1. 2012 Crop Market Outlook Iowa Farm Bureau’s 2012 Economic Summit
Will Today’s Agriculture Boom be Tomorrow’s Bust: Are You Prepared?
Ames, Iowa
July 24, 2012
Chad Hart
Assistant 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
146.0
Production
(mil. bu.)
12,092
13,092
12,447
12,358
12,970
Beg. Stocks
1,624
1,673
1,708
1,128
903
Imports 14 8 28 22 30
Total Supply
13,729
14,774
14,182
13,508
13,903
Feed & Residual
5,182
5,125
4,793
4,550
4,800
Ethanol
3,709
4,591
5,021
5,050
4,900
Food, Seed, & Other
1,316
1,370
1,407
1,405
1,420
Exports
1,849
1,980
1,835
1,600
Total Use
12,056
13,066
13,055
12,605
12,720
Ending Stocks
1,183
Season-Average Price
($/bu.)
4.06
3.55
5.18
6.20
5.90
These are the latest numbers from USDA. Record production and demand is gone. The drought and resulting high prices put a end to the records, except for the potential for prices to reach records again. Feed and export demand took the biggest cuts, but ethanol is also down. Ending stocks are projected to be near 2010 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
41.5
40.5
Production
(mil. bu.)
2,967
3,359
3,329
3,056
3,050
Beg. Stocks
205
138
151
215
170
Imports 13 15 14
Total Supply
3,185
3,512
3,495
3,286
3,235
Crush
1,662
1,752
1,648
1,675
1,610
Seed & Residual
106
110
130
101
124
Exports
1,279
1,499
1,501
1,340
1,370
Total Use
3,047
3,361
3,280
3,116
3,105
Ending Stocks
Season-Average Price
($/bu.)
9.97
9.59
11.30
12.40
14.00
For soybeans, a tight market continues to get tighter. USDA ratcheted down demand for the new crop to hold 2012/13 ending stocks at 130 million bushels. Exports took the big cut.
Source: USDA-WAOB 3 3

4. Prices
Prices have risen 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 took 20 bushels from corn and 3.4 bushels from soybeans.
Source: USDA-NASS

6. Acres Insured in 2011 Corn and Soybeans--Iowa
Crop insurance will help support those who lost yield. While the final 2012 numbers are not in, typically Iowa producers have insurance on 90% of the corn and soybean ground.

7. Coverage Level Choice
And that insurance is revenue-based, captures the harvest price (when it is higher than the planting price), and provides a great deal of coverage.

8. World Corn Production Source: USDA-WAOB
World corn production is on the upswing as the high prices over the last year provided incentives for corn farmers worldwide to increase production. The biggest shifts are in Argentina, Mexico, Canada, South Africa, and China.
Source: USDA-WAOB 8 8

9. World Soybean Production
Soybean prices have also spurred on increased soybean plantings worldwide. South America will lead the charge.
Source: USDA-WAOB 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
While hog margins are not strong right now, the outlook is breakeven at best.
Source: Shane Ellis, ISU Extension

11. Corn Advance Export Sales
Advance sales have backed off as prices have risen.
Source: USDA-FAS

12. Soy Advance Export Sales
Soybean advance sales have held up better.
Source: USDA-FAS

13. Corn Grind for Ethanol Source: DOE-EIA
Negative margins at ethanol plants have finally dragged down production.
Source: DOE-EIA

14. Ethanol Stocks Source: DOE-EIA
But stocks have begun to decline as we are in the heart of the summer driving season.
Source: DOE-EIA

15. Projected 2012 Season-Average Corn Price
The drought has brought in some very strong and profitable prices.
Cost

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

17. Current Corn Futures 7.28 6.30 5.84 5.21 Source: CME Group, 7/23/2012
Based on current futures prices, national season-average cash price estimates for corn are $6.30 for the 2011 crop, $7.28 for 2012, $5.84 for 2013, and $5.21 for So longer-term prices are settling in at the high $4 to $5 range.
5.21
Source: CME Group, 7/23/2012

18. Current Soybean Futures
14.66
12.52
For soybeans, the estimates are $12.52 for the 2011 crop, $14.66 for 2012, $12.05 for 2013, and $11.77 for 2014.
12.05
11.77
Source: CME Group, 7/23/2012

19. Thoughts for 2012 and Beyond
Supply/demand concerns
How about some rain?
Biofuel growth and energy demand
Will supply be able to keep pace with demand?
Drought is pulling supply down
But high prices are diminishing demand
General economic conditions
Continued worldwide economic recovery is a key for crop prices
US job recovery, European financial concerns, China?
2011/12: USDA: Corn $6.20; Soy $12.40
Futures (as of 7/23/12): Corn $6.30; Soy $12.52
2012/13: USDA: Corn $5.90; Soy $14.00
Futures (as of 7/23/12): Corn $7.28; Soy $14.66

20. 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: