Grain and Oilseed Outlook Omaha Ag Outlook Omaha, Nebraska Dec. 7, 2013 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate.edu 515-294-9911 1 1

U.S. Corn Supply and Use 2009 2010 2011 2012 2013 Area Planted (mil. acres) 86.4 88.2 91.9 97.2 95.3 Yield (bu./acre) 164.7 152.8 147.2 123.4 160.4 Production (mil. bu.) 13,092 12,447 12,360 10,780 13,989 Beg. Stocks 1,673 1,708 1,128 989 824 Imports 8 28 29 162 25 Total Supply 14,774 14,182 13,517 11,932 14,837 Feed & Residual 5,125 4,795 4,557 4,333 5,200 Ethanol 4,591 5,019 5,000 4,648 4,900 Food, Seed, & Other 1,370 1,407 1,428 1,396 1,450 Exports 1,980 1,834 1,543 731 1,400 Total Use 13,066 13,055 12,528 11,108 12,950 Ending Stocks 1,887 Season-Average Price ($/bu.) 3.55 5.18 6.22 6.89 4.50 Source: USDA-WAOB 2 2

U.S. Soybean Supply and Use 2009 2010 2011 2012 2013 Area Planted (mil. acres) 77.5 77.4 75.0 77.2 76.5 Yield (bu./acre) 44.0 43.5 41.9 39.8 43.0 Production (mil. bu.) 3,359 3,329 3,094 3,034 3,258 Beg. Stocks 138 151 215 169 141 Imports 15 14 16 36 Total Supply 3,512 3,495 3,325 3,239 3,413 Crush 1,752 1,648 1,703 1,689 1,685 Seed & Residual 110 130 88 90 109 Exports 1,499 1,501 1,365 1,320 1,450 Total Use 3,361 3,280 3,155 3,098 3,243 Ending Stocks 170 Season-Average Price ($/bu.) 9.59 11.30 12.50 14.40 12.15 Source: USDA-WAOB 3 3

Projected Corn Yields Top: 2013 Projected Yield Bottom: Change from last month Units: Bushels/acre Source: USDA-NASS

Projected Soybean Yields Top: 2013 Projected Yield Bottom: Change from last month Units: Bushels/acre Source: USDA-NASS

World Corn Production Source: USDA-WAOB 6 6

World Soybean Production Source: USDA-WAOB 7 7

U.S. Meat Production & Prices Source: USDA-WAOB 8 8

Corn Export Shifts Source: USDA-FAS

Corn Export Sales Source: USDA-FAS

Soybean Export Sales Source: USDA-FAS

Soy Export Shifts Source: USDA-FAS

Corn Grind for Ethanol

Source: DOE-EIA, Annual Energy Outlook

Current Corn Futures 4.39 4.28 4.17 Source: CME Group, 12/4/2013

Current Soybean Futures 12.42 11.01 10.86 Source: CME Group, 12/4/2013

Corn Prices vs. Costs Per Bushel Cost calculated as Per Acre Cost from ISU Extension divided by Actual Yield per Acre Sources: USDA-NASS for Prices, Duffy for Costs

Soybean Prices vs. Costs Per Bushel Cost calculated as Per Acre Cost from ISU Extension divided by Actual Yield per Acre Sources: USDA-NASS for Prices, Duffy for Costs

Crop Acreage Source: USDA-NASS

Crop Shifts Source: USDA-NASS

Thoughts for 2014 and Beyond Supply/demand concerns Corn demand rebounding? Yes, so far, so good Acreage allocation for 2014: Where do the extra corn acres go? Markets favoring soybeans in the short term and corn longer term 2012/13 USDA 2013/14 USDA 2013/14 Futures (12/4/13) Corn $6.89 $4.50 $4.17 Soybeans $14.40 $12.15 $12.42

World Corn Markets Source: USDA 22 22

Arable Land

Thank you for your time. Any questions. My web site: http://www. econ 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/

U.S. Wheat Supply and Use 2009 2010 2011 2012 2013 Area Planted (mil. acres) 59.2 53.6 54.4 55.7 56.2 Yield (bu./acre) 44.5 46.3 43.7 47.2 Production (mil. bu.) 2,218 2,207 1,999 2,266 2,130 Beg. Stocks 657 976 862 743 718 Imports 119 97 112 123 150 Total Supply 2,993 3,279 2,974 3,131 2,998 Food 919 926 941 945 950 Seed 69 71 76 73 Feed & Residual 132 162 388 310 Exports 879 1,289 1,051 1,007 1,100 Total Use 2,018 2,417 2,231 2,414 2,433 Ending Stocks 565 Season-Average Price ($/bu.) 4.87 5.70 7.24 7.77 7.00 Source: USDA-WAOB 25 25

Winter Wheat Acreage Source: USDA-NASS

Winter Wheat Production Top: 2013 Projected Production Bottom: % Change from last year Units: Million bushels Source: USDA-NASS

Durum Wheat Production Top: 2013 Projected Production Bottom: % Change from last year Units: Million bushels Source: USDA-NASS

Other Spring Wheat Production Top: 2013 Projected Production Bottom: % Change from last year Units: Million bushels Source: USDA-NASS

National Wheat Projections

National Wheat Projections

World Wheat Production Source: USDA-WAOB 32 32

Wheat Export Pace Source: USDA-FAS

Wheat Export Shifts Source: USDA-FAS

Current Wheat Futures 6.86 6.54 6.45 Source: CME Group, 12/6/2013

Iowa Crop Shifts Source: USDA-NASS

Renewable Fuels Standard (RFS) 37 37

(Million Barrels Oil Equivalent per Day) Liquid Fuel Usage 2007 2015 2020 2025 2030 2035 (Million Barrels Oil Equivalent per Day) (Percent of 2007 Value) United States 20.6 98% 100% 102% 104% 107% Canada 2.3 96% Mexico 2.1 105% 110% 114% 129% 138% Europe 15.3 92% 88% 89% 90% Japan 5.0 84% 86% 82% China 7.6 132% 153% 178% 201% 222% India 2.8 139% 154% 168% Africa 3.1 113% 116% 126% 135% 148% Central and South America 6.0 112% 117% 125% 133% World 86.1 103% 121% 128% Source: DOE-EIA

Corn Prices vs. Costs

Carry vs. Costs Carry shows the additional revenue that can be obtained from holding on to the crop But there are costs to holding on: storage interest/opportunity costs These are known as the cost of ownership

Why Crops Fail

Building a Marketing Plan 5 basic steps: Estimate number of bushels/animals to sell Calculate breakeven price Project price and production scenarios Compare pricing tools and analyze market opportunities Develop a pricing plan

Marketing Types Harvest Averaging Price Target Time and Price Extended Time and Price

Average Price Captured

Lowest Average

Highest Average

Longer History

Source: USDA

Iowa Land Values Source: Mike Duffy, ISU

Iowa Land Values – Log Scale Source: Mike Duffy, ISU

Land Values and Income Source: Mike Duffy, ISU

Land Values and Income Source: Mike Duffy, ISU

Corn Prices and Recessions

Crop Prices for the Next Decade Source: USDA-ERS

Net Farm Income Source: USDA

GDP Growth Source: USDA-ERS

GDP Growth Source: USDA-ERS

Thank you for your time. Any questions. My web site: http://www. econ 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/