1. ACRE Update & Crop Outlook
ISU Extension Farm Management In-Service
Ames, Iowa
October 13, 2009
Chad Hart
Assistant Professor/Grain Markets Specialist 1

2. ACRE Set-up for 2009 Iowa Corn
Year
Yield per Planted Acre
(bu./acre)
2004
181.0
2005
173.0
2006
166.0
2007
171.0
2008
169.0
Olympic Average
Year
Season-average Price ($/bu.)
2007
4.20
2008
4.06
Average
4.13
The 2008 price was released by USDA in the Sept. 29, 2009 Ag Prices report (see page 27 of the report for details).
So the expected state yield would be bushels per acre and the ACRE price guarantee would be $4.13 per bushel.

3. Using Latest USDA Projections
ACRE revenue guarantee = $635.61/acre
90% * $4.13/bu. * bu./acre
Proj. ACRE actual revenue = $629.80/acre
$3.35/bu. * bu./acre
Proj. ACRE payment rate = $5.81/acre

4. ACRE Payment Rate Matrix ($/acre)
Price
Yield
$2.55
$2.75
$2.95
$3.15
$3.35
$3.55
$3.75
$3.95
$4.15
180
158.90
140.61
104.61
68.61
32.61
0.00
182
135.11
98.71
62.31
25.91
184
129.61
92.81
56.01
19.21
186
124.11
86.91
49.71
12.51
188
156.21
118.61
81.01
43.41
5.81
190
151.11
113.11
75.11
37.11
192
146.01
107.61
69.21
30.81
194
140.91
102.11
63.31
24.51
196
135.81
96.61
57.41
18.21
USDA

5. ACRE Set-up for 2010 Iowa Corn
Year
Yield per Planted Acre
(bu./acre)
2005
173.0
2006
166.0
2007
171.0
2008
169.0
2009
188.0
Olympic Average
Year
Season-average Price ($/bu.)
2008
4.06
2009
3.35
Average
3.71
The 2008 and 2009 yields and prices are USDA’s Oct estimates.
So the expected state yield would be bushels per acre and the ACRE price guarantee would be $3.71 per bushel.

6. 2010 Iowa Corn ACRE Guarantee
By formula, the ACRE revenue guarantee would be $570.97/acre
90% * $3.71/bu. * bu./acre
But the ACRE revenue guarantee can not change by more than 10%
2009 guarantee = $637.15/acre
Allowed range is $ to $699.17
So 2010 proj. guarantee is $572.05/acre

7. ACRE Set-up for 2009 Iowa Soybeans
Year
Yield per Planted Acre
(bu./acre)
2004
49.0
2005
52.0
2006
50.5
2007
2008
46.5
Olympic Average
Year
Season-average Price ($/bu.)
2007
10.10
2008
9.97
Average
10.04
The 2008 price was released by USDA in the Sept. 29, 2009 Ag Prices report (see page 30 of the report for details). Also note, USDA raised Iowa’s soybean yield in 2008 to 46.5 bushels per acre (see the recent Grain Stocks report, page 17, for details).
So the expected state yield would be 50.5 bushels per acre and the ACRE price guarantee would be $10.05 per bushel.

8. Using Latest USDA Projections
ACRE revenue guarantee = $456.32/acre
90% * $10.04/bu. * 50.5 bu./acre
Proj. ACRE actual revenue = $468.00/acre
$9.00/bu. * 52 bu./acre
No payments under this scenario

9. ACRE Payment Rate Matrix ($/acre)
Price
Yield
$8.20
$8.40
$8.60
$8.80
$9.00
$9.20
$9.40
$9.60
$9.80
50.0
46.32
36.32
26.32
16.32
6.32
0.00
50.5
42.22
32.12
22.02
11.92
1.82
51.0
38.12
27.92
17.72
7.52
51.5
34.02
23.72
13.42
3.12
52.0
29.92
19.52
9.12
52.5
25.82
15.32
4.82
53.0
21.72
11.12
0.52
53.5
17.62
6.92
54.0
13.52
2.72
USDA

10. ACRE Set-up for 2010 Iowa Soybeans
Year
Yield per Planted Acre
(bu./acre)
2005
52.0
2006
50.5
2007
2008
46.5
2009
Olympic Average
51.5
Year
Season-average Price ($/bu.)
2008
9.97
2009
9.00
Average
9.49
The 2008 and 2009 yields and prices are USDA’s October 2009 estimates.
So the expected state yield would be 51.5 bushels per acre and the ACRE price guarantee would be $9.49 per bushel.

11. 2010 Iowa Soybean ACRE Guarantee
By formula, the ACRE revenue guarantee would be $439.86/acre
90% * $9.49/bu. * 51.5 bu./acre
But the ACRE revenue guarantee can not change by more than 10%
2009 guarantee = $456.32/acre
Allowed range is $ to $501.95
So 2010 proj. guarantee is $439.86/acre

12. U.S. Corn Supply and Use 2007 2008 2009 Area Planted (mil. acres) 93.5
86.0
86.4
Yield
(bu./acre)
150.7
153.9
164.2
Production
(mil. bu.)
13,038
12,101
13,018
Beg. Stocks
1,304
1,624
1,674
Imports 20 14 10
Total Supply
14,362
13,739
14,702
Feed & Residual
5,913
5,231
5,400
Ethanol
3,049
3,700
4,200
Food, Seed, & Other
1,338
1,276
1,280
Exports
2,437
1,858
2,150
Total Use
12,737
12,065
13,030
Ending Stocks
1,672
Season-Average Price
($/bu.)
4.20
4.06
3.35
Source: USDA 12 12

13. Source: USDA 13 13

14. U.S. Soybean Supply and Use
2007
2008
2009
Area Planted
(mil. acres)
64.7
75.7
77.5
Yield
(bu./acre)
41.7
39.7
42.4
Production
(mil. bu.)
2,677
2,967
3,250
Beg. Stocks
574
205
138
Imports 10 15
Total Supply
3,261
3,187
3,398
Crush
1,803
1,662
1,690
Seed & Residual 93
106
173
Exports
1,159
1,280
1,305
Total Use
3,056
3,049
3,169
Ending Stocks
230
Season-Average Price
($/bu.)
10.10
9.97
9.00
Source: USDA 14 14

15. Source: USDA 15 15

16. World Corn Production
Source: USDA 16 16

17. World Soybean Production
Source: USDA 17 17

18. Exchange Rates (Jan = 1)
Source: USDA, ERS

19. Exports & Advance Sales (1st 5 weeks of marketing year)
Source: USDA, FAS

20. Renewable Fuels Standard (RFS)
Crop
Year
Billion Bushels
2008
3.57
2009
4.11
2010
4.43
2011
4.64 20 20

21. Ethanol Margins
Source: ISU, CARD

22. Outside Influences (Jan. 2007 = 1)

23. Crude Oil Prices
Sources: EIA, NYMEX

24. Corn

25. Corn

26. Soybeans

27. Iowa Crop Basis

28. Ratio: Nov. 2010 Soy/Dec. 2010 Corn
Source: CBOT

29. Input Costs
Source: USDA, Agricultural Prices, Sept. 29, 2009

30. Thoughts for 2009 and Beyond
General economic conditions
Recession concerns still hold significant power in the markets
Projected economic recovery is a major key for crop prices for the 2009 crop year
Continued weakness in the dollar helping exports
Most important ag. statistics: Crop production, $ value, feed demand
USDA is indicating 2009 season-average prices in the neighborhood of $3.35 for corn and $9.00 for soybeans
Current futures Yesterday: Corn $3.64, Soy $9.55

31. 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: