Associate Professor/Crop Marketing Specialist Ag Market Outlook Dec. 4, 2018 Chad Hart Associate Professor/Crop Marketing Specialist chart@iastate.edu 515-294-9911 1 1

+12% +4% +10% +16% +12% Data Source: USDA-NASS, Compiled & Forecasts by LMIC Livestock Marketing Information Center

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

+9% +4% +11% +11% +6% Data Source: USDA-NASS and USDA-ERS, Compiled & Analysis by LMIC Livestock Marketing Information Center

Data Source: USDA-NASS and USDA-ERS, Compiled & Analysis by LMIC Livestock Marketing Information Center

2013 = +$6.21 [-$25.60 to +$24.57] 2014 = +$61.85 [+$13.15 to +$107.25] 2015 = +$7.93 [-$18.40 to +$26.25] 2016 = -$1.26 [-$35.52 to +$32.92] 2017 = +$11.95 [-$12.68 to +$47.62] 2018f = -$4.84 [-$40.71 to +$26.66] 2019f = +$9.87 [-$12.68 to +$32.53]

LMIC Pork Production and Price Quarterly Forecasts (11/15/18) Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC

Data Source: USDA-NASS, Slaughter capacity by Dr. Steve Meyer

Historically large margins in ‘14-’15 drove rapid expansion Data Source: USDA & LMIC, Compiled by LMIC Livestock Marketing Information Center

Data Source: USDA-AMS Livestock Marketing Information Center

Data Source: USDA-AMS Livestock Marketing Information Center

Data Source: USDA-NASS Livestock Marketing Information Center

67% of marketings 33% of marketings Data Source: USDA-NASS Livestock Marketing Information Center

Data Source: USDA-NASS Livestock Marketing Information Center

Data Source: USDA-AMS Livestock Marketing Information Center

2014 = +$197.24 [+$41 to +$269] 2015 = -$225.12 [-$530 to +$43] 2018f = -$33.92 [-$97 to +$103] 2019f = -$47.62 [-$135 to +$64] Source: Lee Schulz, Iowa State University Projected with Basis Adjusted Futures

LMIC Beef Production and Price Quarterly Forecasts (11/8/18) Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC

Data Source: USDA-ERS & USDA-FAS, Compiled and Forecasts by LMIC Livestock Marketing Information Center

U.S. Pork Exports, Jan-Sep 2018 (Carcass Weight Basis) Sep-18/Sep-17 Sep-18/Aug-18 Year-to-Date Country Percent 1,000 lbs ‘17 Share ‘18 Share Japan 1% -13% -2,129 0% 22% 21% Mexico -10% -7% 21,819 2% 32% 31% Canada 5% -3,100 -1% 9% South Korea 36% 148,873 41% 12% China (Mainland) -16% 7% -21,556 -8% 6% Hong Kong -65% 39% -52,612 -52% 3% Australia 55% 14,735 10% 4% Philippines 42% 4,707 Colombia 23% 38% 65,254 52% China (Taiwan) 202% 40% 6,042 27% Honduras 33% -9% 11,426 20% Dominican Republic 128% -3% 21,841 30% Guatemala -30% -23% 2,028 Chile 28% -31% 1,668 Panama 13% 45% 3,187 19% Other Countries 18,889 15% Total 241,074 Source: USDA, Economic Research Service calculations using data from U.S. Department of Commerce, Bureau of the Census.

Source: USDA, Economic Research Service calculations using data from U Source: USDA, Economic Research Service calculations using data from U.S. Department of Commerce, Bureau of the Census.

Baseline Update for International Livestock Markets PORK NET TRADE U.S. Export Δ +11.0% Import Δ -2.9% September 2018 -- https://www.fapri.missouri.edu/publication/baseline-update-for-international-livestock-markets/ Food & Agricultural Policy Research Institute University of Missouri

U.S. Beef Exports, Jan-Sep 2018 (Carcass Weight Basis) Sep-18/Sep-17 Sep-18/Aug-18 Year-to-Date Country Percent 1,000 lbs ‘17 Share ‘18 Share Japan -1% -19% 40,304 6% 29% Mexico -9% 26,760 9% 15% 14% Canada -5% 3% -3,206 11% 10% South Korea 25% -24% 145,145 43% 17% 21% Hong Kong 4% 54% 2,076 1% 12% China (Taiwan) -27% 33,499 33% 5% Vietnam 122% 114% 1,241 Netherlands 57% 177% -4,765 -17% Philippines 19% 6,088 26% Chile 45% -14% -1,002 -4% United Arab Emirates -3% 901 8% Dominican Republic -7% -401 China (Mainland) -13% 20% 12,010 357% 0% Italy -2% 18% -2,609 -21% Indonesia -30% 94% 786 Other Countries -6% -16% 19,268 Total 7% 276,096 Source: USDA, Economic Research Service calculations using data from U.S. Department of Commerce, Bureau of the Census.

Baseline Update for International Livestock Markets BEEF NET TRADE U.S. Export Δ +2.5% Import Δ +3.0% September 2018 -- https://www.fapri.missouri.edu/publication/baseline-update-for-international-livestock-markets/ Food & Agricultural Policy Research Institute University of Missouri

Data Source: USDA-NASS Livestock Marketing Information Center

Data Source: USDA-NASS Livestock Marketing Information Center

Data Source: USDA-NASS Livestock Marketing Information Center

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

10 yr. Avg. All Milk Price Data Source: USDA-NASS

Trade Remains Critical Data Source: USDA-FAS, Compiled & Analysis by LMIC

Pressure on Dairy Moving Forward Exports are Good, but… Shipping at lower prices Tariffs Larger Dairies Still Above COP, but… Regional Differences Exist Prices expected to be systemically lower for the next 2-3 years

LMIC Dairy Production and Price Quarterly Forecasts (10/25/18) Sources: USDA/NASS; USDA/AMS Livestock Market News; Projections and Forecasts by LMIC

U.S. Corn Supply and Use 2015 2016 2017 2018 2019 Area Planted (mil. acres) 88.0 94.0 90.2 89.1 92.0 Yield (bu./acre) 168.4 174.6 176.6 178.9 176.5 Production (mil. bu.) 13,602 15,148 14,604 14,626 14,930 Beg. Stocks 1,731 1,737 2,293 2,140 1,736 Imports 67 57 36 50 Total Supply 15,401 16,942 16,934 16,816 16,716 Feed & Residual 5,120 5,470 5,298 5,500 5,575 Ethanol 5,224 5,432 5,605 5,650 5,700 Food, Seed, & Other 1,422 1,453 1,480 1,490 Exports 1,898 2,294 2,438 2,450 2,425 Total Use 13,664 14,649 14,793 15,080 15,190 Ending Stocks 1,526 Season-Average Price ($/bu.) 3.61 3.36 3.60 3.90 Source: USDA-WAOB, w/ adjustment for Nov. reports 34 34

U.S. Soybean Supply and Use 2015 2016 2017 2018 2019 Area Planted (mil. acres) 82.7 83.4 90.1 89.1 82.5 Yield (bu./acre) 48.0 52.0 49.3 52.1 50.0 Production (mil. bu.) 3,926 4,296 4,411 4,600 4,090 Beg. Stocks 191 197 302 438 955 Imports 24 22 25 Total Supply 4,140 4,515 4,734 5,063 5,070 Crush 1,886 1,901 2,055 2,080 2,075 Seed & Residual 122 146 112 128 127 Exports 1,936 2,166 2,129 1,900 Total Use 3,944 4,214 4,107 4,277 Ending Stocks 793 Season-Average Price ($/bu.) 8.95 9.47 9.33 8.60 8.75 Source: USDA-WAOB, w/ adjustment for Nov. reports 35 35

Projected Corn Yields Top: 2018 Yield Estimate Bottom: Change from last month Units: Bushels per acre Source: USDA-NASS 36 36

Projected Soybean Yields Top: 2018 Yield Estimate Bottom: Change from last month Units: Bushels per acre Source: USDA-NASS 37 37

World Corn Production Source: USDA-WAOB 38 38

World Soybean Production Source: USDA-WAOB 39 39

Arable land

U.S. Meat Production & Prices Source: USDA-WAOB 43 43

Corn Export Sales Source: USDA-FAS

Corn Export Shifts Source: USDA-FAS

Soybean Export Sales Source: USDA-FAS

Soybean Export Shifts Source: USDA-FAS

Soybean Market Shares Sales for 2017 crop Sales for 2018 crop Source: USDA-FAS

Soybean Meal Export Shifts Source: USDA-FAS

Ethanol Production Source: EIA

Ethanol Exports Source: EIA

Current Corn Futures 4.02 3.69 Source: CME Group, 11/30/2018

Current Soybean Futures 9.29 8.82 Source: CME Group, 11/30/2018

2018/19 Crop Margins Based on futures prices

2019/20 Crop Margins w/ 2018 Costs Based on futures prices

Iowa Corn Prices vs. Costs Based on USDA prices and ISU costs

Iowa Soybean Prices vs. Costs Based on USDA prices and ISU costs

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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/