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Extension and Outreach/Department of Economics Ag Cycles, Current Crop Markets and the Farm Bill NACM Heartland Meeting Des Moines, Iowa Mar. 6, 2014 Chad Hart Associate Professor/Crop Markets Specialist [email protected] 515-294-9911

Ag Cycles, Current Crop Markets and the Farm Bill

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Ag Cycles, Current Crop Markets and the Farm Bill. NACM Heartland Meeting Des Moines, Iowa Mar. 6, 2014 Chad Hart Associate Professor/Crop Markets Specialist [email protected] 515-294-9911. Corn Prices vs. Costs. - PowerPoint PPT Presentation

Text of Ag Cycles, Current Crop Markets and the Farm Bill

Slide 1Ag Cycles, Current Crop Markets and the Farm Bill
NACM Heartland Meeting
Des Moines, Iowa
Mar. 6, 2014
Corn Prices vs. Costs
Sources: USDA-NASS for Prices, Duffy for Costs
Per Bushel Cost calculated as Per Acre Cost from ISU Extension divided by Actual Yield per Acre
Extension and Outreach/Department of Economics
Soybean Prices vs. Costs
Sources: USDA-NASS for Prices, Duffy for Costs
Per Bushel Cost calculated as Per Acre Cost from ISU Extension divided by Actual Yield per Acre
Extension and Outreach/Department of Economics
Corn Prices and Recessions
Crop Prices for the Next Decade
Source: USDA-ERS
Livestock
Crops
Net Farm Income
Iowa Land Values
Source: Mike Duffy, ISU
Land Values and Income
Source: Mike Duffy, ISU
Land Values and Income
Source: Mike Duffy, ISU
Source: USDA-WAOB for 2010-13
Source: USDA-WAOB for 2010-13
Corn Yields
Source: USDA-NASS
Soybean Yields
Source: USDA-NASS
World Corn Production
World Soybean Production
Hog Crush Margin
Source: ISU Extension
The Crush Margin is the return after the pig, corn and soybean meal costs.
Carcass weight: 200 pounds Pig price: 50% of 5 mth out lean hog futures
Corn: 10 bushels per pig Soybean meal: 150 pounds per pig
Extension and Outreach/Department of Economics
Cattle Crush Margin
Source: ISU Extension
The Crush Margin is the return after the feeder steer and corn costs.
Live weight: 1250 pounds Feeder weight: 750 pounds
Corn: 50 bushels per head
Extension and Outreach/Department of Economics
U.S. Meat Production & Prices
Corn Export Shifts
Corn Export Sales
Soybean Export Sales
Soy Export Shifts
Corn Grind for Ethanol
Current Corn Futures
Current Soybean Futures
2013/14 Crop Prices
2014/15 Crop Margins
Source: droughtmonitor.unl.edu
Source: NOAA-CPC
Source: NOAA-CPC
Supply/demand concerns
Demand rebounding? Yes, so far, so good
Acreage allocation for 2014: Where do the extra corn acres go?
Markets favoring soybeans in the short term and corn longer term
2013/14 USDA
World Corn Markets
Arable Land
Direct Payments (DP)
Countercyclical Payments (CCP)
Marketing Loans (LDP)
New programs, but they have strong similarities to previous programs
Extension and Outreach/Department of Economics
Two Waves
Probably occurs June-July timeframe
Probably Sept-Oct
Harvest the crop and farm bill at the same time
Extension and Outreach/Department of Economics
Producer Choice
If ARC is chosen, pick between county and individual coverage
If individual coverage is chosen, must be taken for all covered commodities on the farm
2014-2018 crop years
Revenue Programs
Think of ARC-Individual as whole farm
ARC-County
ARC-Individual
5-yr OA county yield * 5-yr OA MYA price
Sum across crops of [5-yr OA (farm yield * MYA price) *crop acreage]
Actual crop revenue
County yield * Max(MYA price or loan rate)
Sum across crops of [Farm production * Max(MYA price or loan rate)] / Total planted acres of all covered crops
Revenue guarantee
Supplemental Coverage Option (SCO)
An additional policy to cover “shallow losses”
Shallow loss = part of the deductible on the producer’s underlying crop insurance policy
SCO has a county-level payment trigger
Indemnities are paid when the county experiences losses greater than 14%
Premium subsidy: 65%
Starts in 2015
Extension and Outreach/Department of Economics
Thank you for your time!
Any questions?