1. University Extension/Department of Economics Crop Outlook for 2011 Cerro Gordo and Worth County Corn and Soybean Clinics Northwood and Clear Lake, Iowa Jan. 28, 2011 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

2. University Extension/Department of Economics U.S. Corn Supply and Use Source: USDA 2007200820092010 Area Planted(mil. acres)93.586.086.488.2 Yield(bu./acre)150.7153.9164.7152.8 Production(mil. bu.)13,03812,09213,09212,447 Beg. Stocks(mil. bu.)1,3041,6241,6731,708 Imports(mil. bu.)2014820 Total Supply(mil. bu.)14,36213,72914,77414,175 Feed & Residual(mil. bu.)5,9135,1825,1405,200 Ethanol(mil. bu.)3,0493,7094,5684,900 Food, Seed, & Other(mil. bu.)1,3381,3161,3711,380 Exports(mil. bu.)2,4371,8491,9871,950 Total Use(mil. bu.)12,73712,05613,06613,430 Ending Stocks(mil. bu.)1,6241,6731,708745 Season-Average Price($/bu.)4.204.063.555.30

3. University Extension/Department of Economics U.S. Soybean Supply and Use 2007200820092010 Area Planted(mil. acres)64.775.777.577.4 Yield(bu./acre)41.739.744.043.5 Production(mil. bu.)2,6772,9673,3593,329 Beg. Stocks(mil. bu.)574205138151 Imports(mil. bu.)101315 Total Supply(mil. bu.)3,2613,1853,5123,495 Crush(mil. bu.)1,8031,6621,7521,655 Seed & Residual(mil. bu.)93106108110 Exports(mil. bu.)1,1591,2791,5011,590 Total Use(mil. bu.)3,0563,0473,3613,355 Ending Stocks(mil. bu.)205138151140 Season-Average Price($/bu.)10.109.979.5911.70 Source: USDA

4. University Extension/Department of Economics World Corn Production Source: USDA

5. University Extension/Department of Economics World Soybean Production Source: USDA

6. University Extension/Department of Economics La Niña Winter Source: NOAA El Niño Neutral La Niña

7. University Extension/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 poundsPig price: 50% of 5 mth out lean hog futures Corn: 10 bushels per pigSoybean meal: 150 pounds per pig

8. University Extension/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 poundsFeeder weight: 750 pounds Corn: 50 bushels per head

9. University Extension/Department of Economics Corn Export Sales Source: USDA, FAS

10. University Extension/Department of Economics 2010 U.S. Corn Exports Source: USDA, FAS

11. University Extension/Department of Economics Soybean Export Sales Source: USDA, FAS

12. University Extension/Department of Economics 2010 U.S. Soybean Exports Source: USDA, FAS

13. University Extension/Department of Economics Soy Export Shifts Source: USDA, FAS

14. University Extension/Department of Economics Renewable Fuels Standard (RFS) Crop Year Billion Bushels 20094.11 20104.43 20114.64 20124.86

15. University Extension/Department of Economics Ethanol Margins Source: ISU, CARD

16. University Extension/Department of Economics Ethanol Margins Source: ISU, CARD

17. University Extension/Department of Economics Ethanol Blending Advantage

18. University Extension/Department of Economics Projected 2010 Season-Average Corn Price

19. University Extension/Department of Economics Projected 2010 Season-Average Soy Price

20. University Extension/Department of Economics Projected 2011 Season-Average Corn Price

21. University Extension/Department of Economics Projected 2011 Season-Average Soy Price

22. University Extension/Department of Economics Corn

23. University Extension/Department of Economics Soybeans

24. University Extension/Department of Economics Iowa Corn Prices vs. Costs

25. University Extension/Department of Economics Iowa Soybean Prices vs. Costs

26. University Extension/Department of Economics States with Room to Grow StateMillion acresCompeting Crops North Dakota2.249Wheat, corn, soy South Dakota1.400Wheat, corn, soy Missouri0.930Rice, cotton, soy Arkansas0.715Rice, cotton, soy Illinois0.535Wheat, corn, soy Texas0.466Cotton, corn, soy Georgia0.395Cotton, corn, soy Mississippi0.284Cotton, rice, soy North Carolina0.284Cotton, corn, soy Louisiana0.283Rice, cotton, soy

27. University Extension/Department of Economics New Crop Futures Price Movements WheatCornSoybeansCotton MGE Sept.CME Dec.CME Nov.ICE Dec. ($/bu.) ($/lb.) June 15.814.049.220.75 Jan. 279.785.8313.261.14 Change68%44% 51%

28. University Extension/Department of Economics

29. Pre-Harvest Strategies Source: Farm Futures magazine 72% 68% 52% 68% 72% 52% 56%

30. University Extension/Department of Economics Seasonal Pattern

31. University Extension/Department of Economics Thoughts for 2011 and Beyond  General economic conditions  Continued economic recovery is a major key for crop prices  Fears of Chinese inflation and credit tightening have hit the markets  Long-term oil price remain in the $90 range  Supply/demand concerns  South America: La Niña impacts  Biofuels: E10, E12, or E15; Ethanol & Biodiesel tax credits renewed  Will supply be able to keep pace with demand?  2010/11:USDA:Corn $5.30, Soy $11.70 Futures (as of 1/27/2011):Corn $5.45, Soy $12.07  2011/12: Futures (as of 1/27/2011):Corn $5.66, Soy $12.71

32. University Extension/Department of Economics Common Crop Insurance Policy Known as COMBO In effect for 2011 crops Combines major policy plans Simplifies guarantees and payments Clarifies enterprise and whole farm units Clarifies replant and prevented planting

33. University Extension/Department of Economics Crop Revenue Coverage (CRC) Revenue Assurance with harvest price option (RA-HPO) Revenue Protection (RP) Revenue Assurance (RA) Income Protection (IP) Revenue Protection with harvest price exclusion (RP-HPE) Actual Production History (APH) Yield Protection (YP) OLDNEW

34. University Extension/Department of Economics Yield Protection (YP) Same as old APH (or MPCI) policy No change to APH yield determination Projected price is the average closing futures price during February (same as for revenue insurance) –Corn: December contract –Soybeans: November contract

35. University Extension/Department of Economics Revenue Protection (RP) Same as old CRC and RA-HPO No change to APH yield determination Projected price is the same Harvest price is average of October futures price –Old RA corn coverage used November

36. University Extension/Department of Economics Corn Insurance Prices Harvest prices have been higher 3 out of last 11 years

37. University Extension/Department of Economics Soy Insurance Prices Harvest prices have been higher 6 out of last 11 years

38. University Extension/Department of Economics Prevented Planting/Replant Payments Based on Feb. futures price, not October Replant payments are no longer based on actual costs Replant Payments: –Corn: 8 bu. x Feb. price, per acre –Soybeans: 3 bu. x Feb. price, per acre

39. University Extension/Department of Economics Good Performance Refund Recent proposal by RMA that could be in place for the 2011 crop year Would provide a refund to producers for good crop insurance performance –Less than 2 years of losses over ten years (2000-09) –Have paid in more than they have received Preliminary rules are under discussion now Total refunds in the $75 million range Estimated average refund for qualifiers ~ $1000 –Refunds will be between $25 and $25,000 per producer

40. University Extension/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/