Crop Market Outlook for 2013 ISU Extension/Fulton Insurance Marketing Meeting Washington, Iowa Jan. 21, 2013 Chad Hart Associate Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911 1 1

U.S. Corn Supply and Use 2008 2009 2010 2011 2012 Area Planted (mil. acres) 86.0 86.4 88.2 91.9 97.2 Yield (bu./acre) 153.9 164.7 152.8 147.2 123.4 Production (mil. bu.) 12,092 13,092 12,447 12,360 10,780 Beg. Stocks 1,624 1,673 1,708 1,128 989 Imports 14 8 28 29 100 Total Supply 13,729 14,774 14,182 13,516 11,869 Feed & Residual 5,182 5,125 4,795 4,548 4,450 Ethanol 3,709 4,591 5,019 5,011 4,500 Food, Seed, & Other 1,316 1,370 1,407 1,426 1,367 Exports 1,849 1,980 1,834 1,543 950 Total Use 12,056 13,066 13,055 12,527 11,267 Ending Stocks 602 Season-Average Price ($/bu.) 4.06 3.55 5.18 6.22 7.40 Source: USDA-WAOB 2 2

U.S. Soybean Supply and Use 2008 2009 2010 2011 2012 Area Planted (mil. acres) 75.7 77.5 77.4 75.0 77.2 Yield (bu./acre) 39.7 44.0 43.5 41.9 39.6 Production (mil. bu.) 2,967 3,359 3,329 3,094 3,015 Beg. Stocks 205 138 151 215 169 Imports 13 15 14 16 20 Total Supply 3,185 3,512 3,495 3,325 3,204 Crush 1,662 1,752 1,648 1,703 1,605 Seed & Residual 106 110 130 91 119 Exports 1,279 1,499 1,501 1,362 1,345 Total Use 3,047 3,361 3,280 3,155 3,070 Ending Stocks 135 Season-Average Price ($/bu.) 9.97 9.59 11.30 12.50 14.25 Source: USDA-WAOB 3 3

Prices

Projected Corn Yields Top: 2012 Yield Bottom: Change from 2011 Units: Bushels/acre

Projected Soybean Yields Top: 2012 Yield Bottom: Change from 2011 Units: Bushels/acre

World Corn Production Source: USDA-WAOB 7 7

World Soybean Production Source: USDA-WAOB 8 8

World Weather Source: USDC and USDA 9 9

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: ISU Extension

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: ISU Extension

U.S. Meat Production & Prices Source: USDA-WAOB 12 12

Corn Export Shifts Source: USDA-FAS

Soy Export Shifts Source: USDA-FAS

Corn Grind for Ethanol

Ethanol Stocks

Fuel Prices

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

Current Corn Futures 6.74 5.56 5.35 Source: CME Group, 1/18/2013

Current Soybean Futures 13.86 12.31 12.06 Source: CME Group, 1/18/2013

Total Acreage Shift Source: USDA-NASS We brought back a lot of acres in 2012. Can we hold them in 2013? Source: USDA-NASS

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

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

Thoughts for 2013 and Beyond Supply/demand concerns Soil moisture issues Biofuel and export strength Worldwide response to drought-induced pricing 2012/13 USDA Futures (1/18/13) 2013/14 Corn $7.40 $6.74 $5.56 Soybeans $14.25 $13.86 $12.31 Risk management Crop insurance Price protection

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/