Volume 1|Issue 1 Article 1 August 2015
Weather and Yields
John R. KruseIowa State University
Follow this and additional works at:http://lib.dr.iastate.edu/iowaagreview
Part of theAgricultural and Resource Economics Commons,Agricultural Economics Commons, and theEconomics Commons
This Article is brought to you for free and open access by the Center for Agricultural and Rural Development at Iowa State University Digital Repository. It has been accepted for inclusion in Iowa Ag Review by an authorized editor of Iowa State University Digital Repository. For more information, please [email protected].
Recommended Citation
Kruse, John R. (2015) "Weather and Yields,"Iowa Ag Review: Vol. 1 : Iss. 1 , Article 1. Available at:http://lib.dr.iastate.edu/iowaagreview/vol1/iss1/1
Iowa Ag
Review
A
Publimtionfmm
tit£• CeuterJm· Ag~iculturala11el
Rum/Dew
:
lopmetll
,
Depmtmelltof t:conomic.-.
,
Collegeof
Ag.-icultun•December
1994
Quarterly
Vol. 1, No.
1
What~
Inside?
Average Fann Prices
Received
By
Iowa Farmers
The Current Situation
S
e
p
AugS
e
p
1994 1994 1993
Weathe
r
and Y
i
elds ...
.
...
...
..
...
..
.
..
.
2
Com L.97 $/Bushe2.06 l 2.11P
rice
s
a
t
Harvest
.
.
.
..
.
...
.
...
.
.
...
.
...
.
.
. 3
Soybeans 5.21 5.51 6.19Poli
c
y Announcemen
t
s ...
.
...
.
.
...
..
...
.
...
.
... 3
Oats l.28 1.21 1.50Nea
r
Term O
u
dook
for the P
o
rk
S
e
c
t
o
r
.
...
..
.. 3
$!Ion
I
nternationa
l
De
v
elopm
e
n
ts ...
4
Alfalfa 76.00 77.00 93.00
All Hay 73.00 73.00 89.00
CARD
IF
APRI Analyses
$/Cwt.
The
I
owa
B
ase
li
ne
.
...
.
...
.
.
.
.
...
.
.
.
.
.
.
...
..
...
5
Steers Feeder Ca& Heifers lves 88.30 66.10 89.20 67.00 91.20 74.00GATT
:
A Laype
r
son
's
Description
.
.
..
..
..
..
.
....
.
6
Cows 42.90 42.70 47.90I
mplications
of
Lhe
GATT Agreemem (or
Barrows & Gilts 36.40 43.50 49.00I
owa Agriculture
...
..
..
...
..
..
...
7
Sows 28.20 30.70 36.80Th
e
Conservation Reserve
Program
...
..
...
8
Sheep 32.30 30.10 28.80I
mplications of Extending th
e
Conservation
Lambs 81.00 80.80 63.50R
es
e
r
ve
Pr
og
r
am for Iowa
...
9
$/LbTurkeys 0.40 0.39 0.38
Special Articles
$/Dozen
Enviro
n
menta
l
Issues
Eggs 0.37 • 0.35 0.36in t
h
e
1995
Farm
Bill
...
.
...
..
...
1
2
$/Cwt.All
Milk
12.40 12.00 12.90Emerging Issues
$/HeadMilk Cows 1,120 1,120 1,160
The 1995
Farm
Bill
....
.
...
....
..
.. 14
Meet the Staff
Iowa
Farm Income Indicators
1994 1993 1992
john
R. Kr
u
se
,
Edi
t
or
,
I
owa Ag
Review
,
an
d
U.S.
Million Dollarsc
rops
and livestock analy
s
t
...
...
....
15
Crop Cash ReceiptsJan- Jun Total 1,669 2,174 2,062
Recent CARD Publications ... 16
Livestock Cash ReceiptsJan -Jun Total 2,764 2,905 2,783
IOWA
STATE UNIVERSITY
Iowa Ag
Review
.
Iowa Corn PriceJan Apr Jul Oct.
•
1992 • 1993 1994Iowa Soybean Price
6.80
...---=---
-
- - - -
--,
~ 6.50 ·1--=-- --' 1/) ~ 6.20·
1
- -
- - - - -
.,.
- -
-'1
t-- -}...
8.
5.90 - 1 - - - -1/) ~ 5.60 t:=-~8
5.30 -1---JI!:~ 5.00 -!---'---1- +--+- - 1 - --+-...-+--+--lJan Apr Jul Oct
•
1992 • 1993 1994Iowa Alfalfa Hay Price
110 c 100 0
1-...
90 Cll c. 1/) .... 80 (1J--
0 0 70 60Jan Mar May Jul Sep Nov
•
1992•
1993 1994Iowa Oat Price
-
Cll ~ 1.65 -t---::~---1-~--1 ::I m ....8.
1 . .50~-~~ 1/) .... (1J-
0 1.35 r-------~~~.,C..----1 0 1.20 4---1---+-+---+--+-...._;Jan Apr Jut Oct
•
1992 • 1993The
Current Situation
In Iowa
Weather and Yields
(John R. Kruse 515-294-6183)
After the flooding of 1993, growing conditions in 1994 appear to have been nearly ideal. As of October 9,
1994, 99 percent of the corn cmp and 98 percent of the soybean crop in Iowa were rated in good to excellent condition. The last record yields for corn and
soy-beans in Iowa were set in 1992 at 147 bushels per acre for com and 44 bushels per acre for soybeans. For both corn and soybeans, 1994 crop conditions are better than 1992 levels. In 1992, 70 percent of the corn crop was rated in good condition and 22 percent of the com crop was rated in excellent condition,
compared with 50 percent of the 1994 corn crop in
good condition and 49 percent of the 1994 com crop currently in excellent condition. For soybeans, 69 percem and 20 percent were rated in good and excel
-lenL condition in 1992, compared with 49 percent in
good condition and 49 percenl in excellent condition for the 1994 crop. With crops in better condition than 1992, the probability of new record yields is very high .
CARD analysis based on technology growth and crop conditions as of October 9 suggested new record yields in lowa of 151 bushels per acre for corn and 48.9
bushels per acre for soybeans. ln Lhe November issue of
Crop Prod
u
ction,
USDA estimated Iowa averageyields at 152 bushels per acre for corn and 51 bushels per acre for soybeans.
While record yields appear to be shaping up for Iowa,
oilier states are not faring quite as we!J. just to the south, Missouri's crop did not experience the good
growing conditions we had in Iowa. As of the last crop condition report on Ocrober9, 43 percent of the
Missouci eorn crop was rated in fair condition and only 3 percent in excellent condition. CARD esti-mates, based on October 9 crop conditions, Lhat
Missouri corn yields will average 119 bushels per acre compared with 135 bushels per acre in 1992.
Soy-beans in Missouri were reported in slightly worse shape than corn with 54 percent rated fair and only 3
percent rated in excellent condition. CARD estimates,
based on October 9 crop conditions, that Missouri soybean yields will average 33 bushels per acre, down
from an average or
38
bushels per acre in 1992.Kansas, North Carolina, Ohio, and other states are also experiencing less favorable growing conditions .
Despite less favorable gmwing conditions in these states, U.S. average yields for com and soybeans are expected to reach new records in 1994. USDA
mates, reported in the November issue of
Crop
Produc-tion, suggest that U.S. corn yields will average 138.4
bushels per acre compared with the 1992 record of
131.4 bushels per acre. The USDA projects that U.S.
soybean yields will average 41.5 bushels per acre in
1994, 3.9 bushels above the 1992 record.
Prices ar Harvest
With record yield levels for lhe United States, 1994
crop production is expected to be quite large. The
USDA estimates that 1994 U.S. corn and soybean
production
will
beJ.O
billion bushels and 2.5 billionbushels, respectively. Expectations of a large. crop have
already forced commodity prices significantly lower.
With a 10 billion bushel com
crop,
the lowa seasonaverage corn price is projected to be in the $1.85
-$1.95 per bushel price range with average harvest
period prices in the $1.75 to $1.85 per bushel range.
Iowa season average prices for soybeans are expected
to fall in the $5.05
ro
$5.25 per bushel rangewith
average harvest period prices in the $4.85 to $5.00 per
bushel range.
Poli
cy
Announ
ce
ments
The Secretary of Agriculture is required by law to
announce ARP (set-aside) rates before planting season.
For wheat, the Secretary must announce a preliminary
ARP rate by june 1 of the year prior to the calendar
year in which the crop is harvested. The secretary
must make any changes in the preliminary ARP rate by
july 31 of the year prior to the calendar year in which
the crop is harvested. Secretary Espy set the ARP rate
for the 1995 wheat crop at 0 percent. The preliminary
ARP
rates announced on September 30 became finalNovember 15, setting an ARP rate of 7.5 pereent for
corn and 0 percent for sorghum and barley. The 1990
FACTA set the oats ARP at 0 percent through 1995.
Near Term
Outlook
for
the Pork
Sector
(Seth Meyer 515-294-6183)
The USDA reported in the September issue of Hogs and
Pigs
that, for the third consecutive quarter, hoginventories throughout the United States were above
previous year levels wiLb the largest inventories
existing since 1980. The USDA estimated that total
hog inventories as of September 1 were 4 percent
above the same time last year. In previous quarters,
USDA estimated total hog inventories were
3
percenthigher on June
1
and1
percent higheron
March 1from rhe same time last year. Not only have market
Iowa Ag
Review
Iowa Steer & Heifer Price
60 +---~--~---+----~----+-~
Jan Mar May Jul Sep Nov
• 1992 • 1993 1994 Iowa Feeder Calf Price 110 .---, "0 as ell J:
...
100 ell Q. 1/)...
as 90 0 0 80Jan May Jul Sep Nov
•
1992•
1993 1994Iowa Barrow & Gilt Price
'i
47 -h'-"<--r~ 0 '-448.
~ 41 ·1-...:--
--y
G.::.-
---
-+
---
__,.
<rl
as--
0 0 38 ~---+---~ 35+--+--~~~--+--+--~~~--+-~Jan Mar May Jul Sep Nov • 1992 • 1993 1994
Iowa Sow Price
Jan Mar May Jul Sep Nov
Iowa Ag
Review
hog inventories increased, but the breeding herd inventory continues to expand, further increasing
potential production and keeping prices low. Breeding herd inventories for September were estimated to be 4
percent above 1993 levels with farrowing intentions for December through February up 5 percent from the
same period last year. lf producers follow through with their stated intentions, the increased supply of hogs will continue as the hogs from those farrowings
come to market in the third quarter of 1995.
This raises the question, "Will hog production
con-tinue to expand?" In the past, producers have ridden
out 12 months of losses before a breeding herd
liquidation begins. JSU
Extensions
Esti
mat
e
d Re
t
urn
s
for Farrowing and
Finis1tin
g
flogs i
.
n
Iowa
showsproducers have been in the red since December 1993.
This would suggest that breeding herd liquidation may take place in the first quarter of 1995. But it con tra-dicts the farrowing intentions in the September 1
report for the December to February 1995 period
which showed a 4 percent increase. Remembering that this is an intention stated before having experienced
12 months o( losses suggests the possibility of a
downward revision in farrowing intentions in the
December 1 report. Even witJ1 a downward revision in farrowing intemions, supplies will remain above the previous year levels until at least the end of the third
quaner of 1995.
Iowa has not been contributing to the recent surge in pork production, This raises the concern of whether or
not lowa, the nation's largest pork producing state, will hold its market share in pork production. The Septem-ber 1, 1994 report shows that the breeding herd r
e-mained constant from a year ago while the whole U.S.
breeding herd increased by 4 percent. Iowa's share of
the U.S. breeding herd has fallen from 25 percent in 1992 to 23.3 percent in 1993to 23 percent in 1994. The decline in share was due to a relatively stable
number of market hogs in Lowa, while the United States overall showed a 4.9 percent increase in market hogs on hand [rom Septen1ber 1, 1992 to September 1, 1994.
ls this a signal of lowas decline as the leader in pork
production? ln order to answer this question one has
to take imo account recent events that may explain Iowa's recent market share slip. 1992 was an
unprofit-able year for Farrow to Finish operations in Iowa. The Extension Service at lowa State University reponed
losses in the estimated returns from Iowa farrowing
and finishing hog operations for 6 of 12 months in that
year, and even profitable months were only marginally
so. ln 1993, Iowa had to contend with severe nooding,
which caused economic hardship and increased feed
costs. In addition, structural changes have been
occurring in the pork industry with a move toward
larger farms. Much of Lhe expansion in the currem
cycle could be associated with these larger farms. With laws discouraging corporate farming, fewer large hog farms have located in Iowa when compared with
surrounding states. However, Lowa continues to have,
relative to the rest of the United States, lower feed
costs and excess slaughter capacity, giving it a
competetive advantage in pork products. The corning
recovery may give early indications of Iowa's future
place in pork production.
With prices averaging $40 per cwt for the second
quarter of 1994, and I i ve hog prices currently falling to below $30, one could speculate that we may already be
entering a period of breeding herd liquidation. The
most recent sow slaughter for the week ending
October 22 showed an increase of 11 percent head in U.S. sow slaughter from the previous year. However,
even if this trend would continue for the rest of the quarter, only 84,000 additional sows would be slaugh
-tered over last year, or only 1 percent of the breeding herd based on September inventory numbers. The gilt replacement rate remains unknown.
We can expect prices to remain in the low $30s for the
first and possibly second quarters of 1995 with a few dollars per cwt. being added to the farm-level live hog
price as the currently high farm-to-retail price margin
is distributed between consumers and producers after a
6 to 9 month lag.
If
the December to Februaryfarrowing intentions are revised downward, we are
likely to see prices average in the mid to upper $30s
through March 1, 1996.
The price recovery will come, but will likely not reach
the price levels of past recoveries, and will be at tl1e
expense of the marginal producers. The newest
large-scale operations, which tend to be low cost producers,
are capital intensive and less able to move in and out of
production. Therefore we
will
see a recovery, butunder a changed market structure it will likely be less
dramatic than the recoveries of previous cycles.
