Economics of Crop & Livestock Production Agribusiness Showcase & Conference Des Moines, Iowa Feb. 10, 2015 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate.edu 515-294-9911 1 1
U.S. Corn Supply and Use 2010 2011 2012 2013 2014 Area Planted (mil. acres) 88.2 91.9 97.3 95.4 90.6 Yield (bu./acre) 152.8 147.2 123.1 158.1 171.0 Production (mil. bu.) 12,447 12,360 10,755 13,829 14,216 Beg. Stocks 1,708 1,128 989 821 1,232 Imports 28 29 160 36 25 Total Supply 14,182 13,517 11,904 14,686 15,472 Feed & Residual 4,795 4,557 4,315 5,036 5,250 Ethanol 5,019 5,000 4,641 5,134 Food, Seed, & Other 1,407 1,428 1,397 1,367 1,395 Exports 1,834 1,543 730 1,917 1,750 Total Use 13,055 12,528 11,083 13,454 13,645 Ending Stocks 1,827 Season-Average Price ($/bu.) 5.18 6.22 6.89 4.46 3.65 Source: USDA-WAOB 2 2
U.S. Soybean Supply and Use 2010 2011 2012 2013 2014 Area Planted (mil. acres) 77.4 75.0 77.2 76.8 83.7 Yield (bu./acre) 43.5 41.9 40.0 44.0 47.8 Production (mil. bu.) 3,329 3,094 3,042 3,358 3,969 Beg. Stocks 151 215 169 141 92 Imports 14 16 41 72 25 Total Supply 3,495 3,325 3,252 3,570 4,086 Crush 1,648 1,703 1,689 1,734 1,795 Seed & Residual 130 88 105 97 116 Exports 1,501 1,365 1,317 1,647 1,790 Total Use 3,280 3,155 3,111 3,478 3,701 Ending Stocks 385 Season-Average Price ($/bu.) 11.30 12.50 14.40 13.00 10.20 Source: USDA-WAOB 3 3
Corn Yields Top: 2014 Yield Bottom: Change from last year Units: Bu/acre Source: USDA-NASS
World Corn Production Source: USDA-WAOB 5 5
World Soybean Production Source: USDA-WAOB 6 6
U.S. Meat Production & Prices Source: USDA-WAOB 7 7
Corn Export Shifts Source: USDA-FAS
Soybean Export Shifts Source: USDA-FAS
Crude Oil Prices Sources: EIA and CME
Strength of the U.S. Dollar Source: Federal Reserve
Corn Grind for Ethanol
Current Corn Futures 4.02 3.75 Source: CME Group, 2/9/2015
Current Soybean Futures 9.96 9.32 Source: CME Group, 2/9/2015
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
Soybean 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
Thoughts for 2015 and Beyond Supply/demand concerns Record corn and soybean crops, but also record demand Markets are in a holding pattern, waiting for news Watching South American crop progress Projected negative margins for 2014 and 2015 crops 2013/14 USDA 2014/15 Futures (2/9/15) 2015/16 Corn $4.46 $3.65 $3.75 $4.02 Soybeans $13.00 $10.20 $9.96 $9.32
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:2/5/2015)
Quarterly Cattle & Beef Forecasts (LMIC:2/5/2015)
Data Source: USDA-AMS, Compiled and Analysis by LMIC Livestock Marketing Information Center
2013 Profits = -$100.77 ~2014 Profits = +$197.24 Oct-03 Profit = $378 Total Cost: = $920 ROI = 41% Oct-14 Profit = $269 Total Cost: = $1,857 ROI = 15%
Given LMIC forecast 54.3 lbs/capita) in 2014: No demand change IF 2014 All Fresh Retail Price = $517.8/lb (+4.8% from 2013) Data Source: Bureau of Economic Analysis & USDA-ERS, Compiled and Analysis by LMIC Livestock Marketing Information Center
Data Source: USDA/ERS, BLS
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
2013 = +$6.21 [-$25.60 to +$24.57] ~2014 = +$61.85 [+$13.15 to +$107.25] ~2015 = +$17.84 [-$10.79 to +$38.77]
Quarterly Hog & Pork Forecasts (LMIC:2/2/2015)
Quarterly Hog & Pork Forecasts (LMIC:02/05/2015)
Given LMIC forecast 46.0 lbs/capita) in 2014: No demand change IF 2014 Pork Price = $380.0/lb (+1.7% from 2013) Data Source: Bureau of Economic Analysis & USDA-ERS, Compiled and Analysis by LMIC Livestock Marketing Information Center
Thank you for your time. Any questions. My web site: http://www. econ Thank you for your time! Any questions? My web site: http://www.econ.iastate.edu/~chart/ Iowa Farm Outlook: http://www.econ.iastate.edu/ifo/ Ag Decision Maker: http://www.extension.iastate.edu/agdm/