Ag Market Outlook Dec 4 2018 Chad Hart

Ag Market Outlook Dec. 4, 2018 Chad Hart Associate Professor/Crop Marketing Specialist chart@iastate. edu 515 -294 -9911 Extension and Outreach/Department of Economics

+12% +4% +10% +16% +12% Data Source: USDA-NASS, Compiled & Forecasts by LMIC Livestock Marketing Information Center Extension and Outreach/Department of Economics

Data Source: USDA-NASS, Compiled & Forecasts by LMIC Livestock Marketing Information Center Extension and Outreach/Department of Economics

+9% +4% +11% +6% Data Source: USDA-NASS and USDA-ERS, Compiled & Analysis by LMIC Livestock Marketing Information Center Extension and Outreach/Department of Economics

Data Source: USDA-NASS and USDA-ERS, Compiled & Analysis by LMIC Livestock Marketing Information Center Extension and Outreach/Department of Economics

Extension and Outreach/Department of Economics

2013 = +$6. 21 2014 = +$61. 85 2015 = +$7. 93 2016 = -$1. 26 2017 = +$11. 95 2018 f = -$4. 84 2019 f = +$9. 87 [-$25. 60 to +$24. 57] [+$13. 15 to +$107. 25] [-$18. 40 to +$26. 25] [-$35. 52 to +$32. 92] [-$12. 68 to +$47. 62] [-$40. 71 to +$26. 66] [-$12. 68 to +$32. 53] Extension and Outreach/Department of Economics

LMIC Pork Production and Price Quarterly Forecasts (11/15/18) Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC Extension and Outreach/Department of Economics

Data Source: USDA-NASS, Slaughter capacity by Dr. Steve Meyer Extension and Outreach/Department of Economics

Historically large margins in ‘ 14 -’ 15 drove rapid expansion Data Source: USDA & LMIC, Compiled by LMIC Livestock Marketing Information Center Extension and Outreach/Department of Economics

Data Source: USDA-AMS Livestock Marketing Information Center Extension and Outreach/Department of Economics

Data Source: USDA-AMS Livestock Marketing Information Center Extension and Outreach/Department of Economics

Data Source: USDA-NASS Livestock Marketing Information Center Extension and Outreach/Department of Economics

67% of marketings 33% of marketings Data Source: USDA-NASS Livestock Marketing Information Center Extension and Outreach/Department of Economics

Data Source: USDA-NASS Livestock Marketing Information Center Extension and Outreach/Department of Economics

Data Source: USDA-AMS Livestock Marketing Information Center Extension and Outreach/Department of Economics

2014 = +$197. 24 2015 = -$225. 12 2016 = -$110. 62 2017 = +$144. 86 2018 f = -$33. 92 2019 f = -$47. 62 [+$41 to +$269] [-$530 to +$43] [-$359 to +$113] [-$74 to +$415] [-$97 to +$103] [-$135 to +$64] Source: Lee Schulz, Iowa State University Projected with Basis Adjusted Futures Extension and Outreach/Department of Economics

LMIC Beef Production and Price Quarterly Forecasts (11/8/18) Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC Extension and Outreach/Department of Economics

Data Source: USDA-ERS & USDA-FAS, Compiled and Forecasts by LMIC Livestock Marketing Information Center Extension and Outreach/Department of Economics

U. S. Pork Exports, Jan-Sep 2018 (Carcass Weight Basis) Country Japan Mexico Canada South Korea China (Mainland) Hong Kong Australia Philippines Colombia China (Taiwan) Honduras Dominican Republic Guatemala Chile Panama Other Countries Total Sep-18/Sep-17 Sep-18/Aug-18 Percent 1% -10% 1% 36% -16% -65% 55% 9% 23% 202% 33% 128% -30% 28% 13% 32% 3% -13% -7% 5% 21% 7% 39% -10% 42% 38% 40% -9% -3% -23% -31% 45% 12% -1% Year-to-Date 1, 000 lbs -2, 129 21, 819 -3, 100 148, 873 -21, 556 -52, 612 14, 735 4, 707 65, 254 6, 042 11, 426 21, 841 2, 028 1, 668 3, 187 18, 889 241, 074 Percent 0% 2% -1% 41% -8% -52% 10% 7% 52% 27% 20% 30% 7% 3% 19% 15% 6% ‘ 17 Share 22% 32% 9% 9% 7% 3% 4% 2% 3% 1% 1% 2% 1% 1% 1% 3% Source: USDA, Economic Research Service calculations using data from U. S. Department of Commerce, Bureau of the Census. Extension and Outreach/Department of Economics ‘ 18 Share 21% 31% 9% 12% 6% 1% 4% 2% 4% 1% 2% 2% 1% 1% 0% 3%

Source: USDA, Economic Research Service calculations using data from U. S. Department of Commerce, Bureau of the Census. Extension and Outreach/Department of Economics

Baseline Update for International Livestock Markets PORK NET TRADE September 2018 -- https: //www. fapri. missouri. edu/publication/baseline-update-for-internationallivestock-markets/ Food & Agricultural Policy Research Institute University of Missouri Extension and Outreach/Department of Economics U. S. Export Δ +11. 0% Import Δ -2. 9%

U. S. Beef Exports, Jan-Sep 2018 Country Japan Mexico Canada South Korea Hong Kong China (Taiwan) Vietnam Netherlands Philippines Chile United Arab Emirates Dominican Republic China (Mainland) Italy Indonesia Other Countries Total Sep-18/Sep-17 Sep-18/Aug-18 Percent -1% 6% -5% 25% 4% 6% 122% 57% 14% 45% -9% 17% -13% -2% -30% -6% 7% -19% -9% 3% -24% 54% -27% 114% 177% 19% -14% -3% -7% 20% 18% 94% -16% -7% (Carcass Weight Basis) Year-to-Date 1, 000 lbs 40, 304 26, 760 -3, 206 145, 145 2, 076 33, 499 1, 241 -4, 765 6, 088 -1, 002 901 -401 12, 010 -2, 609 786 19, 268 276, 096 Percent 6% 9% -1% 43% 1% 33% 6% -17% 26% -4% 8% -3% 357% -21% 6% 18% 9% ‘ 17 Share ‘ 18 Share 29% 15% 11% 17% 12% 5% 1% 1% 1% 0% 1% 1% 5% Source: USDA, Economic Research Service calculations using data from U. S. Department of Commerce, Bureau of the Census. Extension and Outreach/Department of Economics 29% 14% 10% 21% 9% 6% 1% 1% 0% 1% 5%

Extension and Outreach/Department of Economics

Baseline Update for International Livestock Markets BEEF NET TRADE September 2018 -- https: //www. fapri. missouri. edu/publication/baseline-update-for-internationallivestock-markets/ Food & Agricultural Policy Research Institute University of Missouri Extension and Outreach/Department of Economics U. S. Export Δ +2. 5% Import Δ +3. 0%

Data Source: USDA-NASS Livestock Marketing Information Center Extension and Outreach/Department of Economics

Data Source: USDA-NASS Livestock Marketing Information Center Extension and Outreach/Department of Economics

Data Source: USDA-NASS Livestock Marketing Information Center Extension and Outreach/Department of Economics

Data Source: USDA-AMS & USDA-NASS Livestock Marketing Information Center Extension and Outreach/Department of Economics

10 yr. Avg. All Milk Price Data Source: USDA-NASS Extension and Outreach/Department of Economics

Trade Remains Critical Data Source: USDA-FAS, Compiled & Analysis by LMIC Extension and Outreach/Department of Economics

Pressure on Dairy Moving Forward • Exports are Good, but… • Shipping at lower prices • Tariffs • Larger Dairies Still Above COP, but… • Regional Differences Exist • Prices expected to be systemically lower for the next 2 -3 years Extension and Outreach/Department of Economics

LMIC Dairy Production and Price Quarterly Forecasts Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC Extension and Outreach/Department of Economics (10/25/18)

U. S. Corn Supply and Use 2015 2016 2017 2018 2019 88. 0 94. 0 90. 2 89. 1 92. 0 Area Planted (mil. acres) Yield (bu. /acre) 168. 4 174. 6 176. 6 178. 9 176. 5 Production (mil. bu. ) 13, 602 15, 148 14, 604 14, 626 14, 930 Beg. Stocks (mil. bu. ) 1, 731 1, 737 2, 293 2, 140 1, 736 Imports (mil. bu. ) 67 57 36 50 50 Total Supply (mil. bu. ) 15, 401 16, 942 16, 934 16, 816 16, 716 Feed & Residual (mil. bu. ) 5, 120 5, 470 5, 298 5, 500 5, 575 Ethanol (mil. bu. ) 5, 224 5, 432 5, 605 5, 650 5, 700 Food, Seed, & Other (mil. bu. ) 1, 422 1, 453 1, 480 1, 490 Exports (mil. bu. ) 1, 898 2, 294 2, 438 2, 450 2, 425 Total Use (mil. bu. ) 13, 664 14, 649 14, 793 15, 080 15, 190 Ending Stocks (mil. bu. ) 1, 737 2, 293 2, 140 1, 736 1, 526 3. 61 3. 36 3. 60 3. 90 Season-Average Price ($/bu. ) Source: USDA-WAOB, w/ adjustment for Nov. reports Extension and Outreach/Department of Economics

U. S. Soybean Supply and Use 2015 2016 2017 2018 2019 Area Planted (mil. acres) 82. 7 83. 4 90. 1 89. 1 82. 5 Yield (bu. /acre) 48. 0 52. 0 49. 3 52. 1 50. 0 Production (mil. bu. ) 3, 926 4, 296 4, 411 4, 600 4, 090 Beg. Stocks (mil. bu. ) 191 197 302 438 955 Imports (mil. bu. ) 24 22 22 25 25 Total Supply (mil. bu. ) 4, 140 4, 515 4, 734 5, 063 5, 070 Crush (mil. bu. ) 1, 886 1, 901 2, 055 2, 080 2, 075 Seed & Residual (mil. bu. ) 122 146 112 128 127 Exports (mil. bu. ) 1, 936 2, 166 2, 129 1, 900 2, 075 Total Use (mil. bu. ) 3, 944 4, 214 4, 296 4, 107 4, 277 Ending Stocks (mil. bu. ) 197 302 438 955 793 Season-Average Price ($/bu. ) 8. 95 9. 47 9. 33 8. 60 8. 75 Source: USDA-WAOB, w/ adjustment for Nov. reports Extension and Outreach/Department of Economics

Projected Corn Yields Top: 2018 Yield Estimate Bottom: Change from last month Units: Bushels per acre Source: USDA-NASS Extension and Outreach/Department of Economics

Projected Soybean Yields Top: 2018 Yield Estimate Bottom: Change from last month Units: Bushels per acre Source: USDA-NASS Extension and Outreach/Department of Economics

World Corn Production Source: USDA-WAOB Extension and Outreach/Department of Economics

World Soybean Production Source: USDA-WAOB Extension and Outreach/Department of Economics

Extension and Outreach/Department of Economics

Arable land Extension and Outreach/Department of Economics

Extension and Outreach/Department of Economics

U. S. Meat Production & Prices Source: USDA-WAOB Extension and Outreach/Department of Economics

Corn Export Sales Source: USDA-FAS Extension and Outreach/Department of Economics

Corn Export Shifts Source: USDA-FAS Extension and Outreach/Department of Economics

Soybean Export Sales Source: USDA-FAS Extension and Outreach/Department of Economics

Soybean Export Shifts Source: USDA-FAS Extension and Outreach/Department of Economics

Soybean Market Shares Sales for 2018 2017 crop Sales for 2016 crop Source: USDA-FAS Extension and Outreach/Department of Economics

Soybean Meal Export Shifts Source: USDA-FAS Extension and Outreach/Department of Economics

Ethanol Production Source: EIA Extension and Outreach/Department of Economics

Ethanol Exports Source: EIA Extension and Outreach/Department of Economics

Current Corn Futures 4. 02 3. 69 Source: CME Group, 11/30/2018 Extension and Outreach/Department of Economics

Current Soybean Futures 9. 29 8. 82 Source: CME Group, 11/30/2018 Extension and Outreach/Department of Economics

2018/19 Crop Margins Based on futures prices Extension and Outreach/Department of Economics

2019/20 Crop Margins w/ 2018 Costs Based on futures prices Extension and Outreach/Department of Economics

Iowa Corn Prices vs. Costs Based on USDA prices and ISU costs Extension and Outreach/Department of Economics

Iowa Soybean Prices vs. Costs Based on USDA prices and ISU costs Extension and Outreach/Department of Economics

Want to provide feedback on my presentation? https: //www. surveymonkey. com/r/Chad. Hart Extension and Outreach/Department of Economics

Thank you for your time! Any questions? My web site: http: //www 2. econ. iastate. edu/faculty/hart/ Iowa Farm Outlook: http: //www 2. econ. iastate. edu/ifo/ Ag Decision Maker: http: //www. extension. iastate. edu/agdm/ Extension and Outreach/Department of Economics