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Ag Outlook

Ag Outlook. 1 st Farm Credit Services Meetings Dixon and Freeport, Illinois Dec. 14, 2016 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate.edu 515-294-9911. U.S. Corn Supply and Use. Source: USDA-WAOB 2013-16, USDA-OCE 2017. U.S. Soybean Supply and Use.

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Ag Outlook

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  1. Ag Outlook 1st Farm Credit Services Meetings Dixon and Freeport, Illinois Dec. 14, 2016 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate.edu 515-294-9911

  2. U.S. Corn Supply and Use Source: USDA-WAOB 2013-16, USDA-OCE 2017

  3. U.S. Soybean Supply and Use Source: USDA-WAOB 2013-16, USDA-OCE 2017

  4. Corn Yield Estimates Top: 2016 Yield Bottom: Change from last month Units: Bushels/acre Source: USDA-NASS

  5. Soy Yield Estimates Top: 2016 Yield Bottom: Change from last month Units: Bushels/acre Source: USDA-NASS

  6. Drought Monitor Source: National Drought Mitigation Center

  7. World Corn Production Source: USDA-WAOB

  8. World Soybean Production Source: USDA-WAOB

  9. U.S. Meat Production & Prices Source: USDA-WAOB

  10. Corn Export Sales Source: USDA-FAS

  11. Change in Corn Export Sales Source: USDA-FAS

  12. Soybean Export Sales Source: USDA-FAS

  13. Change in Soybean Export Sales Source: USDA-FAS

  14. Strength of the U.S. Dollar Source: Federal Reserve

  15. Corn Grind for Ethanol

  16. Crude Oil Prices Sources: EIA and CME

  17. Current Corn Futures 3.68 3.37 Source: CME Group, 12/12/2016

  18. Current Soybean Futures 9.77 9.71 Source: CME Group, 12/12/2016

  19. 2016/17 Crop Margins @ Trend Yields

  20. 2016/17 Crop Margins @ Actual Yields

  21. 2017/18 Crop Margins

  22. Iowa Corn Prices vs. Costs

  23. Iowa Soybean Prices vs. Costs

  24. Beef: + 2015.Q4 Pork: + 2015.Q1 Total Poultry: +2012.Q4 Data Source: USDA-NASS, Compiled & Analysis by LMIC Livestock Marketing Information Center

  25. 2017 2016 2015 Data Source: USDA/ERS

  26. 2016 Beef Cattle Situation • Transition to larger beef supplies in 2016 has been challenging • Cow-calf: Converging toward long-term levels • Herd expansion slowed, stalled, or stopped? • Stocker: Varies widely across situations • Opportunities vs. risk of owning cattle and managing risk • Feedlot: Worst behind us (I think), still red ink • Structural concerns—excess capacity, price discovery, etc.

  27. 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

  28. Expansion slowed, stalled, or stopped? Projections Yr-over-Yr Dec-2015 2015-21: +9.5% Yr-over-Yr Dec-2016 2015-21: +8.5% Yr-over-Yr Mar-16 2015-21: +5.1% Yr-over-Yr Aug-16 2015-21: +4.8% Data Source: USDA/ERS. FAPRI

  29. Data Source: USDA/NASS

  30. Data Source: USDA & LMIC, Compiled by LMIC Livestock Marketing Information Center

  31. Data Source: USDA/AMS

  32. Beef Cow Culling Rates 2005 = 7.7% (6.9%) 2006 - 2007 = 8.4% (8.0%) 2008 - 2012 = 11.2% (10.1%) 2013 = 10.5% (9.6%) 2014 = 8.8% (8.0%) 2015 = 7.6% (6.9%) 2016 = 7.5% (7.5%) 2016 Slaughter +13.1% (vs. 2015) -23.2% (vs. 2010-14) Data Source: USDA-AMS & USDA-NASS Livestock Marketing Information Center

  33. Data Source: USDA/AMS

  34. Cattle on Feed―11/18 report • (1,000+ head capacity feedlots; & < 1,000 in Iowa) • Nov 1 On Feed: -1.3% yr/yr • Vs. -1.1% pre-report est. -2.3%, -0.5%) • IA: -6.3% vs last year [1,000+ Head] • IA: 0.0% vs last year [<1,000 Head] • Oct Placements: -5.0% • Vs. -4.9% pre-report est. (-10.1%, -3.4%) • IA: -17.3% vs last year [1,000+ Head] • IA: +11.0% vs last year [<1,000 Head] • Oct Marketings: +4.6% • Vs. +4.4% pre-report est. (+3.1%, +6.5%) • IA: -15.0% vs last year [1,000+ Head] • IA: -36.5% vs last year [<1,000 Head] -3.5% -7.6% -24.2% Data Source: USDA/NASS

  35. Steer Live Weights This week: 1,437 Last week: 1,447 Last year: 1,447 Heifer Live Weights This week: 1,307 Last week: 1,322 Last year: 1,310 Data Source: USDA-NASS, Compiled & Analysis by LMIC Livestock Marketing Information Center

  36. Data Source: USDA-AMS Livestock Marketing Information Center

  37. 2013 = -$59.43 [-$155 to +$77] 2014 = +$197.24 [+$41 to +$269] 2015 = -$225.12 [-$530 to +$43] 2016f = -$116.68 [-$359 to +$113] 2017f = -$34.55 [-$115 to +$110]

  38. U.S. Beef Exports, Jan-Sep 2016 (Volume excluding by-products & variety meats) WASDE U.S.: 2015: 2,265 mil lbs 2016: 2,459 (+9%) 2017: 2,630 (+7%) Source: USDA/ERS

  39. U.S. Beef Imports, Jan-Sep 2016 (Volume excluding by-products & variety meats) WASDE U.S.: 2015: 3,371 mil lbs 2016: 3,011 (-11%) 2017: 2,680 (-11%) Source: USDA/ERS

  40. Relative Changes in Beef & Cattle Prices Source: USDA/ERS, USDA/AMS

  41. 2016 Pork Situation • Record production. Processing capacity squeeze. • Demand is always an important driver. But we first need to understand supply dynamics. • Lower hog and pig prices have likely raised the red flag on further expansion, at least for now. • Longer-term additional expansion is quite possible • Low feed grain prices, packer competition • Revisions to H&P report complicate analysis • Dec-16 report should help with recalibration

  42. 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

  43. Data source: CME Group, compiled by BarChart.com.

  44. Data Source: USDA-ERS & USDA-FAS Livestock Marketing Information Center

  45. 2013 = +$6.21 [-$25.60 to +$24.57] 2014 = +$61.85 [+$13.15 to +$107.25] 2015 = +$7.93 [-$18.40 to +$26.25] 2016f = -$1.58 [-$35.56 to +$32.92] 2017f = -$2.19 [-$17.22 to +$18.26]

  46. Data Source: USDA/NASS. Urner Barry pre-report estimates

  47. Source: USDA/AMS. * Steve Meyer, EMI.

  48. Source: USDA/AMS

  49. U.S. Packing Capacity Under Construction July 19, 2016 Source: Steve Meyer. Published in National Hog Farmer Magazine.

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