot of acres in Can we hold them in 2013?
Source: USDA-NASS

28. Acreage Shift by State Top: Planted in 2012 Bottom: Change from 2011
Weather was great for planting in 2012 (just not for producing). To hold acreage we will need great planting weather again.
Top: Planted in 2012
Bottom: Change from 2011
Units: 1,000 acres
Source: USDA-NASS

29. Acreage Shift by Crop Acreage change from 2011 Units: 1,000 acres
Cotton will likely give up acreage again. But with crop prices strong across the board, the acreage battle could be interesting in 2013.
Source: USDA-NASS

30. Thoughts for 2013 and Beyond
Supply/demand concerns
Soil moisture
South America gets 1st chance to respond to drought pricing
Will supply be able to keep pace with demand?
Drought is pulling supply down
But high prices are diminishing demand
General economic conditions
Continued worldwide economic recovery is a key for crop prices
US job recovery, European financial concerns, China?
2012/13: USDA: Corn $8.20; Soy $16.00
Futures (as of 9/6/12): Corn $7.44; Soy $16.23
2013/14: Futures Corn $6.24; Soy $13.17
2014/15: Futures Corn $5.64; Soy $12.44

33. 2013 Crop Cost Estimates Source: ISU Extension Economics, July 2012
Open your book to page 84. On the screen you see our 2013 estimates. We’ll publish new estimates in January Note the historical costs of production on pages 97 and 98. Then on 99 you have a recent survey of current input costs. This changes over time. As crop values have gone up, the different input suppliers have responded. The level of fundamental driven change in input prices is worth discussing as well as the market driven changes.
SEED UP 7%
HERBICIDES UP 5% FOR NOW
N PRICE IS NOW 60% NH3 AND 20% UAN AND UREA
N DOWN; P DOWN P is for MAP and includes N value; K UNCHANGED
CROP INSURANCE UP 4%
LABOR UP $.55 AN HOUR
INTEREST DOWN .36%
RENTS UP 7%
ENERGY UNCHAGED FROM 2012
Total Cost
Expected Yield bu/A
Cost Per Bushel
Corn After Corn
Corn After Beans
Beans After Corn
$832
165
$5.04
$778
180
$4.32
$567 50
$11.34
Source: ISU Extension Economics, July 2012 33

34. Corn Projections 2013 2014 2015 2016 2017 Area Planted (mil. acres)
96.1
93.1
93.2
92.7
92.8
Yield
(bu./acre)
163.2
165.7
167.9
170.2
172.4
Production
(mil. bu.)
14,386
14,159
14,354
14,468
14,676
Beg. Stocks
645
1,510
1,675
1,766
1,789
Imports 25
Total Supply
15,056
15,695
16,054
16,259
16,490
Feed & Residual
4,852
4,855
4,964
5,022
5,082
Ethanol
5,386
5,649
5,665
5,643
5,657
Food, Seed, & Other
1,435
1,460
1,473
1,472
1,490
Exports
1,890
2,055
2,186
2,322
2,445
Total Use
13,546
14,020
14,288
14,470
14,675
Ending Stocks
1,815
Season-Average Price
($/bu.)
5.20
4.86
4.74
4.75
Source: FAPRI-MO

35. Soybean Projections 2013 2014 2015 2016 2017 Area Planted (mil. acres)
77.0
76.0
76.4
77.1
77.4
Yield
(bu./acre)
43.8
44.5
44.9
45.5
46.0
Production
(mil. bu.)
3,326
3,333
3,385
3,459
3,510
Beg. Stocks
110
182
186
180
177
Imports 15
Total Supply
3,452
3,530
3,586
3,653
3,702
Crush
1,683
1,719
1,740
1,762
1,780
Seed & Residual
128
131
133
136
138
Exports
1,460
1,494
1,533
1,578
1,609
Total Use
3,270
3,344
3,406
3,476
3,526
Ending Stocks
176
Season-Average Price
($/bu.)
11.28
11.05
11.26
11.41
11.57
Source: FAPRI-MO

36. Land Allocation
Source: FAPRI-MO

37. U.S. Per-Capita Meat Consumption
Source: FAPRI-MO

38. U.S. Pork Projections
Source: FAPRI-MO

39. U.S. Beef Projections
Source: FAPRI-MO

40. Food Price Projections
Source: FAPRI-MO

41. Senate Proposal,
$ per acre
Source: FAPRI-MO

42. House Proposal,
$ per acre
Source: FAPRI-MO

43. Planted Acres,
Million acres
Source: FAPRI-MO

44. Prices,
Source: FAPRI-MO

45. Gov. Expenditures,
$ million
Source: FAPRI-MO

46. Change in Expenditures, 2013-2017
Source: FAPRI-MO

47. Payments as a Share of Receipts
Source: FAPRI-MO

48. Source: Babcock, ISU

49. Iowa Corn Yields
Source: USDA-NASS

50. Land Value & Cash Rental Rate Trends
Source: ISU Extension Economics 50

51. Positive Factors for Land Values51

52. Negative Factors for Land Values52

53. 53

54. Grain Transportation Source: USDA-AMS
Open your book to page 84. On the screen you see our 2013 estimates. We’ll publish new estimates in January Note the historical costs of production on pages 97 and 98. Then on 99 you have a recent survey of current input costs. This changes over time. As crop values have gone up, the different input suppliers have responded. The level of fundamental driven change in input prices is worth discussing as well as the market driven changes.
SEED UP 7%
HERBICIDES UP 5% FOR NOW
N PRICE IS NOW 60% NH3 AND 20% UAN AND UREA
N DOWN; P DOWN P is for MAP and includes N value; K UNCHANGED
CROP INSURANCE UP 4%
LABOR UP $.55 AN HOUR
INTEREST DOWN .36%
RENTS UP 7%
ENERGY UNCHAGED FROM 2012
Source: USDA-AMS 54

55. Grain Transportation Source: USDA-AMS
Open your book to page 84. On the screen you see our 2013 estimates. We’ll publish new estimates in January Note the historical costs of production on pages 97 and 98. Then on 99 you have a recent survey of current input costs. This changes over time. As crop values have gone up, the different input suppliers have responded. The level of fundamental driven change in input prices is worth discussing as well as the market driven changes.
SEED UP 7%
HERBICIDES UP 5% FOR NOW
N PRICE IS NOW 60% NH3 AND 20% UAN AND UREA
N DOWN; P DOWN P is for MAP and includes N value; K UNCHANGED
CROP INSURANCE UP 4%
LABOR UP $.55 AN HOUR
INTEREST DOWN .36%
RENTS UP 7%
ENERGY UNCHAGED FROM 2012
Source: USDA-AMS 55

56. Lock Breakdowns Source: Steven Stockton
Open your book to page 84. On the screen you see our 2013 estimates. We’ll publish new estimates in January Note the historical costs of production on pages 97 and 98. Then on 99 you have a recent survey of current input costs. This changes over time. As crop values have gone up, the different input suppliers have responded. The level of fundamental driven change in input prices is worth discussing as well as the market driven changes.
SEED UP 7%
HERBICIDES UP 5% FOR NOW
N PRICE IS NOW 60% NH3 AND 20% UAN AND UREA
N DOWN; P DOWN P is for MAP and includes N value; K UNCHANGED
CROP INSURANCE UP 4%
LABOR UP $.55 AN HOUR
INTEREST DOWN .36%
RENTS UP 7%
ENERGY UNCHAGED FROM 2012
Source: Steven Stockton 56

57. Thank you for your time. Any questions. My web site: http://www. econ
Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker: