Agricultural Markets 101 Climate Prediction Applications Science Workshop Des Moines, Iowa Feb. 21, 2011 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911 1 1

Supply Demand U.S. Corn Supply and Use 2007 2008 2009 2010 Area Planted (mil. acres) 93.5 86.0 86.4 88.2 Yield (bu./acre) 150.7 153.9 164.7 152.8 Production (mil. bu.) 13,038 12,092 13,092 12,447 Beg. Stocks 1,304 1,624 1,673 1,708 Imports 20 14 8 Total Supply 14,362 13,729 14,774 14,175 Feed & Residual 5,913 5,182 5,140 5,200 Ethanol 3,049 3,709 4,568 4,950 Food, Seed, & Other 1,338 1,316 1,371 1,400 Exports 2,437 1,849 1,987 1,950 Total Use 12,737 12,056 13,066 13,500 Ending Stocks 675 Season-Average Price ($/bu.) 4.20 4.06 3.55 5.40 Supply Demand The arrows show the changes from last month. Stocks continue to shrink. But even with national yields down to 152.8 bushels per acre, we’re still looking at the 3rd largest corn crop ever. But it’s relatively short due to the strong demand for corn. Demand jumped in the 1st quarter of the 2010 marketing year as old crop corn was blended and used. Ethanol demand is projected to continue to exceed the Renewable Fuels Standard. That’s enough to push stocks-to-use to 5.0%, the lowest level since 1995. And push prices higher with USDA at the $5.40 level for an average 2010/11 price. Source: USDA 2 2

Projected 2010 Season-Average Corn Price As the crop got smaller and the demands got larger, projected stocks were reduced and prices headed north. Both the futures market and USDA have been north of $5 for corn for the last few months. With the latest report, we’ll likely see futures indicate season-average prices over $5.50.

Projected 2011 Season-Average Corn Price The pressure’s on for 2011.

Timing of the Crop Source: USDA La Nina and the dry conditions in Argentina are beginning to show in the USDA numbers for South America. USDA pulled their Argentina corn estimate down 6 percent from last month and the reports from Argentina suggest we’ll see further reductions in the future. Source: USDA 5 5

La Niña Winter El Niño Neutral La Niña Source: NOAA La Nina will shape the crop outlook for South America, with concerns about the possibility of drought in the major crop production regions. Those concerns are finally showing up in production estimates. Source: NOAA 6 6

World Corn Production Source: USDA La Nina and the dry conditions in Argentina are beginning to show in the USDA numbers for South America. USDA pulled their Argentina corn estimate down 6 percent from last month and the reports from Argentina suggest we’ll see further reductions in the future. Source: USDA 7 7

World Corn Markets Source: USDA La Nina and the dry conditions in Argentina are beginning to show in the USDA numbers for South America. USDA pulled their Argentina corn estimate down 6 percent from last month and the reports from Argentina suggest we’ll see further reductions in the future. Source: USDA 8 8

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/