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Crop & Livestock Outlook

Crop & Livestock Outlook. Farmers Coop Society Elite Member Meeting Sioux City, Iowa Dec. 9, 2015 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate.edu 515-294-9911. U.S. Corn Supply and Use. Source: USDA-WAOB. U.S. Soybean Supply and Use. Source: USDA-WAOB.

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Crop & Livestock Outlook

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  1. Crop & Livestock Outlook Farmers Coop Society Elite Member Meeting Sioux City, Iowa Dec. 9, 2015 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate.edu 515-294-9911

  2. U.S. Corn Supply and Use Source: USDA-WAOB

  3. U.S. Soybean Supply and Use Source: USDA-WAOB

  4. Corn Yield Estimate Top: 2015 Estimated Yields Bottom: Change from last month Units: Bushels/acre Source: USDA-NASS

  5. Soybean Yield Estimate Top: 2015 Estimated Yields Bottom: Change from last month Units: Bushels/acre Source: USDA-NASS

  6. World Corn Production Source: USDA-WAOB

  7. World Soybean Production Source: USDA-WAOB

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

  9. Corn Export Sales Source: USDA-FAS

  10. Soybean Export Sales Source: USDA-FAS

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

  12. Crude Oil Prices Sources: EIA and CME

  13. Corn Grind for Ethanol

  14. Current Corn Futures 3.75 3.55 Source: CME Group, 12/7/2015

  15. Current Soybean Futures 8.61 8.59 Source: CME Group, 12/7/2015

  16. 2015/16 Crop Margins

  17. 2016/17 Crop Margins

  18. Iowa Corn Prices vs. Costs

  19. Iowa Soybean Prices vs. Costs

  20. Thoughts for 2016 and Beyond • Supply/demand concerns • Feed and ethanol markets have alternatives (sorghum, wheat) • Exports weaken as dollar strengthens and China slows • Will El Niño last through our next crop cycle? • Negative margins for 2015-2016 crops

  21. Overarching Dairy Industry • Economic Outlook • Exports continue to be sluggish • World dairy prices putting downward pressure—Particularly on butter • Domestic consumption strong—Particularly full fat products (e.g., butter) • No sign of cut back in domestic milk production • First half of 2016 low farm milk prices • Can world production cut back enough for recover in second half of 2016?

  22. This margin is calculated as the All Milk price minus a ration approximately comprised of 60lbs of corn, 15lbs of SBM and 27lbs of alfalfa hay. It is meant to support 100lbs of milk production and the associated proportion of dry cows, hospital animals and young stock in the herd.

  23. Dairy Trends World milk production high in 2015 U.S. milk production up following profitable 2014 EU quotas ended Stocks of dairy powders high World import demand lower Russian import ban China working through stocks from 2014 purchases Dairy prices very low in EU and NZ—not so much in U.S.

  24. US Dairy Exports: Sluggish

  25. LMIC Milk Production and Price Quarterly Forecasts (12/7/15) Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC

  26. LMIC Milk Production and Price Quarterly Forecasts (12/7/15) Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC

  27. Overarching Beef Industry • Economic Outlook • Supplies • Historically tight; but expansion well underway • Supply of heavy cattle; has driven market lately • Demand largely positive • U.S. demand has been GOOD – Will it continue? • Trade a bit of a drag but improving • U.S. dollar impacts but lower prices on the way? • Combined: Somewhat depends on… • Perspective • Sector of the industry

  28. Quarterly Cattle & Beef Forecasts (LMIC: 12/7/2015)

  29. Quarterly Cattle & Beef Forecasts (LMIC: 12/7/2015)

  30. Data Source: USDA & LMIC, Compiled by LMIC Livestock Marketing Information Center

  31. Data Source: USDA/AMS

  32. Economic Outlook Overview: • Feedlots • 2015 has been rough • Structural concerns still persist: • Excess capacity • Heifer retention, feeder cattle supplies outside feedlots • Supply of heavy cattle burdensome

  33. Data Source: USDA-NASS Livestock Marketing Information Center

  34. Data Source: USDA-AMS & USDA-NASS Livestock Marketing Information Center

  35. Data Source: USDA-AMS & USDA-NASS Livestock Marketing Information Center

  36. U.S. Beef Exports, Jan-Oct 2015 (Volume excluding by-products & variety meats) WASDE U.S.: 2014: 2,573 mil lbs 2015: 2,223 (-13.6%) 2016: 2,425 (+9.1%) Source: USDA/ERS

  37. U.S. Beef Imports, Jan-Oct 2015 (Volume excluding by-products & variety meats) WASDE U.S.: 2014: 2,947 mil lbs 2015: 3,432 (+16.5%) 2016: 3,045 (-11.3%) Source: USDA/ERS

  38. Cattle-Beef Wrap-Up • Broad 2015/16 Profitability Situation & Outlook • Industry at tipping point on role of tight supplies • Cow-calf: Good (but not 2014) • Backgrounding: Discouraging, with lots of $ tied up • Feedlot: Struggle, with lots of $ tied up

  39. Key factors impacting hog-pork market • Crops/feedstuffs – ADVANTAGEOUS for the industry. • Size of industry driven by last year’s profitability – Some calculated restraint? • BIG changes in some state inventories – Rebuild and/or growth? • Productivity to guide 2016 hog supply prospects – AND weights something to watch. • U.S. consumer demand has been GOOD – Will it continue? • International trade a bit of a drag but improving – U.S. dollar impacts but lower prices on the way?

  40. Data Source: USDA/NASS. Urner Barry pre-report estimates

  41. New Pork Packing Plants (2017) Sioux City, IA ― Seaboard/Triumph Coldwater, MI ― Clements Foods 2015-YTD 8.7% (vs. 2014) 3.3% (vs. 2009-13) 8.9% (vs. ‘14 since 1st wk of Sep) Data Source: USDA/AMS. * Steve Meyer, Vice President, Pork Analysis, Express Markets Inc. Analytics.

  42. Data Source: USDA/AMS

  43. U.S. Pork Exports, Jan-Oct 2015 (Volume excluding by-products & variety meats) WASDE U.S.: 2014: 4,857 mil lbs 2015: 4,996 (+2.9% vs 2014) 2016: 5,225 (+4.6% vs 2015) Source: USDA/ERS

  44. LMIC Pork Production and Price Quarterly Forecasts (12/7/15) Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC

  45. LMIC Pork Production and Price Quarterly Forecasts (12/7/15) Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC

  46. Data Source: USDA/ERS, BLS

  47. Thank you for your time!Any questions?My web site:http://www2.econ.iastate.edu/faculty/hart/Iowa Farm Outlook:http://www2.econ.iastate.edu/ifo/Ag Decision Maker:http://www.extension.iastate.edu/agdm/

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