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Drought, Grain Marketing, and Risk Management

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Presentation on theme: "Drought, Grain Marketing, and Risk Management"— Presentation transcript:

1 Drought, Grain Marketing, and Risk Management
Clear Lake Bank & Trust Ag. Meeting Garner, Iowa Dec. 6, 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 96.9 Yield (bu./acre) 153.9 164.7 152.8 147.2 122.3 Production (mil. bu.) 12,092 13,092 12,447 12,358 10,725 Beg. Stocks 1,624 1,673 1,708 1,128 988 Imports 14 8 28 29 100 Total Supply 13,729 14,774 14,182 13,515 11,814 Feed & Residual 5,182 5,125 4,795 4,547 4,150 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 1,150 Total Use 12,056 13,066 13,055 12,527 11,167 Ending Stocks 647 Season-Average Price ($/bu.) 4.06 3.55 5.18 6.22 7.60 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 77.2 Yield (bu./acre) 39.7 44.0 43.5 41.9 39.3 Production (mil. bu.) 2,967 3,359 3,329 3,094 2,971 Beg. Stocks 205 138 151 215 169 Imports 13 15 14 16 20 Total Supply 3,185 3,512 3,495 3,325 3,160 Crush 1,662 1,752 1,648 1,703 1,560 Seed & Residual 106 110 130 91 115 Exports 1,279 1,499 1,501 1,362 1,345 Total Use 3,047 3,361 3,280 3,155 3,021 Ending Stocks 140 Season-Average Price ($/bu.) 9.97 9.59 11.30 12.50 14.90 Source: USDA-WAOB 3 3

4 Prices

5 Projected Corn Yields

6 Projected Soybean Yields

7 World Corn Production Source: USDA-WAOB 7 7

8 World Soybean Production
Source: USDA-WAOB 8 8

9 World Weather Source: USDC and USDA 9 9

10 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

11 Cattle Crush Margin The Crush Margin is the return after the feeder steer and corn costs. Live weight: pounds Feeder weight: 750 pounds Corn: 50 bushels per head Source: ISU Extension

12 U.S. Meat Production & Prices
Higher feed costs have led to lower meat production projections. Source: USDA-WAOB 12 12

13 Corn Export Shifts Source: USDA-FAS

14 Soy Export Shifts Source: USDA-FAS

15 Corn Grind for Ethanol

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

17 Current Corn Futures 6.91 6.07 5.63 Source: CME Group, 12/5/2012

18 Current Soybean Futures
13.92 12.67 12.27 Source: CME Group, 12/5/2012

19 Early Prices for 2013 Crops 2013 crop prices are still strong to entice acreage to remain in production.

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

21 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

22 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

23

24 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 (12/5/12) 2013/14 Corn $7.60 $6.91 $6.07 Soybeans $14.90 $13.92 $12.67 Risk management Crop insurance Price protection

25 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:


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