Crop Market Update Citizens Savings Bank Producer Meeting Calmar, Iowa Dec. 14, 2015 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate.edu 515-294-9911 1 1

U.S. Corn Supply and Use 2012 2013 2014 2015 2015 Δ Area Planted (mil. acres) 97.3 95.4 90.6 88.4 Yield (bu./acre) 123.1 158.1 171.0 169.3 Production (mil. bu.) 10,755 13,829 14,216 13,654 Beg. Stocks 989 821 1,232 1,731 Imports 160 36 32 30 Total Supply 11,904 14,686 15,479 15,415 Feed & Residual 4,315 5,040 5,315 5,300 Ethanol 4,641 5,124 5,209 5,200 25 Food, Seed, & Other 1,397 1,369 1,359 1,380 Exports 730 1,920 1,864 1,750 -50 Total Use 11,083 13,454 13,748 13,630 -25 Ending Stocks 1,785 Season-Average Price ($/bu.) 6.89 4.46 3.70 3.65 Source: USDA-WAOB 2 2

U.S. Soybean Supply and Use 2012 2013 2014 2015 2015 Δ Area Planted (mil. acres) 77.2 76.8 83.3 83.2 Yield (bu./acre) 40.0 44.0 47.5 48.3 Production (mil. bu.) 3,042 3,358 3,927 3,981 Beg. Stocks 169 141 92 191 Imports 41 72 33 30 Total Supply 3,252 3,570 4,052 4,203 Crush 1,689 1,734 1,873 1,890 Seed & Residual 105 107 145 133 Exports 1,317 1,638 1,843 1,715 Total Use 3,111 3,478 3,861 3,738 Ending Stocks 465 Season-Average Price ($/bu.) 14.40 13.00 10.10 8.90 Source: USDA-WAOB 3 3

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

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

U.S. Meat Production & Prices Source: USDA-WAOB 6 6

Corn Export Sales Source: USDA-FAS

Soybean Export Sales Source: USDA-FAS

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

Crude Oil Prices Sources: EIA and CME

Corn Grind for Ethanol

Current Corn Futures 3.75 3.55 Source: CME Group, 12/7/2015

Current Soybean Futures 8.61 8.59 Source: CME Group, 12/7/2015

2015/16 Crop Margins

2016/17 Crop Margins

Corn Price Distributions

Soybean Price Distributions

Iowa Corn Prices vs. Costs

Iowa Soybean Prices vs. Costs

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

Iowa Soybean Costs Overall 69% increase 88% 14% 56% 72% Source: AgDM A1-21

Iowa Corn Costs Source: AgDM A1-21

Iowa Soybean Costs Source: AgDM A1-21

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

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.

Ag Decision Maker

Marketing Information

Crop Marketing 101

Iowa Commodity Challenge

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/