13
Dry Mill Plant Profitability(% ROI for a 75 Million Gallon Plant, 60% Debt Financed)
Source: Roberts, OSU and Tiffany, U of MN, 2007.25
US Soybean Supply & Demand
Source: USDA WASDE Report, Jan. 11th, 2008.
14
$9.90
$10.90
U.S. Soybean Ending Stocks vs. Price(National Cash Average)
Source: USDA WASDE Reports, Jan. 11th, 2008.
27
s 500
600
700U.S. Soybean Carryover
Mill
ion
bush
el
100
200
300
400
Source: ProFarmer Newsletter, Jan. 11th, 2008.
28
1975
-76
1977
-78
1979
-80
1981
-82
1983
-84
1985
-86
1987
-88
1989
-90
1991
-92
1993
-94
1995
-96
1997
-98
1999
-00
2001
-02
2003
-04
2005
-06
2007
-08
0
15
ons
45
55
65Global Soybean Carryover
Mill
ion
met
ric t
5
15
25
35
45
Source: ProFarmer Newsletter, Dec. 11th, 2007.
29
1990
-91
1991
-92
1992
-93
1993
-94
1994
-95
1995
-96
1996
-97
1997
-98
1998
-99
1999
-00
2000
-01
2001
-02
2002
-03
2003
-04
2004
-05
2005
-06
2006
-07
2007
-085
Soybean Cash Price & Probability Forecast’07-’08 Marketing Year
$10.80/bu65%
$12.00/bu18%
$10.00/bu17%
Source: Wisner, ISU Ext. Economics, 1-14-08.
16
Soybeans Storage Costs
Source: ISU Extension Economics, Jan. 2008.
31
Biodiesel Refineries
32
Source: www.iowarfa.org, Dec, 2007.
17
Jul$13.37Jan. 15th , 2008
Soybean Futures Carry
May $13.20
Mar. $13.02
Jan XXXXX
Adequate carry, rewards on-farmJan. XXXXX
Source: CBOT & ISU Ext. Economics, Jan. 2008.
Nov. $12.85
33
rewards on farm storage
Seasonal Soybean Futures Trend
65% Odds: Spring Price Exceeds
CBOT data
Harvest Price
Source: U of MN, CFFM, 2007.
34
18
Historical Soybean Monthly Futures Price
Source: Jim Wyckoff, Dec. 2007.
35
Historical Soybean Weekly Futures Price
Source: Jim Wyckoff, Dec. 2007.
36
19
Soybean CFTC Report
Weekly Soybean Futures
1200
1300
1400
0.9
1.2
1.5
Speculative FundsCommercials
with trader positions
600
700
800
900
1000
1100
cent
s/bu
sh
09
-0.6
-0.3
0
0.3
0.6
Net
pos
ition
s - b
illio
n bu
CommercialsIndex Funds
Source: Commodity Futures Trading Commission & AgriVisor, Jan. 11th, 2008. 37
400
500
600
Feb-04 Aug-04 Feb-05 Aug-05 Feb-06 Aug-06 Feb-07 Aug-07 Feb-08-1.5
-1.2
-0.9
U.S. Planted Acreage Trend & Outlook
◊ - Estimated * - Forecast Source: USDA NASS & ISU Ext. Economics, Jan. 2008.
20
2008 U.S. Planted Acres
More WheatSource: Johnson, ISU Ext. Economics, Jan. 2008.
Soybean to Corn Price RatioNew Crop Soybean Futures ÷ New Crop Corn Futures
Average = 2.31
2008 Futures Price Ratio: $12.85 ÷ $5.29 = 2.43$ $
Source: CBOT & ISU Extension Economics, Jan. 2008.
40
21
Corn & Soybean Direct Input Costs ($/A)Historical vs. 2008 Estimates
Source: U of IL Extension Economics, Oct. 2007.
41
$314/A
Margins: Gross Revenue vs. Non-Land Costs ($/A)Historical vs. 2008 Estimates
$200/A Margin minus Land
Margin
$154/A Margin
$268/A Margin
42
Source: U of IL Extension Economics, Oct. 2007.
22
Corn Revenue Guarantee vs. Insurance Premium
* Forecast
Source: Johnson, ISU Ext. Economics, Jan. 2008.
43
Soybean Revenue Guarantee vs. Insurance Premium
* Forecast
Source: Johnson, ISU Ext. Economics, Jan. 2008.
44
23
2007 Iowa Crop Insurance Products
12%
6%RA – Revenue AssuranceCRC – Crop Revenue CoverageAPH – Actual Production HistoryGRIP – Group Risk Income ProtectionGRP – Group Risk ProtectionIP – Income Protection
21%59%
21%
Source: USDA Risk Management Agency, Nov. 2007.
45
2007 Iowa Crop Insurance Coverage
6%
5%5%
60% Coverage55% Coverage
34%
11%
24%
15%
Source: USDA Risk Management Agency, Nov. 2007.
46
24
Use of Crop Revenue
Insurance
Plan Ahead: Crop Rotation, Purchases and
P H t
5 Strategies for Growing Forward
Coverage
Match Crop Sales to Your Cash Flow &
Expect Large Gross Revenues
& Margin
Pre-Harvest Sales
Source: Johnson, ISU Ext. Economics, Jan. 2008.
47
Cash Flow & Storage
Manage Input Costs: Land, Fertilizer, Machinery
& Margin Compression
5 Advanced Decision Tools• Ag Decision Maker (Spreadsheets - Decision
Tools)www.extension.iastate.edu/agdm
• Ag Marketing Resource Centerwww.agmrc.org
• Center for Ag & Rural Development (CARD)www.card.iastate.edu
• Crop Marketing Newsletters/Webcastswww.extension.iastate.edu/polk/farmmanagement
• Farm Analysis Solution Tools (FAST Tools)www.farmdoc.uiuc.edu/fasttools/index.asp
Source: Johnson, ISU Ext. Economics, Jan. 2008.
48