1. Ag Outlook Federal Reserve of Kansas City Risk Council Meeting
Kansas City, Missouri
Oct. 30, 2015
Chad Hart
Associate Professor/Crop Markets Specialist 1 1

2. Key factors for 2015 and beyond
Crops/Feedstuffs – BULLISH for livestock sector
Hog supply – or lack of supply issues in U.S. hog herd
Beef herd rebuilding is under way and accelerating – limiting current supplies BUT currently the fed cattle market purge is on
HPAI in U.S. poultry – HUGE hit on layers/eggs, only meat impact was turkey, chicken was okay---but represents the largest risk
U.S. consumer demand has been GREAT – will it hold?
The U.S. dollar

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

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

5. Data Source: USDA/NASS, tabulations by Lee Schulz

7. Quarterly Cattle & Beef Forecasts (LMIC: 10/1/2015)
Change
Average
Commercial
from
Dressed
Beef
Year
Slaughter
Year Ago
Weight
Production
Quarter
(1,000 hd)
(%)
(lbs)
(mil lbs)
2015 I
6,967
-5.5
813
2.2
5,664
-3.5 II
7,227
-7.8
810
2.7
5,855
-5.3
III
7,297
-4.4
831
2.6
6,064
-1.9 IV
7,358
0.4
833
1.3
6,128
1.8
28,849
822
23,711
-2.2
2016
7,144
2.5
1.2
5,875
3.7
7,411
6,026
2.9
7,604
4.2
835
0.5
6,353
4.8
7,532
2.4
837
6,304
29,691
827
0.6
24,558
3.6
2017
7,395
3.5
828
6,120
7,690
3.8
816
6,276
4.1
7,804
839
6,549
3.1
7,871
4.5
842
6,628
5.1
30,760
25,573

8. Quarterly Cattle & Beef Forecasts (LMIC: 10/1/2015)
Live Sltr.
Change
Steer Price
from
Feeder Steer Price
Year
5-Mkt Avg
Year Ago
Southern Plains
Quarter
($/cwt)
(%)
7-800#
5-600#
2015 I
162.43
11.0
215.87
276.14 II
158.11
7.0
225.29
279.32
III
-9.5 IV
-10.0
-0.7
2016
-7.3
-4.5
1.4
-1.3
-3.3
2017
-2.7
-2.6
-2.1
-2.0
-2.4

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

10. Crude Oil Prices
Sources: EIA and CME

11. 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

14. LMIC Pork Production and Price Quarterly Forecasts (9/21/15)
Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC
Year
Comm’l
% Chg.
Avg Carcass
Comm’l Pork
Quarter
Slaughter
Year Ago
Weight
Production
2014
(1,000 hd)
(lbs)
(mil lbs) I
27,131
-2.6
213
2.7
5,784
0.2 II
25,575
-4.4
215
4.4
5,504
-0.2
III
25,558
-7.6
212
4.3
5,424
-3.5 IV
28,612
-4.0
1.7
6,131
-2.3
106,876
-4.6
214
3.3
22,843
-1.5
2015
28,723
5.9
0.8
6,161
6.5
27,848
8.9
-1.1
5,925
7.6
28,301
10.7
210
-1.2
5,937
9.5
30,400
6.3
6,510
6.2
115,272
7.9
-0.4
24,533
7.4
2016
29,117
1.4
-0.3
6,239
1.3
27,491
-1.3
5,867
-1.0
28,065
-0.8
5,898
-0.7
30,248
-0.5
0.3
6,495
114,921
0.1
24,499
-0.1

15. LMIC Pork Production and Price Quarterly Forecasts (9/21/15)
Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC
Year
Nat’l Wtd
% Chg.
Quarter
Avg Base Price
Year Ago
2014
($/carcass cwt)
($/live cwt) I
91.44
12.8
68.13 II
111.84
25.2
83.32
III
110.03
15.5
81.97 IV
90.13
8.6
67.15
100.86
16.1
75.14
2015
68.55
-25.0
51.07
73.52
-34.3
54.77
74-75
-32.3
55-56
64-66
-27.9
48-49
70-71
-30.2
52-53
2016
64-67
-4.4
48-50
73-77
2.0
54-57
74-79
2.7
55-59
65-71
4.6
48-53
70-73
1.4
52-54

16. Choice
All Fresh
Pork
Broiler
Turkey
Aug-15/Jul-15
-0.3%
-0.9%
1.7%
-0.2%
-1.4%
Aug-15/Aug-14
5.1%
-8.7%
-0.5%
-3.6%

17. U.S. Corn Supply and Use 2012 2013 2014 2015 2015 Δ Area Planted
(mil. acres)
97.3
95.4
90.6
88.4
-0.5
Yield
(bu./acre)
123.1
158.1
171.0
168.0
0.5
Production
(mil. bu.)
10,755
13,829
14,216
13,555
-30
Beg. Stocks
989
821
1,232
1,731 -1
Imports
160 36 32 30
Total Supply
11,904
14,686
15,479
15,316
-31
Feed & Residual
4,315
5,034
5,317
5,275
Ethanol
4,641
5,134
5,207
5,250
Food, Seed, & Other
1,397
1,369
1,359
1,380
Exports
730
1,917
1,864
1,850
Total Use
11,083
13,454
13,748
13,755
Ending Stocks
1,561
Season-Average Price
($/bu.)
6.89
4.46
3.70
3.80
0.05
Source: USDA-WAOB 17 17

18. U.S. Soybean Supply and Use
2012
2013
2014
2015
2015 Δ
Area Planted
(mil. acres)
77.2
76.8
83.3
83.2
-1.1
Yield
(bu./acre)
40.0
44.0
47.5
47.2
0.1
Production
(mil. bu.)
3,042
3,358
3,927
3,888
-47
Beg. Stocks
169
141 92
191
-19
Imports 41 72 33 30
Total Supply
3,252
3,570
4,052
4,109
-66
Crush
1,689
1,734
1,875
1,880 10
Seed & Residual
105 97
143
130
Exports
1,317
1,647
1,843
1,675
-50
Total Use
3,111
3,478
3,861
3,685
-40
Ending Stocks
425
-25
Season-Average Price
($/bu.)
14.40
13.00
10.10
9.15
0.00
Source: USDA-WAOB 18 18

19. Corn Yield Estimate Top: 2015 Estimated Yields
Bottom: Change from last month
Units: Bushels/acre
Source: USDA-NASS

20. World Corn Production
Source: USDA-WAOB 20 20

21. World Soybean Production
Source: USDA-WAOB 21 21

22. U.S. Meat Production & Prices
Source: USDA-WAOB 22 22

23. Corn Export Sales
Source: USDA-FAS

24. Soybean Export Sales
Source: USDA-FAS

25. Corn Grind for Ethanol

26. 2015/16 Crop Margins

27. 2016/17 Crop Margins

28. Iowa Corn Prices vs. Costs

29. Iowa Corn Costs Overall 75% increase 88% 26% 88% 46%
Source: AgDM A1-21

30. Iowa Corn Costs
Source: AgDM A1-21

31. Iowa Average Farmland Values
all grades 1950−2014

32. 2015 Cropland Value by State - Dollars per acre and percent change from 2014

33. Margin Maneuvers Negotiate lower land rental rates
Explore variety choice (seed cost vs. seed benefits)
Soil test and apply required fertilizer
Examine and control other input costs (pesticides, herbicides, etc.)
Be more aggressive marketing on rallies
May look to limit losses, as opposed to capture profits
Singles & doubles vs. Home run strategy

34. Margin Maneuvers Fully utilize government programs
ARC-CO, PLC, crop insurance
Break price into futures and basis components to capture improvements in either
Put the pencil to paper and calculate storage benefits/costs
Will a traditional seasonal price swing cover storage costs?
What are futures prices telling you about storage opportunities now?
Remember, Rome wasn’t built in a day
It took us awhile to get into this situation and it will take awhile to get out.

35. Crop Insurance No Payment Neither Pay RPE Pays YP Pays Both Pay
RP Pays

36. PLC pays, ARC does not
Neither pay
Both pay
ARC pays, PLC does not

37. Thank you for your time. Any questions. My web site: http://www2. econ
Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker: