university extension/department of economics crop outlook for 2011 cerro gordo and worth county corn...
TRANSCRIPT
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
University Extension/Department of Economics
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 ($/bu.) 4.20 4.06 3.55 5.30
University Extension/Department of Economics
U.S. Soybean Supply and Use2007 2008 2009 2010
Area Planted (mil. acres) 64.7 75.7 77.5 77.4
Yield (bu./acre) 41.7 39.7 44.0 43.5
Production (mil. bu.) 2,677 2,967 3,359 3,329
Beg. Stocks (mil. bu.) 574 205 138 151
Imports (mil. bu.) 10 13 15 15
Total Supply (mil. bu.) 3,261 3,185 3,512 3,495
Crush (mil. bu.) 1,803 1,662 1,752 1,655
Seed & Residual (mil. bu.) 93 106 108 110
Exports (mil. bu.) 1,159 1,279 1,501 1,590
Total Use (mil. bu.) 3,056 3,047 3,361 3,355
Ending Stocks (mil. bu.) 205 138 151 140
Season-Average Price ($/bu.) 10.10 9.97 9.59 11.70
Source: USDA
University Extension/Department of Economics
World Corn Production
Source: USDA
University Extension/Department of Economics
World Soybean Production
Source: USDA
University Extension/Department of Economics
La Niña Winter
Source: NOAA
El Niño
Neutral
La Niña
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
2010 U.S. Corn Exports
Source: USDA, FAS
Unknown11%
Other20%
China1%
Taiwan5%
SouthKorea
7%
Egypt7%
Mexico15%
Japan29%
University Extension/Department of Economics
Soybean Export Sales
Source: USDA, FAS
0
400
800
1,200
1,600
Week
Mill
ion
bu
she
ls
2008 2009 2010
University Extension/Department of Economics
2010 U.S. Soybean Exports
Source: USDA, FAS
Unknown7%
Other10%
Indonesia2%
Mexico5%
Japan4%
Taiwan3%
EU5%
China64%
University Extension/Department of Economics
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%
University Extension/Department of Economics
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
University Extension/Department of Economics
Ethanol Margins
Source: ISU, CARD
University Extension/Department of Economics
Ethanol Margins
Source: ISU, CARD
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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%
University Extension/Department of Economics
University Extension/Department of Economics
Pre-Harvest Strategies
Source: Farm Futures magazine
72%68%
68%
68%
52%
52%
68%
72%
52%
56%
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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
University Extension/Department of Economics
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/