Ag Outlook June 7 2017 Chad Hart Associate

Ag Outlook June 7, 2017 Chad Hart Associate Professor/Crop Marketing Specialist chart@iastate. edu 515 -294 -9911 Extension and Outreach/Department of Economics

Ag Productivity and Usage Using corn as an example Source: USDA Extension and Outreach/Department of Economics

Ag Prices Using corn as an example Source: USDA Extension and Outreach/Department of Economics

Net Farm Income Source: USDA Extension and Outreach/Department of Economics

Farm Debt Source: Federal Reserve Extension and Outreach/Department of Economics

Ag Economic Summary • Agricultural production and consumption has grown rapidly over the past several years. – But when production exceeds consumption, prices fall. • Crop revenues peaked in 2012 -13, while livestock revenues crested in 2014 -15, leading to record farm incomes. • Since then net farm income has been cut in half. – While the percentage loss in substantial, net farm income remains above levels from the early 2000’s. • Farmers and ranchers have partially compensated for the loss in income by taking on higher debt loads. – Farm and ranch balance sheets are eroding and financial stress is building for some producers, but the financial issues are not as severe as during the 1980’s. • If agricultural prices slowly improve (as projected), the squeeze on farm finances will improve as well. But for some producers, the squeeze may be too much. Extension and Outreach/Department of Economics

AVERAGE VALUES all farmland 1941− 2016 Iowa Nominal and Inflation-adjusted Farmland Values 1941 -2016 10000 9000 7000 6000 5000 4000 3000 2000 1000 0 -5. 9% 1941 1943 1945 1947 1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 $7, 183 As of Nov. 16 Land Value ($ per acre) 8000 Nominal value Inflation-adjusted value (2015 dollars) Extension and Outreach/Department of Economics

-40, 0% 1942 1944 1946 1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Annual Percentage Change (%) % Change in Nominal Iowa Farmland Values 1942 -2016 40, 0% 30, 0% 20, 0% 10, 0% -10, 0% -20, 0% -30, 0% Extension and Outreach/Department of Economics

A replay of 1920 s or 1980 s farm crisis? Extension and Outreach/Department of Economics Source: USDA-ERS, Ag DM C 2 -70, Zhang and Beek (2016) Farm Policy Journal

President’s Budget Request Source: OMB, 2018 Budget Extension and Outreach/Department of Economics

USDA’s Budget Source: USDA 2017 Budget Extension and Outreach/Department of Economics

Proposed Adjustments in Farm Policy Source: OMB, 2018 Budget Extension and Outreach/Department of Economics

U. S. Corn Supply and Use 2013 2014 2015 2016 2017 95. 4 90. 6 88. 0 94. 0 90. 0 Area Planted (mil. acres) Yield (bu. /acre) 158. 1 171. 0 168. 4 174. 6 170. 7 Production (mil. bu. ) 13, 829 14, 216 13, 602 15, 148 14, 065 Beg. Stocks (mil. bu. ) 821 1, 232 1, 731 1, 737 2, 295 Imports (mil. bu. ) 36 32 67 55 50 Total Supply (mil. bu. ) 14, 686 15, 479 15, 401 16, 940 16, 410 Feed & Residual (mil. bu. ) 5, 040 5, 280 5, 120 5, 500 5, 425 Ethanol (mil. bu. ) 5, 124 5, 200 5, 224 5, 450 5, 500 Food, Seed, & Other (mil. bu. ) 1, 369 1, 401 1, 422 1, 470 1, 500 Exports (mil. bu. ) 1, 920 1, 867 1, 898 2, 225 1, 875 Total Use (mil. bu. ) 13, 454 13, 748 13, 664 14, 645 14, 300 Ending Stocks (mil. bu. ) 1, 232 1, 731 1, 737 2, 295 2, 110 4. 46 3. 70 3. 61 3. 40 Season-Average Price ($/bu. ) Source: USDA-WAOB Extension and Outreach/Department of Economics

U. S. Soybean Supply and Use 2013 2014 2015 2016 2017 Area Planted (mil. acres) 76. 8 83. 3 82. 7 83. 4 89. 5 Yield (bu. /acre) 44. 0 47. 5 48. 0 52. 1 48. 0 Production (mil. bu. ) 3, 358 3, 927 3, 926 4, 307 4, 255 Beg. Stocks (mil. bu. ) 141 92 191 197 435 Imports (mil. bu. ) 72 33 24 25 25 Total Supply (mil. bu. ) 3, 570 4, 052 4, 140 4, 528 4, 715 Crush (mil. bu. ) 1, 734 1, 873 1, 886 1, 925 1, 950 Seed & Residual (mil. bu. ) 107 146 122 118 135 Exports (mil. bu. ) 1, 638 1, 842 1, 936 2, 043 2, 085 Total Use (mil. bu. ) 3, 478 3, 862 3, 944 4, 093 4, 235 Ending Stocks (mil. bu. ) 92 191 197 435 480 Season-Average Price ($/bu. ) 13. 00 10. 10 8. 95 9. 55 9. 30 Source: USDA-WAOB 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 Trade Million pounds Source: USDA-WAOB 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

Corn Grind for Ethanol Extension and Outreach/Department of Economics

Current Corn Futures 4. 02 3. 87 3. 48 Source: CME Group, 5/30/2017 Extension and Outreach/Department of Economics

Current Soybean Futures 9. 47 9. 19 9. 11 Source: CME Group, 5/30/2017 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

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