Iowa Farm Outlook & News

Headlines
  • 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
  • Mar. 2017 Prices for 2016/17 Crops:
       Corn $3.40 per bushel, steady with last month
       Soybean $9.60 per bushel, up 10 cents from last month
  • Mar. 2017 Acreage Estimates for 2017/18 Crops:
       Corn 90 million acres, down 4 million from last year
       Soybean 89.5 million acres, up 6.1 million from last year
Livestock
Market Reactions (4/1/17)

Before USDA releases a Hogs and Pigs Report, market analysts, traders, and others anticipate the numbers that USDA's National Ag Statistics Service will report. Analysts use the relationship of inventories to other weekly reported data series, and a general understanding of current market conditions to make estimates. They use prior quarterly Hogs and Pigs reports, especially the most recent one, as a reference starting point. News wire services gather and report pre-release estimates approximately one week before USDA releases the Hogs and Pigs Report. These pre-release estimates are important because they generally reflect the aggregate opinion, or forecast, of what data will be in the report. More importantly, these general expectations are often "bid into" market prices before the report's release. Assuming markets are efficient, the market price for hogs reflects this pre-release information even before the report is available. Therefore, much of the market reaction following the report often is relative to the market's pre-release estimates, not necessarily the actual increases or decreases in hog supply in the report. Due to other supply and demand factors, hog prices may not always move in the direction suggested by the Hogs and Pigs Report and pre-release estimates. The phrase "everything else being equal" would need to be used so that hog and pig numbers could be evaluated without simultaneously considering changes in these other factors. Annually USDA's National Ag Statistics Service publishes Price Reactions After USDA Livestock Reports. The latest report was released on March 16th and is available here. This analysis suggests markets do appear to bid expected information regarding the supply of hogs into prices before the report is released. The market does also respond to unanticipated information offered in the report. Or said differently, the report does contain information not forecasted prior to the report's release. However, from a long-term perspective, price reactions tend to even out over time and there appears to be no systematic effect on the hog market.

Crops
A Whole Lot of Soybean (3/31/17)

USDA released the Grain Stocks and Prospective Plantings reports today and they showed that there are a lot of corn and soybeans to work with in the markets. National soybean stocks as of March 1 stand at 1.73 billion bushels. That's up 13 percent from last year. Soybean usage and disappearance over the December to February time frame was 1.16 billion bushels, down 2 percent from last year. For corn, stock levels were also higher at 8.62 billion bushels, up 10 percent. But corn usage and disappearance were higher as well, with 3.77 billion bushels being used during the quarter.

On the acreage side, national soybean plantings are estimated at a record 89.5 million acres, while corn area fell to 90 million acres. Wheat plantings fell to the lowest recorded level since USDA began issuing reports in 1919. The reductions in corn and wheat opened up many acres for soybeans. Given trend yields, the early estimates for corn and soybean production come in at 14 billion bushels of corn and 4.25 billion bushels of soybeans. So both crops would be smaller than last year's record crops, but both crops would still have enough bushels to meet (and potentially exceed) demand.

The markets reacted favorably to the reduced corn planting and the increased corn usage by adding 6 to 9 cents to futures prices. Soybean prices, on the other hand, retreated after the reports, with old crop futures dropping 11 to 17 cents, while new crop futures lost 7 to 9 cents.

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