Extension In-ServiceMarch 23, 2011

Charles Hurburgh, Iowa Grain Quality InitiativeConnie L. Hardy, Extension SpecialistChad Hart, Extension Grain Economist

Increased Grain Prices: Logistics Challenges

Corn Use

Source: USDA

0

1

2

3

4

5

6

7

Bill

ion

bu

shels

Feed Ethanol Other Exports

Iowa Ethanol Production and Corn Usage

Summary Statistics May-2010

nEthanol Producedmil gal/yr

Corn Usedmil bu/yr

DGS000 tons/yr

Current Dry-grind Plants 34 3,280 1170 10,237

Expansions and new construction

1 277 98 857

Wet Mills 4 500 178 1,557

Nearby Iowa 11 636 227 1,986

Total 50 4,6931,673

(69% of 2009)

14,637

Gross Revenue fromSoybeans

can be less than Net Revenue from

Corn (land cost excluded)

Corn Yield Potential

Source: Monsanto, June 2010

Overall = 2.1 bu/a/yr; Last 10= 3.5 bu/a/yr; Seed industry = 4-6 bu/a/yr; +400-500 million bu/year Nitrogen use: 1.0-1.1 lb/bu down to 0.7-0.8 lb/bu

Fast Export Growth, Slow Yield Growth2%/yr, 3 bu/acre/yr

Trend Export Growth, Fast Yield Growth1%/yr, 5 bu/acre/yr

2010 2015 2020 2025 2030 20350

1000

2000

3000

4000

5000

6000

7000

8000

New Corn Storage as Piles"Pile"= 1,500,000 bu

Year

Nu

mb

er

of

Pile

s

3 bu/acre/yr yield increase

2010 2015 2020 2025 2030 20350

1000

2000

3000

4000

5000

6000

7000

8000

New Corn Storage as Piles"Pile"= 1,500,000 bu

Year

Nu

mb

er

of

Pile

s

5 bu/acre/yr yield increase

Corn Drying Capacity Needs

103516 516 516 516 516

28903406

39224438

49545470

3371

3973

4575

5177

5779

6381

0

1000

2000

3000

4000

5000

6000

7000

2010 2015 2020 2025 2030 2035

Nu

mb

er o

f D

ryer

s

Year

Corn Dryers Needed, US1 "Dryer" = 25,000 bu-pts/hour

New Total +1% MC

Summary• Corn production is increasing faster than

traditional uses can absorb.• Increase 3-5 bu/a/yr = 350-500MM bu• Major economic growth is several areas.• Huge surpluses very quickly if ……• Systems thinking in policy planning:

– Corn, soybeans, other grains together.– Growth connected with acreage balances

and continued process improvements

So….

Summary - OpEd

Grain is not the only natural resource increasing in price

Natural resource prices, especially grain, are locked to energy prices (Dermot Hayes)

Production agriculture is becoming more concentrated but has 2-5X the economic relevance of just 4 years ago.

Will production agriculture learn the leadership and influence skills that protect other low number but high economic impact industries? OIL! Etc.

Who will stand with our core business? It can supply both food and fuel.

Food has been cheap; some of the world can

now outbid us.

Copyright © 2010 Iowa State University

Where To Find Us…

Analytical ProgramsQuality Management

Systems