Department of Economics

Corn & SoybeanSituation and Outlook

AAEA & ACCI2009 Joint Annual Meeting

Milwaukee, WisconsinJuly 27, 2009

Chad HartAssistant Professor/Grain Markets Specialist

chart@iastate.edu515-294-9911

Department of Economics

U.S. Corn Supply and Use

Source: USDA

3.754.054.20($/bu.)Season-Average Price1,5501,7701,624(mil. bu.)Ending Stocks

12,52511,97012,737(mil. bu.)Total Use1,9501,8002,436(mil. bu.)Exports1,2751,2701,337(mil. bu.)Food, Seed, & Other4,1003,6503,026(mil. bu.)Ethanol5,2005,2505,938(mil. bu.)Feed & Residual

14,07513,74014,362(mil. bu.)Total Supply151520(mil. bu.)Imports

1,7701,6241,304(mil. bu.)Beg. Stocks12,29012,10113,038(mil. bu.)Production153.4153.9150.7(bu./acre)Yield87.086.093.5(mil. acres)Area Planted200920082007

Department of Economics

U.S. Soybean Supply and Use

Source: USDA

9.3010.0010.10($/bu.)Season-Average Price

1,6801,6551,803(mil. bu.)Crush17515491(mil. bu.)Seed & Residual

1,2751,2601,161(mil. bu.)Exports3,1303,0703,056(mil. bu.)Total Use

3,2612,9592,677(mil. bu.)Production110205574(mil. bu.)Beg. Stocks101510(mil. bu.)Imports

3,3803,1793,261(mil. bu.)Total Supply

250110205(mil. bu.)Ending Stocks

42.639.641.7(bu./acre)Yield77.575.764.7(mil. acres)Area Planted200920082007

Department of EconomicsSource: USDA, Weekly Weather and Crop Bulletin

Department of Economics

Hog Returns vs. Corn Prices

Sources: ISU Extension, Farrow-to-Finish;USDA-NASS

-50

-40

-30

-20

-10

0

10

20

30

Sep-06

Dec-06

Mar-07

Jun-07

Sep-07

Dec-07

Mar-08

Jun-08

Sep-08

Dec-08

Mar-09

Jun-09

$ pe

r hea

d

2

3

4

5

6

$ pe

r bus

hel

Department of Economics

0.80

0.85

0.90

0.95

1.00

1.05

1.10

Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

Canada Mexico Brazil EU China South KoreaJapan Australia

Exchange Rates (Jan. 2009 = 1)

Source: USDA, ERS

Department of Economics

2009 Advance Export Sales

Source: USDA, FAS

0

50

100

150

200

250

300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Milli

on b

ushe

ls

Corn Soybeans

Department of Economics

Crude Oil Futures Prices

Source: NYMEX

60

70

80

90

100

110

120

130

140

Aug.2008

Dec.2008

Dec.2009

Dec.2010

Dec.2011

Dec.2012

Dec.2013

Dec.2014

Dec.2015

Dec.2016

$ pe

r bar

rel

2008 2009

Department of Economics

Renewable Fuels Standard (RFS)

0

2

4

6

8

10

12

14

16

2009 2010 2011

Billio

n ga

llons

Additional Advanced Biofuels BiodieselCellulosic Biofuels Conventional Biofuels

CropYear

Billion Bushels

2008 3.572009 4.112010 4.43

Department of Economics

Outside Influences (Jan. 2007 = 1)

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

2.3

1/3/

2007

3/3/

2007

5/3/

2007

7/3/

2007

9/3/

2007

11/3

/200

7

1/3/

2008

3/3/

2008

5/3/

2008

7/3/

2008

9/3/

2008

11/3

/200

8

1/3/

2009

3/3/

2009

5/3/

2009

7/3/

2009

Corn Soybeans Ethanol Gasoline

Department of Economics

Outside Influences (Jan. 2009 = 1)

0.75

1.00

1.25

1.50

1.75

2.00

1/2/

2009

1/16

/200

9

1/30

/200

9

2/13

/200

9

2/27

/200

9

3/13

/200

9

3/27

/200

9

4/10

/200

9

4/24

/200

9

5/8/

2009

5/22

/200

9

6/5/

2009

6/19

/200

9

7/3/

2009

7/17

/200

9

Corn Soybeans Ethanol Gasoline

Department of Economics

1.5

2

2.5

3

3.5

0% 5% 10% 15% 20% 25% 30%

Price ($ per bushel)

Stocks‐to‐use ratio

Corn1990 - 2006

Department of Economics

2007/082008/092009/10 May

2009/10 June

2009/10 July

1.5

2

2.5

3

3.5

4

4.5

0% 5% 10% 15% 20% 25% 30%

Price ($ per bushel)

Stocks‐to‐use ratio

Corn

Department of Economics

Seasonal Pricing Patterns

0.94

0.96

0.98

1.00

1.02

1.04

1.06

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Corn SoySource: USDA, NASS,Monthly Price Data 1980-2008

Department of Economics

3.00

3.20

3.40

3.60

3.80

4.00

Aug

-09

Sep

-09

Oct

-09

Nov

-09

Dec

-09

Jan-

10

Feb-

10

Mar

-10

Apr-1

0

May

-10

Jun-

10

Jul-1

0

$ pe

r bus

hel

Corn Futures

Source: CBOT, 7/24/09

2009 Rev. Ins. Price $4.04

Department of Economics

8.80

9.20

9.60

10.00

10.40

Aug

-09

Sep

-09

Oct

-09

Nov

-09

Dec

-09

Jan-

10

Feb-

10

Mar

-10

Apr

-10

May

-10

Jun-

10

Jul-1

0

$ pe

r bus

hel

Soybean Futures

Source: CBOT, 7/24/09

2009 Rev. Ins. Price $8.80

Department of Economics

Thoughts for 2009 and BeyondGeneral economic conditions

Recession concerns still hold significant power in the marketsProjected economic recovery is a major key for crop prices for the

2009 crop year

Most important ag. statistics: Crop yield and acreage estimates

USDA is indicating 2009 season-average prices in the neighborhood of $3.75 for corn and $9.30 for soybeans (Update coming Aug. 12)

Current futures Friday: Corn $3.08, Soy $8.71

Department of Economics

Thank you for your time!

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/