Ag Outlook Young Professionals in Agriculture Johnston, Iowa Jan. 13, 2015 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate.edu 515-294-9911 1 1

U.S. Corn Supply and Use 2010 2011 2012 2013 2014 Area Planted (mil. acres) 88.2 91.9 97.3 95.4 90.6 Yield (bu./acre) 152.8 147.2 123.1 158.1 171.0 Production (mil. bu.) 12,447 12,360 10,755 13,829 14,216 Beg. Stocks 1,708 1,128 989 821 1,232 Imports 28 29 160 36 25 Total Supply 14,182 13,517 11,904 14,686 15,472 Feed & Residual 4,795 4,557 4,315 5,036 5,275 Ethanol 5,019 5,000 4,641 5,134 5,175 Food, Seed, & Other 1,407 1,428 1,397 1,367 1,395 Exports 1,834 1,543 730 1,917 1,750 Total Use 13,055 12,528 11,083 13,454 13,595 Ending Stocks 1,877 Season-Average Price ($/bu.) 5.18 6.22 6.89 4.46 3.65 Source: USDA-WAOB 2 2

U.S. Soybean Supply and Use 2010 2011 2012 2013 2014 Area Planted (mil. acres) 77.4 75.0 77.2 76.8 83.7 Yield (bu./acre) 43.5 41.9 40.0 44.0 47.8 Production (mil. bu.) 3,329 3,094 3,042 3,358 3,969 Beg. Stocks 151 215 169 141 92 Imports 14 16 41 72 15 Total Supply 3,495 3,325 3,252 3,570 4,076 Crush 1,648 1,703 1,689 1,734 1,780 Seed & Residual 130 88 105 97 116 Exports 1,501 1,365 1,317 1,647 1,770 Total Use 3,280 3,155 3,111 3,478 3,666 Ending Stocks 410 Season-Average Price ($/bu.) 11.30 12.50 14.40 13.00 10.20 Source: USDA-WAOB 3 3

World Corn Production Source: USDA-WAOB 4 4

World Soybean Production Source: USDA-WAOB 5 5

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

Corn Export Shifts Source: USDA-FAS

Soybean Export Shifts Source: USDA-FAS

Corn Grind for Ethanol

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 Actual Yield per Acre Sources: USDA-NASS for Prices, Duffy for Costs

Thoughts for 2015 and Beyond Supply/demand concerns Record corn and soybean crops, but also record demand Markets are in a holding pattern, waiting for news Watching South American crop progress Projected negative margins for 2014 and 2015 crops 2013/14 USDA 2014/15 Futures (1/12/15) 2015/16 Corn $4.46 $3.65 $3.80 $4.07 Soybeans $13.00 $10.20 $10.04 $9.60

Quarterly Cattle & Beef Forecasts (LMIC:1/8/2015)   Change Average Commercial from Dressed Beef Year Slaughter Year Ago Weight Production Quarter (1,000 hd) (%) (lbs) (mil lbs) 2013 I 7,781 -3.1 794 1.4 6,175 -1.7 II 8,325 0.2 782 0.4 6,513 0.6 III 8,321 -0.1 0.5 6,609 IV 8,035 -3.0 799 0.7 6,423 -2.3 32,462 -1.5 792 25,720 -0.7 2014 7,375 -5.2 796 0.3 5,868 -5.0 7,836 -5.9 789 0.9 6,183 -5.1 7,630 -8.3 810 1.9 6,178 -6.5 7,328 -8.8 821 2.8 6,019 -6.3 30,169 -7.1 804 24,248 -5.7 2015 7,142 -3.2 817 2.7 5,834 -0.6 7,614 -2.8 807 2.2 6,141 7,488 -1.9 820 1.3 7,291 -0.5 822 0.1 5,995 -0.4 29,535 -2.1 816 1.6 24,111 2016 7,159 5,881 0.8 7,348 -3.5 812 5,967 7,652 828 6,334 3.1 7,343 827 6,075 29,502 24,257

Quarterly Cattle & Beef Forecasts (LMIC:1/8/2015)   Live Sltr. Change Feeder Steer Price from Price Year 5-Mkt Avg Year Ago 7-800# 5-600# Quarter ($/cwt) (%) 2013 I 125.51 0.2 142.41 -7.68 170.13 -6.73 II 124.95 3.3 137.34 -10.03 159.71 -10.60 III 122.30 2.2 155.95 9.97 171.19 13.69 IV 130.77 4.2 167.04 14.02 187.56 16.20 125.88 2.5 150.69 1.26 172.15 2.31 2014 146.34 16.6 171.77 20.62 209.30 23.03 147.82 18.3 193.16 40.64 227.67 42.55 158.49 29.6 225.93 44.87 263.14 53.71 165.59 26.6 239.81 43.56 285.63 52.29 154.56 22.8 207.67 37.81 246.44 43.15 2015 163-166 12.4 226-230 32.73 276-282 33.30 163-167 11.6 228-234 19.59 280-287 24.52 159-164 1.9 226-233 1.58 273-282 5.46 160-166 -1.6 222-230 -5.76 266-275 -5.30 162-165 5.8 226-231 10.03 274-281 12.61 2016 161-168 0.0 221-230 -1.10 270-283 -0.90 162-170 0.6 224-233 -1.08 274-287 -1.06 158-167 221-232 -1.31 268-282 158-168 216-228 -1.77 261-276 -0.74 161-167 0.3 222-229 270-280

How Much Expansion. ERS & FAPRI Herd Projections http://www. ers. usda ERS-2023 Herd Would Be: +16% from 2014 (~= 2000) FAPRI-2023 Herd Would Be: +4% from 2014 (~= 2012 & 1962)

Data Source: USDA-AMS, Compiled and Analysis by LMIC Livestock Marketing Information Center

Data Source: USDA/AMS

2013 Profits = -$100.77 ~2014 Profits = +$197.24 ~2015 Profits = -$80.55

Given LMIC forecast 54.3 lbs/capita) in 2014: No demand change IF 2014 All Fresh Retail Price = $517.8/lb (+4.8% from 2013) Data Source: Bureau of Economic Analysis & USDA-ERS, Compiled and Analysis by LMIC Livestock Marketing Information Center

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

Quarterly Hog & Pork Forecasts (LMIC:1/8/2015)   Change Average Commercial from Carcass Pork Year Slaughter Year Ago Weight Production Quarter (1,000 hd) (%) (lbs) (mil lbs) 2013 I 27,864 -0.9 208 -0.5 5,775 -1.4 II 26,765 0.4 206 5,516 -0.1 III 27,657 -1.1 204 1.2 5,622 -0.2 IV 29,792 -2.1 211 2.6 6,274 0.5 112,077 -1.0 207 0.7 23,187 -0.3 2014 27,134 -2.6 213 2.7 5,785 0.2 25,574 -4.4 215 4.4 5,504 25,554 -7.6 212 4.2 5,423 -3.5 28,624 -3.9 214 1.5 6,131 -2.3 106,886 -4.6 3.2 22,844 -1.5 2015 27,403 1.0 0.8 5,894 1.9 26,428 3.3 5,665 2.9 26,814 4.9 -0.7 5,652 30,177 5.4 0.1 6,473 5.6 110,822 3.7 -0.0 23,684 2016 28,935 6,235 5.8 27,241 3.1 5,850 27,622 3.0 0.3 5,839 30,620 6,585 1.7 114,418 24,509 3.5

Quarterly Hog & Pork Forecasts (LMIC:1/8/2015)   Prices Change National Wtd from Year Avg Base Year Ago Quarter (%/cwt) (%) 2013 I 81.08 -3.6 II 89.32 4.7 III 95.25 12.4 IV 82.98 3.0 87.16 4.1 2014 91.44 12.8 111.84 25.2 110.03 15.5 90.13 8.6 100.86 16.1 2015 85-88 -5.4 89-93 -18.6 86-91 -19.6 77-83 -11.2 84-89 -14.4 2016 77-84 -6.9 81-89 -6.6 80-88 -5.1 72-82 -3.8 79-85 -5.2

2013 Profits = +$4.77 ~2014 Profits = +$39.48 ~2015 Profits = +$4.43

Given LMIC forecast 46.0 lbs/capita) in 2014: No demand change IF 2014 Pork Price = $380.0/lb (+1.7% from 2013) Data Source: Bureau of Economic Analysis & USDA-ERS, Compiled and Analysis by LMIC Livestock Marketing Information Center

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/