1. Associate Professor/Crop Markets Specialist
Ag Outlook
GNB Bank Meeting
Iowa Falls, IA
Dec. 6, 2016
Chad Hart
Associate Professor/Crop Markets Specialist 1 1

2. U.S. Corn Supply and Use 2012 2013 2014 2015 2016 Area Planted
(mil. acres)
97.3
95.4
90.6
88.0
94.5
Yield
(bu./acre)
123.1
158.1
171.0
168.4
175.3
Production
(mil. bu.)
10,755
13,829
14,216
13,601
15,226
Beg. Stocks
989
821
1,232
1,731
1,738
Imports
160 36 32 67 50
Total Supply
11,904
14,686
15,479
15,400
17,013
Feed & Residual
4,315
5,040
5,280
5,130
5,650
Ethanol
4,641
5,124
5,200
5,206
5,300
Food, Seed, & Other
1,397
1,369
1,401
1,429
1,435
Exports
730
1,920
1,867
1,898
2,225
Total Use
11,083
13,454
13,748
13,662
14,610
Ending Stocks
2,403
Season-Average Price
($/bu.)
6.89
4.46
3.70
3.61
3.30
Source: USDA-WAOB 2 2

3. U.S. Soybean Supply and Use
2012
2013
2014
2015
2016
Area Planted
(mil. acres)
77.2
76.8
83.3
82.7
83.7
Yield
(bu./acre)
40.0
44.0
47.5
48.0
52.5
Production
(mil. bu.)
3,042
3,358
3,927
3,926
4,361
Beg. Stocks
169
141 92
191
197
Imports 41 72 33 24 30
Total Supply
3,252
3,570
4,052
4,140
4,588
Crush
1,689
1,734
1,873
1,886
1,930
Seed & Residual
105
107
146
121
127
Exports
1,317
1,638
1,842
1,936
2,050
Total Use
3,111
3,478
3,862
3,943
4,108
Ending Stocks
480
Season-Average Price
($/bu.)
14.40
13.00
10.10
8.95
9.20
Source: USDA-WAOB 3 3

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

5. Soy Yield Estimates Top: 2016 Yield Bottom: Change from last month
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. Drought Monitor
Source: National Drought Mitigation Center 8 8

9. 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

10. 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

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. Crude Oil Prices
Sources: EIA and CME

19. Current Corn Futures
3.67
3.35
Source: CME Group, 12/5/2016

20. Current Soybean Futures
9.84
9.73
Source: CME Group, 12/5/2016

21. 2016/17 Crop Margins @ Trend Yields

22. 2016/17 Crop Margins @ Actual Yields

23. 2017/18 Crop Margins

24. Iowa Corn Prices vs. Costs

25. Iowa Soybean Prices vs. Costs

26. Beef: + 2015.Q4 Pork: + 2015.Q1 Total Poultry: +2012.Q4
Data Source: USDA-NASS, Compiled & Analysis by LMIC
Livestock Marketing Information Center

27. 2017
2016
2015
Data Source: USDA/ERS

28. 2016 Beef Cattle Situation
Transition to larger beef supplies in 2016 has been challenging
Cow-calf: Converging toward long-term levels
Herd expansion slowed, stalled, or stopped?
Stocker: Varies widely across situations
Opportunities vs. risk of owning cattle and managing risk
Feedlot: Worst behind us (I think), still red ink
Structural concerns—excess capacity, price discovery, etc.

29. Projections for 11/6/15 9/2/16 9/27/16 11/1/16 2016 $300 $78 $15 -$30
2017
$86
$22
-$29
Data Source: USDA & LMIC, Compiled by LMIC
Livestock Marketing Information Center

30. Data Source: USDA/AMS

31. Top 10, 2015 to 2016
Head % TX
+160,000
+3.9% OK
+73,000 MO
+61,000
+3.3% NE
+96,000
+5.5% SD
+79,000
+4.9% KS
+4.3% MT
-10,000
-0.7% KY
+24,000
+2.4% IA
+40,000
+4.4% FL
+9,000
+1.0%
Total
593,000
+3.5%

32. Data Source: USDA/AMS

33. 2016 Slaughter +13.0% (vs. 2015) -23.2% (vs. 2010-14)
Beef Cow Culling Rates
2005 = 7.7% (6.6%)
= 9.4% (8.0%)
= 11.2% (9.6%)
2013 = 10.5% (9.1%)
2014 = 8.8% (7.7%)
2015 = 7.6% (6.5%)
2016 = 7.1% (7.1%)
2016 Slaughter
+13.0% (vs. 2015)
-23.2% (vs )
Data Source: USDA-AMS & USDA-NASS
Livestock Marketing Information Center

34. 36.8% is average between 1996‐2016 HEIFER REPLACEMENTS 2016: +3.5%
2015: +9.6%
1993: +8.0%
1982: +7.7%
Data Source: USDA/NASS

35. Data Source: USDA/AMS

36. Cattle on Feed―11/18 report
(1,000+ head capacity feedlots; & < 1,000 in Iowa)
Oct 1 On Feed: -1.3% yr/yr
Vs. -1.1% pre-report est. -2.3%, -0.5%)
IA: -6.3% vs last year [1,000+ Head]
IA: 0.0% vs last year [<1,000 Head]
Sep Placements: -5.0%
Vs. -4.9% pre-report est. (-10.1%, -3.4%)
IA: -17.3% vs last year [1,000+ Head]
IA: +11.0% vs last year [<1,000 Head]
Sep Marketings: +4.6%
Vs. +4.4% pre-report est. (+3.1%, +6.5%)
IA: -15.0% vs last year [1,000+ Head]
IA: -36.5% vs last year [<1,000 Head]
-3.5%
-7.6%
-24.2%
Data Source: USDA/NASS

37. Steer Live Weights Heifer Live Weights
This week: 1,447
Last week: 1,464
Last year: 1,453
Heifer Live Weights
This week: 1,322
Last week: 1,320
Last year: 1,294
Data Source: USDA-NASS, Compiled & Analysis by LMIC
Livestock Marketing Information Center

38. Data Source: USDA-AMS
Livestock Marketing Information Center

39. 2013 = -$ [-$155 to +$77]
2014 = +$ [+$41 to +$ 269]
2015 = -$ [-$530 to +$43]
2016f = -$ [-$359 to +$113]
2017f = -$ [-$108 to +$114]

40. U.S. Beef Exports, Jan-Sep 2016
(Volume excluding by-products & variety meats)
Sep-16/Aug-16
Sep-16/Sep-15
Year-to-Date
Country
Percent
1,000 lbs
Mexico
-10% 5%
29,444
11%
Japan
36%
61,711
14%
Canada 4% 7%
-19,954
-8%
South Korea
-18%
83%
74,660
32%
Hong Kong
38%
19%
-7,867
-4%
China (Taiwan)
-16%
87%
10,999
13%
Vietnam
27%
100%
2,971
37%
Netherlands
-14%
-6%
-4,162
Philippines
-3%
43%
-6,906
-28%
Bahamas
-24%
-2%
-64
-1%
United Arab Emirates
-21%
33%
864 8%
Chile
-27%
17%
1,646 9%
Dominican Republic
-15%
-3,377
Italy
-4,329
-30%
Other Countries
6,927
Total
30%
142,563
WASDE U.S.: 2015: 2,265 mil lbs : 2,459 (+9%) : 2,630 (+7%)
Source: USDA/ERS

41. U.S. Beef Imports, Jan-Sep 2016
(Volume excluding by-products & variety meats)
Sep-16/Aug-16
Sep-16/Sep-15
Year-to-Date
Country
Percent
1,000 lbs
Australia
-36%
-67%
-403,211
-38%
Canada
-6%
15%
67,580
14%
New Zealand
-37%
-33%
-45,195
-8%
Brazil
25%
35%
-20,597
-16%
Uruguay
-7%
30%
-17,408
Mexico
-3%
40%
40,296
13%
Nicaragua
-21%
79%
110 0%
Costa Rica
-19%
-680
Other Countries
44%
-29%
-2,226
-23%
Total
-17%
-24%
-381,332
-14%
WASDE U.S.: 2015: 3,371 mil lbs : 3,011 (-11%) : 2,680 (-11%)
Source: USDA/ERS

42. Relative Changes in Beef & Cattle Prices
ALL
COMPRE
HENSIVE
FRESH
BOXED
IA/MN IA
RETAIL
BEEF
DIRECT
550 LB
CUTOUT
STEER
CALF
$/lb
$/cwt
2008
$3.97
$151.05
$91.39
$122.56
2009
$3.89
$139.53
$82.44
$112.24
2010
$4.02
$154.24
$94.25
$130.02
2011
$4.44
$178.71
$115.02
$150.38
2012
$4.69
$187.95
$122.70
$169.29
2013
$4.94
$193.18
$125.80
$173.53
2014
$5.60
$236.02
$153.84
$253.26
2015
$6.04
$235.25
$147.24
$253.33
2016
$5.77
$204.99
$120.59
$168.56
YR/YR Change (%)
-1.9%
-7.6%
-9.8%
-8.4%
3.3%
10.5%
14.3%
15.8%
10.4%
15.9%
22.0%
15.7%
5.7%
5.2%
6.7%
12.6%
2.8%
2.5%
13.4%
22.2%
22.3%
45.9%
7.8%
-0.3%
-4.3%
0.0%
-4.4%
-12.9%
-18.1%
-33.5%
Source: USDA/ERS, USDA/AMS

43. 2016 Pork Situation
Processing capacity squeeze Déjà vu???
Demand is always an important driver. But we first need to understand supply dynamics.
Lower hog and pig prices have likely raised the red flag on further expansion, at least for now.
Longer-term additional expansion is quite possible
Low feed grain prices, packer competition
Revisions to H&P report complicate analysis

44. Data source: CME Group, compiled by BarChart.com.

45. Data Source: USDA-ERS & USDA-FAS
Livestock Marketing Information Center

47. 2013 = +$ [-$25.60 to +$24.57]
2014 = +$ [+$13.15 to +$107.25]
2015 = +$ [-$18.40 to +$26.25]
2016f = -$ [-$30.11 to +$32.92]
2017f = -$ [-$23.31 to +$17.97]

48. USDA Quarterly Hogs and Pigs Report – United States
September 30, 2016
2016 as %
Pre-Report
Actual -
2015
2016
of 2015
Range
Estimate
Inventories on Sep 1 *
All hogs and pigs
69,185
70,851
102.4
101.1
1.3
Kept for breeding
5,986
6,016
100.5
100.6
-0.1
Market
63,200
64,835
102.6
1.5
Under 50 pounds
20,741
21,090
101.7
99.9
1.8
pounds
18,496
18,851
101.9
100.8
1.1
pounds
12,855
13,325
103.7
102.3
1.4
180 pounds and over
11,108
11,568
104.1
103.1
1.0
Farrowing **
Jun – Aug sows farrowed
3,017
3,024
100.2
98.5
1.7
Sep – Nov intentions
2,929
2,928
100.0
99.6
0.4
Dec – Feb intentions
2,927
2,925
-0.3
Jun – Aug Pig Crop *
31,343
31,983
102.0
99.7
2.3
Jun – Aug Pigs per Litter
10.39
10.58
101.8
101.3
0.5
* 1,000 head
** 1,000 litters
Data Source: USDA/NASS. Urner Barry pre-report estimates

49. Source: USDA/AMS. * Steve Meyer, EMI.

50. Source: USDA/AMS

51. U.S. Packing Capacity Under Construction
New (proposed) pork
Fall 2016
Fall 2017
Fall 2018
Fall 2018 – TSF Doubled
packing plants
Daily
Annual
Pleasant Hope, MO
2,500
625,000
Windom, MN
4,000
1,000,000
Sioux City, IA
12,000
3,000,000
20,000
5,000,000
Coldwater, MI
10,000
2,500,000
Wright County, IA
Total
6,500
1,625,000
28,500
7,125,000
38,500
9,625,000
46,500
11,625,000
Head per week
31,250
137,019
185,096
223,558
% of '15 avg = mil
1.4%
6.2%
8.4%
10.2 %
% of '15 max = mil
1.2%
5.5%
7.4%
8.9 %
July 19, 2016
Source: Steve Meyer. Published in National Hog Farmer Magazine.

52. 2016 Slaughter +0.6% (vs. 2015) -1.7% (vs. 2010-14) Sow Slaughter
as % of Sows Farrowed
1998 = 28.5%
1999 = 28.7%
2013 = 26.0%
2014 = 24.1%
2015 = 24.4%
2016 = 25.5%
2016 Slaughter
+0.6% (vs. 2015)
-1.7% (vs )
Data Source: USDA-AMS & USDA-NASS
Livestock Marketing Information Center

53. Source: USDA/AMS

54. 2013 = +$ [-$14.80 to +$22.07]
2014 = +$ [+$1.62 to +$84.64]
2015 = -$ [-$30.32 to +$4.70]
2016f = -$ [-$43.07 to +$17.05]
2017f = -$ [-$28.48 to +$10.90]

55. Data Source: USDA/AMS

56. Data Source: USDA-AMS
Livestock Marketing Information Center

57. U.S. Pork Exports, Jan-Sep 2016
(Volume excluding by-products & variety meats)
Sep-16/Aug-16
Sep-16/Sep-15
Year-to-Date
Country
Percent
1,000 lbs
Japan
-12%
-5%
-81,119
-8%
Mexico 5%
14%
-28,234
-2%
Canada
3,610 1%
South Korea
-15%
-4%
-98,459
-26%
China (Mainland) 3%
23%
214,882
112%
Hong Kong
11% 4%
44,622
63%
Australia
-6%
-13%
6,118
Philippines
37%
-20%
2,346
China (Taiwan)
-36%
-69%
-15,724
-53%
Colombia
36%
38%
-16,218
-19%
Honduras
7,497
16%
Dominican Republic
-14%
15%
5,799
12%
Guatemala
10%
675 2%
Chile
-16%
-17%
-3,929
Other Countries
2,103
Total 0%
43,970
WASDE U.S.: 2015: 5,009 mil lbs : 5,179 (+3%) : 5,440 (+5%)
Source: USDA/ERS

58. Relative Changes in Pork & Hog Prices
IA/MN
CASH/
PORK
TOTAL WTD
FORMULA
RETAIL
AVG BASE
10-12 LB
PRICE
CUTOUT
LEAN HOG
PIG
$/lb
$/cwt
$/head
2008
$2.94
$69.23
$65.12
$33.99
2009
$2.92
$58.04
$57.04
$32.15
2010
$3.11
$81.01
$72.51
$41.76
2011
$3.43
$93.82
$86.56
$38.09
2012
$3.47
$84.60
$83.54
$38.45
2013
$3.64
$92.71
$86.83
$42.42
2014
$4.02
$110.19
$100.82
$59.32
2015
$3.85
$79.27
$69.31
$38.10
2016
$3.78
$78.72
$64.91
$35.76
YR/YR Change (%)
-0.6%
-16.2%
-12.4%
-5.4%
6.6%
39.6%
27.1%
29.9%
10.3%
15.8%
19.4%
-8.8%
1.0%
-9.8%
-3.5%
0.9%
5.1%
9.6%
3.9%
18.9%
16.1%
39.8%
-4.1%
-28.1%
-31.3%
-35.8%
-2.0%
-0.7%
-6.4%
-6.1%
Source: USDA/ERS, USDA/AMS

59. 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: