The Outlook for Ethanol, Corn, and Beef

Chad HartCenter for Agricultural and Rural Development &Food and Agricultural Policy Research Institute

Iowa State Universitychart@iastate.edu

515-294-9911

Beef Quality Summit: Beef Quality in the Ethanol EraOmaha, NebraskaNovember 8, 2007

Outline

•Look at key variables for ethanol, crops, and beef sectors

•FAPRI March 2007 Baseline

•FAPRI August 2007 Update

Model Interactions

Current ethanol capacity: 131 plants, 6.92 billion gallons/year

Total capacity under construction and expansion: 6.56 billion gallons/year

73 new ethanol plants and 10 expansion projects underway

U.S. Ethanol Industry

2.2 billion bushels of corn were used in producing fuel ethanol in 2006/2007 marketing year.

3.2-3.5 billion bushels of corn are expected to be used in producing fuel ethanol for 2007/2008 marketing year.

Projected U.S. Ethanol Production

0

2

4

6

8

10

12

14

16

2006 2008 2010 2012

billion gallons

0

2

4

6

8

10

12

14

16

Aug-07 Mar-07

Wholesale Gasoline and Ethanol Prices

1.00

1.25

1.50

1.75

2.00

2.25

2.50

2.75

3.00

2006 2008 2010 2012

US$/gallon

Unleaded Gasoline Ethanol

Projected U.S. Corn Acreage

75

80

85

90

95

2006 2008 2010 2012

million acres

75

80

85

90

95

Aug-07 Mar-07

Projected U.S. Corn Production

10

11

12

13

14

15

2006 2008 2010 2012

billion bushels

10

11

12

13

14

15

Aug-07 Mar-07

Projected U.S. Corn Prices

3.00

3.05

3.10

3.15

3.20

3.25

3.30

3.35

3.40

2006 2008 2010 2012

$/bushel

3.00

3.05

3.10

3.15

3.20

3.25

3.30

3.35

3.40

Aug-07 Mar-07

Projected Utilization of U.S. Corn

0

1000

2000

3000

4000

5000

6000

7000

2006 2007 2008 2009 2010 2011 2012

million bushels

Feed Fuel HFCS Seed Food, Other Exports

Projected U.S. Wheat Acreage

55

57

59

61

63

65

2006 2008 2010 2012

million acres

55

57

59

61

63

65

Aug-07 Mar-07

Projected U.S. Wheat Prices

4.00

4.20

4.40

4.60

4.80

5.00

5.20

2006 2008 2010 2012

$/bushel

4.00

4.20

4.40

4.60

4.80

5.00

5.20

Aug-07 Mar-07

Projected U.S. Soybean Acreage

60

65

70

75

80

2006 2008 2010 2012

million acres

60

65

70

75

80

Aug-07 Mar-07

Projected U.S. Soybean Prices

6.00

6.40

6.80

7.20

7.60

8.00

8.40

2006 2008 2010 2012

$/bushel

6.00

6.40

6.80

7.20

7.60

8.00

8.40

Aug-07 Mar-07

Projected U.S. Soybean Meal Prices

170.00

180.00

190.00

200.00

210.00

220.00

2006 2008 2010 2012

$/ton

170.00

180.00

190.00

200.00

210.00

220.00

Aug-07 Mar-07

Projected U.S. Hay Acreage

60.0

60.5

61.0

61.5

62.0

62.5

2006 2008 2010 2012

million acres

60.0

60.5

61.0

61.5

62.0

62.5

Aug-07 Mar-07

Projected U.S. Distillers Grains Production

15

25

35

45

2006 2008 2010 2012

million tons

15

25

35

45

Aug-07 Mar-07

Projected U.S. Distillers Grains Prices

85.00

95.00

105.00

115.00

2006 2008 2010 2012

$/ton

85.00

95.00

105.00

115.00

Aug-07 Mar-07

Projected U.S. Beef Cows (Jan. 1)

30

31

32

33

34

35

2006 2008 2010 2012

million head

30

31

32

33

34

35

Aug-07 Mar-07

Projected U.S. Cattle and Calves (Jan. 1)

95

96

97

98

99

100

2006 2008 2010 2012

million head

95

96

97

98

99

100

Aug-07 Mar-07

Projected U.S. Beef Production

25

26

27

28

29

30

2006 2008 2010 2012

billion pounds

25

26

27

28

29

30

Aug-07 Mar-07

Projected U.S. Beef Domestic Use

27

27.5

28

28.5

29

29.5

30

2006 2008 2010 2012

billion pounds

27

27.5

28

28.5

29

29.5

30

Aug-07 Mar-07

Projected U.S. Cattle Prices

1100-1300 lb. NE Direct Steers

80

83

86

89

92

95

2006 2008 2010 2012

$/cwt.

80

83

86

89

92

95

Aug-07 Mar-07

Projected U.S. Beef Retail Prices

3.50

3.70

3.90

4.10

4.30

4.50

2006 2008 2010 2012

$/lb.

3.50

3.70

3.90

4.10

4.30

4.50

Aug-07 Mar-07

Projected U.S. Cow-Calf Net Returns

-50.00

-25.00

0.00

25.00

50.00

75.00

100.00

2006 2008 2010 2012

$/cow

-50.00

-25.00

0.00

25.00

50.00

75.00

100.00

Aug-07 Mar-07

Thank You