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Ethanol, Grain Marketing, and Risk Management

Ethanol, Grain Marketing, and Risk Management. 25 th Annual Tri-State Agricultural Lender’s Seminar Dubuque, Iowa Oct. 26, 2011 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911. Oil Prices. Source: EIA for history, NYMEX for future. Population.

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Ethanol, Grain Marketing, and Risk Management

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  1. Ethanol, Grain Marketing, and Risk Management 25th Annual Tri-State Agricultural Lender’s Seminar Dubuque, Iowa Oct. 26, 2011 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

  2. Oil Prices Source: EIA for history, NYMEX for future

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

  4. Liquid Fuel Usage Source: Energy Information Administration

  5. Ethanol Production Source: EIA, 2011 Projection by Hart

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

  7. Corn Grind for Ethanol Source: DOE-EIA

  8. Ethanol Margins Source: CARD

  9. Ethanol Margins Source: CARD

  10. Ethanol Blending Advantage

  11. RFS Coverage

  12. Gasoline Consumption Source: EIA, Annual Energy Outlook

  13. U.S. Corn Supply and Use Source: USDA-WAOB

  14. U.S. Soybean Supply and Use Source: USDA-WAOB

  15. Projected Corn Yields Source: USDA-NASS

  16. Projected Soybean Yields Source: USDA-NASS

  17. World Corn Production Source: USDA-WAOB

  18. World Soybean Production Source: USDA-WAOB

  19. Corn vs. Wheat Source: CME Group, 10/25/2011

  20. 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

  21. Corn Export Sales Source: USDA-FAS

  22. Corn Export Shifts Source: USDA-FAS

  23. Soybean Export Sales Source: USDA-FAS

  24. Soy Export Shifts Source: USDA-FAS

  25. Projected 2011 Season-Average Corn Price

  26. Projected 2011 Season-Average Soy Price

  27. Projected 2012 Season-Average Corn Price

  28. Projected 2012 Season-Average Soy Price

  29. Iowa Corn Prices vs. Costs

  30. Iowa Soybean Prices vs. Costs

  31. Iowa Crop Margins

  32. Thoughts for 2012 and Beyond • General economic conditions • Continued worldwide economic recovery is a major key for crop prices • US job recovery, European financial concerns, Chinese inflation • Supply/demand concerns • Smaller than anticipated U.S. crops • Biofuel growth and energy demand • Corn still has the upper hand in the acreage competition • Will supply be able to keep pace with demand? • 2011/12: USDA: Corn $6.70; Soy $13.15 • Futures (as of 10/25/11): Corn $6.32; Soy $11.97 • 2012/13: Futures (as of 10/25/11): Corn $5.90; Soy $11.92

  33. 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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