University Extension/Department of Economics Crop Outlook for 2011 Cerro Gordo and Worth County Corn and Soybean Clinics Northwood and Clear Lake, Iowa

University Extension/Department of Economics

Crop Outlook for 2011

Cerro Gordo and Worth County Corn and Soybean ClinicsNorthwood and Clear Lake, Iowa

Jan. 28, 2011

Chad HartAssistant Professor/Grain Markets Specialist

[email protected]


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


La Niña Winter

Source: NOAA

El Niño

Neutral

La Niña


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


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


Corn Export Sales

Source: USDA, FAS

0

500

1,000

1,500

2,000

2,500

Week

Mill

ion

bu

she

ls

2008 2009 2010


2010 U.S. Corn Exports

Source: USDA, FAS

Unknown11%

Other20%

China1%

Taiwan5%

SouthKorea

7%

Egypt7%

Mexico15%

Japan29%


Soybean Export Sales

Source: USDA, FAS

0

400

800

1,200

1,600

Week

Mill

ion

bu

she

ls

2008 2009 2010


2010 U.S. Soybean Exports

Source: USDA, FAS

Unknown7%

Other10%

Indonesia2%

Mexico5%

Japan4%

Taiwan3%

EU5%

China64%


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 b

ush

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

ga

llon

s

Conventional Biofuels Cellulosic Biofuels

Biodiesel Additional Advanced Biofuels

Renewable Fuels Standard (RFS)

CropYear

Billion Bushels

2009 4.11

2010 4.43

2011 4.64

2012 4.86


Ethanol Margins

Source: ISU, CARD


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

/20

07

4/3

/20

07

7/3

/20

07

10

/3/2

00

7

1/3

/20

08

4/3

/20

08

7/3

/20

08

10

/3/2

00

8

1/3

/20

09

4/3

/20

09

7/3

/20

09

10

/3/2

00

9

1/3

/20

10

4/3

/20

10

7/3

/20

10

10

/3/2

01

0

1/3

/20

11

$ p

er

ga

llon


Projected 2010 Season-Average Corn Price

3.00

3.50

4.00

4.50

5.00

5.50

6.006/8

/2009

8/8

/2009

10/8

/2009

12/8

/2009

2/8

/2010

4/8

/2010

6/8

/2010

8/8

/2010

10/8

/2010

12/8

/2010

$ p

er

bu

she

l

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

/2009

12/8

/2009

2/8

/2010

4/8

/2010

6/8

/2010

8/8

/2010

10/8

/2010

12/8

/2010

$ p

er

bu

she

l

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

12/1

4/2

009

1/1

4/2

010

2/1

4/2

010

3/1

4/2

010

4/1

4/2

010

5/1

4/2

010

6/1

4/2

010

7/1

4/2

010

8/1

4/2

010

9/1

4/2

010

10/1

4/2

010

11/1

4/2

010

12/1

4/2

010

1/1

4/2

011

$ p

er

bu

she

l

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

12

/14

/200

9

1/1

4/2

010

2/1

4/2

010

3/1

4/2

010

4/1

4/2

010

5/1

4/2

010

6/1

4/2

010

7/1

4/2

010

8/1

4/2

010

9/1

4/2

010

10

/14

/201

0

11

/14

/201

0

12

/14

/201

0

1/1

4/2

011

$ p

er

bu

she

l

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


2010/11

2007/082008/09

2009/10

4

5

6

7

8

9

10

11

12

13

0% 5% 10% 15% 20%

Stocks-to-use Ratio

Pric

e ($

per

bus

hel)

Soybeans


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

$ p

er

Bu

she

l

Season-average Price Cost per Bushel


Iowa Soybean Prices vs. Costs

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

11.00

12.00

13.00

$ p

er

Bu

she

l

Season-average Price Cost per Bushel


States with Room to GrowState Million acres Competing Crops

North Dakota 2.249 Wheat, corn, soy

South Dakota 1.400 Wheat, corn, soy

Missouri 0.930 Rice, cotton, soy

Arkansas 0.715 Rice, cotton, soy

Illinois 0.535 Wheat, corn, soy

Texas 0.466 Cotton, corn, soy

Georgia 0.395 Cotton, corn, soy

Mississippi 0.284 Cotton, rice, soy

North Carolina 0.284 Cotton, corn, soy

Louisiana 0.283 Rice, cotton, soy


New Crop Futures Price Movements

Wheat Corn Soybeans Cotton

MGE Sept. CME Dec. CME Nov. ICE Dec.

($/bu.) ($/bu.) ($/bu.) ($/lb.)

June 1 5.81 4.04 9.22 0.75

Jan. 27 9.78 5.83 13.26 1.14

Change 68% 44% 44% 51%



Pre-Harvest Strategies

Source: Farm Futures magazine

72%68%

68%

68%

52%

52%

68%

72%

52%

56%


Seasonal Pattern

0.94

0.96

0.98

1.00

1.02

1.04

1.06

1.08

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

Corn Soy


Thoughts for 2011 and BeyondGeneral economic conditions

Continued economic recovery is a major key for crop pricesFears of Chinese inflation and credit tightening have hit the marketsLong-term oil price remain in the $90 range

Supply/demand concernsSouth America: La Niña impactsBiofuels: E10, E12, or E15; Ethanol & Biodiesel tax credits renewedWill supply be able to keep pace with demand?

2010/11: USDA: Corn $5.30, Soy $11.70Futures (as of 1/27/2011): Corn $5.45, Soy $12.07

2011/12:Futures (as of 1/27/2011): Corn $5.66, Soy $12.71


Common Crop Insurance Policy

• Known as COMBO

• In effect for 2011 crops

• Combines major policy plans

• Simplifies guarantees and payments

• Clarifies enterprise and whole farm units

• Clarifies replant and prevented planting


Crop Revenue Coverage (CRC)Revenue Assurance with

harvest price option (RA-HPO)Revenue Protection (RP)

Revenue Assurance (RA)Income Protection (IP)

Revenue Protection with harvest price exclusion

(RP-HPE)

Actual Production History (APH) Yield Protection (YP)

OLD NEW


Yield Protection (YP)

• Same as old APH (or MPCI) policy• No change to APH yield determination• Projected price is the average closing

futures price during February (same as for revenue insurance)– Corn: December contract– Soybeans: November contract


Revenue Protection (RP)

• Same as old CRC and RA-HPO

• No change to APH yield determination

• Projected price is the same

• Harvest price is average of October futures price – Old RA corn coverage used November


0

1

2

3

4

5

6

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

$ p

er

bu

she

l

Projected Price Harvest Price

Corn Insurance Prices

Harvest prices have been higher 3 out of last 11 years


Soy Insurance Prices

0

2

4

6

8

10

12

14

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

$ p

er

bu

she

l

Projected Price Harvest Price

Harvest prices have been higher 6 out of last 11 years


Prevented Planting/Replant Payments

• Based on Feb. futures price, not October

• Replant payments are no longer based on actual costs

• Replant Payments:– Corn: 8 bu. x Feb. price, per acre– Soybeans: 3 bu. x Feb. price, per acre


Good Performance Refund• Recent proposal by RMA that could be in place for

the 2011 crop year

• Would provide a refund to producers for good crop insurance performance– Less than 2 years of losses over ten years (2000-09)– Have paid in more than they have received

• Preliminary rules are under discussion now

• Total refunds in the $75 million range

• Estimated average refund for qualifiers ~ $1000– Refunds will be between $25 and $25,000 per producer


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

University Extension/Department of Economics Crop Outlook for 2011 Cerro Gordo and Worth County Corn and Soybean Clinics Northwood and Clear Lake, Iowa