Ag Markets and Tools Whiskey Creek Insurance Annual Growers Meeting South Sioux City, Nebraska Dec. 9, 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

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

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

World Corn Production Source: USDA-WAOB 6 6

World Soybean Production Source: USDA-WAOB 7 7

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 10 10

Corn Export Sales Source: USDA-FAS

Corn Export Sales Source: USDA-FAS

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

Crude Oil Prices Sources: EIA and CME

Soybean Export Sales Source: USDA-FAS

Soybean Export Sales Source: USDA-FAS

Corn Grind for Ethanol

Ethanol Stocks Source: EIA

Ethanol Exports Source: EIA

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

Iowa Corn Prices vs. Costs

Iowa Soybean Prices vs. Costs

Thoughts for 2016 and Beyond Supply/demand concerns Feed and ethanol markets have alternatives (sorghum, wheat) Exports weaken as dollar strengthens and China slows Will El Niño last through our next crop cycle? Negative margins for 2015-2016 crops 2014/15 USDA 2015/16 Futures (12/7/15) 2016/17 Corn $3.70 $3.65 $3.55 $3.75 Soybeans $10.10 $8.90 $8.61 $8.59

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/