Iowa Farm Outlook & News

  • Sept. 2017 Hogs and Pigs: All Hogs and Pigs:
       U.S.: 73.549 million head, up 2.5% from last year
       Iowa: 22.900 million head, up 2.7% from last year
  • Sept. 2017 Hogs and Pigs: Breeding Herd:
       U.S.: 6.087 million head, up 1.2% from last year
       Iowa: 980,000 head, steady with last year
  • Sept. 2017 Hogs and Pigs: Market Hogs:
       U.S.: 67.462 million head, up 2.6% from last year
       Iowa: 21.920 million head, up 2.8% from last year
  • Nov. 2017 Prices for 2017/18 Crops:
       Corn $3.20 per bushel, steady with last month
       Soybean $9.30 per bushel, up 10 cents from last month
  • Nov. 2017 Yield for 2017/18 U.S. Crops:
       Corn 175.4 bushels per acre, up 3.6 bushels from last month
       Soybean 49.5 bushels per acre, steady with last month
  • Nov. 2017 Yield for 2017/18 Iowa Crops:
       Corn 197.0 bushels per acre, up 6 bushels from last month
       Soybean 56.0 bushels per acre, steady with last month
Forward Contracting (11/1/17)

USDA's Agricultural Marketing Service report LM_CT153 provides the weekly volume (number of head) of new forward contract signings and basis bids between cattle feeders and beef packers. The report also tracks the cumulative volume and basis bids. During the week ending Sunday, 10/29/17, 11,231 head of fed cattle were contracted for March 2018 delivery with 9,655 head (86%) at a premium to April live cattle futures, 355 head (3%) at par, and 1,225 head (11%) at a discount. So far there are 129,629 head committed for March 2018 delivery, less than is committed for February (145,061 head) and April (155,830 head). The range in basis for March delivery is -$22.00/cwt to $7.37/cwt versus the April live cattle futures price. The delivery location and specification of these contracted cattle is not given, but large negative basis values are likely for dairy beef. The large positive basis levels suggest that the forward market is considering the strong basis levels observed last spring. Packers use historical basis in formulating bids. March 2017 Iowa/Minnesota fed cattle basis averaged $8.40/cwt and was as high as $12.29/cwt during the month. This was much higher than the historical average. Live cattle futures prices suggest higher prices to start 2018. The longer the volume of fed cattle contracted for spring, especially March, remains relatively low, the stronger basis bids will likely get. This presents an attractive price risk management opportunity.

What the Market Didn't Want to Hear (11/9/17)

USDA released its November updates today and the numbers were not what the markets wanted to hear. Corn supplies continue to charge higher as yields are better than expected, reaching another surprising record. Corn usage is still relatively strong, but the projected changes in feed and export use are not enough to stop another increase in ending stocks and a continuation of lower prices. Soybean supplies were already projected at record levels, so the small production adjustment by USDA today did not change that outlook. And the adjustments to soybean usage do not change the general story in that market as well. So it was an update we needed, but did not want.

Looking within the numbers, the big push in production came from the northern corn crop. State estimates from North Dakota to Indiana jumps 6 to 8 bushels per acre as the corn harvest reaches its latter stages. The fears of the yield impacts from this year's drought turned out to be much larger than the actual yield impacts. With the national yield now projected at a record 175.4 bushels per acre, the record national yield will be set without Illinois, Indiana, or Iowa being at a record as well.

For soybeans, the bigger storyline is the global supply and demand situation. Usage is up, but supplies continue to grow faster. Overall, Chinese imports of soybeans from all sources are projected to reach 97 million tons (or 3.56 billion bushels), up 3.5 million tons from last year. But global soybean usage is not enough to prevent global ending stocks from growing another 1.6 million tons over the current marketing year.