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Crops, Biofuels, and Policy in 2011

Explore key insights from the 2011 Ag Credit School in Ames, Iowa, regarding crops, biofuels, and policy impact. Gain valuable knowledge on corn and soybean supply, planting progress, global production, exports, renewable fuel standards, government policies, and projected crop prices. Understand how biofuel growth and energy demand influence agricultural markets and learn about crucial factors shaping crop prices and margins.

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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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