Crop and Feed Outlook for 2012 Farmers Elevator Coop Meeting Sioux Falls, South Dakota Dec. 12, 2011 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911 1 1
Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC 2
U.S. Meat Production & Prices Source: USDA
Cattle and Hog Prices Source: CME Group
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 Source: Shane Ellis, ISU Extension
Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC 6
Livestock Marketing Information Center Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC 7
Cattle Crush Margin 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 Source: Shane Ellis, ISU Extension
Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC 9
Livestock Marketing Information Center Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC 10
Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC 11
Livestock Marketing Information Center Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC 12
U.S. Meat Trade Source: USDA
Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC 14
Livestock Marketing Information Center Data Source: USDA-NASS, Compiled & Analysis by LMIC 15
U.S. Milk Production & Prices Source: USDA
Class III Milk Prices Source: CME Group
Thoughts for 2012 and Beyond Continued economic recovery is a major key for livestock prices Meat demand is recovering Meat supplies tightened up with smaller herds/flocks Feed costs have kept margins tight The combination implies livestock expansion will take awhile Poultry is currently backing off, Hogs are expanding slightly, and Cattle will not start expanding for a few years
U.S. Corn Supply and Use 2008 2009 2010 2011 Area Planted (mil. acres) 86.0 86.4 88.2 91.9 Yield (bu./acre) 153.9 164.7 152.8 146.7 Production (mil. bu.) 12,092 13,092 12,447 12,310 Beg. Stocks 1,624 1,673 1,708 1,128 Imports 14 8 28 15 Total Supply 13,729 14,774 14,182 13,453 Feed & Residual 5,182 5,125 4,792 4,600 Ethanol 3,709 4,591 5,021 5,000 Food, Seed, & Other 1,316 1,370 1,407 1,405 Exports 1,849 1,980 1,835 1,600 Total Use 12,056 13,066 13,054 12,605 Ending Stocks 848 Season-Average Price ($/bu.) 4.06 3.55 5.18 6.40 Source: USDA-WAOB 19 19
U.S. Soybean Supply and Use 2008 2009 2010 2011 Area Planted (mil. acres) 75.7 77.5 77.4 75.0 Yield (bu./acre) 39.7 44.0 43.5 41.3 Production (mil. bu.) 2,967 3,359 3,329 3,046 Beg. Stocks 205 138 151 215 Imports 13 15 14 Total Supply 3,185 3,512 3,495 3,275 Crush 1,662 1,752 1,648 1,625 Seed & Residual 106 110 130 120 Exports 1,279 1,499 1,501 1,300 Total Use 3,047 3,361 3,280 3,045 Ending Stocks 230 Season-Average Price ($/bu.) 9.97 9.59 11.30 11.70 Source: USDA-WAOB 20 20
Projected Corn Yields Source: USDA-NASS
Projected Soybean Yields Source: USDA-NASS
U.S. DDG Supply and Use 2008 2009 2010 2011 Production (mil. metric tons) 28.6 35.4 38.7 38.6 Imports 0.3 0.4 Total Supply 28.9 35.8 39.2 38.9 Domestic 23.9 27.5 30.9 32.1 Exports 5.0 8.3 6.8 Total Use 39.1 Average Price ($/ton) 122 113 179 207 My estimates, so take with a grain (or pound) of salt 23 23
U.S. Soybean Meal Supply and Use 2009 2010 2011 Production (thou. short tons) 41,707 39,251 38,685 Beg. Stocks 235 302 350 Imports 160 179 165 Total Supply 42,101 39,731 39,200 Domestic 30,640 30,277 30,100 Exports 11,160 9,104 8,800 Total Use 41,800 39,381 38,900 Ending Stocks 300 Season-Average Price ($/short ton) 311.27 345.52 295.00 Source: USDA-WAOB 24 24
World Corn Production Source: USDA-WAOB 25 25
World Soybean Production Source: USDA-WAOB 26 26
Feed Pricing Source: USDA-AMS
Corn vs. Wheat Source: CME Group, 12/9/2011
Corn Export Shifts Source: USDA-FAS
Soy Export Shifts Source: USDA-FAS
Change of Export Pace
DDG Exports Source: USDA-FAS
Soybean Meal Export Sales Source: USDA-FAS
Renewable Fuels Standard (RFS) Crop Year Billion Bushels 2011 4.64 2012 4.86 2013 5.07 2014 5.29 34 34
Corn Grind for Ethanol Source: DOE-EIA
Ethanol Margins Source: CARD
Ethanol Blending Advantage
Biodiesel Production Source: DOE-EIA
Biodiesel Margins Source: CARD
Projected 2011 Season-Average Corn Price
Projected 2011 Season-Average Soy Price
Projected 2012 Season-Average Corn Price
Projected 2012 Season-Average Soy Price
Iowa Corn Prices vs. Costs
Iowa Soybean Prices vs. Costs
Principal Crop Area Source: USDA-NASS
States with Room to Grow Number is the difference in planted acres between 2008 and 2011
Iowa Crop Margins
Thoughts for 2012 and Beyond General economic conditions Continued worldwide economic recovery is a major key for crop prices US job recovery, European financial concerns Supply/demand concerns Smaller than anticipated U.S. crops, worries about dry conditions Biofuel growth and energy demand Corn has the upper hand in the acreage competition Will supply be able to keep pace with demand? 2011/12: USDA: Corn $6.40; Soy $11.70 Futures (as of 12/9/11): Corn $5.73; Soy $11.06 2012/13: Futures (as of 12/9/11): Corn $5.36; Soy $10.99
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/