1. Associate Professor/Crop Markets Specialist
Markets & Farm Bill
2014 Ag Seminar
Coon Rapids, Iowa
Feb. 26, 2014
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
97.2
95.4
92.0
Yield
(bu./acre)
152.8
147.2
123.4
158.8
165.3
Production
(mil. bu.)
12,447
12,360
10,780
13,925
13,985
Beg. Stocks
1,708
1,128
989
821
1,481
Imports 28 29
162 35 25
Total Supply
14,182
13,517
11,932
14,781
15,491
Feed & Residual
4,795
4,557
4,335
5,300
5,400
Ethanol
5,019
5,000
4,648
Food, Seed, & Other
1,407
1,428
1,396
1,400
1,430
Exports
1,834
1,543
731
1,600
1,550
Total Use
13,055
12,528
11,111
13,300
13,380
Ending Stocks
2,111
Season-Average Price
($/bu.)
5.18
6.22
6.89
4.50
3.90
Source: USDA-WAOB for 2 2

3. U.S. Soybean Supply and Use
2010
2011
2012
2013
2014
Area Planted
(mil. acres)
77.4
75.0
77.2
76.5
79.5
Yield
(bu./acre)
43.5
41.9
39.8
43.3
45.2
Production
(mil. bu.)
3,329
3,094
3,034
3,289
3,550
Beg. Stocks
151
215
169
141
150
Imports 14 16 36 30 15
Total Supply
3,495
3,325
3,239
3,459
3,715
Crush
1,648
1,703
1,689
1,700
1,725
Seed & Residual
130 88 90 99
105
Exports
1,501
1,365
1,320
1,510
1,600
Total Use
3,280
3,155
3,099
3,309
3,430
Ending Stocks
285
Season-Average Price
($/bu.)
11.30
12.50
14.40
12.70
9.65
Source: USDA-WAOB for 3 3

4. Corn Yields Top: 2013 Yield Bottom: Change from 2012
Units: Bushels/acre
Source: USDA-NASS

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

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

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

8. Corn Export Shifts
Source: USDA-FAS

9. Soy Export Shifts
Source: USDA-FAS

10. Corn Grind for Ethanol

11. Current Corn Futures
4.54
4.51
4.48
Source: CME Group, 2/26/2014

12. Current Soybean Futures
13.05
11.35
10.84
Source: CME Group, 2/26/2014

13. 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

14. 2013/14 Crop Prices

15. 2014/15 Crop Margins

16. Source: droughtmonitor.unl.edu

17. 3-Month Temperature Outlook
Source: NOAA-CPC

18. 3-Month Precipitation Outlook
Source: NOAA-CPC

19. Thoughts for 2014 and Beyond
Supply/demand concerns
Demand rebounding? Yes, so far, so good
Acreage allocation for 2014: Where do the extra corn acres go?
Markets favoring soybeans in the short term and corn longer term
2013/14
USDA
2014/15
Unofficial
Futures
(2/26/14)
Corn
$4.50
$3.90
$4.54
$4.48
Soybeans
$12.70
$9.65
$13.05
$11.35

20. 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

21. Two Waves First wave: Choice on base acreage and yield updating
Probably occurs June-July timeframe
Second wave: Choice on farm bill programs
Probably Sept-Oct
Harvest the crop and farm bill at the same time

22. Producer Choice Have one-time choice between:
PLC or ARC (can pick by commodity)
If ARC is chosen, pick between county and individual coverage
If individual coverage is chosen, must be taken for all covered commodities on the farm
crop years

23. PLC vs. CCP and DP

24. Revenue Programs Think of ARC-County as crop-by-crop
ARC-Individual
Benchmark revenue
5-yr OA county yield * 5-yr OA MYA price
Sum across crops of [5-yr OA (farm yield * MYA price) *crop acreage]
Actual crop revenue
County yield * Max(MYA price or loan rate)
Sum across crops of [Farm production * Max(MYA price or loan rate)] / Total planted acres of all covered crops
Revenue guarantee
86% of benchmark
Think of ARC-County as crop-by-crop
Think of ARC-Individual as whole farm

25. Supplemental Coverage Option (SCO)
An additional policy to cover “shallow losses”
Shallow loss = part of the deductible on the producer’s underlying crop insurance policy
SCO has a county-level payment trigger
Indemnities are paid when the county experiences losses greater than 14%
Premium subsidy: 65%
Starts in 2015
Can’t have ARC and SCO together

26. 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: