Ag Outlook Ackley State Bank Ag Outlook Iowa Falls, Iowa Dec. 17, 2015 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate.edu 515-294-9911 1 1

Key Factors for Livestock Feedstuffs – ADVANTAGEOUS for livestock sector Size of hog industry driven by last year’s profitability – Productivity to guide 2016 supply prospects Tight cattle-beef supplies but expansion well underway – Supply of heavy cattle has driven market lately HPAI in U.S. poultry – HUGE hit on layers/eggs, only meat impact was turkey, broilers were okay – Rebuild/expansion underway Relatively stable domestic dairy herd expected through 2017 – Worldwide production up, prices U.S. consumer demand has been GOOD – International trade a bit of a drag but should improve

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

USDA Quarterly Hogs and Pigs Report – United States September 25, 2015   2015 as % Pre-Report Actual - 2014 2015 of 2014 Range Estimate Inventories on Sep 1 * All hogs and pigs 65,979 68,395 103.7 103.0 - 104.7 103.6 0.1 Kept for breeding 5,920 5,986 101.1 99.0 - 101.0 100.3 0.8 Market 60,059 62,410 103.9 103.0 - 105.1 0.0 Under 50 pounds 20,390 20,291 99.5 98.8 - 101.0 100.2 -0.7 50-119 pounds 17,458 17,986 103.0 102.0 - 104.5 103.2 -0.2 120-179 pounds 12,112 13,080 108.0 104.9 - 108.4 106.6 1.4 180 pounds and over 10,098 11,053 109.5 107.9 - 111.2 109.7 Farrowing ** Jun – Aug sows farrowed 2,991 2,944 98.4 97.0 - 100.5 98.1 0.3 Sep – Nov intentions 2,994 2,920 97.5 95.7 - 99.5 97.2 Dec – Feb intentions 2,895 2,875 99.3 95.7 - 101.2 99.1 0.2 Jun – Aug Pig Crop * 30,402 30,585 100.6 99.0 - 103.0 100.4 Jun – Aug Pigs per Litter 10.16 10.39 102.3 101.9 - 103.0 102.4 -0.1 * 1,000 head ** 1,000 litters Data Source: USDA/NASS. Urner Barry pre-report estimates

New Pork Packing Plants (2017) Sioux City, IA ― Seaboard/Triumph Coldwater, MI ― Clements Foods Data Source: USDA/AMS. * Steve Meyer, Vice President, Pork Analysis, Express Markets Inc. Analytics.

U.S. Pork Exports, Jan-Oct 2015 (Volume excluding by-products & variety meats) Oct-15/Sep-15 Oct-15/Oct-14 Year-to-Date Country Percent 1,000 lbs Japan -10% -4% -40,063 Mexico 3% 10% 134,708 12% Canada -15% -1% -15,458 -3% South Korea 50% -6% 104,843 34% China (Mainland) -9% 7% -92,686 -30% Hong Kong 126% 45% -12,032 -12% Australia -25% 87% 13,165 Philippines -11% 99% -24,900 -29% China (Taiwan) 29% 378% 11,199 49% Honduras 5% 11,100 27% Colombia 38% 6% -17,701 -16% Dominican Republic 1% 60% 14,422 36% Chile -22% -41% 2,144 Other Countries 23% -107,287 -39% Total 2% -18,544 -0.5% WASDE U.S.: 2014: 4,857 mil lbs 2015: 4,946 (+1.8% vs 2014) 2016: 5,125 (+3.6% vs 2015) Source: USDA/ERS

LMIC Pork Production and Price Quarterly Forecasts (12/10/15) Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC Year Comm’l % Chg. Avg Carcass Comm’l Pork Quarter Slaughter Year Ago Weight Production 2015 I 28,723 5.9 215 0.8 6,161 6.5 II 27,848 8.9 213 -1.1 5,925 7.6 III 28,474 11.4 209 -1.5 5,957 9.8 IV 30,243 5.7 214 -0.2 6,478 115,288 7.9 -0.5 24,521 7.3 2016 29,161 1.5 6,257 1.6 27,536 0.2 5,877 -0.8 28,319 0.1 5,929 30,435 0.6 0.3 6,537 0.9 115,451 24,600 2017 29,909 2.6 6,431 2.8 28,163 2.3 6,023 2.5 28,495 210 5,976 31,335 3.0 6,742 3.1 117,902 2.1 25,172

LMIC Pork Production and Price Quarterly Forecasts (12/10/15) Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC Year Nat’l Wtd % Chg. CME Quarter Avg Base Price Year Ago LHF Price 2015 I 68.55 -25.0 II 73.52 -34.3 III 74.60 -32.3 IV 63-64 -29.5 70-71 -30.2 2016 64-66 -5.2 59-63 74-78 3.4 63-76 75-80 4.0 67-76 65-71 7.1 64-67 71-73 2.1 2017 62-69 0.8 67-68 70-78 -2.6 70-79 -3.9 60-70 -4.4 66-74 -2.8

Cattle Crush Margin The Crush Margin is the return after the feeder steer and corn costs. Live weight: 1250 pounds Feeder weight: 750 pounds Corn: 50 bushels per head Source: ISU Extension

Quarterly Cattle & Beef Forecasts (LMIC: 12/10/2015)   Change Average Commercial from Dressed Beef Year Slaughter Year Ago Weight Production Quarter (1,000 hd) (%) (lbs) (mil lbs) 2015 I 6,967 -5.5 813 2.2 5,664 -3.5 II 7,227 -7.8 810 2.7 5,855 -5.3 III 7,288 -4.5 832 2.8 6,066 -1.8 IV 7,283 -0.6 841 2.3 6,123 1.7 28,765 -4.7 824 2.5 23,708 -2.2 2016 7,140 822 1.1 5,868 3.6 7,405 0.4 6,020 7,623 4.6 836 6,370 5.0 7,519 3.2 839 -0.2 6,309 3.0 29,687 828 24,567 2017 7,446 4.3 827 0.7 6,161 7,720 816 6,299 7,815 6,559 7,857 4.5 842 6,616 4.9 30,838 3.9 831 0.5 25,635

Quarterly Cattle & Beef Forecasts (LMIC: 12/10/2015) Steer Price Change From Feeder Steer Price Year 5-Mkt Avg Year Ago Southern Plains Quarter ($/cwt) (%) 7-800# 5-600# 2015 I 162.43 11.0 215.87 276.14 II 158.11 7.0 225.29 279.32 III 144.22 -9.0 214.38 246.04 IV 132-133 -20.0 183-184 214-216 149-150 -3.3 209-210 253-255 2016 140-144 -12.6 178-182 217-222 144-148 -7.7 181-186 221-228 138-143 -2.6 178-184 217-225 138-144 6.4 175-182 210-219 141-145 -4.3 179-183 217-223 2017 138-145 -0.4 173-181 213-223 138-146 -2.7 174-183 214-225 133-143 -1.8 171-181 212-223 134-145 -1.1 167-179 202-216 137-143 -2.1 173-179 212-220

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

Cattle on Feed―11/20 report (1,000+ head capacity feedlots) Nov .1 On Feed: +2.1% Vs. +2.2% pre-report est. (+1.6%, +3.2%) IA: +8.5% vs last year [1,000+ Head] IA: +6.3% vs last year [<1,000 Head] Oct. Placements: -3.7% Vs. -3.9% pre-report est. (-6.2%, -1.6%) IA: +18.2% vs last year; largest (+) of main states [1,000+ Head] IA: +9.3% vs last year [<1,000 Head] Oct. Marketings: -3.3% Vs. -3.9% pre-report est. (-5.0%, -2.0%) IA: +13.0% vs last year (TX -14%, KS -6%, SD -9%, MN +45%) [1,000+ Head] IA: +28.8% vs last year [<1,000 Head]

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

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

U.S. Beef Exports, Jan-Oct 2015 (Volume excluding by-products & variety meats) Oct-15/Sep-15 Oct-15/Oct-14 Year-to-Date Country Percent 1,000 lbs Mexico 14% 13% -72,469 -20% Japan -12% -41% -102,254 -18% Canada 16% -10% -39,635 -13% South Korea 24% -11% 13,385 5% Hong Kong 79% -93,350 -28% China (Taiwan) 20% -16% 2,785 3% Vietnam 65% 42% 2,871 43% Netherlands -1% 2,459 8% Philippines 28% -17% 2,510 10% United Arab Emirates 87% -3% 1,273 11% Dominican Republic 40% 37% 3,022 Chile 6% 7% -2,688 Italy -40% -582 -4% Other Countries 2% -6,337 -5% Total 18% -14% -289,010 -13.4% WASDE U.S.: 2014: 2,573 mil lbs 2015: 2,223 (-13.6%) 2016: 2,425 (+9.1%) Source: USDA/ERS

U.S. Beef Imports, Jan-Oct 2015 (Volume excluding by-products & variety meats) Oct-15/Sep-15 Oct-15/Oct-14 Year-to-Date Country Percent 1,000 lbs Australia -33% 292,365 34% Canada -6% 5% 33,975 7% New Zealand -17% 8% 91,299 17% Brazil -29% 20% 66,532 99% Uruguay 13% 57% 43,388 Mexico 9% 76,725 30% Nicaragua 53% -42% -13,396 -13% Argentina -100% -186 Costa Rica -14% -22% 1,811 Other Countries -8% 755 Total -18% 593,269 25% WASDE U.S.: 2014: 2,947 mil lbs 2015: 3,382 (+14.8%) 2016: 2,945 (-12.9%) Source: USDA/ERS

U.S. Corn Supply and Use 2012 2013 2014 2015 2015 Δ Area Planted (mil. acres) 97.3 95.4 90.6 88.4 Yield (bu./acre) 123.1 158.1 171.0 169.3 Production (mil. bu.) 10,755 13,829 14,216 13,654 Beg. Stocks 989 821 1,232 1,731 Imports 160 36 32 30 Total Supply 11,904 14,686 15,479 15,415 Feed & Residual 4,315 5,040 5,315 5,300 Ethanol 4,641 5,124 5,209 5,200 25 Food, Seed, & Other 1,397 1,369 1,359 1,380 Exports 730 1,920 1,864 1,750 -50 Total Use 11,083 13,454 13,748 13,630 -25 Ending Stocks 1,785 Season-Average Price ($/bu.) 6.89 4.46 3.70 3.65 Source: USDA-WAOB 20 20

U.S. Soybean Supply and Use 2012 2013 2014 2015 2015 Δ Area Planted (mil. acres) 77.2 76.8 83.3 83.2 Yield (bu./acre) 40.0 44.0 47.5 48.3 Production (mil. bu.) 3,042 3,358 3,927 3,981 Beg. Stocks 169 141 92 191 Imports 41 72 33 30 Total Supply 3,252 3,570 4,052 4,203 Crush 1,689 1,734 1,873 1,890 Seed & Residual 105 107 145 133 Exports 1,317 1,638 1,843 1,715 Total Use 3,111 3,478 3,861 3,738 Ending Stocks 465 Season-Average Price ($/bu.) 14.40 13.00 10.10 8.90 Source: USDA-WAOB 21 21

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

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

World Corn Production Source: USDA-WAOB 24 24

World Soybean Production Source: USDA-WAOB 25 25

U.S. Meat Production & Prices Source: USDA-WAOB 26 26

Corn Export Sales Source: USDA-FAS

Corn Export Sales Source: USDA-FAS

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

Crude Oil Prices Sources: EIA and CME

Soybean Export Sales Source: USDA-FAS

Soybean Export Sales Source: USDA-FAS

Corn Grind for Ethanol

Ethanol Stocks Source: EIA

Ethanol Exports Source: EIA

Current Corn Futures 3.71 3.55 Source: CME Group, 12/16/2015

Current Soybean Futures 8.47 8.36 Source: CME Group, 12/16/2015

2015/16 Crop Margins

2016/17 Crop Margins

Iowa Corn Prices vs. Costs

Iowa Soybean Prices vs. Costs

2015 Iowa Land Values

2015 Iowa Land Values - % Change

2015 Iowa Land Values

2015 Iowa Land Values - % Change

Thank you for your time. Any questions. My web site: http://www2. econ 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/