Department of Economics Corn Situation and Outlook 2009 Midwest/Great Plains/Western Outlook Conference Columbus, Ohio August 18, 2009 Chad Hart Assistant

Department of Economics

Corn Situation and Outlook

2009 Midwest/Great Plains/Western Outlook Conference

Columbus, OhioAugust 18, 2009

Chad HartAssistant Professor/Grain Markets Specialist

[email protected]


U.S. Corn Supply and Use

Source: USDA

2007 2008 2009

Area Planted (mil. acres) 93.5 86.0 87.0

Yield (bu./acre) 150.7 153.9 159.5

Production (mil. bu.) 13,038 12,101 12,761

Beg. Stocks (mil. bu.) 1,304 1,624 1,720

Imports (mil. bu.) 20 15 15

Total Supply (mil. bu.) 14,362 13,740 14,496

Feed & Residual (mil. bu.) 5,913 5,250 5,300

Ethanol (mil. bu.) 3,049 3,650 4,200

Food, Seed, & Other (mil. bu.) 1,338 1,270 1,275

Exports (mil. bu.) 2,437 1,850 2,100

Total Use (mil. bu.) 12,737 12,020 12,875

Ending Stocks (mil. bu.) 1,624 1,720 1,621

Season-Average Price ($/bu.) 4.20 4.05 3.50

Department of EconomicsSource: USDA


U.S. Corn Statistics

Source: USDA, Crop Progress


U.S. Corn Conditions, Good to Excellent

Source: USDA, Crop Progress

40

45

50

55

60

65

70

75

80

22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39

Week

Pe

rce

nt

2004 2005 2006 2007 2008 2009

Department of EconomicsSource: NOAA, Climate Prediction Center

3 Month Temperature Outlook

Aug. – Oct.



Sept. – Nov.

Source: NOAA, Climate Prediction Center



Oct. – Dec.

Source: NOAA, Climate Prediction Center


World Corn Production

Source: USDA


Hog Returns vs. Corn Prices

Sources: ISU Extension, Farrow-to-Finish;USDA-NASS

-50

-40

-30

-20

-10

0

10

20

30

Sep-06

Dec-06

Mar-07

Jun-07

Sep-07

Dec-07

Mar-08

Jun-08

Sep-08

Dec-08

Mar-09

Jun-09

$ p

er

head

2

3

4

5

6

$ p

er

bush

el


USDA Meat Production Projections

Source: USDA, WASDE report


0.80

0.85

0.90

0.95

1.00

1.05

1.10

Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

Canada Mexico Brazil EU China South KoreaJapan Australia

Exchange Rates (Jan. 2009 = 1)

Source: USDA, ERS


Corn Export Sales

Source: USDA, FAS

0

500

1,000

1,500

2,000

2,500

3,000

Week

Mil

lion

bu

shel

s

2006 2007 2008


2008 U.S. Corn Exports

Source: USDA, FAS

Taiwan7%

South Korea11%

Other29%

Mexico17%

Japan36%


Advance Export Sales

Source: USDA, FAS

0

50

100

150

200

250

300

350

400

450

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Mill

ion b

ush

els


2009 U.S. Corn Export Advance Sales

Source: USDA, FAS

Taiwan1%

Japan7%

Mexico21%

Other54%

South Korea17%


Crude Oil Futures Prices

Source: NYMEX

60

70

80

90

100

110

120

Sept.2008

Dec.2008

Dec.2009

Dec.2010

Dec.2011

Dec.2012

Dec.2013

Dec.2014

Dec.2015

Dec.2016

$ p

er

barr

el

2008 2009


Renewable Fuels Standard (RFS)

0

2

4

6

8

10

12

14

16

2009 2010 2011

Bill

ion g

allo

ns

Additional Advanced Biofuels Biodiesel

Cellulosic Biofuels Conventional Biofuels

CropYear

Billion Bushels

2008 3.57

2009 4.11

2010 4.43


Ethanol Margins

Source: ISU, CARD


Outside Influences (Jan. 2007 = 1)

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

2.3

2.51

/3/2

00

7

3/3

/20

07

5/3

/20

07

7/3

/20

07

9/3

/20

07

11

/3/2

00

7

1/3

/20

08

3/3

/20

08

5/3

/20

08

7/3

/20

08

9/3

/20

08

11

/3/2

00

8

1/3

/20

09

3/3

/20

09

5/3

/20

09

7/3

/20

09

Dow Oil Corn Soybeans


Outside Influences (Jan. 2009 = 1)

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.61/2

/200

9

1/1

6/2

009

1/3

0/2

009

2/1

3/2

009

2/2

7/2

009

3/1

3/2

009

3/2

7/2

009

4/1

0/2

009

4/2

4/2

009

5/8

/200

9

5/2

2/2

009

6/5

/200

9

6/1

9/2

009

7/3

/200

9

7/1

7/2

009

7/3

1/2

009

8/1

4/2

009

Dow Oil Corn Soybeans


U.S. Stocks-to-Use Ratios

0%

5%

10%

15%

20%

25%

30%

1990/9

1

1991/9

2

1992/9

3

1993/9

4

1994/9

5

1995/9

6

1996/9

7

1997/9

8

1998/9

9

1999/0

0

2000/0

1

2001/0

2

2002/0

3

2003/0

4

2004/0

5

2005/0

6

2006/0

7

2007/0

8

2008/0

9

2009/1

0

Corn Corn - Avg. 1990-2007


World Stocks-to-Use Ratios

10%

15%

20%

25%

199

0/9

1

199

1/9

2

199

2/9

3

199

3/9

4

199

4/9

5

199

5/9

6

199

6/9

7

199

7/9

8

199

8/9

9

199

9/0

0

200

0/0

1

200

1/0

2

200

2/0

3

200

3/0

4

200

4/0

5

200

5/0

6

200

6/0

7

200

7/0

8

200

8/0

9

200

9/1

0

Corn Corn - Avg. 1990-2007


1.5

2

2.5

3

3.5

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

Pric

e ($

per

bus

hel)

Stocks-to-use ratio

Corn1990 - 2006


2007/082008/092009/10 May

2009/10 June

2009/10 July

2009/10 Aug.

1.5

2

2.5

3

3.5

4

4.5

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

Stocks-to-use ratio

Pric

e ($

per

bus

hel)

Corn


Seasonal Pricing Patterns

0.94

0.96

0.98

1.00

1.02

1.04

1.06

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Corn Soy

Source: USDA, NASS,Monthly Price Data 1980-2008


Iowa Crop Basis

-140

-120

-100

-80

-60

-40

-20

0

Cen

ts p

er b

ushe

l

Average 2000-05 - Corn Average 2000-05 - Soy 2008 - Corn2008 - Soy 2009 - Corn 2009 - Soy


3.00

3.20

3.40

3.60

3.80

4.00

Aug-0

9

Sep-0

9

Oct

-09

Nov-

09

Dec-

09

Jan-1

0

Feb-1

0

Mar-

10

Apr-

10

May-

10

Jun-1

0

Jul-10

$ p

er

bu

sh

el

Corn Futures

Source: CBOT, 8/14/09

2009 Rev. Ins. Price $4.04


Ratio: Nov. 2010 Soy/Dec. 2010 Corn

Source: CBOT

2

2.1

2.2

2.3

2.4

2.5

2.6

2.7

1/2

/20

09

1/1

6/2

009

1/3

0/2

009

2/1

3/2

009

2/2

7/2

009

3/1

3/2

009

3/2

7/2

009

4/1

0/2

009

4/2

4/2

009

5/8

/20

09

5/2

2/2

009

6/5

/20

09

6/1

9/2

009

7/3

/20

09

7/1

7/2

009

7/3

1/2

009

8/1

4/2

009


Input Costs

Source: USDA, Agricultural Prices, July 31, 2009


Thoughts for 2009 and BeyondGeneral economic conditions

Recession concerns still hold significant power in the marketsProjected economic recovery is a major key for crop prices for the 2009 crop year

Most important ag. statistics: Crop yield estimates, livestock numbers

USDA is indicating 2009 season-average prices in the neighborhood of $3.50 for corn

Current futures Friday: ’09 Corn $3.09 ’10 Corn $3.54


Thank you for your time!

Any questions?

My web site:http://www.econ.iastate.edu/faculty/hart/

Iowa Farm Outlook:http://www.econ.iastate.edu/outreach/agriculture/periodicals/ifo/

Ag Decision Maker:http://www.extension.iastate.edu/agdm/

Documents

Department of Economics Corn Situation and Outlook 2009 Midwest/Great Plains/Western Outlook Conference Columbus, Ohio August 18, 2009 Chad Hart Assistant