1. Bumpy Ag Markets and How to Survive Them
Sept. 5, 2018
Chad Hart
Associate Professor/Crop Marketing Specialist 1 1

2. U.S. Corn Supply and Use 2015 2016 2017 2018 Δ2018 Area Planted
(mil. acres)
88.0
94.0
90.2
89.1
0.0
Yield
(bu./acre)
168.4
174.6
176.6
178.4
4.4
Production
(mil. bu.)
13,602
15,148
14,604
14,586
356
Beg. Stocks
1,731
1,737
2,293
2,027
Imports 67 57 40 50
Total Supply
15,401
16,942
16,937
16,664
Feed & Residual
5,120
5,470
5,450
5,525
100
Ethanol
5,224
5,432
5,600
5,625
Food, Seed, & Other
1,422
1,453
1,460
1,480
Exports
1,898
2,294
2,400
2,350
125
Total Use
13,664
14,649
14,910
14,980
225
Ending Stocks
1,684
132
Season-Average Price
($/bu.)
3.61
3.36
3.40
3.60
-0.20
Source: USDA-WAOB 2 2

3. U.S. Soybean Supply and Use
2015
2016
2017
2018
Δ2018
Area Planted
(mil. acres)
82.7
83.4
90.1
89.6
0.0
Yield
(bu./acre)
48.0
52.0
49.1
51.6
3.1
Production
(mil. bu.)
3,926
4,296
4,392
4,586
276
Beg. Stocks
191
197
302
430
-35
Imports 24 22 25
Total Supply
4,140
4,515
4,715
5,040
240
Crush
1,886
1,901
2,040
2,060 15
Seed & Residual
122
146
136 1
Exports
1,936
2,166
2,110 20
Total Use
3,944
4,214
4,286
4,256 36
Ending Stocks
785
205
Season-Average Price
($/bu.)
8.95
9.47
9.35
8.90
-0.35
Source: USDA-WAOB 3 3

4. World Corn Production
Source: USDA-WAOB 4 4

5. World Soybean Production
Source: USDA-WAOB 5 5

7. U.S. Meat Production & Prices
Source: USDA-WAOB 7 7

8. Pork Export Shifts
Source: USDA-FAS

9. Beef Export Shifts
Source: USDA-FAS

10. Corn Export Shifts
Source: USDA-FAS

11. Advance Corn Export Sales
Source: USDA-FAS

12. Soybean Export Shifts
Source: USDA-FAS

13. Advance Soybean Export Sales
Source: USDA-FAS

14. Ethanol Production
Source: EIA

15. Ethanol Exports
Source: EIA

16. Current Corn Futures
4.01
3.72
Source: CME Group, 9/4/2018

17. Current Soybean Futures
8.87
8.39
Source: CME Group, 9/4/2018

18. 2017/18 Crop Margins

19. 2018/19 Crop Margins

20. Corn Prices vs. Marketings
Sources: USDA, NASS & ERS, Monthly Price Data

21. Soy Prices vs. Marketings
Sources: USDA, NASS & ERS, Monthly Price Data

22. Evaluate pricing alternatives and actions…

23. Strategies: 1. Protect your working capital
Revise recent asset purchases
Revise share of rented land
Revise scale of operation and fixed costs over next 2-3 years
Manage taxes: visit with tax advisor
Deferred payment contracts
Carry back operating losses to obtain tax refunds

24. Strategies: 2. Avoid cash shortages
Plan for operating losses (renters)
Secure operating loan/emergency loan terms
Be very careful with new capital expenditures
Maintain cash reserves and operating credit lines
Source: File A1-20, Ag Decision Maker

25. Strategies: 3. Diversify Income
Add or don’t lose non-farm income
Consider alternative sources of revenue with your assets: custom work, snow removal, truck driving in fall & winter

26. Strategies: 4. Revise production costs
Revise production plans, especially for rented land (renegotiate land rent?)
Can you make changes that generate savings that offset reductions in revenue?
Seek volume discounts in seeds, chemicals, etc.
Visit with agronomist: update your production skills, evaluate how to control costs

27. Strategies: 5. Actively Manage Risks
Know your break-even prices
Design a marketing plan with price and date targets and stick to it
Lock-in margins whenever possible
Revise crop insurance (Explore ways to maintain protection while lowering costs)
Revise use of forward contracts & crop insurance to finance inputs

28. Strategies: 6. Revise family living expenses
Revise family living expenditures:
Vacation plans
House remodeling plans
Truck purchase

29. Strategies: 7. Secure repayment capacity
Short repayment schedules reduce cash flow vs. long repayment schedules
Try to extend repayment schedules on equipment & real estate loans (low interest rates)
Work a plan with your lender(s) for

30. Strategies: 8. Revise Growth Strategy
Depending on your growth stage:
Offload unproductive assets
Downsize
Slow down growth
Beginning farmers: wait to buy land
Align short term needs with long term growth goals

31. Strategies: 9. Know your gov’t programs
Payments vary widely across counties and programs
ARC and PLC still form the base of support
Crop insurance has become the largest federal ag program
New temporary tariff aid package will provide needed cash flow infusion
Source: Iowa Farm Bureau Federation

32. Summary Expect low to negative margins in 2018/19 Visit with:
Agronomist – control costs?
Lender – refinance, lower payments?
Tax advisor – refunds from previous years?
Crop insurance agent – change coverage?
Use Ag Decision Maker:

33. Want to provide feedback on my presentation. https://www. surveymonkey

34. 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: