Corn Outlook

Extension and Outreach/Department of Economics

Corn Outlook

Midwest, Great Plains, & Western Outlook ConferenceLouisville, Kentucky

August 16, 2011

Chad HartAssistant Professor/Grain Markets Specialist

chart@iastate.edu515-294-9911

Extension and Outreach/Department of Economics

U.S. Corn Supply and Use2008 2009 2010 2011

Area Planted (mil. acres) 86.0 86.4 88.2 92.3

Yield (bu./acre) 153.9 164.7 152.8 153.0

Production (mil. bu.) 12,092 13,092 12,447 12,914

Beg. Stocks (mil. bu.) 1,624 1,673 1,708 940

Imports (mil. bu.) 14 8 30 20

Total Supply (mil. bu.) 13,729 14,774 14,185 13,874

Feed & Residual (mil. bu.) 5,182 5,140 5,000 4,900

Ethanol (mil. bu.) 3,709 4,568 5,020 5,100

Food, Seed, & Other (mil. bu.) 1,316 1,371 1,400 1,410

Exports (mil. bu.) 1,849 1,987 1,825 1,750

Total Use (mil. bu.) 12,056 13,066 13,245 13,160

Ending Stocks (mil. bu.) 1,673 1,708 940 714

Season-Average Price ($/bu.) 4.06 3.55 5.25 6.70

Extension and Outreach/Department of Economics

Corn Area

Source: USDA-NASS

Extension and Outreach/Department of Economics

Crop Conditions

Source: USDA-NASS

60

61

62

63

64

65

66

67

68

69

70

% G

ood t

o E

xcelle

nt

Corn Soybeans

Extension and Outreach/Department of Economics

Crop Conditions & Corn Yields

80

90

100

110

120

130

140

150

160

170

Bu

she

ls p

er

acr

e

Actual Yield Projected Yield 20-yr Trend

Extension and Outreach/Department of Economics

Examining the Relationship

0.45

0.50

0.55

0.60

0.65

24 25 26 27 28 29 30 31 32 33 34 35 36

Week

Yie

ld p

er

Gto

E P

oin

t

0.80

0.85

0.90

0.95

1.00

R-s

qu

are

% Good to Excellent R-square

Extension and Outreach/Department of Economics

Preliminary Corn Yields

Source: USDA-NASS

Extension and Outreach/Department of Economics

Corn Production

Source: USDA-NASS

Extension and Outreach/Department of Economics

World Corn Production

Source: USDA

Extension and Outreach/Department of Economics

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Canada Mexico Brazil EU China South KoreaJapan Australia

Exchange Rates (Jan. 2003 = 1)

Source: USDA, ERS

Extension and Outreach/Department of Economics

Corn Export Markets

Source: USDA, FAS

Unknown4%

Other23%

China2%

Taiwan6% South Korea

13%

Egypt7% Mexico

15%

Japan30%

Extension and Outreach/Department of Economics

Corn Export Shifts

Source: USDA, FAS

Japan Mexico

Taiwan

Egypt

Unknown

Other

South Korea

Total

China

-200

-150

-100

-50

0

50

100

Mill

ion b

ush

els

-6.9%-15.3%

-21.7%

-13.1%

3.1%

145.5%

-2.4%

-7.8%

-35.8%

Extension and Outreach/Department of Economics

Corn Advance Export Sales

Source: USDA, FAS

0

100

200

300

400

500

600

700

12/3

0

1/1

3

1/2

7

2/1

0

2/2

4

3/1

0

3/2

4

4/7

4/2

1

5/5

5/1

9

6/2

6/1

6

6/3

0

7/1

4

7/2

8

8/1

1

8/2

5

Mill

ion b

ush

els

2011 Crop 2010 Crop

Extension and Outreach/Department of Economics

Corn Advance Export Sales

Source: USDA, FAS

Unknown37%

Other11%

Japan16%

Mexico23%

Egypt0%

South Korea5%

Taiwan1%

China7%

Extension and Outreach/Department of Economics

Nearby Futures (Jan. 3, 2011 = 1)

0.90

1.00

1.10

1.20

1.30

1.40

1.501

/3/2

01

1

1/1

7/2

011

1/3

1/2

011

2/1

4/2

011

2/2

8/2

011

3/1

4/2

011

3/2

8/2

011

4/1

1/2

011

4/2

5/2

011

5/9

/20

11

5/2

3/2

011

6/6

/20

11

6/2

0/2

011

7/4

/20

11

7/1

8/2

011

8/1

/20

11

8/1

5/2

011

Corn Ethanol Gasoline

Extension and Outreach/Department of Economics

Ethanol Margin

Source: CARD

Extension and Outreach/Department of Economics

-0.04

-0.02

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

1/3

/20

07

4/3

/20

07

7/3

/20

07

10

/3/2

007

1/3

/20

08

4/3

/20

08

7/3

/20

08

10

/3/2

008

1/3

/20

09

4/3

/20

09

7/3

/20

09

10

/3/2

009

1/3

/20

10

4/3

/20

10

7/3

/20

10

10

/3/2

010

1/3

/20

11

4/3

/20

11

7/3

/20

11

$ p

er

ga

llon

Ethanol Blending Advantage

Extension and Outreach/Department of Economics

Corn Grind for Ethanol

86

88

90

92

94

96

98

100

Sep-10

Oct-10

Nov-10

Dec-10

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Mill

ion

bush

els

Extension and Outreach/Department of Economics

Ethanol Stocks

650

700

750

800

850

900

Sep-10

Oct-10

Nov-10

Dec-10

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Mill

ion

gallo

ns

Extension and Outreach/Department of Economics

Projected 2011 Season-Average Corn Price

3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00

12

/14

/200

9

2/1

4/2

010

4/1

4/2

010

6/1

4/2

010

8/1

4/2

010

10

/14

/201

0

12

/14

/201

0

2/1

4/2

011

4/1

4/2

011

6/1

4/2

011

8/1

4/2

011

$ p

er

bu

she

l

Futures USDA

Extension and Outreach/Department of Economics

Projected 2011 Season-Average Corn Price

5.50

6.00

6.50

7.00

$ p

er

bu

she

l

Futures USDA

Extension and Outreach/Department of Economics

Projected 2012 Season-Average Corn Price

4.50

5.00

5.50

6.00

6.50

$ p

er

bu

she

l

Futures USDA

Extension and Outreach/Department of Economics

Corn Prices vs. Costs

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00$ p

er

Bu

she

l

Season-average Price Cost per Bushel

Extension and Outreach/Department of Economics

Input Costs

Source: USDA, Agricultural Prices, July 29, 2011

Extension and Outreach/Department of Economics

Iowa Cash Rents

Source: USDA-NASS

80

100

120

140

160

180

200

Ca

sh R

en

t ($

pe

r a

cre

)

Extension and Outreach/Department of Economics

Thoughts for 2011 and BeyondGeneral economic conditions

Continued worldwide economic recovery is a major key for crop pricesDebt limit, US credit ratingUS job recovery, European financial concerns, Chinese inflation

Supply/demand concernsPrevented planting, flooding, heat wave, nighttime temps?Biofuel growth and energy demandWill supply be able to keep pace with demand?

2010/11: USDA Corn $5.25

2011/12: USDA Corn $6.70 Futures (as of 8/15/2011) Corn $6.95

2012/13: Futures (as of 8/15/2011) Corn $6.27

Extension and Outreach/Department of Economics

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/