Ag Outlook Ackley State Bank Ag Outlook Iowa

Ag Outlook Ackley State Bank Ag Outlook Iowa Falls, Iowa Dec. 17, 2015 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate. edu 515 -294 -9911 Extension and Outreach/Department of Economics

Key Factors for Livestock § Feedstuffs – ADVANTAGEOUS for livestock sector § Size of hog industry driven by last year’s profitability – Productivity to guide 2016 supply prospects § Tight cattle-beef supplies but expansion well underway – Supply of heavy cattle has driven market lately § HPAI in U. S. poultry – HUGE hit on layers/eggs, only meat impact was turkey, broilers were okay – Rebuild/expansion underway § Relatively stable domestic dairy herd expected through 2017 – Worldwide production up, prices § U. S. consumer demand has been GOOD – International trade a bit of a drag but should improve Extension and Outreach/Department of Economics

Hog Crush Margin The Crush Margin is the return after the pig, corn and soybean meal costs. Carcass weight: 200 pounds Pig price: 50% of 5 mth out lean hog futures Corn: 10 bushels per pig Soybean meal: 150 pounds per pig Source: ISU Extension and Outreach/Department of Economics

Extension and Outreach/Department of Economics

USDA Quarterly Hogs and Pigs Report – United States September 25, 2015 2014 2015 as % of 2014 Inventories on Sep 1 * All hogs and pigs Kept for breeding Market Under 50 pounds 50 -119 pounds 120 -179 pounds 180 pounds and over 65, 979 5, 920 60, 059 20, 390 17, 458 12, 112 10, 098 68, 395 5, 986 62, 410 20, 291 17, 986 13, 080 11, 053 103. 7 101. 1 103. 9 99. 5 103. 0 108. 0 109. 5 103. 0 - 104. 7 99. 0 - 101. 0 103. 0 - 105. 1 98. 8 - 101. 0 102. 0 - 104. 5 104. 9 - 108. 4 107. 9 - 111. 2 103. 6 100. 3 103. 9 100. 2 103. 2 106. 6 109. 7 0. 1 0. 8 0. 0 -0. 7 -0. 2 1. 4 -0. 2 Farrowing ** Jun – Aug sows farrowed Sep – Nov intentions Dec – Feb intentions 2, 991 2, 994 2, 895 2, 944 2, 920 2, 875 98. 4 97. 5 99. 3 97. 0 - 100. 5 95. 7 - 99. 5 95. 7 - 101. 2 98. 1 97. 2 99. 1 0. 3 0. 2 Jun – Aug Pig Crop * Jun – Aug Pigs per Litter 30, 402 10. 16 30, 585 10. 39 100. 6 102. 3 99. 0 - 103. 0 101. 9 - 103. 0 100. 4 102. 4 0. 2 -0. 1 * 1, 000 head Pre-Report Range Pre-Report Actual Estimate ** 1, 000 litters Data Source: USDA/NASS. Urner Barry pre-report estimates Extension and Outreach/Department of Economics

New Pork Packing Plants (2017) Sioux City, IA ― Seaboard/Triumph Coldwater, MI ― Clements Foods Data Source: USDA/AMS. * Steve Meyer, Vice President, Pork Analysis, Express Markets Inc. Analytics. Extension and Outreach/Department of Economics

U. S. Pork Exports, Jan-Oct 2015 Oct-15/Sep-15 Country Japan Mexico Canada South Korea China (Mainland) Hong Kong Australia Philippines China (Taiwan) Honduras Colombia Dominican Republic Chile Other Countries Total Oct-15/Oct-14 Percent -10% 3% -15% 50% -9% 126% -25% -11% 29% 5% 38% 1% -22% 23% 2% WASDE U. S. : 2014: 4, 857 mil lbs Percent -4% 10% -1% -6% 7% 45% 87% 99% 378% 45% 6% 60% -41% -6% 7% 2015: 4, 946 (+1. 8% vs 2014) Extension and Outreach/Department of Economics (Volume excluding byproducts & variety meats) Year-to-Date 1, 000 lbs Percent -40, 063 -4% 134, 708 12% -15, 458 -3% 104, 843 34% -92, 686 -30% -12, 032 -12% 13, 165 10% -24, 900 -29% 11, 199 49% 11, 100 27% -17, 701 -16% 14, 422 36% 2, 144 6% -107, 287 -39% -18, 544 -0. 5% 2016: 5, 125 (+3. 6% vs 2015) Source: USDA/ERS

LMIC Pork Production and Price Quarterly Forecasts (12/10/15) Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC Year Quarter 2015 I II IV Year 2016 I II IV Year 2017 I II IV Year Comm’l Slaughter % Chg. Year Ago Avg Carcass % Chg. Weight Year Ago Comm’l Pork Production % Chg. Year Ago 28, 723 27, 848 28, 474 30, 243 115, 288 5. 9 8. 9 11. 4 5. 7 7. 9 215 213 209 214 213 0. 8 -1. 1 -1. 5 -0. 2 -0. 5 6, 161 5, 925 5, 957 6, 478 24, 521 6. 5 7. 6 9. 8 5. 7 7. 3 29, 161 27, 536 28, 319 30, 435 115, 451 1. 5 -1. 1 -0. 5 0. 6 0. 1 215 213 209 215 213 -0. 2 0. 1 0. 3 0. 1 6, 257 5, 877 5, 929 6, 537 24, 600 1. 6 -0. 8 -0. 5 0. 9 0. 3 29, 909 28, 163 28, 495 31, 335 117, 902 2. 6 2. 3 0. 6 3. 0 2. 1 215 214 210 215 213 0. 2 0. 2 6, 431 6, 023 5, 976 6, 742 25, 172 2. 8 2. 5 0. 8 3. 1 2. 3 Extension and Outreach/Department of Economics

LMIC Pork Production and Price Quarterly Forecasts (12/10/15) Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC Year Quarter 2015 I II IV Year 2016 I II IV Year 2017 I II IV Year Nat’l Wtd Avg Base Price % Chg. Year Ago 68. 55 73. 52 74. 60 63 -64 70 -71 -25. 0 -34. 3 -32. 3 -29. 5 -30. 2 64 -66 74 -78 75 -80 65 -71 71 -73 -5. 2 3. 4 4. 0 7. 1 2. 1 59 -63 63 -76 67 -76 64 -67 62 -69 70 -78 70 -79 60 -70 66 -74 0. 8 -2. 6 -3. 9 -4. 4 -2. 8 67 -68 Extension and Outreach/Department of Economics CME LHF Price

Cattle Crush Margin The Crush Margin is the return after the feeder steer and corn costs. Live weight: 1250 pounds Feeder weight: 750 pounds Corn: 50 bushels per head Source: ISU Extension and Outreach/Department of Economics

Quarterly Cattle & Beef Forecasts (LMIC: 12/10/2015) Change Commercial from Year Slaughter Year Ago Quarter (1, 000 hd) (%) 2015 6, 967 -5. 5 I 7, 227 -7. 8 II 7, 288 -4. 5 III 7, 283 -0. 6 IV 28, 765 -4. 7 Year 2016 7, 140 2. 5 I 7, 405 2. 5 II 7, 623 4. 6 III 7, 519 3. 2 IV Year 29, 687 3. 2 2017 I 7, 446 4. 3 II 7, 720 4. 3 III 7, 815 2. 5 IV 7, 857 4. 5 Year 30, 838 3. 9 Average Change Dressed from Weight Year Ago (lbs) (%) Commercial Change Beef from Production Year Ago (mil lbs) (%) 813 810 832 841 824 2. 2 2. 7 2. 8 2. 3 2. 5 5, 664 5, 855 6, 066 6, 123 23, 708 -3. 5 -5. 3 -1. 8 1. 7 -2. 2 822 813 836 839 828 1. 1 0. 4 -0. 2 0. 4 5, 868 6, 020 6, 370 6, 309 24, 567 3. 6 2. 8 5. 0 3. 6 827 816 839 842 831 0. 7 0. 4 0. 5 6, 161 6, 299 6, 559 6, 616 25, 635 5. 0 4. 6 3. 0 4. 9 4. 3 Extension and Outreach/Department of Economics

Quarterly Cattle & Beef Forecasts (LMIC: 12/10/2015) Year Quarter 2015 I II IV Year 2016 I II IV Year 2017 I II IV Year Steer Price 5 -Mkt Avg ($/cwt) Change From Year Ago (%) 162. 43 158. 11 144. 22 132 -133 149 -150 11. 0 7. 0 -9. 0 -20. 0 -3. 3 215. 87 225. 29 214. 38 183 -184 209 -210 276. 14 279. 32 246. 04 214 -216 253 -255 140 -144 144 -148 138 -143 138 -144 141 -145 -12. 6 -7. 7 -2. 6 6. 4 -4. 3 178 -182 181 -186 178 -184 175 -182 179 -183 217 -222 221 -228 217 -225 210 -219 217 -223 138 -145 138 -146 133 -143 134 -145 137 -143 -0. 4 -2. 7 -1. 8 -1. 1 -2. 1 173 -181 174 -183 171 -181 167 -179 173 -179 213 -223 214 -225 212 -223 202 -216 212 -220 Extension and Outreach/Department of Economics Feeder Steer Price Southern Plains 7 -800# 5 -600#

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

Extension and Outreach/Department of Economics

Cattle on Feed― 11/20 report (1, 000+ head capacity feedlots) • Nov. 1 On Feed: +2. 1% – Vs. +2. 2% pre-report est. (+1. 6%, +3. 2%) § IA: +8. 5% vs last year [1, 000+ Head] § IA: +6. 3% vs last year [<1, 000 Head] • Oct. Placements: -3. 7% – Vs. -3. 9% pre-report est. (-6. 2%, -1. 6%) § IA: +18. 2% vs last year; largest (+) of main states [1, 000+ Head] § IA: +9. 3% vs last year [<1, 000 Head] • Oct. Marketings: -3. 3% – Vs. -3. 9% pre-report est. (-5. 0%, -2. 0%) § § IA: +13. 0% vs last year (TX -14%, KS -6%, SD -9%, MN +45%) [1, 000+ Head] IA: +28. 8% vs last year [<1, 000 Head] Extension and Outreach/Department of Economics

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

U. S. Beef Exports, Jan-Oct 2015 Oct-15/Sep-15 Country Mexico Japan Canada South Korea Hong Kong China (Taiwan) Vietnam Netherlands Philippines United Arab Emirates Dominican Republic Chile Italy Other Countries Total WASDE U. S. : 2014: 2, 573 mil lbs Percent 14% -12% 16% 24% 79% 20% 65% 3% 28% 87% 40% 6% -28% 11% 18% Oct-15/Oct-14 Percent 13% -41% -10% -11% -12% -16% 42% -17% -3% 37% 7% -40% 2% -14% 2015: 2, 223 (-13. 6%) (Volume excluding byproducts & variety meats) Year-to-Date 1, 000 lbs -72, 469 -102, 254 -39, 635 13, 385 -93, 350 2, 785 2, 871 2, 459 2, 510 1, 273 3, 022 -2, 688 -582 -6, 337 -289, 010 Percent -20% -18% -13% 5% -28% 3% 43% 8% 10% 11% 20% -12% -4% -5% -13. 4% 2016: 2, 425 (+9. 1%) Source: USDA/ERS Extension and Outreach/Department of Economics

U. S. Beef Imports, Jan-Oct 2015 Oct-15/Sep-15 Country Australia Canada New Zealand Brazil Uruguay Mexico Nicaragua Argentina Costa Rica Other Countries Total Oct-15/Oct-14 Percent -33% -6% -17% -29% 13% 9% 53% -100% -14% 13% -18% WASDE U. S. : 2014: 2, 947 mil lbs Percent -33% 5% 8% 20% 57% 20% -42% -100% -22% -8% -13% 2015: 3, 382 (+14. 8%) (Volume excluding byproducts & variety meats) Year-to-Date 1, 000 lbs Percent 292, 365 34% 33, 975 7% 91, 299 17% 66, 532 99% 43, 388 57% 76, 725 30% -13, 396 -13% -186 -13% 1, 811 8% 755 8% 593, 269 25% 2016: 2, 945 (-12. 9%) Source: USDA/ERS Extension and Outreach/Department of Economics

U. S. Corn Supply and Use 2012 2013 2014 2015 Δ 97. 3 95. 4 90. 6 88. 4 0 Area Planted (mil. acres) Yield (bu. /acre) 123. 1 158. 1 171. 0 169. 3 0 Production (mil. bu. ) 10, 755 13, 829 14, 216 13, 654 0 Beg. Stocks (mil. bu. ) 989 821 1, 232 1, 731 0 Imports (mil. bu. ) 160 36 32 30 0 Total Supply (mil. bu. ) 11, 904 14, 686 15, 479 15, 415 0 Feed & Residual (mil. bu. ) 4, 315 5, 040 5, 315 5, 300 0 Ethanol (mil. bu. ) 4, 641 5, 124 5, 209 5, 200 25 Food, Seed, & Other (mil. bu. ) 1, 397 1, 369 1, 359 1, 380 0 Exports (mil. bu. ) 730 1, 920 1, 864 1, 750 -50 Total Use (mil. bu. ) 11, 083 13, 454 13, 748 13, 630 -25 Ending Stocks (mil. bu. ) 821 1, 232 1, 731 1, 785 25 6. 89 4. 46 3. 70 3. 65 0 Season-Average Price ($/bu. ) Source: USDA-WAOB Extension and Outreach/Department of Economics

U. S. Soybean Supply and Use 2012 2013 2014 2015 Δ Area Planted (mil. acres) 77. 2 76. 8 83. 3 83. 2 0 Yield (bu. /acre) 40. 0 44. 0 47. 5 48. 3 0 Production (mil. bu. ) 3, 042 3, 358 3, 927 3, 981 0 Beg. Stocks (mil. bu. ) 169 141 92 191 0 Imports (mil. bu. ) 41 72 33 30 0 Total Supply (mil. bu. ) 3, 252 3, 570 4, 052 4, 203 0 Crush (mil. bu. ) 1, 689 1, 734 1, 873 1, 890 0 Seed & Residual (mil. bu. ) 105 107 145 133 0 Exports (mil. bu. ) 1, 317 1, 638 1, 843 1, 715 0 Total Use (mil. bu. ) 3, 111 3, 478 3, 861 3, 738 0 Ending Stocks (mil. bu. ) 141 92 191 465 0 Season-Average Price ($/bu. ) 14. 40 13. 00 10. 10 8. 90 0 Source: USDA-WAOB Extension and Outreach/Department of Economics

Corn Yield Estimate Top: 2015 Estimated Yields Bottom: Change from last month Units: Bushels/acre Source: USDA-NASS Extension and Outreach/Department of Economics

Soybean Yield Estimate Top: 2015 Estimated Yields Bottom: Change from last month Units: Bushels/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

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

Strength of the U. S. Dollar Source: Federal Reserve Extension and Outreach/Department of Economics

Crude Oil Prices Sources: EIA and CME Extension and Outreach/Department of Economics

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

Corn Grind for Ethanol Extension and Outreach/Department of Economics

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

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

Current Corn Futures 3. 71 3. 55 Source: CME Group, 12/16/2015 Extension and Outreach/Department of Economics

Current Soybean Futures 8. 47 8. 36 Source: CME Group, 12/16/2015 Extension and Outreach/Department of Economics

2015/16 Crop Margins Extension and Outreach/Department of Economics

2016/17 Crop Margins Extension and Outreach/Department of Economics

Iowa Corn Prices vs. Costs Extension and Outreach/Department of Economics

Iowa Soybean Prices vs. Costs Extension and Outreach/Department of Economics

2015 Iowa Land Values Extension and Outreach/Department of Economics

2015 Iowa Land Values - % Change Extension and Outreach/Department of Economics

2015 Iowa Land Values Extension and Outreach/Department of Economics

2015 Iowa Land Values - % Change 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