Iowa Farm Outlook & News

  • July 2018 Cattle:
       U.S.: Cattle and Calves: 103.2 million head, up 1.0% from last year
       U.S.: Beef Cows: 32.5 million head, up 0.9% from last year
       U.S.: Dairy Cows: 9.4 million head, steady with last year
       U.S.: Calf Crop: 36.5 million head, up 1.9% from last year
  • Aug. 2018 Yields for 2018/19 U.S. Crops:
       Corn 178.4 bushels per acre, up 1.8 bushels from last year
       Soybean 51.6 bushels per acre, up 2.5 bushels from last year
  • Aug. 2018 Stocks for 2018/19 U.S. Crops:
       Corn 1.68 billion bushels, up 132 million bushels from last month's estimate
       Soybean 785 million bushels, up 205 million bushels from last month's estimate
Cattle Prices (8/6/18)

Fed cattle prices started off the year strong and remained above year earlier levels through the first week of March, with Iowa-Minnesota prices averaging $126/cwt and $5/cwt higher than the same period in 2017. Since then, fed steer prices have consistently fallen below levels observed a year earlier as prices averaged $117/cwt during the April through June quarter, $15/cwt lower than during 2017's second quarter. Fed cattle prices during July averaged $111/cwt, $8/cwt lower than in July 2017. A price rebound from summer lows into the fall months is possible. Live cattle futures are currently pricing a $2/cwt premium from the Aug to Oct contract. A $5/cwt premium from the Aug to Dec contract. Even more than fed cattle, prices for steer calves started the year off much stronger than in 2017, primarily because prices in 2017 were surprisingly weak. Prices for 500 to 600 pound steer calves in Iowa averaged $185/cwt during the January through March quarter, $27/cwt higher than a year earlier, before declining slightly during the second quarter to average $177/cwt, only $4/cwt lower than during April-June 2017. Declines in corn prices have been supportive of prices for both calves and feeders this summer and are expected to remain supportive this fall. The futures markets are currently pricing in value for feeder cattle and calves, making it a good time to review options for offsetting risk and protecting value. Current calf and feeder cattle prices are well above breakeven prices suggested by cattle feeding margin projections.

Higher Crop Ratings Equal Higher Crop Yields (8/10/18)

USDA August updates provided a little fodder for everybody. Both supply and usage numbers are higher. For corn, the higher corn ratings throughout this growing season have translated into higher yield estimates for this fall. The national corn yield is projected at 178.4 bushels per acre, up 4.4 bushels from trend and up 1.8 bushels from last year's record yield. While the drought conditions have impacted some states (example: Missouri's 39 bushel drop), most of the Corn Belt still have the potential to achieve strong corn yields. Iowa was estimated at 202 bushels per acre, even with last year. The national yield boost adds 356 million bushels to expected production. On the demand side, USDA increased its projections for corn feed and exports. The increase in feed now puts the feed and residual usage above 5.5 billion bushels. The increase in the export numbers implies only a 50 million bushel drop in exports for the coming year, despite the trade disputes. In making these changes, USDA pointed to lower prices as the catalyst. With the 2018/19 ending stock estimate now at 1.68 billion bushels, USDA set the midpoint of its season-average price estimate at $3.60 per bushel, down 20 cents from last month. For soybeans, it's a similar story. The national soybean yield is projected at 51.6 bushels per acre, up 3.1 bushels from trend and up 2.5 bushels from last year. The yield declines are in the states completely covered by drought. Iowa's soybean yield is set at 59 bushels per acre, up 2.5 bushels from last year. With the higher yield estimate, soybean production is set to top 4.5 billion bushels for the 1st time. On the usage side, domestic crush was raised by 15 million bushels, while export projections were increased by 20 million bushels. But overall, the shifts added over 200 million bushels to the 2018/19 ending stocks, raising them to 785 million bushels. USDA moved the midpoint of their season-average price range to $8.90 per bushel, down 35 cents from last month.