2012 Market Price Outlook ISU Northern Research Farm Meeting Duncan, Iowa Mar. 8, 2012 Chad Hart Assistant 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 94.0 Yield (bu./acre) 153.9 164.7 152.8 147.2 164.0 Production (mil. bu.) 12,092 13,092 12,447 12,358 14,270 Beg. Stocks 1,624 1,673 1,708 1,128 801 Imports 14 8 28 20 15 Total Supply 13,729 14,774 14,182 13,506 15,086 Feed & Residual 5,182 5,125 4,793 4,600 5,200 Ethanol 3,709 4,591 5,021 5,000 4,950 Food, Seed, & Other 1,316 1,370 1,407 1,405 1,420 Exports 1,849 1,980 1,835 1,700 1,900 Total Use 12,056 13,066 13,055 12,705 13,470 Ending Stocks 1,616 Season-Average Price ($/bu.) 4.06 3.55 5.18 6.20 5.00 Source: USDA-WAOB, 2012 Unofficial Projections 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 Yield (bu./acre) 39.7 44.0 43.5 41.5 43.9 Production (mil. bu.) 2,967 3,359 3,329 3,056 3,250 Beg. Stocks 205 138 151 215 275 Imports 13 15 14 Total Supply 3,185 3,512 3,495 3,286 3,540 Crush 1,662 1,752 1,648 1,615 1,660 Seed & Residual 106 110 130 120 126 Exports 1,279 1,499 1,501 1,275 1,550 Total Use 3,047 3,361 3,280 3,011 3,335 Ending Stocks Season-Average Price ($/bu.) 9.97 9.59 11.30 11.70 11.50 Source: USDA-WAOB, 2012 Unofficial Projections 3 3

2011 Corn Yields Source: USDA-NASS

2011 Soybean Yields Source: USDA-NASS

World Corn Production Source: USDA-WAOB 6 6

World Soybean Production Source: USDA-WAOB 7 7

Corn vs. Wheat Source: CME Group, 3/7/2012

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

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

Corn Export Shifts Source: USDA-FAS

Soy Export Shifts Source: USDA-FAS

Change of Export Pace

Renewable Fuels Standard (RFS) Crop Year Billion Bushels 2011 4.64 2012 4.86 2013 5.07 2014 5.29 14 14

Corn Grind for Ethanol Source: DOE-EIA

Ethanol Blending Advantage

U.S. Blended Gasoline Consumption 7.6 bil. gal. 7.4 bil. gal. Source: DOE-EIA, via USDA-ERS

Projected 2011 Season-Average Corn Price Cost

Projected 2011 Season-Average Soy Price Cost

Projected 2012 Season-Average Corn Price Cost

Projected 2012 Season-Average Soy Price Cost

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

2012 Crop Prices

Current Corn Futures 5.96 5.42 5.31 5.22 Source: CME Group, 3/7/2012

Current Soybean Futures 12.41 12.10 11.75 11.53 Source: CME Group, 3/7/2012

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 Worries about dry conditions in South America and in U.S. 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 $6.20; Soy $11.70 Futures (as of 3/7/12): Corn $5.96; Soy $12.10 2012/13: Futures (as of 3/7/12): Corn $5.42; Soy $12.41

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/