1. Crop Market Outlook Women Marketing Grain Meeting Algona, Iowa
Chad Hart
Associate Professor/Crop Marketing Specialist 1 1

2. U.S. Corn Supply and Use 2013 2014 2015 2016 2017 Area Planted
(mil. acres)
95.4
90.6
88.0
94.0
90.0
Yield
(bu./acre)
158.1
171.0
168.4
174.6
170.7
Production
(mil. bu.)
13,829
14,216
13,602
15,148
14,065
Beg. Stocks
821
1,232
1,731
1,737
2,320
Imports 36 32 67 55 50
Total Supply
14,686
15,479
15,401
16,940
16,435
Feed & Residual
5,040
5,280
5,131
5,600
5,450
Ethanol
5,124
5,200
5,206
5,350
5,400
Food, Seed, & Other
1,369
1,401
1,429
1,445
1,470
Exports
1,920
1,867
1,898
2,225
1,900
Total Use
13,454
13,748
13,664
14,620
14,220
Ending Stocks
2,215
Season-Average Price
($/bu.)
4.46
3.70
3.61
3.40
3.50
Source: USDA-WAOB , USDA-OCE 2017 2 2

3. U.S. Soybean Supply and Use
2013
2014
2015
2016
2017
Area Planted
(mil. acres)
76.8
83.3
82.7
83.4
88.0
Yield
(bu./acre)
44.0
47.5
48.0
52.1
Production
(mil. bu.)
3,358
3,927
3,926
4,307
4,180
Beg. Stocks
141 92
191
197
420
Imports 72 33 24 25
Total Supply
3,570
4,052
4,140
4,528
4,625
Crush
1,734
1,873
1,886
1,930
1,945
Seed & Residual
107
146
122
128
135
Exports
1,638
1,842
1,936
2,050
2,125
Total Use
3,478
3,862
3,944
4,108
4,205
Ending Stocks
Season-Average Price
($/bu.)
13.00
10.10
8.95
9.50
9.60
Source: USDA-WAOB , USDA-OCE 2017 3 3

4. Corn Yields Top: 2016 Yield Bottom: Change from last year
Units: Bushels/acre
Source: USDA-NASS

5. Soy Yields Top: 2016 Yield Bottom: Change from last year
Units: Bushels/acre
Source: USDA-NASS

6. World Corn Production
Source: USDA-WAOB 6 6

7. World Soybean Production
Source: USDA-WAOB 7 7

8. 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

9. 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

10. U.S. Meat Trade
Source: USDA-WAOB 10 10

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

12. Corn Export Sales
Source: USDA-FAS

13. Change in Corn Export Sales
Source: USDA-FAS

14. Soybean Export Sales
Source: USDA-FAS

15. Change in Soybean Export Sales
Source: USDA-FAS

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

17. Corn Grind for Ethanol

18. Current Corn Futures
4.06
3.98
3.57
Source: CME Group, 3/3/2017

19. Current Soybean Futures
10.08
9.74
9.72
Source: CME Group, 3/3/2017

20. 2016/17 Crop Margins @ Actual Yields

21. 2017/18 Crop Margins

22. Iowa Corn Prices vs. Costs

34. Federal Crop Insurance

35. Federal Crop Insurance: Total Acres Insured

36. Types of Crop Insurance
Individual Yield (YP)
Individual Revenue (RP and RPE)
Area Yield (AYP)
Area Revenue (ARP and ARPE)

37. Example Farm
A 100 acre corn farm in Story County, Iowa with a 5-year average yield of 180 bu/acre
Purchases insurance at the 80% coverage level
Spring price: $3.96/bu (average of Feb. prices for Dec. corn futures)

38. Individual Yield Insurance (YP)
Farmer chooses percentage of expected yield to insure
Expected yield measured by average yield
Price at which the crop is valued is set up front and does not change
If yields are 100 bushels per acre, the farmer receives $ per acre = $3.96/bu * (80% * 180 bu/ac bu/ac)

39. Yield Insurance Payout Graph
No Payout
Payout

40. Yield Insurance is like an Option

41. Individual Revenue Insurance (RP or RPE)
Farmer chooses percentage of expected revenue to insure
Expected revenue measured by average yield times initial crop price
Price at which the crop is valued can move with price changes in the market

42. Individual Revenue Insurance (RP or RPHPE)
In our example, the farmer has insured $ of revenue per acre (80% * $3.96/bu * 180 bu/ac)
Final value of the crop determined by average futures prices over harvest period

43. Individual Revenue Insurance (RP or RPHPE)
If yields are 100 bushels per acre and harvest prices average $3.50, the farmer receives $ per acre
0.80*$3.96/bu.*180 bu./acre $3.50/bu.*100 bu./acre

44. RPHPE Payout Graph
No Payout
Payout

45. Rev. Insurance is like an Option

46. Individual Revenue Insurance (RP)
This policy has a “harvest price option”
If the harvest price is greater than the planting price, then the harvest price is used in all calculations
In essence, the policy is giving you a put option with the strike price at the planting price

47. Harvest Price Option

48. Individual Revenue Insurance (RP)
If yields are 100 bushels per acre and harvest prices average $5.50, the farmer receives $ per acre
0.80*$3.96/bu.*180 bu./acre $5.50/bu.*100 bu./acre
5.50

49. RP Payout Graph No Payment Neither Pay RPHPE Pays YP Pays Both Pay
RP Pays

50. What Units to Choose? Optional Units: Each farm is separate
Basic Units: Combine owned and cash rented acres in same county
Enterprise Units: Combine all acres of the same crop in same county
Whole Farm: Combine all crops in county

51. Current Subsidy Rates 60% 64% 80% 65% 59% 70% 75% 55% 77% 48% 68% 71%
Coverage level
Basic Units
Optional Units
Enterprise Units
Whole Farm Units
60%
64%
80%
not avail.
65%
59%
70%
75%
55%
77%
48%
68%
71%
85%
38%
53%
56%

53. Corn Acres Insured in 2016
87% of all
corn acres
are insured

54. Soy Acres Insured in 2016
87% of all
soybean acres
are insured

55. 2016 Corn and Soy Coverage Levels

56. Thank you for your time. Any questions. My web site: http://www2. econ
Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker: