Crop Market Outlook, Farm Income, Land Values, and the Farm Bill Wyffels Post Harvest Meeting Emmetsburg, Iowa Nov. 20, 2013 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate.edu 515-294-9911 1 1

U.S. Corn Supply and Use 2009 2010 2011 2012 2013 Area Planted (mil. acres) 86.4 88.2 91.9 97.2 95.3 Yield (bu./acre) 164.7 152.8 147.2 123.4 160.4 Production (mil. bu.) 13,092 12,447 12,360 10,780 13,989 Beg. Stocks 1,673 1,708 1,128 989 824 Imports 8 28 29 162 25 Total Supply 14,774 14,182 13,517 11,932 14,837 Feed & Residual 5,125 4,795 4,557 4,333 5,200 Ethanol 4,591 5,019 5,000 4,648 4,900 Food, Seed, & Other 1,370 1,407 1,428 1,396 1,450 Exports 1,980 1,834 1,543 731 1,400 Total Use 13,066 13,055 12,528 11,108 12,950 Ending Stocks 1,887 Season-Average Price ($/bu.) 3.55 5.18 6.22 6.89 4.50 Source: USDA-WAOB 2 2

U.S. Soybean Supply and Use 2009 2010 2011 2012 2013 Area Planted (mil. acres) 77.5 77.4 75.0 77.2 76.5 Yield (bu./acre) 44.0 43.5 41.9 39.8 43.0 Production (mil. bu.) 3,359 3,329 3,094 3,034 3,258 Beg. Stocks 138 151 215 169 141 Imports 15 14 16 36 Total Supply 3,512 3,495 3,325 3,239 3,413 Crush 1,752 1,648 1,703 1,689 1,685 Seed & Residual 110 130 88 90 109 Exports 1,499 1,501 1,365 1,320 1,450 Total Use 3,361 3,280 3,155 3,098 3,243 Ending Stocks 170 Season-Average Price ($/bu.) 9.59 11.30 12.50 14.40 12.15 Source: USDA-WAOB 3 3

Source: USDA-NASS

Projected Corn Yields Top: 2013 Projected Yield Bottom: Change from last month Units: Bushels/acre Source: USDA-NASS

Early Reports on Corn Yields Source: AgWeb.com

Projected Soybean Yields Top: 2013 Projected Yield Bottom: Change from last month Units: Bushels/acre Source: USDA-NASS

Early Reports on Soybean Yields Source: AgWeb.com

World Corn Production Source: USDA-WAOB 9 9

World Soybean Production Source: USDA-WAOB 10 10

U.S. Meat Production & Prices Source: USDA-WAOB 11 11

Corn Export Shifts Source: USDA-FAS

Corn Export Sales Source: USDA-FAS

Soybean Export Sales Source: USDA-FAS

Soy Export Shifts Source: USDA-FAS

Corn Grind for Ethanol

Source: DOE-EIA, Annual Energy Outlook

Current Corn Futures 4.36 4.23 4.07 Source: CME Group, 11/15/2013

Current Soybean Futures 12.14 10.92 10.75 Source: CME Group, 11/15/2013

Corn Prices vs. Costs Per Bushel Cost calculated as Per Acre Cost from ISU Extension divided by Expected Yield per Acre Sources: USDA-NASS for Prices, Duffy for Costs

Corn Prices vs. Costs Per Bushel Cost calculated as Per Acre Cost from ISU Extension divided by Actual Yield per Acre Sources: USDA-NASS for Prices, Duffy for Costs

Soybean Prices vs. Costs Per Bushel Cost calculated as Per Acre Cost from ISU Extension divided by Expected Yield per Acre Sources: USDA-NASS for Prices, Duffy for Costs

Soybean Prices vs. Costs Per Bushel Cost calculated as Per Acre Cost from ISU Extension divided by Actual Yield per Acre Sources: USDA-NASS for Prices, Duffy for Costs

Crop Acreage Source: USDA-NASS

Crop Shifts Source: USDA-NASS

Thoughts for 2014 and Beyond Supply/demand concerns Corn demand rebounding? Yes, so far, so good Acreage allocation for 2014: Where do the extra corn acres go? Markets favoring soybeans in the short term and corn longer term 2012/13 USDA 2013/14 USDA 2013/14 Futures (11/15/13) Corn $6.89 $4.50 $4.07 Soybeans $14.40 $12.15 $12.14

Iowa Land Values Source: Mike Duffy, ISU

Iowa Land Values – Log Scale Source: Mike Duffy, ISU

Land Values and Income Source: Mike Duffy, ISU

Land Values and Income Source: Mike Duffy, ISU

Farm Bill Titles Commodities IX. Energy Conservation X. Hort. & Organic Ag. Trade XI. Livestock Nutrition XII. Crop Insurance Credit XIII. Commodity Futures Rural Development XIV. Miscellaneous Research XV. Trade & Taxes Forestry

Ideas on the Next Farm Bill Let’s look at the common features from the House and Senate bills Both versions of the farm bill eliminate direct payments, countercyclical payments, ACRE, and SURE The marketing loan program would continue Livestock disaster programs would be reestablished

Reference Prices Senate: 55% of 5-yr Olympic average MYA price House: Set by law Corn $3.70 Wheat $5.50 Soybean $8.40 Corn $2.95 Wheat $3.62 Soybean $6.29

ARC or RLC instead of ACRE Revenue-based support program Revenues based on 5-year Olympic averages for yields and prices Yields and prices have cups (T-yields and reference prices)

AMP or PLC instead of CCP Price-based support program Reference prices establish targets Works like CCP Payment rate = Max(0, Reference price – Max(MYA price, Loan rate))

Dairy Dairy Producer Margin Protection Program Voluntary margin coverage, with the opportunity for supplemental coverage Dairy Market Stabilization Program Managed supplies when margins fall

SCO Examples from Last Year’s Bills Source: Congressional Research Service

World Corn Markets Source: USDA 39 39

Arable Land

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