Iowa Farm Outlook & News

Headlines
  • May 2017 Prices for 2016/17 Crops:
       Corn $3.40 per bushel, steady with last month
       Soybean $9.55 per bushel, steady with last month
  • May 2017 Prices for 2017/18 Crops:
       Corn $3.40 per bushel
       Soybean $9.30 per bushel
  • May 2017 Yields for 2017/18 Crops:
       Corn 170.7 bushels per acre
       Soybean 48.0 bushels per acre
  • Mar. 2017 Hogs & Pigs: Inventory of All Hogs & Pigs:
       U.S. 70.976 million head, up 4.2% from last year
       IA 21.8 million head, up 7.9% from last year
  • Mar. 2017 Hogs & Pigs: Breeding Herd Inventory:
       U.S. 6.068 million head, up 1.5% from last year
       IA 1.0 million head, up 2.0% from last year
  • Mar. 2017 Hogs & Pigs: Market Hog Inventory:
       U.S. 64.908 million head, up 4.4% from last year
       IA 20.8 million head, up 8.2% from last year
Livestock
Beef Demand (5/1/17)

The story of 2017 has been one of beef demand. Big supplies at the cheapest prices in years has sparked retail, food service, and export buying interest and they continue coming back for more. Through March, beef exports were up 22% compared to the first three months of 2016. Packers' motivation to meet demand has supported maintaining fed cattle purchases. Packers are competing against one another for the first cut of cattle more and more and the offerings of market-ready fed cattle have become greener. Available supplies are arguably more current now than they have been in years. USDA AMS report LM_CT167 shows Iowa/Minnesota prices rose to $143.77 per cwt during the week ending Sunday, May 7. That was the highest weekly average fed cattle price since mid-August 2015. It also represents a 50% increase since mid-October, when 2016 prices bottomed at $95.93 per cwt. Concurrently, the June and August 2017 live cattle futures contracts gained over $30 per cwt, or 35%, on average. October and December 2017 live cattle futures contracts gained over $20 per cwt, or 22%, on average. This rally will likely not persist through the summer. Cattle on feed placements were large in March and are expected to be so again in April. Packer margins have tightened in 2017. As soon as beef supplies in the marketing pipeline are replenished the market will likely soften and become focused on larger summer supplies. This is the time to seriously consider acting to get some price protection. Look at futures, options, or sales for future delivery. Not long ago summer and fall live cattle futures were in the $100s and that was a good chance to do something also, and the market only went up from there. Opportunities appear and disappear as markets continue to adjust and producers should look for chances to take advantage of those opportunities. When profitable margins present themselves, careful consideration should be paid to locking-in those profits. Remember the goal of price risk management is to minimize risk by limiting losses and increasing the probability of profit.

Crops
First Official Estimates for 2017 Crops (5/11/17)

With the May release of the World Agricultural Supply and Demand Estimates report, we get the first official estimates for the upcoming corn and soybean crops. While the crop estimates are smaller than last year's record crop production, the projections show another set of large crops heading into the market this fall. With USDA estimating the corn trend yield at 170.7 bushels per acre, total corn production in 2017 is estimated just over 14 billion bushels. That is roughly 1 billion bushels less than last year, but is also still the 3rd largest corn crop in U.S. history, trailing only the 2014 and 2016 crops. Domestic demand for corn is projected to remain steady, but export demand is expected to decline, due to increased competition from other corn exporting countries, especially from South America. Meanwhile, the price outlook remains flat as USDA has the midpoints for their estimated ranges for the average farm prices for corn for the 2016/17 and 2017/18 crops at the same level, $3.40 per bushel.

For soybeans, USDA put the trend yield at 48 bushels per acre. Given the acreage from the Prospective Plantings report, that puts 2017/18 production at 4.255 billion bushels, down 52 million bushels from last year's record crop. The projections for soybean demand show continued growth in domestic and international sectors, but production is expected to slightly exceed usage. So ending stocks are projected to continue to rise and prices are expected to retreat. The current midpoints for the season-average farm prices are $9.55 per bushel for the 2016/17 crop and $9.30 per bushel for the 2017/18 crop.

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