Associate Professor/Crop Marketing Specialist Ag Outlook 2017/18 June 12, 2017 Chad Hart Associate Professor/Crop Marketing Specialist chart@iastate.edu 515-294-9911 1 1

Ag Productivity and Usage Using corn as an example Source: USDA

Ag Prices Using corn as an example Source: USDA

Net Farm Income Source: USDA

Farm Debt Source: Federal Reserve

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.

AVERAGE VALUES all farmland 1941−2016 $7,183 As of Nov. 16 -5.9%

A replay of 1920s or 1980s farm crisis? Source: USDA-ERS, Ag DM C2-70, Zhang and Beek (2016) Farm Policy Journal

President’s Budget Request Source: OMB, 2018 Budget

USDA’s Budget Source: USDA 2017 Budget

Proposed Adjustments in Farm Policy Source: OMB, 2018 Budget

U.S. Meat Production & Prices Source: USDA-WAOB 12 12

U.S. Meat Trade Million pounds Source: USDA-WAOB 13 13

U.S. Corn Supply and Use 2013 2014 2015 2016 2017 Area Planted (mil. acres) 95.4 90.6 88.0 94.0 90.0 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 821 1,232 1,731 1,737 2,295 Imports 36 32 67 55 50 Total Supply 14,686 15,479 15,401 16,940 16,410 Feed & Residual 5,040 5,280 5,120 5,500 5,425 Ethanol 5,124 5,200 5,224 5,450 Food, Seed, & Other 1,369 1,401 1,422 1,470 1,500 Exports 1,920 1,867 1,898 2,225 1,875 Total Use 13,454 13,748 13,664 14,645 14,300 Ending Stocks 2,110 Season-Average Price ($/bu.) 4.46 3.70 3.61 3.35 3.40 Source: USDA-WAOB 16 16

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 Production (mil. bu.) 3,358 3,927 3,926 4,307 4,255 Beg. Stocks 141 92 191 197 450 Imports 72 33 24 25 Total Supply 3,570 4,052 4,140 4,528 4,730 Crush 1,734 1,873 1,886 1,910 1,950 Seed & Residual 107 146 122 118 135 Exports 1,638 1,842 1,936 2,050 2,150 Total Use 3,478 3,862 3,944 4,078 4,235 Ending Stocks 495 Season-Average Price ($/bu.) 13.00 10.10 8.95 9.55 9.30 Source: USDA-WAOB 17 17

World Corn Production Source: USDA-WAOB 18 18

World Soybean Production Source: USDA-WAOB 19 19

Corn Export Sales Source: USDA-FAS

Soybean Export Sales Source: USDA-FAS

Corn Grind for Ethanol

Current Corn Futures 4.16 4.06 3.51 Source: CME Group, 6/9/2017

Current Soybean Futures 9.50 9.37 9.35 Source: CME Group, 6/9/2017

Iowa Corn Prices vs. Costs

Iowa Soybean Prices vs. Costs

Thank you for your time. Any questions. My web site: http://www2. econ Thank you for your time! Any questions? My web site: http://www2.econ.iastate.edu/faculty/hart/ Iowa Farm Outlook: http://www2.econ.iastate.edu/ifo/ Ag Decision Maker: http://www.extension.iastate.edu/agdm/