WILLAg Notes

February 12, 2015

2015 Corn Balance Sheet

There are likely to be fewer corn acres planted this spring. It is clear farmers and landowners are concerned about the high cost of corn production and the consequence may very well be a drop in the number of acres sown to the crop.
 
     
 
Anecdotal evidence supports the drop, however University of Illinois Ag Economist Darrel Good says the factual evidence suggests it may be muted. This is because U.S. farmers have already reduced the number of acres planted to corn over the last two years by nearly seven million acres. Add to this the two million acre reduction in winter wheat seedings last fall, likely not to be sown to corn this spring, and you arrive at beginning point for acreage planted to corn. Darrel Good expects a 1.25 million acre reduction. This would project U.S. plantings at 89.3 million acres of corn, with 81.8 million of those harvested this fall.
 
USDA and the CBO both have lower planted acreage numbers than Darrel Good. USDA in its February 11th Long Term Projection set it at 88 million acres with a 167.2 bushel to the acre average. CBO is using 89 million acres and 165.8 bushel to the acre yield. There are really two ways to go about figuring yield states Good in his February 9, 2015 Weekly Outlook article posted to the FarmDocDaily website. Analysis of trend-yield and yield-under-normal-weather-conditions puts his projection lower than either USDA or CBO.
 
A yield expectation somewhere around 164 bushels to the acre seems reasonable says Good. This is seven bushels less than the record set in 2014. The combination of acreage and yield would produce a crop of 13.4 billion bushels and ultimately create a total supply of 15.3 billion including the carryover stocks.
 
This total is 170 million bushels less than the amount tallied for the current marketing year. Good expects more corn to be consumed next year, than this year... in an amount greater than the total harvest. This, he says, should lead to some small decline in stocks by the end of the marketing year in the fall of 2016. His numbers bump up corn used to make ethanol by 50 million bushels to 5.225 billion, put corn exports at 1.85 billion, and he says the feed and residual number will stay steady at 5.275 billion bushels.
 
Taken together these projections point to consumption of 13.76 billion bushels and year ending corn stocks of 1.54 billion. This is down 300 million bushels from the expected ending stocks for this year. It points to a marketing year average price from September 2015 to August 2016 in the low $4.00 range. This price is higher than most other analysts projections and is just slightly higher than the price currently reflected by the futures market.
 
Factually, Darrel Good's 2015 season's average price is 50 to 70 cents higher than most other analysts' price projections.

February 10, 2015

Blown Away by the Soybean Export Number

The price of soybeans has been dropping and many in the trade are very worried about the potential for futures to continue to move lower. However, the February WASDE numbers may suggest some strength remains.


February 09, 2015

Finer Ground Corn More Digestible

An animal nutritionist at the University of Illinois has quantified the importance of particle size in ground feed for hogs.


February 06, 2015

Crude Oil Jumps Off Lows

The cost of a barrel of crude oil has dropped dramatically since last June. Back then the price was more the $100 per barrel. It dropped to nearly $44 a barrel earlier this year and has now begun to make a sharp turn higher. There are series of reasons for the rally says Bloomington based energies specialist for Growmark Harry Cooney. 

There has been a steelworkers strike at some of the refineries. This has caused some concerned. The rig counts have also declined. This number indicates how many oil wells are operational and the trade, which focuses on future supply, thinks the supply may peak out and then start to decline. 

However, it is important to remember says Harry Cooney crude oil started its price decline at around $107.00 a barrel. It is very unlikely the oil rig count contraction taking place now will greatly constrain supply. Still Cooney has been advising end users, like farmers that purchase gasoline and diesel in bulk, to lock in the price of their 2015 needs. 

The end users see these values, values they haven’t seen for four or five years, as an opportunity to lock in the price of fuel even though they’re above the recent lows. The price of fuel, unlike other inputs on the farm, has decreased more rapidly in percentage terms. 

Nitrogen fertilizer, for instance, has yet to drop in price.


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