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Crop Outlook and Grain Flow Shifts

This report provides insights into the crop outlook and grain flow shifts in Iowa, covering topics such as corn and soybean supply and use, producer and handler markets, livestock adjustments, ethanol margins, crop exports, and more.

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Crop Outlook and Grain Flow Shifts

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  1. Crop Outlook and Grain Flow Shifts Iowa Cooperative Managers’ Association Johnston, Iowa February 10, 2009 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

  2. U.S. Corn Supply and Use +81 -50 -100 -50 +316 $4.00 -0.10 $3.90 Source: USDA-WAOB, Jan. 2009

  3. U.S. Soybean Supply and Use +38 -30 +50 $9.00 NC $9.00 Source: USDA-WAOB, Jan. 2009

  4. 2.05 billion bushels of corn were produced during the 2006/07 marketing year. 82% sold, 11% utilized on the farm, 7% remaining for future sales 510 million bushels of soybeans were produced 92% sold, 1% used on the farm, 7% expected to be marketed Grain Marketers Survey Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  5. Producer Markets for Corn Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  6. Shifting Markets for Corn percent Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  7. Producer Markets for Soybeans Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  8. Shifting Markets for Soybeans percent Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  9. About 1.09 billion bushels of corn and 311 million bushels of soybeans were processed or shipped. More than 2 million tons of ethanol co-products were handled during the 2006/07 marketing year. Corn shipments 1999/2000: 43% by truck, 57% by rail 2006/07: 66% by truck, 30% by rail Grain Handlers Survey Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  10. Handler Markets for Corn Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  11. Shifting Markets for Corn Handlers percent Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  12. Handler Markets for Soybeans Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  13. Shifting Markets for Soy Handlers percent Source: Yu and Hart 2006/07 Iowa Grain and Biofuel Flow Survey

  14. Livestock Adjustments Sows farrowing: Sept-Nov 2008 2.99 million, down 6% from last year Dec-Feb 2009 2.97 million, down 3% from last year Mar-May 2009 3.01 million, down 2% from last year Broiler-type eggs set: 203 million, down 7% from last year Broiler chicks placed: 166 million, down 6% from last year Feedlot placements: 2.02 million, down 5% from last year Sources: Various USDA-NASS reports

  15. Ethanol Margins Source: ISU, CARD

  16. Renewable Fuels Standard (RFS)

  17. U.S. Blended Motor Gasoline Consumption Source: Energy Information Administration

  18. Outside Influences (Jan. 2007 = 1)

  19. Outside Influences (Sept. 2008 = 1)

  20. Crop Exports Source: USDA, PSD

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

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

  23. Argentine Drought Impacts (Early Reports) 2007 Production Corn 20.9 million tons Soybeans 46.2 million tons Current USDA Estimates Corn 16.5 million tons -21% Soybeans 49.5 million tons +7% Estimates from Buenos Aires Cereal Exchange Corn 12.3 to 13.7 million tons -35 to -41% Soybeans 34.5 to 38.2 million tons -17 to -25% Source: Dow Jones Newswires

  24. Chinese Corn Production Source: USDA-WAOB, Jan. 2009

  25. Soybeans in China Source: USDA-PSD, Jan. 2009

  26. 2007 World Corn Exports Drought issues for 2008 crops Source: USDA, FAS

  27. 2007 World Soybean Exports Drought issues for 2008 crops Source: USDA, FAS

  28. Pace of Corn Export Sales Source: USDA, FAS

  29. 2008 U.S. Corn Exports Source: USDA, FAS

  30. Pace of Soybean Export Sales Source: USDA, FAS

  31. 2008 U.S. Soybean Exports Source: USDA, FAS

  32. U.S. Stocks-to-Use Ratios

  33. Estimates for 2009 Iowa Costs December 2009 Corn Futures = $4.2175 (2/9/09) November 2009 Soy Futures = $9.43 (2/9/09) Source: Duffy and Smith, http://www.extension.iastate.edu/agdm/crops/pdf/a1-20.pdf

  34. Finishing Out the 2008 Crop Year • General economic conditions • A lot of recent market trade has been tied to reaction to the financial crisis and the world’s response • Economic slowdown raises concern about export and energy demand • Most important ag. statistic: Exchange rates or South American production • Current futures are indicating 2008 season-average prices of $3.75-4.25 for corn and $9.25-9.75 for soybeans • Stress on South American crops has provided some support for prices

  35. Thoughts for 2009 and Beyond • Many of the storylines from 2008 will continue • Tight stocks for corn (worldwide) and soybeans (U.S.) • The competition for acreage • Ethanol’s buildout & livestock’s adjustment • Energy price & general economy concerns • Market volatility will remain high • Link to the energy markets • More market players with different trading objectives • Given current factors, the 2009 outlook is for crop prices around $4.00 for corn and $8.50-8.75 for soybeans • Key factor: Economic growth returns by early 2010

  36. Thank you for your time!Any questions?My web site:http://www.econ.iastate.edu/faculty/hart/Iowa Farm Outlook:http://www.econ.iastate.edu/outreach/agriculture/periodicals/ifo/Ag Decision Maker:http://www.extension.iastate.edu/agdm/ Grain and Biofuel Flow Survey Report:http://www.card.iastate.edu/publications/DBS/PDFFiles/08sr102.pdf

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