1. Droughts, Markets, Fuel, & Food
Agronomy Seminar
Ames, Iowa
Oct. 4, 2012
Chad Hart
Associate Professor/Grain Markets Specialist 1 1

2. U.S. Corn Supply and Use ? ? ? ? 2008 2009 2010 2011 2012 Area Planted
(mil. acres)
86.0
86.4
88.2
91.9
96.4
Yield
(bu./acre)
153.9
164.7
152.8
147.2
122.8
Production
(mil. bu.)
12,092
13,092
12,447
12,358
10,727
Beg. Stocks
1,624
1,673
1,708
1,128
988
Imports 14 8 28 25 75
Total Supply
13,729
14,774
14,182
13,511
11,790
Feed & Residual
5,182
5,125
4,793
4,400
4,150
Ethanol
3,709
4,591
5,021
5,000
4,500
Food, Seed, & Other
1,316
1,370
1,407
1,390
1,350
Exports
1,849
1,980
1,835
1,540
1,250
Total Use
12,056
13,066
13,055
12,330
11,250
Ending Stocks
540
Season-Average Price
($/bu.)
4.06
3.55
5.18
6.25
7.90 ? ? ?
These are the latest numbers from USDA. Record production and demand is gone and was replaced by record prices. All sectors of demand took major cuts. Ending stocks are projected to be at pipeline levels. ?
Source: USDA-WAOB 2 2

3. U.S. Soybean Supply and Use
2008
2009
2010
2011
2012
Area Planted
(mil. acres)
75.7
77.5
77.4
75.0
76.1
Yield
(bu./acre)
39.7
44.0
43.5
41.9
35.3
Production
(mil. bu.)
2,967
3,359
3,329
3,094
2,634
Beg. Stocks
205
138
151
215
169
Imports 13 15 14 16 20
Total Supply
3,185
3,512
3,495
3,325
2,824
Crush
1,662
1,752
1,648
1,705
1,500
Seed & Residual
106
110
130 90
114
Exports
1,279
1,499
1,501
1,360
1,055
Total Use
3,047
3,361
3,280
3,156
2,670
Ending Stocks
154
Season-Average Price
($/bu.)
9.97
9.59
11.30
12.45
16.00
For soybeans, a tight market continues to get tighter. USDA ratcheted down demand for the new crop to hold 2012/13 ending stocks at 115 million bushels. As with corn, all sectors of demand took a big cut.
Source: USDA-WAOB 3 3

4. Prices
Prices have risen and fallen with the temperatures.

5. Crop Conditions Source: USDA-NASS
But dry conditions have weakened the crops, as the crop conditions show. The USDA update reflects the scale of yield loss as they have taken over 40 bushels from corn and nearly 8 bushels from soybeans.
Source: USDA-NASS

6. World Corn Production Source: USDA-WAOB
Global corn production took a hit last month, with Canada and Europe seeing reductions in potential corn production.
Source: USDA-WAOB 6 6

7. World Soybean Production
Soybean prices have spurred on increased soybean plantings worldwide. South America will lead the charge.
Source: USDA-WAOB 7 7

8. U.S. Meat Production & Prices
Higher feed costs have led to lower meat production projections.
Source: USDA-WAOB 8 8

9. U.S. Pork Projections
Source: FAPRI-MO

10. U.S. Beef Projections
Source: FAPRI-MO

11. U.S. Per-Capita Meat Consumption
Source: FAPRI-MO

12. Food Price Projections
Source: FAPRI-MO

13. Food Dollar
Source: USDA-ERS

14. Corn Export Sales Source: USDA-FAS
Corn exports for the 2012 crop have started even slower than 2011, only China buying more.
Source: USDA-FAS

15. Soy Export Sales Source: USDA-FAS
2012 soybean exports have rebounded to around 2010 levels. The key market here is China and they have purchased a lot of soybeans recently.
Source: USDA-FAS

16. Population 2010 2020 2050 (billion) World 6.831 7.558 9.202 China
2020
2050
(billion)
World
6.831
7.558
9.202
China
1.330
1.385
India
1.657
1.173
1.326
1.304
U.S.
0.310
0.341
0.439
Indonesia
0.243
0.268
0.313
Brazil
0.201
0.223
Ethiopia
0.278
Pakistan
0.177
0.204
0.276
Bangladesh
0.158
Nigeria
0.182
0.264
0.152
0.181
0.260
Russia
0.139
0.132
0.234
Japan
0.127
Mexico
0.125
Congo
0.189
Source: U.S. Census Bureau, International Data Base

17. 10 Largest Economies (GDP Rank)
2020
2030
2040
2050 US
China
Japan
India
Germany
Brazil
France
Russia UK
Mexico
Italy
Indonesia
Canada
Source: PwC, The World in 2050, January 2011

18. Corn Grind for Ethanol
Negative margins at some ethanol plants have dragged down production.

19. Ethanol Stocks Source: DOE-EIA
And stocks have built up in recent weeks, weakening price projections.
Source: DOE-EIA

20. 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

21. Renewable Fuels Standard (RFS)21 21

22. Projected 2012 Season-Average Corn Price
The drought has brought in some very strong and profitable prices, but harvest rolls along and the yield story seems to be improving, prices have fallen.

23. Projected 2012 Season-Average Soy Price
The same is true for soybeans.

24. Current Corn Futures 7.06 5.91 5.57 Source: CME Group, 10/4/2012
Based on current futures prices, national season-average cash price estimates for corn are $7.06 for the 2012 crop, $5.91 for 2013, and $5.57 for 2014.
5.57
Source: CME Group, 10/4/2012

25. Current Soybean Futures
14.63
For soybeans, the estimates are $14.63 for the 2012 crop, $12.70 for 2013, and $12.20 for 2014.
12.70
12.20
Source: CME Group, 10/4/2012

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

27. 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

28. 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

29. Thank you for your time. Any questions. My web site: http://www. econ
Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker: