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Crops, Biofuels, and Policy in 2011

Crops, Biofuels, and Policy in 2011. Ag Credit School Ames, Iowa June 6, 2011 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911. U.S. Corn Supply and Use. U.S. Soybean Supply and Use. Corn Planting Progress. Source: USDA-NASS. Corn Area.

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Crops, Biofuels, and Policy in 2011

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  1. Crops, Biofuels, and Policy in 2011 Ag Credit School Ames, Iowa June 6, 2011 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

  2. U.S. Corn Supply and Use

  3. U.S. Soybean Supply and Use

  4. Corn Planting Progress Source: USDA-NASS

  5. Corn Area Source: USDA-NASS

  6. Comparison to 2008 Source: USDA-NASS

  7. Soybean Planting Progress Source: USDA-NASS

  8. Soybean Area Source: USDA-NASS

  9. World Corn Production Source: USDA

  10. Corn – Argentina & Brazil Source: USDA

  11. World Soybean Production Source: USDA

  12. Soybeans – Argentina & Brazil Source: USDA

  13. Population Source: U.S. Bureau of the Census, International Data Base

  14. World Consumption Growth In 2000, we used 21.5 billion bushels of wheat, 24 billion bushels of corn, and 6 billion bushels of soybeans. Sources: USDA, FAPRI

  15. Hog Crush Margin 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 futures Corn: 10 bushels per pig Soybean meal: 150 pounds per pig Source: Shane Ellis, ISU Extension

  16. Cattle Crush Margin 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 Source: Shane Ellis, ISU Extension

  17. Wheat Crop Condition Source: USDA-NASS

  18. Exchange Rates (Jan. 2003 = 1) Source: USDA, ERS

  19. Corn Export Sales Source: USDA, FAS

  20. Soybean Export Sales Source: USDA, FAS

  21. Export Pace vs. Last Year Source: USDA, FAS

  22. Corn Export Shifts Source: USDA, FAS

  23. Corn Advance Export Sales Source: USDA, FAS

  24. Soybean Export Shifts Source: USDA, FAS

  25. Soy Advance Export Sales Source: USDA, FAS

  26. Nearby Futures (Jan. 3, 2011 = 1)

  27. Ethanol Margin Source: CARD

  28. Ethanol Blending Advantage

  29. Corn Grind for Ethanol

  30. Ethanol Stocks

  31. Projected Ethanol Margin Source: CARD

  32. Proj. Ethanol Blending Advantage

  33. Liquid Fuel Usage Source: U.S. Dept. of Energy, Energy Information Administration

  34. Renewable Fuels Standard (RFS)

  35. Farm Bill Titles Commodities IX. Energy Conservation X. Hort. & Organic Ag. Trade XI. Livestock Nutrition XII. Crop Insurance Credit XIII. Commodity Futures Rural Development XIV. Miscellaneous Research XV. Trade & Taxes Forestry

  36. Farm Bill Projected Spending Projected Spending 2008-2013 $297 Billion

  37. Government Deficits Source: Congressional Budget Office, Apr. 2011

  38. Government Policies for Biofuels Ethanol • Ad valorem tariff of 2.5% • Import duty of $0.54 per gallon • Volumetric Ethanol Excise Tax Credit (VEETC) • $0.45 per gallon Biodiesel • Biodiesel Mixture Excise Tax Credit • $1.00/0.50 per gallon Cellulosic • Cellulosic Biofuel Producer Tax Credit • $1.01 per gallon

  39. Cellulosic Biofuel Waiver Provisions • EPA (in consultation with DOE and USDA) can reduce the cellulosic biofuel mandated volume • Waiver trigger based on EIA projections • EPA will also sell cellulosic biofuel credits • Price set at Max($0.25 per gallon, $3.00 – Average wholesale gasoline price per gallon)

  40. Biomass Crop Assistance Program • To support production of crops for bioenergy and assist with collection, harvest, storage, and transportation of biomass to conversion facilities • Excluded materials • Farm program crops, animal byproducts, food waste, yard waste, algae

  41. Biomass Crop Assistance Program • Payments are authorized for biomass collection, harvest, storage, and transportation • Matching payments • $1 for each $1 per ton paid by conversion facility, up to $45 per ton, for 2 years

  42. Projected 2011 Season-Average Corn Price

  43. Projected 2011 Season-Average Soy Price

  44. Projected Harvest Time Crop Margins

  45. Corn Prices vs. Costs

  46. Soybean Prices vs. Costs

  47. Input Costs Source: USDA, Agricultural Prices, May 31, 2011

  48. Thoughts for 2011 and Beyond • General economic conditions • Continued worldwide economic recovery is a major key for crop prices • Energy prices limiting recovery • US job recovery, European financial concerns, Chinese inflation • Supply/demand concerns • Prevented planting and flooding taking out corn area • Biofuel growth and energy demand • Will supply be able to keep pace with demand? • 2010/11: USDA: Corn $5.25, Soy $11.40 • 2011/12: USDA: Corn $6.00, Soy $13.00 • Futures (as of 6/3/2011): Corn $6.69, Soy $13.48

  49. 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/

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