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Outlook and Market Update for 2012
Outlook and Market Update for 2012
Corn Short Course and Georgia Corn Growers Annual Meeting
January 17, 2012
Dr. Nathan B. SmithExtension Economist
What’s Happened to Markets?
What’s Happened to Markets?
• Drought and Excessive Heat in the South– Costly crops , Hurt quality
• Peanuts in short supply• Corn, cotton and soybean domestic
demand “destruction”• Wheat production hurt in southern Great
Plains, Soft Red Winter wheat supply up. • Europe in economic turmoil, US dollar up.
US Dollar Index
Georgia CornGeorgia Corn
• Acreage fluctuates year to year.• Corn is #3 Georgia row crop in value
($170 mil.) followed by soybeans ($70 mil.) and then wheat ($60 mil.).
• Nearly 70% of corn is irrigated in GA.• Corn deficit state, feed about 6 times
more than produce.
40
140
240
340
440
540
640
740
840
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Mill
ion
Acr
es
GA Corn Acreage
Planted Harvested
134 140 140145
158
0
20
40
60
80
100
120
140
160
180
Bu
sh
els
Pe
r A
cre
Georgia Corn Yields
GA & US Corn Crops, 2009 -2011GA & US Corn Crops, 2009 -2011
• U.S. planted acreage up 4.2% in 2011, GA up 17%
• Harvested up 3% for U.S., GA up 10%• U.S. production down 1%, GA up 24%
Planted Acres Harvested Acres Yield (bu/acre)
2009 2010 2011 2009 2010 2011 2009 2010 2011
GA(1,000)
420 295 345 379 245 270 140 145 158
US (million)
86.4 88.2 91.9 79.581.4
583.9
4164.
7152.
8147.
2
U.S. Corn Supply and Demand
U.S. Corn Supply and Demand
19.8%17.5%
11.6% 12.8% 13.9% 13.1%8.6% 6.8%
0%
10%
20%
30%
40%
50%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2004/05 2005/06 2006/07 2007/08 2008/09 2009/102010/11 2011/12
Ending Stocks Production Domestic Use and Exports Stocks:Use
Mil bu
More Corn Used for Ethanol as Energy Act Mandates
More Corn Used for Ethanol as Energy Act Mandates
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
96/9
7
97/9
8
98/9
9
99/0
0
00/0
1
01/0
2
02/0
3
03/0
4
04/0
5
05/0
6
06/0
7
07/0
8
08/0
9
09/1
0
10/1
1
11/1
2
Feed and Residual Ethanol Exports Food Seed and Other Industrial
Million bushels
Source: USDA WASDE Report, 11/9/2011
Hit the 10% Blend Wall in the past year. Ethanol exports growing.
Ethanol FuturesEthanol Futures
Corn Futures – December 2012
Source: Barchart.com
Corn Futures – September 2012
Source: Barchart.com
Corn ConsiderationsCorn Considerations• Increased competition from South America. • Ethanol 10% blend wall appears to been
reached.• Blender’s credit expired in January ‘12• Soybean/Corn price ratio favors corn (MidWest).• Seasonal low? • Potential to plant 94-95 million acres in 2012.• Global economic turmoil, tight stocks, ethanol
uncertainties mean continued volatile prices.
2012 Budgeting Considerations2012 Budgeting Considerations
• Yield Expectation – raised budgets to 200 bu/ac• Fuel prices expected to increase. Gone up
more than expected to date. • Fertilizer prices for 2012
– More corn and wheat acres likely to lead to higher fertilizer prices.
• Cost of technology, – Seed prices up for newest technology.– Most chemical prices expected to increase 3%
– Price of Corn continue to be volatile.
2012 Corn Cost Analysis 2012 Corn Cost Analysis Practice Dryland Irrigated
Yield 85 bu 200 bu
Per Acre Per Bu Per Acre Per Bu
Variable Costs $328 $3.86 $664 $3.32
Fixed Costs $71 $0.84 $197 $0.99
Management $16 $0.19 $33 $0.17
Total Costs $415 $4.89 $894 $4.47 Price $5 $5.5 $6 $5 $5.5 $6Breakeven Yield bu/ac Variable Costs 66 60 55 133 121 111
Breakeven Yield bu/ac Total Costs 83 76 69 179 163 149
Corn Cost EstimatesCorn Cost EstimatesDryland Corn, Conventional
0 50 100 150 200 250 300 350
Fixed
Variable
Interest
Labor
Repairs
Fuel
Chemicals
Fertilizer
Seed
Inp
uts
$/Acre
2007 2008 2009 2010 2011 2012
Corn Cost EstimatesCorn Cost EstimatesIrrigated Corn, Conventional
0 100 200 300 400 500 600 700
Fixed
Variable
Interest
Labor
Irrigation
Repairs
Fuel
Chemicals
Fertilizer
Seed
Inp
ut
$/Acre
2007 2008 2009 2010 2011 2012
BudgetsBudgets
http://www.caes.uga.edu/?tiny=WERQYW
http://www.caes.uga.edu/?tiny=ZRH78W
Crop Comparison ToolCrop Comparison Tool
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