www.iowabeefcenter.org adjusting to an ethanol world

www.iowabeefcenter.org

Adjusting to an Ethanol World


US Ethanol Production

0

1000

2000

3000

4000

5000

6000

1980 1985 1990 1995 2000 2005

Millions of Gallons

2006 = 4.9 Bgal


Ethanol Production

0

5000

10000

15000

20000

25000

30000

35000

40000

1980 1985 1990 1995 2000 2005 2010 2015

2017 Bush Target

Millions of Gallons


Existing & Planned U.S. Corn Processing Plants

Blue = OperatingRed = constructionGreen = plannedPink = Expansion of Existing plants

8/30/06

www.iowabeefcenter.orgIowa corn processing & ethanol plants, current & planned, 10/26/06

63

Sac

Linn

Lee

Ida

Tama

Clay Kosuth

Jasper

Lyon

Page

StoryrJones

Fayette

Adair

Bentonn

Wapello

Pocahontas

Osceola

Jefferson

Audubon

Washington

BuenaVista

BlackHawk

Appanoose

CerroGordo

VanBuren

Mucatine

Dickenson

DesMoines

Winnebago

Montgomery

Iowa Corn Processing & Ethanol Plant Locations, Actual & Planned . 9/26/06,

PoweshiekPolk

BooneGreeneCarrollCrawford

Plymouth

O’Brien

Woodbury

Monona

Harrison Shelby

Wright Franklin

Floyd Chickasaw

Webster Hardin

Louisa

Emmet

Palo Alto

Hancock

Worth Mitchell HowardWinneshiek Allamakee

BremerButler

HamiltonGrundy

Buchanan

Delaware

Dubuque

Jackson

Clintonn

Guthrie Dallas

Johnson

Marshall

Pottawattamie

Mills

Fremont

Madison

Warren Marion Mahaska

Keokuk

Adams Union Clarke Lucas Monroe

Taylor Ringgold

Cherokee

Calhoun

Decatur Wayne Davis

Henry

Scott

Humboldt

Clayton

Cedar

Sioux

Cass

Iowa*

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Sac

Linn

Lee

Ida

Tama

Clay Kosuth

Jasper

Lyon

Page

StoryrJones

Fayette

Adair

Bentonn

Wapello

Pocahontas

Osceola

Jefferson

Audubon

Washington

BuenaVista

BlackHawk

Appanoose

CerroGordo

VanBuren

Mucatine

Dickenson

DesMoines

Winnebago

Montgomery

,

PoweshiekPolk


Plymouth

O’Brien

Woodbury

Monona

Harrison Shelby

Wright Franklin

Floyd Chickasaw

Webster Hardin

Louisa

Emmet

Palo Alto

Hancock


BremerButler

HamiltonGrundy

Buchanan

Delaware

Dubuque

Jackson

Clintonn

Guthrie Dallas

Johnson

Marshall

Pottawattamie

Mills

Fremont

Madison


Keokuk


Taylor Ringgold

Cherokee

Calhoun

Decatur Wayne Davis

Henry

Scott

Humboldt

Clayton

Cedar

Sioux

Cass

Iowa*

**

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Sac

Linn

Lee

Ida

Tama

Clay Kosuth

Jasper

Lyon

Page

StoryrJones

Fayette

Adair

Bentonn

Wapello

Pocahontas

Osceola

Jefferson

Audubon

Washington

BuenaVista

BlackHawk

Appanoose

CerroGordo

VanBuren

Mucatine

Dickenson

DesMoines

Winnebago

Montgomery

Iowa Corn Processing & Ethanol Plant Locations, Actual & Planned . 9/26/06,

PoweshiekPolk


Plymouth

O’Brien

Woodbury

Monona

Harrison Shelby

Wright Franklin

Floyd Chickasaw

Webster Hardin

Louisa

Emmet

Palo Alto

Hancock


BremerButler

HamiltonGrundy

Buchanan

Delaware

Dubuque

Jackson

Clintonn

Guthrie Dallas

Johnson

Marshall

Pottawattamie

Mills

Fremont

Madison


Keokuk


Taylor Ringgold

Cherokee

Calhoun

Decatur Wayne Davis

Henry

Scott

Humboldt

Clayton

Cedar

Sioux

Cass

Iowa*

**

*

*

*

*

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*

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*

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Sac

Linn

Lee

Ida

Tama

Clay Kosuth

Jasper

Lyon

Page

StoryrJones

Fayette

Adair

Bentonn

Wapello

Pocahontas

Osceola

Jefferson

Audubon

Washington

BuenaVista

BlackHawk

Appanoose

CerroGordo

VanBuren

Mucatine

Dickenson

DesMoines

Winnebago

Montgomery

,

PoweshiekPolk


Plymouth

O’Brien

Woodbury

Monona

Harrison Shelby

Wright Franklin

Floyd Chickasaw

Webster Hardin

Louisa

Emmet

Palo Alto

Hancock


BremerButler

HamiltonGrundy

Buchanan

Delaware

Dubuque

Jackson

Clintonn

Guthrie Dallas

Johnson

Marshall

Pottawattamie

Mills

Fremont

Madison


Keokuk


Taylor Ringgold

Cherokee

Calhoun

Decatur Wayne Davis

Henry

Scott

Humboldt

Clayton

Cedar

Sioux

Cass

Iowa*

**

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*

*

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*

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66 Planned + current in Iowa

11 Just across the borders

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Figure 1.

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Iowa corn processing & ethanol plants, current & planned, 11/20/ 06

63

Capacity: 129% of 2006 crop


5.5 Bil. Bu. For Ethanol


OMAHA CORN PRICESWeekly

1.40

1.90

2.40

2.90

3.40

3.90

JAN APR JUL OCT

$ Per Bu.

Avg.2000-04

2005

2006

G-P-0212/14/06

Livestock Marketing Information Center


MED. & LRG. #1 FEEDER STEER PRICES700-800 Pounds, Southern Plains, Weekly

80

85

90

95

100

105

110

115

120

125

JAN APR JUL OCT

$ Per Cwt.

Avg.2000-04

2005

2006

C-P-4901/03/07Livestock Marketing Information Center


DISTILLER DRIED GRAIN PRICESCentral Illinois, Weekly

50

60

70

80

90

100

110

120

130

JAN APR JUL OCT

$ Per Ton

Avg.2000-04

2005

2006

12/14/06

Livestock Marketing Information Center


DDGS Production and UsagePotential production Mil Ton

5.5 Billion Bu. Corn 46.8Potential use

COF @ 20% 7.10Dairy @ 20% 6.13Hogs @ 15% 6.72Total 19.95

Excess for export or use 26-27


Situation• More ethanol and more DGS

• Higher corn prices and more corn acres

• Higher land prices

• Lower calf and yearling prices

• Lighter carcasses and fewer Choice


Strengths: Weaknesses:

Opportunities: Threats:

External Factors

Internal Factors


Strengths:

Using MIG

Close to coproduct

Own land

Produce corn

High equity position

Weaknesses:

Nearing retirement

Sell feeder cattle

No facilities or equipment to background or feed coproduct

Opportunities:

Increasing land prices

DGS nearby

More corn stalks available

Limited herd expansion or contraction

Threats:

Higher corn prices

Lower calf prices

Fewer cows will lead to less infrastructure

External Factors

Internal Factors

Case 1


Strengths:

Young, long horizon

Good nutrition and management skills

Facilities and equipment to background and/or feed

Packers nearby

Weaknesses:

High debt level

Rent most of pasture

Limited labor available

Opportunities:

DGS nearby

More corn stalks available

Limited herd expansion or contraction

Threats:

Higher rental rates

Losing pasture to crop production

Lower calf prices

Fewer cows will lead to less infrastructure

External Factors

Internal Factors

Case 2


Strategies• Adopt management intensive grazing

• Utilize DGS and/or CDS on pasture or in winter feed

• Convert hay to pasture and use aftermath with DGS/CDS for winter feed

• Early wean and/or creep feed to run more cows on same acres. Improve grading

www.iowabeefcenter.org adjusting to an ethanol world

Documents

dgshigher corn prices

situationmore ethanol

key message

key point

andor creep feed

feed coproductopportunities

rapid growth

moving target