Crop Market Outlook ISU Extension Farm Management In-Service Ames, Iowa September 30, 2008 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911 1

U.S. Corn Supply and Use $5.40 $5.50 Source: USDA-WAOB, Sept. 2008 -2.7 -216 -100 -115 $5.40 +0.10 $5.50 Source: USDA-WAOB, Sept. 2008 2

U.S. Soybean Supply and Use -0.5 -39 -30 $12.25 +0.10 $12.35 Source: USDA-WAOB, Aug. 2008

World Corn (million metric tons) Source: USDA-WAOB, Sept. 2008

World Corn Production Source: USDA-WAOB, Sept. 2008

World Soybean (million metric tons) Source: USDA-WAOB, Sept. 2008

World Soybean Production Source: USDA-WAOB, Sept. 2008

Source: USDA-NASS, Sept. 2008

Source: USDA-NASS, Sept. 2008

Crop Basis Patterns Sources: CARD, Iowa State; IA Dept. of Ag.

Livestock Adjustments Sows farrowing: Sept-Nov 2008 3.01 million, down 5% from last year Dec-Feb 2009 2.98 million, down 3% from last year Broiler-type eggs set: 195 million, down 8% from last year Broiler chicks placed: 168 million, down 4% from last year Feedlot placements: 2.06 million, down 3% from last year (2nd lowest since 1996) Sources: Various USDA-NASS reports

Renewable Fuels Standard (RFS) Calendar Year Billion Bushels 2009 3.75 2010 4.29 2011 4.50 Crop Year Billion Bushels 2008 3.57 2009 4.11 2010 4.43 12

Exchange Rate Ratios (Jan. 2007 = 1) Source: CME futures

Corn & Soybean Area Growth rate of 1.5 million acres per year

Input Costs Source: USDA, Agricultural Prices, Aug. 2008

Stocks-to-Use Ratios

Thoughts for 2008 Still looking for a later than average frost Wet spring/flooding impacts will likely continue to show up in yields How about the dollar? Weaker dollar has helped hold up crop and livestock exports General economic conditions A lot of recent market trade has been tied to reaction to the financial crisis and the federal government’s response Most important ag. statistic: Crude oil price

Thoughts for 2009 and Beyond Many of the storylines from the past few years will continue Tight stocks for both corn and soybeans The competition for acreage Ethanol’s buildout & livestock’s adjustment Energy price & general economy concerns Market volatility will remain high Link to the energy markets More market players with different trading objectives Given current factors, the 2009 outlook is for crop prices to be in the neighborhood of 2008 prices

Thoughts for 2009 and Beyond With input costs moving up, need to protect against downside price risk Forward contracting Futures/options Revenue insurance Know your break-even price and defend it The competition for acreage should lead to pricing opportunities pre-planting

Thank you for your time! Any questions?