Crop & Livestock Marketing & Risk Management 30th Annual Tri-State Agricultural Lenders Seminar Dubuque, Iowa Oct. 25, 2016 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate.edu 515-294-9911 1 1

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

9/27/16 Projections (vs 9/2/16) 2016: $15 (vs $78) 2017: $22 (vs $86) Data Source: USDA & LMIC, Compiled by LMIC

Cattle on Feed―9/23 report (1,000+ head capacity feedlots; & < 1,000 in Iowa) Sep 1 On Feed: +1.5% yr/yr Vs. +1.2% pre-report est. (+0.3%, +1.9%) IA: -6.5% vs last year [1,000+ Head] IA: -3.9% vs last year [<1,000 Head] Aug Placements: +15.1% Vs. +13.1% pre-report est. (+8.6%, 18.0%) IA: +1.4% vs last year [1,000+ Head] IA: -47.8% vs last year [<1,000 Head] Aug Marketings: +17.6% Vs. +17.5% pre-report est. (+12.3%, +18.1%) IA: +16.9% vs last year [1,000+ Head] IA: -30.4% vs last year [<1,000 Head] Data Source: USDA/NASS

Historical and Projected Iowa Finishing Yearling Steer Returns (as of 10/17/16) (http://www2.econ.iastate.edu/estimated-returns/) Place Closeout Net   Fed Feeder Breakeven Mo-Yr Return* FCOG** Price Fed Price Feeder Price Apr-16 Sep-16 -175.95 73.16 104.85 151.55 41.17 118.38 128.09 May-16 Oct-16 -281.06 72.01 94.99 149.33 20.90 116.61 111.85 Jun-16 Nov-16 -258.35 71.20 97.64 151.47 24.23 117.51 117.03 Jul-16 Dec-16 -200.47 70.25 97.81 144.75 33.80 113.23 118.02 Aug-16 Jan-17 -216.96 71.24 100.94 151.65 31.79 117.63 122.73 Feb-17 -152.14 72.36 100.22 140.94 44.70 111.93 120.65 Mar-17 -31.38 73.17 101.73 126.86 67.46 104.14 122.67 Apr-17 26.25 73.79 102.20 119.52 78.57 100.18 123.02 May-17 15.12 74.20 98.61 114.49 76.95 97.44 116.51 2013 -59.43 112.76 126.16 143.91 101.95 130.73 135.99 2014 197.24 85.05 154.15 178.52 120.91 138.97 204.82 2015 -225.12 79.08 147.87 228.33 38.15 165.19 198.32 2016 -143.07 73.87 117.54 168.64 47.86 128.55 149.57 2017 -70.88 75.22 95.85 120.42 62.33 101.30 110.97 * Net return is $/head and all other values are $/cwt. ** FCOG = Feeding cost of gain.

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

Data Source: CME Group

Data Source: USDA/AMS

USDA Quarterly Hogs and Pigs Report – United States September 30, 2016   2016 as % Pre-Report Actual - 2015 2016 of 2015 Range Estimate Inventories on Sep 1 * All hogs and pigs 69,185 70,851 102.4 100.6 - 102.3 101.1 1.3 Kept for breeding 5,986 6,016 100.5 99.0 - 101.1 100.6 -0.1 Market 63,200 64,835 102.6 100.6 - 102.4 1.5 Under 50 pounds 20,741 21,090 101.7 99.0 - 102.0 99.9 1.8 50-119 pounds 18,496 18,851 101.9 99.0 - 102.4 100.8 1.1 120-179 pounds 12,855 13,325 103.7 101.8 - 103.1 102.3 1.4 180 pounds and over 11,108 11,568 104.1 100.5 - 104.0 103.1 1.0 Farrowing ** Jun – Aug sows farrowed 3,017 3,024 100.2 97.7 - 99.8 98.5 1.7 Sep – Nov intentions 2,929 2,928 100.0 98.0 - 101.1 99.6 0.4 Dec – Feb intentions 2,927 2,925 98.0 - 101.3 -0.3 Jun – Aug Pig Crop * 31,343 31,983 102.0 99.0 - 101.3 99.7 2.3 Jun – Aug Pigs per Litter 10.39 10.58 101.8 100.8 - 102.0 101.3 0.5 * 1,000 head ** 1,000 litters Data Source: USDA/NASS. Urner Barry pre-report estimates

+3.4% (since mid-July) Last 4 weeks +8.3% +8.1% +5.6% -0.7% Data Source: USDA/NASS

Data Source: USDA/AMS

Historical and Projected Iowa Wean to Finish Returns (as of 10/17/16) (http://www2.econ.iastate.edu/estimated-returns/) SEW Breakeven Net   LH (50% 5 mo) Month Year Return* FCOG** Price Price* 2013 4.77 54.86 90.41 36.78 56.71 88.06 41.55 2014 39.48 46.53 105.89 54.90 61.83 86.39 94.38 2015 -14.32 40.48 68.61 48.83 34.93 75.69 34.51 Jan-Mar 2016 -5.76 37.84 60.41 30.46 35.61 63.25 24.70 Apr-Jun 9.31 38.60 73.08 39.09 42.21 68.48 48.40 Jul-Sep -19.23 38.97 63.62 47.51 31.51 73.11 28.28 Oct-Dec 2016f -46.72 37.75 42.45 35.28 19.65 65.52 -11.44 -15.60 38.29 59.89 38.08 32.24 67.59 22.49 2017f -31.39 38.44 47.71 28.82 26.27 63.20 -2.57 -4.39 39.64 61.76 27.18 37.94 63.93 22.79 -7.06 40.97 65.72 34.44 38.24 69.21 27.39 -21.21 40.55 57.11 32.23 32.33 67.58 11.02 -16.01 39.90 58.08 30.67 33.70 65.98 14.66 * Net return and SEW price is $/head and all other values are $/carcass cwt. ** FCOG = Feeding cost of gain.

U.S. Soybean Supply and Use 2012 2013 2014 2015 2016 Area Planted (mil. acres) 77.2 76.8 83.3 82.7 83.7 Yield (bu./acre) 40.0 44.0 47.5 48.0 51.4 Production (mil. bu.) 3,042 3,358 3,927 3,926 4,269 Beg. Stocks 169 141 92 191 197 Imports 41 72 33 24 30 Total Supply 3,252 3,570 4,052 4,140 4,496 Crush 1,689 1,734 1,873 1,886 1,950 Seed & Residual 105 107 146 121 126 Exports 1,317 1,638 1,842 1,936 2,025 Total Use 3,111 3,478 3,862 3,943 4,101 Ending Stocks 395 Season-Average Price ($/bu.) 14.40 13.00 10.10 8.95 9.05 Source: USDA-WAOB, modified 13 13

Soy Yield Estimates Top: 2016 Yield Bottom: Change from last month Units: Bushels/acre Source: USDA-NASS

World Soybean Production Source: USDA-WAOB 15 15

U.S. Meat Production & Prices Source: USDA-WAOB 16 16

Soybean Export Sales Source: USDA-FAS

Change in Soybean Export Sales Source: USDA-FAS

Current Soybean Futures 9.37 9.35 Source: CME Group, 10/20/2016

U.S. Corn Supply and Use 2012 2013 2014 2015 2016 Area Planted (mil. acres) 97.3 95.4 90.6 88.0 94.5 Yield (bu./acre) 123.1 158.1 171.0 168.4 173.4 Production (mil. bu.) 10,755 13,829 14,216 13,601 15,057 Beg. Stocks 989 821 1,232 1,731 1,738 Imports 160 36 32 67 50 Total Supply 11,904 14,686 15,479 15,400 16,845 Feed & Residual 4,315 5,040 5,324 5,192 5,650 Ethanol 4,641 5,124 5,200 5,206 5,275 Food, Seed, & Other 1,397 1,369 1,360 1,367 1,375 Exports 730 1,920 1,864 1,898 2,225 Total Use 11,083 13,454 13,748 13,662 14,525 Ending Stocks 2,320 Season-Average Price ($/bu.) 6.89 4.46 3.70 3.61 3.25 Source: USDA-WAOB, modified 20 20

Corn Yield Estimates Top: 2016 Yield Bottom: Change from last month Units: Bushels/acre Source: USDA-NASS

World Corn Production Source: USDA-WAOB 22 22

Corn Export Sales Source: USDA-FAS

Change in Corn Export Sales Source: USDA-FAS

Corn Grind for Ethanol

Current Corn Futures 3.67 3.29 Source: CME Group, 10/20/2016

2016/17 Crop Margins @ Trend Yields

2016/17 Crop Margins @ Actual Yields

2017/18 Crop Margins

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/