Ag Outlook Iowa Farm Business Association Meeting Ames
Ag Outlook Iowa Farm Business Association Meeting Ames, Iowa Sept. 23, 2015 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate. edu 515 -294 -9911 Extension and Outreach/Department of Economics
U. S. Corn Supply and Use 2011 2012 2013 2014 2015 91. 9 97. 3 95. 4 90. 6 88. 9 Area Planted (mil. acres) Yield (bu. /acre) 147. 2 123. 1 158. 1 171. 0 167. 5 Production (mil. bu. ) 12, 360 10, 755 13, 829 14, 216 13, 585 Beg. Stocks (mil. bu. ) 1, 128 989 821 1, 232 1, 732 Imports (mil. bu. ) 29 160 36 30 30 Total Supply (mil. bu. ) 13, 517 11, 904 14, 686 15, 477 15, 347 Feed & Residual (mil. bu. ) 4, 557 4, 315 5, 034 5, 300 5, 275 Ethanol (mil. bu. ) 5, 000 4, 641 5, 134 5, 205 5, 250 Food, Seed, & Other (mil. bu. ) 1, 428 1, 397 1, 369 1, 365 1, 380 Exports (mil. bu. ) 1, 543 730 1, 917 1, 875 1, 850 Total Use (mil. bu. ) 12, 528 11, 083 13, 454 13, 745 13, 755 Ending Stocks (mil. bu. ) 989 821 1, 232 1, 732 1, 592 6. 22 6. 89 4. 46 3. 68 3. 75 Season-Average Price ($/bu. ) Source: USDA-WAOB Extension and Outreach/Department of Economics
U. S. Soybean Supply and Use 2011 2012 2013 2014 2015 Area Planted (mil. acres) 75. 0 77. 2 76. 8 83. 7 84. 3 Yield (bu. /acre) 41. 9 40. 0 44. 0 47. 8 47. 1 Production (mil. bu. ) 3, 094 3, 042 3, 358 3, 969 3, 935 Beg. Stocks (mil. bu. ) 215 169 141 92 210 Imports (mil. bu. ) 16 41 72 33 30 Total Supply (mil. bu. ) 3, 325 3, 252 3, 570 4, 094 4, 175 Crush (mil. bu. ) 1, 703 1, 689 1, 734 1, 870 Seed & Residual (mil. bu. ) 88 105 97 179 130 Exports (mil. bu. ) 1, 365 1, 317 1, 647 1, 835 1, 725 Total Use (mil. bu. ) 3, 155 3, 111 3, 478 3, 884 3, 725 Ending Stocks (mil. bu. ) 169 141 92 210 450 12. 50 14. 40 13. 00 10. 06 9. 15 Season-Average Price ($/bu. ) 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
Corn Objective Yield Data 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
Soybean Yield Estimate 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
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
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
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 Sales Source: USDA-FAS Extension and Outreach/Department of Economics
Soybean Export Sales Source: USDA-FAS Extension and Outreach/Department of Economics
Soybean Export Sales Source: USDA-FAS Extension and Outreach/Department of Economics
Crude Oil Prices Sources: EIA and CME Extension and Outreach/Department of Economics
Strength of the U. S. Dollar Source: Federal Reserve 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. 84 3. 62 Source: CME Group, 9/22/2015 Extension and Outreach/Department of Economics
Current Soybean Futures 8. 27 8. 21 Source: CME Group, 9/22/2015 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 Costs Overall 75% increase 88% 26% 88% 46% Source: Ag. DM A 1 -21 Extension and Outreach/Department of Economics
Iowa Soybean Costs Overall 69% increase 88% 14% 56% 72% Source: Ag. DM A 1 -21 Extension and Outreach/Department of Economics
Iowa Corn Costs Source: Ag. DM A 1 -21 Extension and Outreach/Department of Economics
Iowa Soybean Costs Source: Ag. DM A 1 -21 Extension and Outreach/Department of Economics
Margin Maneuvers Ø Negotiate lower land rental rates Ø Explore variety choice (seed cost vs. seed benefits) Ø Soil test and apply required fertilizer Ø Examine and control other input costs (pesticides, herbicides, etc. ) Ø Be more aggressive marketing on rallies Ø May look to limit losses, as opposed to capture profits Ø Singles & doubles vs. Home run strategy Extension and Outreach/Department of Economics
Margin Maneuvers Ø Fully utilize government programs Ø ARC-CO, PLC, crop insurance Ø Break price into futures and basis components to capture improvements in either Ø Put the pencil to paper and calculate storage benefits/costs Ø Will a traditional seasonal price swing cover storage costs? Ø What are futures prices telling you about storage opportunities now? Ø Remember, Rome wasn’t built in a day Ø It took us awhile to get into this situation and it will take awhile to get out. 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
Net Farm Income Extension and Outreach/Department of Economics
Thoughts for 2016 and Beyond ØSupply/demand concerns ØRain made grain, but we’re still debating how much ØExports weaken as dollar strengthens and China slows ØNegative margins for 2015 -2016 crops 2014/15 2015/16 USDA Corn Soybeans $3. 68 $10. 06 $3. 75 $9. 15 Extension and Outreach/Department of Economics 2015/16 Futures (9/22/15) $3. 62 $8. 21 2016/17 Futures (9/22/15) $3. 84 $8. 27
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
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