university extension/department of economics 2011 grain market outlook 2011 weather & market...

University Extension/Department of Economics

2011 Grain Market Outlook

2011 Weather & Market Outlook SeminarsCedar Rapids and Hills, Iowa

Mar. 9, 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 4,950

Food, Seed, & Other (mil. bu.) 1,338 1,316 1,371 1,400

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

Total Use (mil. bu.) 12,737 12,056 13,066 13,500

Ending Stocks (mil. bu.) 1,624 1,673 1,708 675

Season-Average Price ($/bu.) 4.20 4.06 3.55 5.40


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

Unknown8%

Other22%

China1%

Taiwan5%

SouthKorea

7%

Egypt6%

Mexico17%

Japan30%


Corn Export Shifts

Source: USDA, FAS

Japan

MexicoTaiwan

EgyptUnknown

Other

South Korea

Total

China

-40

-20

0

20

40

60

80

100

Mill

ion

bu

she

ls

14.4%

-7.2%

-15.2%

-13.3%

74.6%40.4%

0.6%

6.2%


Corn Advance Export Sales

Source: USDA, FAS

0

100

200

300

400

500

600

700

12

/30

1/1

3

1/2

7

2/1

0

2/2

4

3/1

0

3/2

4

4/7

4/2

1

5/5

5/1

9

6/2

6/1

6

6/3

0

7/1

4

7/2

8

8/1

1

8/2

5

Mill

ion

bu

shels

2011 Crop 2010 Crop


Soybean Export Sales

Source: USDA, FAS

0

400

800

1,200

1,600

Week

Mill

ion

bush

els

2008 2009 2010


2010 U.S. Soybean Exports

Source: USDA, FAS

Other10%

Unknown5%

Indonesia2%

Mexico6%

Japan5%

Taiwan3%

EU6%

China63%


Soy Export Shifts

Source: USDA, FAS

China

EU

JapanMexico

Taiwan

Total

Other

Indonesia

Unknown

-40

-20

0

20

40

60

80

100

120

140

Mill

ion b

ush

els

12.9%

-0.4% 1.6%

8.7%-10.0%

142.2%

-12.2%

10.0%

7.7%


Soy Advance Export Sales

Source: USDA, FAS

0

100

200

300

400

500

600

700

12

/30

1/1

3

1/2

7

2/1

0

2/2

4

3/1

0

3/2

4

4/7

4/2

1

5/5

5/1

9

6/2

6/1

6

6/3

0

7/1

4

7/2

8

8/1

1

8/2

5

Mill

ion

bu

shels

2011 Crop 2010 Crop


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


-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

Ethanol Blending Advantage


0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

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

Ethanol Gasoline

Fuel Prices


Projected 2010 Season-Average Corn Price

3.00

3.50

4.00

4.50

5.00

5.50

6.00

6/8

/20

09

8/8

/20

09

10

/8/2

00

9

12

/8/2

00

9

2/8

/20

10

4/8

/20

10

6/8

/20

10

8/8

/20

10

10

/8/2

01

0

12

/8/2

01

0

2/8

/20

11

$ 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

/20

09

8/8

/20

09

10

/8/2

00

9

12

/8/2

00

9

2/8

/20

10

4/8

/20

10

6/8

/20

10

8/8

/20

10

10

/8/2

01

0

12

/8/2

01

0

2/8

/20

11

$ 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

6.00

6.25

12

/14

/20

09

1/1

4/2

01

0

2/1

4/2

01

0

3/1

4/2

01

0

4/1

4/2

01

0

5/1

4/2

01

0

6/1

4/2

01

0

7/1

4/2

01

0

8/1

4/2

01

0

9/1

4/2

01

0

10

/14

/20

10

11

/14

/20

10

12

/14

/20

10

1/1

4/2

01

1

2/1

4/2

01

1

$ 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

13.50

12

/14

/20

09

1/1

4/2

01

0

2/1

4/2

01

0

3/1

4/2

01

0

4/1

4/2

01

0

5/1

4/2

01

0

6/1

4/2

01

0

7/1

4/2

01

0

8/1

4/2

01

0

9/1

4/2

01

0

10

/14

/20

10

11

/14

/20

10

12

/14

/20

10

1/1

4/2

01

1

2/1

4/2

01

1

$ 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


Corn Futures Trade

Source: CFTC

0

2.5

5

7.5

10

1/3

/20

06

5/3

/20

06

9/3

/20

06

1/3

/20

07

5/3

/20

07

9/3

/20

07

1/3

/20

08

5/3

/20

08

9/3

/20

08

1/3

/20

09

5/3

/20

09

9/3

/20

09

1/3

/20

10

5/3

/20

10

9/3

/20

10

1/3

/20

11

Bill

ion

bu

she

ls

$2.00

$3.50

$5.00

$6.50

$8.00

Total Trade Non Comm Net Price


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 B

ush

el

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

14.00

$ p

er

Bu

she

l

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 a

cres


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

Mar. 8 9.26 6.10 13.46 1.21

Change 59% 51% 46% 60%


Projected Crop Margins

140

160

180

200

220

240

260

280

300

320

$ p

er

acr

e

Corn Margin Per Acre Soy Margin Per Acre


Pre-Harvest Strategies

Source: Farm Futures magazine

72%68%

68%

68%

52%

52%

68%

72%

52%

56%


Current Corn Futures

6.00

6.10

6.20

6.30

6.40

6.50

6.60

6.70

6.80

6.90

7.00

7.10

7.20

Mar-

11

Apr-

11

May-

11

Jun-1

1

Jul-11

Aug

-11

Sep

-11

Oct

-11

No

v-11

De

c-11

$ p

er

bu

sh

el

0.070.12

-0.43

-0.89


Current Soybean Futures

13.40

13.50

13.60

13.70

13.80

13.90

14.00

Ma

r-1

1

Ap

r-1

1

Ma

y-1

1

Jun

-11

Jul-

11

Au

g-1

1

Se

p-1

1

Oct

-11

No

v-11

$ p

er

bu

sh

el 0.06

0.15

-0.14

-0.30

0.05


Thoughts for 2011 and BeyondGeneral economic conditions

Continued economic recovery is a major key for crop pricesLong-term oil prices are now in the $100 range

Supply/demand concerns92 million acres of corn and 78 million acres of soybeans?South America: La Niña impacts (Argentina , Brazil )Biofuels: E15; Ethanol & Biodiesel tax credits renewedWill supply be able to keep pace with demand?

2010/11: USDA: Corn $5.40, Soy $11.70Futures (as of 3/8/2011): Corn $5.46, Soy $11.75

2011/12:Futures (as of 3/8/2011): Corn $5.95, Soy $12.93


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/

university extension/department of economics 2011 grain market outlook 2011 weather & market...

Documents