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Crop and Policy Outlook

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Presentation on theme: "Crop and Policy Outlook"— Presentation transcript:

1 Crop and Policy Outlook
Arizona Ag Marketing/QLF Market Outlook Luncheon Tempe, Arizona Oct. 16, 2013 Chad Hart Associate Professor/Crop Markets Specialist 1 1

2 U.S. Corn Supply and Use 2009 2010 2011 2012 2013 Area Planted
(mil. acres) 86.4 88.2 91.9 97.2 97.4 Yield (bu./acre) 164.7 152.8 147.2 123.4 155.3 Production (mil. bu.) 13,092 12,447 12,360 10,780 13,843 Beg. Stocks 1,673 1,708 1,128 989 824 Imports 8 28 29 162 25 Total Supply 14,774 14,182 13,517 11,931 14,593 Feed & Residual 5,125 4,795 4,546 4,475 5,100 Ethanol 4,591 5,019 5,011 4,665 4,900 Food, Seed, & Other 1,370 1,407 1,428 1,395 1,450 Exports 1,980 1,834 1,543 735 1,225 Total Use 13,066 13,055 12,528 11,270 12,675 Ending Stocks 2,018 Season-Average Price ($/bu.) 3.55 5.18 6.22 6.90 4.80 Source: USDA-WAOB 2 2

3 U.S. Soybean Supply and Use
2009 2010 2011 2012 2013 Area Planted (mil. acres) 77.5 77.4 75.0 77.2 Yield (bu./acre) 44.0 43.5 41.9 39.8 41.2 Production (mil. bu.) 3,359 3,329 3,094 3,034 3,149 Beg. Stocks 138 151 215 169 141 Imports 15 14 16 40 Total Supply 3,512 3,495 3,325 3,243 3,305 Crush 1,752 1,648 1,703 1,690 1,655 Seed & Residual 110 130 88 97 115 Exports 1,499 1,501 1,365 1,315 1,370 Total Use 3,361 3,280 3,155 3,102 3,140 Ending Stocks 166 Season-Average Price ($/bu.) 9.59 11.30 12.50 14.40 Source: USDA-WAOB 3 3

4 Objective Yield Data Source: USDA-NASS

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

6 Early Reports on Corn Yields
Source: AgWeb.com

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

8 Early Reports on Soybean Yields
Source: AgWeb.com

9 World Corn Production Source: USDA-WAOB 9 9

10 World Soybean Production
Source: USDA-WAOB 10 10

11 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

12 Cattle Crush Margin The Crush Margin is the return after the feeder steer and corn costs. Live weight: pounds Feeder weight: 750 pounds Corn: 50 bushels per head Source: ISU Extension

13 U.S. Meat Production & Prices
Source: USDA-WAOB 13 13

14 Corn Export Shifts Source: USDA-FAS

15 Corn Export Sales Source: USDA-FAS

16 Soy Export Shifts Source: USDA-FAS

17 Soybean Export Sales Source: USDA-FAS

18 Corn Grind for Ethanol

19 Source: DOE-EIA, Annual Energy Outlook

20 Current Corn Futures 4.58 4.47 4.13 Source: CME Group, 10/15/2013

21 Current Soybean Futures
12.02 11.00 10.87 Source: CME Group, 10/15/2013

22 New Crop Prices

23 Crop Acreage Source: USDA-NASS

24 Crop Shifts Source: USDA-NASS

25 Winter Wheat Progress Source: USDA-NASS

26 Thoughts for 2014 and Beyond
Supply/demand concerns A lot of production uncertainty for harvest time Corn demand rebounding? 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 (10/15/13) Corn $6.90 $4.80 $4.13 Soybeans $14.40 $12.50 $12.02

27 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

28 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

29 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

30 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)

31 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))

32 Dairy Dairy Producer Margin Protection Program
Voluntary margin coverage, with the opportunity for supplemental coverage Dairy Market Stabilization Program Managed supplies when margins fall Packages are very similar across the House and Senate versions

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

34 Thank you for your time. Any questions. My web site: http://www. econ
Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker:


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