Post-Harvest Crop Marketing Strategies

October 2009
Grain Quality Issues USDA Supply/Demand Report

Weather & Harvest Delays

S Steven D.Johnson h
Farm&AgBusinessManagementSpecialist (515)9575790 sdjohns@iastate.edu www.extension.iastate.edu/polk/farmmanagement.htm

Presentation Objectives
ReviewthelatestU.S.Supply/Demandand PriceForecastsforCorn&Soybeans HighlighttheUSDAYieldEstimates Review2010CropCosts Highlight2010CropPriceForecasts Summarizewith5CropMarketingStrategies &5CropRiskManagementWebsites

U.S. Corn Supply & Demand

2007 AreaPlanted Yield Production Beg.Stocks Imports TotalSupply Feed&Residual Ethanol Food, ,Seed, ,&Other Exports TotalUse EndingStocks SeasonAveragePrice (mil.acres) (bu./acre) (mil bu (mil. bu.) ) (mil.bu.) (mil.bu.) (mil.bu.) (mil.bu.) (mil.bu.) (mil.bu.) ( ) (mil.bu.) (mil.bu.) (mil.bu.) ($/bu.) 93.5 150.7 13 038 13,038 1,304 20 14,362 5,913 3,049 1,338 , 2,437 12,737 1,624 $4.20 2008 86.0 153.9 12 101 12,101 1,624 15 13,740 5,250 3,650 1,276 , 1,858 12,065 1,674 $4.06 2009 86.4 164.2 13 018 13,018 1,674 10 14,702 5,400 4,200 1,280 , 2,150 13,030 1,672 $3.35

Source: WASDE, Updated Oct. 9th, 2009

Corn Trend Line Yields

164.2 bu/A

19901990 -2008 T Trend d

19601960 -2008 Trend

Source: WASDE, Oct. 9th, 2009

USDA Corn Yield Estimates

Corn Cash Price & Probability Forecast

09-10 Marketing Year
Based on 86.4 M planted acres and 166 bu/A avg yield avg.

$3.10/bu 60%

$3.75/bu 15%

$3.25/bu 25%
Source: Wisner, ISU Biofuels Economist, Oct. 9th, 2009

U.S. Soybean Supply & Demand

2007 AreaPlanted Yield Production Beg.Stocks Imports TotalSupply Crush Seed&Residual Exports TotalUse EndingStocks SeasonAveragePrice (mil.acres) (bu./acre) (mil.bu.) (mil.bu.) (mil.bu.) (mil.bu.) (mil.bu.) (mil.bu.) (mil.bu.) (mil.bu.) (mil.bu.) ($/bu.) 64.7 41.7 2,677 574 10 3,261 1,803 93 1,159 3,056 205 $10.10 2008 75.7 39.6 2,959 205 15 3,187 1,662 106 1,280 3,049 138 $9.97 2009 77.5 42.4 3250 138 10 3,398 1,690 173 1,305 3,169 230 $9.00

Source: WASDE, Updated Oct. 9th, 2009

Soybean Trend Line Yields

19901990 -2008 Trend
42 4 bu/A 42.4 b /A

19601960 -2008 Trend

Source: WASDE, Oct. 9th, 2009

USDA Soybean Yield Estimates

Soybean Cash Price & Probability Forecast

09-10 Marketing Year
Based on 77.5 M planted acres and 43.3 bu/A avg yield avg.

$8.95/bu 50%

$10.50/bu 30%

$8.50/bu 20%
Source: Wisner, ISU Biofuels Economist, Oct.9th, 2009

Dollar Value Index Chart

Source: www.jimwykoff.com, Oct. 2009

Corn & Soybean Quality

CornHarvest
similarto2008 moredamagefromthefield lowertestweightandbreakage lowerprotein goodstalkstrengthexcepthail

SoybeanHarvest
possiblylowerprotein goodseedsizeexcepthailareas harvestdelaysmayimpactquality.
Source: www.iowagrain.org, Oct. 2009

Grain Quality: Corn Aeration Phases

Phase1:FallCoolDown
Lowergraintemperaturesstepwise
October4045F November3540F December2835F

Phase2:WinterMaintenance
Maintaintemperatureswithintermittentaeration
January,February2835F

Phase3:SpringHolding
Keepcoldgraincold
Sealfans Ventilateheadspaceintermittently.
Source: www.iowagrain.org, Oct. 2009

Temporary Ground Storage

Pileonsolid,drainedsurface Dry,clean,55lb/butestweightcorn
currentcroponly

Pilerapidly,notatdeliverypace Evensurface,uniformdepth Alwayshaveaeration! 1hp/10,000bu=~0.1cfm/bu Upflowifuncovered,downflowifcovered.

Source: www.iowagrain.org, Oct. 2009

Maximum storage time (months) for corn and soybeans*

Corn temperature F 40 50 60 70 80 Corn, soybeans moisture content 13%, 11% 150 84 47 26 15 14%, 12% 61 34 19 11 6 15%, 13% 29.0 16.0 9.2 5.2 2.9 16%, 14% 15.0 8.9 5.0 2.8 1.6 17%, 15% 9.4 5.3 3.0 1.7 0.9 18%, 16% 6.1 3.4 1.9 1.1 0.9 24% N/A 1.3 0.5 0.3 0.2 0.06

*Based on 0.5% maximum dry matter losscalculated on the basis of USDA research at Iowa State University. Corresponds to one grade number loss; 2-3% pts in damaged seeds Soybeans approximated at 2% lower moisture than corn.

Source: www.iowagrain.org, Oct. 2009

Marketing Decision Chart

Basis Contract Sell Cash and Buy Futures Call Options Mi i Minimum P Price i C Contract, t t Fixed Basis Futures Increase Store & Wait to Price Delayed Price Contract Minimum Price Contract, V i bl B Variable Basis i

Basis Weakens

Expected Change

Basis Strengthens

Cash Sale Forward Contract

Futures Decrease

Hedge Hedge to Arrive/NBE Put Options

Source: ISU Extension Economics, October 2009

2010CropCostEstimates CornFollowingCorn
Low Yield Medium Yield High Yield

$737 $674 $610

Average Yield Cost per bushel

$4.88/bu

$4.65/bu

$4.47/bu

Source: Duffy, ISU Extension Economics, July 2009

2010CropCostEstimates CornFollowingSoybeans
Low Yield Medium Yield High Yield

$722 $658 $594

Average Yield Cost per bushel

$4.25/bu

$4.11/bu

$4.01/bu

Source: Duffy, ISU Extension Economics, July 2009

2010CropCostEstimates SoybeansFollowingCorn
Low Yield Medium Yield High Yield

$487 $449

$525

Average Yield Cost per bushel

$9.97/bu

$9.73/bu

$9.55/bu

Source: Duffy, ISU Extension Economics, July 2009

2010BreakEvenCostsbyCropRotation&Yield

Source: Duffy, ISU Extension Economics, July 2009

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Corn Cash Price & Probability Forecast

10-11 Marketing Year
Based on 88 M planted acres and 159 bu/A avg yield avg.

$3.75/bu 65%

$4.40/bu 18%

$3.55/bu 17%
Source: Wisner, ISU Biofuels Economist, Oct. 9th, 2009

Soybean Cash Price & Probability Forecast

010-11 Marketing Year
Based on 76.2 M planted acres and 43.1 bu/A avg yield avg.

$8.25/bu 65%

$10.30/bu 18%

$7.50/bu 17%
Source: Wisner, ISU Biofuels Economist, Oct. 9th, 2009

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5 Post-Harvest Marketing Strategies

Plan 2010 Crop Rotation: Fall Tillage & Fertility Decisions Grain Quality will be a C i i l Critical Factor Later than Normal Fall Harvest, , Basis Variability Utilize Fall Harvest Delays to Trigger Sales

Utilize a Variety of Tools: Sell 2009 Crop to Match Cash Flow & On-Farm Storage Source: Johnson, ISUE Farm Mgt., Sept. 2008.
Source: Johnson, ISU Extension, October 2009

5 Crop Risk Management Web Sites

AgDecisionMaker ISUExtensionEconomics
(CropOutlookandProfitability,Publications,Spreadsheets DecisionTools)

www.extension.iastate.edu/agdm FarmDoc Uof fILExtensionEconomics www.farmdoc.uiuc.edu GrainMarketingEconomics www.econ.iastate.edu/faculty/hart IowaGrainQualityInitiative www.iowagrain.org CropRiskManagement ISUPolkCounty
Marketing,FarmProgram,CropInsurance&FarmlandLeasing Updates/Newsletters/Webcasts

www.extension.iastate.edu/polk/farmmanagement
Source: Johnson, ISU Extension, October 2009

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