1. Crop Production Economic Risk Management
WinField Regional Conference
Ames, Iowa
Feb. 24, 2015
Chad Hart
Associate Professor/Crop Markets Specialist 1 1

2. 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
5,250
Ethanol
5,019
5,000
4,641
5,134
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
13,645
Ending Stocks
1,827
Season-Average Price
($/bu.)
5.18
6.22
6.89
4.46
3.65
Source: USDA-WAOB 2 2

3. 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 25
Total Supply
3,495
3,325
3,252
3,570
4,086
Crush
1,648
1,703
1,689
1,734
1,795
Seed & Residual
130 88
105 97
116
Exports
1,501
1,365
1,317
1,647
1,790
Total Use
3,280
3,155
3,111
3,478
3,701
Ending Stocks
385
Season-Average Price
($/bu.)
11.30
12.50
14.40
13.00
10.20
Source: USDA-WAOB 3 3

4. Corn Yields Top: 2014 Yield Bottom: Change from last year
Units: Bu/acre
Source: USDA-NASS

5. Soybean Yields Top: 2014 Yield Bottom: Change from last month
Units: Bu/acre
Source: USDA-NASS

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

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

8. U.S. Meat Production & Prices
Source: USDA-WAOB 8 8

9. Corn Export Shifts
Source: USDA-FAS

10. Soybean Export Shifts
Source: USDA-FAS

11. Crude Oil Prices
Sources: EIA and CME

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

13. Corn Grind for Ethanol

14. Current Corn Futures
3.98
3.72
Source: CME Group, 2/20/2015

15. Current Soybean Futures
10.04
9.47
Source: CME Group, 2/20/2015

16. 2014/15 Crop Margins

17. 2015/16 Crop Margins

18. 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
(2/20/15)
2015/16
Corn
$4.46
$3.65
$3.72
$3.98
Soybeans
$13.00
$10.20
$10.04
$9.47

19. 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

20. 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

21. Farm Bill: Old vs. New Direct Payments (DP)
Countercyclical Payments (CCP)
Marketing Loans (LDP)
Revenue Countercyclical Payments (ACRE)
Countercyclical Payments (PLC)
Marketing Loans (LDP)
Revenue Countercyclical Payments (ARC)
New programs, but they have strong similarities to previous programs

22. PLC: Corn Payment Potential
Reference Price = $3.70 per bushel
Payment Yield = 150 bushels per acre
Marketing Year Price ($/bu)
PLC Payment Rate ($/bu)
PLC Payment ($/base acre)
$3.10
$0.60
$76.50
$3.20
$0.50
$63.75
$3.30
$0.40
$51.00
$3.40
$0.30
$38.25
$3.50
$0.20
$25.50
$3.60
$0.10
$12.75
$3.70
$0.00
Notes: PLC payments are made on 85% of base acres.

23. ARC-CO: 2014 Corn Revenue Guarantee
Year
Yield
MYA Price
ARC Price
2009
202.0
$3.55
$3.70
2010
196.0
$5.18
2011
177.0
$6.22
2012
125.0
$6.89
2013
174.0
$4.46
Oly. Ave.
182.3
$5.29
Benchmark Revenue = $ per acre
ARC Revenue Guarantee = $ per acre
Notes: Revenue Guarantee equals 86% of Benchmark.

24. ARC-CO: 2014 Potential Corn Payment
ARC Revenue Guarantee = $ per acre
ARC Max Payment Rate = $96.44 per acre
But ARC-CO is paid on 85% of base acres
and 85% of $96.44 is $81.97
Price: $3.50
$4.00
$4.50
$5.00
Yield: 150
$81.97
$79.36
175
$41.86
$0.00
200
$29.36
225
250

25. PLC pays, ARC does not Neither pay Both pay ARC pays, PLC does not
The choice depends on where you expect prices and yields to be over the next 5 years. There are price/yield combinations where PLC pays and ARC does not. There are also price/yield combinations where ARC pays and PLC does not.

26. Iowa Corn Acres Insured in 2014
93% of all Iowa
corn acres are
insured

27. Iowa Soy Acres Insured in 2014
94% of all Iowa
soybean acres
are insured

28. Coverage Levels for RP

29. Federal Crop Insurance

30. Supplemental Coverage Option (SCO)RP
RPHPE YP

31. 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: