State of the Ag Economy June 10, 2017 Chad Hart Associate Professor/Crop Marketing Specialist chart@iastate.edu 515-294-9911
Ag Productivity and Usage Using corn as an example Source: USDA
Ag Prices Using corn as an example Source: USDA
Net Farm Income Source: USDA
Farm Debt Source: Federal Reserve
Ag Economic Summary Agricultural production and consumption has grown rapidly over the past several years. But when production exceeds consumption, prices fall. Crop revenues peaked in 2012-13, while livestock revenues crested in 2014-15, leading to record farm incomes. Since then net farm income has been cut in half. While the percentage loss in substantial, net farm income remains above levels from the early 2000 s. Farmers and ranchers have partially compensated for the loss in income by taking on higher debt loads. Farm and ranch balance sheets are eroding and financial stress is building for some producers, but the financial issues are not as severe as during the 1980 s. If agricultural prices slowly improve (as projected), the squeeze on farm finances will improve as well. But for some producers, the squeeze may be too much.
Land Value ($ per acre) 1941 1944 1947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 AVERAGE VALUES 10000 9000 8000 all farmland 1941 2016 Iowa Nominal and Inflation-adjusted Farmland Values 1941-2016 7000 6000 $7,183 As of Nov. 16 5000 4000 3000 2000 1000 0-5.9% Nominal value Inflation-adjusted value (2015 dollars)
Annual Percentage Change (%) 1942 1944 1946 1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 40.0% % Change in Nominal Iowa Farmland Values 1942-2016 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0%
A replay of 1920s or 1980s farm crisis? Source: USDA-ERS, Ag DM C2-70, Zhang and Beek (2016) Farm Policy Journal
President s Budget Request Source: OMB, 2018 Budget
USDA s Budget Source: USDA 2017 Budget
Proposed Adjustments in Farm Policy Source: OMB, 2018 Budget
U.S. Meat Production & Prices Source: USDA-WAOB
U.S. Meat Trade Million pounds Source: USDA-WAOB
U.S. Corn Supply and Use 2013 2014 2015 2016 2017 Area Planted (mil. acres) 95.4 90.6 88.0 94.0 90.0 Yield (bu./acre) 158.1 171.0 168.4 174.6 170.7 Production (mil. bu.) 13,829 14,216 13,602 15,148 14,065 Beg. Stocks (mil. bu.) 821 1,232 1,731 1,737 2,295 Imports (mil. bu.) 36 32 67 55 50 Total Supply (mil. bu.) 14,686 15,479 15,401 16,940 16,410 Feed & Residual (mil. bu.) 5,040 5,280 5,120 5,500 5,425 Ethanol (mil. bu.) 5,124 5,200 5,224 5,450 5,500 Food, Seed, & Other (mil. bu.) 1,369 1,401 1,422 1,470 1,500 Exports (mil. bu.) 1,920 1,867 1,898 2,225 1,875 Total Use (mil. bu.) 13,454 13,748 13,664 14,645 14,300 Ending Stocks (mil. bu.) 1,232 1,731 1,737 2,295 2,110 Season-Average Price ($/bu.) 4.46 3.70 3.61 3.35 3.40 Source: USDA-WAOB
U.S. Soybean Supply and Use 2013 2014 2015 2016 2017 Area Planted (mil. acres) 76.8 83.3 82.7 83.4 89.5 Yield (bu./acre) 44.0 47.5 48.0 52.1 48.0 Production (mil. bu.) 3,358 3,927 3,926 4,307 4,255 Beg. Stocks (mil. bu.) 141 92 191 197 450 Imports (mil. bu.) 72 33 24 25 25 Total Supply (mil. bu.) 3,570 4,052 4,140 4,528 4,730 Crush (mil. bu.) 1,734 1,873 1,886 1,910 1,950 Seed & Residual (mil. bu.) 107 146 122 118 135 Exports (mil. bu.) 1,638 1,842 1,936 2,050 2,150 Total Use (mil. bu.) 3,478 3,862 3,944 4,078 4,235 Ending Stocks (mil. bu.) 92 191 197 450 495 Season-Average Price ($/bu.) 13.00 10.10 8.95 9.55 9.30 Source: USDA-WAOB
World Corn Production Source: USDA-WAOB
World Soybean Production Source: USDA-WAOB
Corn Export Sales Source: USDA-FAS
Soybean Export Sales Source: USDA-FAS
Corn Grind for Ethanol
Current Corn Futures 4.06 4.16 3.51 Source: CME Group, 6/9/2017
Current Soybean Futures 9.50 9.37 9.35 Source: CME Group, 6/9/2017
Iowa Corn Prices vs. Costs
Iowa Soybean Prices vs. Costs
Thank you for your time! Any questions? My web site: http://www2.econ.iastate.edu/faculty/hart/ Iowa Farm Outlook: http://www2.econ.iastate.edu/ifo/ Ag Decision Maker: http://www.extension.iastate.edu/agdm/