Current Situation for Iowa’s Major Ag Commodities

A double whammy of rising feed prices and falling hog prices point to tighter hog margins than were expected earlier this year. Projected 2018 profits in ISU’s farrow-to-finish model dipped from the $11 per head forecast in December to losses of $4 per head in April. Carcass weight prices in 2018 are now expected to average near $63 per cwt compared to about $66.50 last year. USDA’s annual Cattle inventory report confirmed that beef herd expansion continued in 2017, albeit at a slower pace than in 2016. Beef herd expansions often last for four to six years. The current expansion began in 2014 and could continue for another year or so. If it does, beef production in this cycle likely would not peak until early in the next decade. The biggest shakeup for the crop markets from the Prospective Plantings report came from soybeans. Throughout March, the soybean market had been preparing for an announcement of a record number of acres planted to soybeans, exceeding corn for the first time since 1983. Well, the second part of that statement happened, but not the first. Farmers indicated they would plant one million fewer acres to soybeans (but the total still exceeds corn). However, like with corn, projected production is still quite large. The 4.27 billion bushels would be the third-largest soybean crop, following the record crop from last year and the bin-buster from 2016