Ag Outlook for 2011

University Extension/Department of Economics

Ag Outlook for 2011

Iowa Chapter of ASFMRA and RLI Annual MeetingAmes, IowaFeb. 3, 2011

Chad HartAssistant Professor/Grain Markets Specialist

[email protected]


COMMERCIAL MEAT & POULTRY PRODUCTION

By Type of Meat, Annual

0102030405060708090

100

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Bil. Pounds

Turkey

Chicken

Lamb &Veal

Pork

Beef

M-S-03A01/28/11Livestock Marketing Information Center

Data Source: USDA-NASS, Compiled & Analysis by LMIC

University Extension/Department of Economics Source: USDA


Cattle and Hog Prices

Source: CME Group

0

20

40

60

80

100

120

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Pric

e ($

/cw

t)

Lean Hogs Live Hogs Live Cattle


Cattle Crush Margin

Source: Shane Ellis, ISU Extension

The Crush Margin is the return after the feeder steer and corn costs.Live weight: 1250 pounds Feeder weight: 750 pounds Corn: 50 bushels per head


Hog Crush Margin

Source: Shane Ellis, ISU Extension

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 futuresCorn: 10 bushels per pig Soybean meal: 150 pounds per pig


COMMERCIAL BEEF PRODUCTIONQuarterly

5.8

6.0

6.2

6.4

6.6

6.8

7.0

JAN-MAR APR-JUN JUL-SEP OCT-DEC

Bil. Pounds

Avg.2005/09

2010

2011

2012

M-S-0101/25/11Livestock Marketing Information Center

Data Source: USDA-NASS, Compiled & Analysis by LMIC


Livestock Marketing Information CenterData Source: USDA-NASS, Compiled & Analysis by LMIC

COMMERCIAL PORK PRODUCTIONQuarterly

4.8

5.0

5.2

5.4

5.6

5.8

6.0

6.2

6.4


Bil. Pounds

Avg.2005/09

2010

2011

2012

M-S-0601/25/11



M-S-0601/25/11

RTC BROILER PRODUCTIONQuarterly

8.0

8.4

8.8

9.2

9.6


Bil. Pounds

Avg.2005/09

2010

2011

2012

M-S-3001/25/11



U S RED MEAT & POULTRY CONSUMPTIONPer Capita, Retail Weight, Annual

0

50

100

150

200

1987 1990 1993 1996 1999 2002 2005 2008 2011

Pounds

Turkey

TotalChicken

Pork

Beef

M-C-0101/25/11


Cattle/Beef Prices

Source: USDA

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

Pric

e ($

/pou

nd)

Live Retail


Hog/Pork Prices

Source: USDA

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

Pric

e ($

/pou

nd)

Live Retail



Livestock Marketing Information CenterData Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC

U S BEEF AND VEAL EXPORTSCarcass Weight, Annual

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1987 1990 1993 1996 1999 2002 2005 2008 2011

Bil. Pounds

I-N-0601/04/11



U S PORK EXPORTSCarcass Weight, Annual

0.0

0.5

1.0

1.5

2.02.5

3.0

3.5

4.0

4.5

5.0

1987 1990 1993 1996 1999 2002 2005 2008 2011

Bil. Pounds

I-N-0501/04/11



U S BROILER EXPORTSRTC, Annual

0

1

2

3

4

5

6

7

8

1987 1990 1993 1996 1999 2002 2005 2008 2011

Bil. Pounds

I-N-5201/04/11



MILK PRODUCTION vs. MILK COW INVENTORY

Average Annual Inventory, U.S.

8.8

9.2

9.6

10.0

10.4

10.8

11.2

1985 1988 1991 1994 1997 2000 2003 2006 2009

Mil. Head

135

145

155

165

175

185

195

205Bil. Pounds

D-S-1001/19/11



Class III Milk Prices

Source: CME Group

13

14

15

16

17

18

19

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Pric

e ($

/cw

t)


Thoughts for 2011 and BeyondContinued economic recovery is a major key for livestock prices

Meat demand is recovering

Meat supplies tightened up with smaller herds/flocks

Feed costs have continued to march higher

The combination implies livestock expansion will take awhile

Poultry in 2010, Hogs maybe in 2012, and Cattle after that


U.S. Corn Supply and Use

Source: USDA

2007 2008 2009 2010

Area Planted (mil. acres) 93.5 86.0 86.4 88.2

Yield (bu./acre) 150.7 153.9 164.7 152.8

Production (mil. bu.) 13,038 12,092 13,092 12,447

Beg. Stocks (mil. bu.) 1,304 1,624 1,673 1,708

Imports (mil. bu.) 20 14 8 20

Total Supply (mil. bu.) 14,362 13,729 14,774 14,175

Feed & Residual (mil. bu.) 5,913 5,182 5,140 5,200

Ethanol (mil. bu.) 3,049 3,709 4,568 4,900

Food, Seed, & Other (mil. bu.) 1,338 1,316 1,371 1,380

Exports (mil. bu.) 2,437 1,849 1,987 1,950

Total Use (mil. bu.) 12,737 12,056 13,066 13,430

Ending Stocks (mil. bu.) 1,624 1,673 1,708 745

Season-Average Price ($/bu.) 4.20 4.06 3.55 5.30


U.S. Soybean Supply and Use2007 2008 2009 2010

Area Planted (mil. acres) 64.7 75.7 77.5 77.4

Yield (bu./acre) 41.7 39.7 44.0 43.5

Production (mil. bu.) 2,677 2,967 3,359 3,329

Beg. Stocks (mil. bu.) 574 205 138 151

Imports (mil. bu.) 10 13 15 15

Total Supply (mil. bu.) 3,261 3,185 3,512 3,495

Crush (mil. bu.) 1,803 1,662 1,752 1,655

Seed & Residual (mil. bu.) 93 106 108 110

Exports (mil. bu.) 1,159 1,279 1,501 1,590

Total Use (mil. bu.) 3,056 3,047 3,361 3,355

Ending Stocks (mil. bu.) 205 138 151 140

Season-Average Price ($/bu.) 10.10 9.97 9.59 11.70

Source: USDA


World Corn Production

Source: USDA


World Soybean Production

Source: USDA


Corn Export Sales

Source: USDA, FAS

0

500

1,000

1,500

2,000

2,500

Week

Mill

ion

bush

els

2008 2009 2010


Corn Export Shifts

Source: USDA, FAS

Japan

Mexico

Taiwan

EgyptUnknown

Other

South Korea

Total

China

-60

-50

-40

-30

-20

-10

0

10

20

30

40

Mill

ion

bush

els

10.8%

-23.6%

-10.0% -22.2%

71.6%27.6%

-9.6%

-0.4%


Soybean Export Sales

Source: USDA, FAS

0

400

800

1,200

1,600

Week

Mill

ion

bush

els

2008 2009 2010


Soy Export Shifts

Source: USDA, FAS

China

EU Japan

Mexico

Taiwan

Total

Other

Indonesia

Unknown

-20

0

20

40

60

80

100

120

Mill

ion

bush

els

11.6%

-8.7% -13.9%

15.1%

-13.4%

36.2%

-9.3%

8.0%

36.0%


0

2

4

6

8

10

12

14

16

2010 2011 2012

Bill

ion

gallo

ns

Conventional Biofuels Cellulosic BiofuelsBiodiesel Additional Advanced Biofuels

Renewable Fuels Standard (RFS)

CropYear

Billion Bushels

2009 4.112010 4.432011 4.642012 4.86


Ethanol Margins

Source: ISU, CARD


Ethanol Blending Advantage

-0.04

-0.02

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

1/3/

2007

4/3/

2007

7/3/

2007

10/3

/200

7

1/3/

2008

4/3/

2008

7/3/

2008

10/3

/200

8

1/3/

2009

4/3/

2009

7/3/

2009

10/3

/200

9

1/3/

2010

4/3/

2010

7/3/

2010

10/3

/201

0

1/3/

2011

$ pe

r gal

lon


0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

1/3/

2007

4/3/

2007

7/3/

2007

10/3

/200

7

1/3/

2008

4/3/

2008

7/3/

2008

10/3

/200

8

1/3/

2009

4/3/

2009

7/3/

2009

10/3

/200

9

1/3/

2010

4/3/

2010

7/3/

2010

10/3

/201

0

1/3/

2011

$ pe

r gal

lon

Ethanol Gasoline

Fuel Prices


Projected 2010 Season-Average Corn Price

3.00

3.50

4.00

4.50

5.00

5.50

6.006/

8/20

09

8/8/

2009

10/8

/200

9

12/8

/200

9

2/8/

2010

4/8/

2010

6/8/

2010

8/8/

2010

10/8

/201

0

12/8

/201

0

$ pe

r bus

hel

Futures USDA


Projected 2010 Season-Average Soy Price

8.00

8.50

9.00

9.50

10.00

10.50

11.00

11.50

12.00

12.50

6/8/

2009

8/8/

2009

10/8

/200

9

12/8

/200

9

2/8/

2010

4/8/

2010

6/8/

2010

8/8/

2010

10/8

/201

0

12/8

/201

0

$ pe

r bus

hel

Futures USDA


Projected 2011 Season-Average Corn Price

3.50

3.75

4.00

4.25

4.50

4.75

5.00

5.25

5.50

5.75

6.00

12/1

4/20

09

1/14

/201

0

2/14

/201

0

3/14

/201

0

4/14

/201

0

5/14

/201

0

6/14

/201

0

7/14

/201

0

8/14

/201

0

9/14

/201

0

10/1

4/20

10

11/1

4/20

10

12/1

4/20

10

1/14

/201

1

$ pe

r bus

hel

Futures USDA


Projected 2011 Season-Average Soy Price

8.50

9.00

9.50

10.00

10.50

11.00

11.50

12.00

12.50

13.00

13.50

$ pe

r bus

hel

Futures USDA


2008/092007/08

2009/10

2010/11

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

0% 5% 10% 15% 20% 25% 30%

Stocks-to-use ratio

Pric

e ($

per

bus

hel)

Corn


Iowa 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

$ pe

r Bus

hel

Season-average Price Cost per Bushel


Iowa Soybean Prices vs. Costs

2.003.004.005.006.007.008.009.00

10.0011.0012.0013.0014.00

$ pe

r Bus

hel

Season-average Price Cost per Bushel


Principal Crop Area

Source: USDA-NASS

315

317

319

321

323

325

327

329

331

333

335M

illio

n ac

res


States with Room to GrowState Million acres Competing CropsNorth Dakota 2.249 Wheat, corn, soySouth Dakota 1.400 Wheat, corn, soyMissouri 0.930 Rice, cotton, soyArkansas 0.715 Rice, cotton, soyIllinois 0.535 Wheat, corn, soyTexas 0.466 Cotton, corn, soyGeorgia 0.395 Cotton, corn, soyMississippi 0.284 Cotton, rice, soyNorth Carolina 0.284 Cotton, corn, soyLouisiana 0.283 Rice, cotton, soy


New Crop Futures Price Movements

Wheat Corn Soybeans CottonMGE Sept. CME Dec. CME Nov. ICE Dec.

($/bu.) ($/bu.) ($/bu.) ($/lb.)June 1 5.81 4.04 9.22 0.75Feb. 2 10.13 5.98 13.75 1.18Change 74% 48% 49% 57%


Thoughts for 2011 and BeyondGeneral economic conditions

Continued economic recovery is a major key for crop pricesChinese inflation, European credit tightening, and Middle Eastern unrest have hit the marketsLong-term oil price remain in the $90 range

Supply/demand concernsSouth America: La Niña impactsWill supply be able to keep pace with demand?

2010/11: USDA: Corn $5.30, Soy $11.70Futures (as of 2/2/2011): Corn $5.48, Soy $12.252011/12:Futures (as of 2/2/2011): Corn $5.83, Soy $13.16


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/

Documents

Ag Outlook for 2011