WILLAg Notes

November 30, 2016

2016 Gross Farm Revenue & Income

It looks like this year is going to be better than last year for farmers in central Illinois. Todd Gleason explores how gross income has changed for row croppers in the middle of the prairie state.



The gross revenue for corn is $292 per acre. It is tallied from three income sources. The crop is worth $262. There was a $20 farm safety net payment from the ARC-County program and a $10 crop insurance indemnity. The total, again $292, is lower than last year says University of Illinois Agricultural Economist Gary Schnitkey, “Even though we are putting in a very high yield, we are using 231 bushels to the acre for the corn average - the same as in 2014, revenues will be down for corn in 2016 as compared to 2015”.



Schnitkey calculated the gross revenue figures for the farmdocdaily website.

The soybean figures add up in a similar fashion. The gross revenue is estimated to total $718 per acre. It’s a figure much higher than the 2015 gross says the agricultural economist, “We are including very high soybean yields for 2016. Record-breaking yields, in fact, of 73 bushels to the acre. The price is above $9.50, and this may actually turn out to be low as prices continue to climb. Overall, revenue on soybeans will be up from last year and much higher than total costs. So, our bright spot for the 2016 year will be revenue and income from soybeans”.



All in all, on the highly productive soils of central Illinois, 2016 will go down as a high-yield low-income year. Another year in which farmers just-get-by says Gary Schnitkey.

Quote Summary - Get-by year, but better than it could have been without the high yields. Most farmers will maintain equity, but may see some working capital declines. The declines will be more pronounced on farms working a higher percentage of cash rented land. It is better than 2015, but still not up to sustainable levels for the long-run. We need to see higher returns, particularly for corn prices in the future.

There are a series of graphics detailing 2016 central Illinois row crop farm gross income on the farmdocdaily website.


November 28, 2016

EPA Renewable Fuels Standard Rallies Soybean Oil Prices

Source | Darrel Good, Agricultural Economist - University of Illinois

The price of soybeans rallied about 10 percent from mid-October to mid-November. It came,despite the record sized crop harvested in the United States.



Farmers have been in awe of the soybean market since mid-August. There have been a few reasons for it to rally; a short crop out of South America and a drought constrained supply of palm oil coming from Indonesia for instance. Still, this U.S. soybean crop is big, mighty big in fact. Yet, the price of soybeans has gone higher.

Darrel Good writes about it in this week’s Weekly Outlook. You may read it online at FarmDocDaily.

There are two unusual things about this price rally. Well, one really, but it is driven by the first. The rally has come because the world seems to be short of vegetable oils. Soybean oil is among those. Here’s the important part, soybean oil lead rallies generally do not last. Darrel Good thinks this one might and that it could change the dynamics of the soybean complex. The change is driven by the Renewable Fuels Standard. The RFS did the same thing for the corn market when it began to ramp up ethanol production in the United States more than a decade ago.

The soy complex is made up of three parts; the price of soybeans, the price of soybean meal, and the price of soybean oil. The last two are the products derived from the soybean when it is processed, crushed.

The EPA RFS announcement, made last week, initially resulted in a surge in soybean oil and soybean prices. Increasing soybean oil consumption for mandated advanced biofuels, in this case biodiesel production, this year and beyond may require the domestic soybean crush to be larger than previously thought concludes Darrel Good. He says this could lead to some long-term pricing questions.

Historically, the domestic crush has been driven by soybean meal demand. If it is driven instead by soybean oil demand, this could result in lower soybean meal prices. Soybean meal has a short shelf life. Its price would need to be low enough to for it to be used quickly.

The impact of higher soybean oil prices and lower soybean meal prices on the price of soybeans is difficult to anticipate. However, a “surplus” of soybean meal, says Good, might result in lower soybean meal prices relative to feed grain prices. It could cause the soybean meal to corn price ratio that has ranged from 2.55 to 3.2 in recent years to decline. The historical range is 2.0 to 2.5.


November 24, 2016

Farm Assets Conference

Soybean Panel
Greg Johnson, The Andersons - Champaign, Illinois
Ellen Dearden, AgReview - Morton, Illinois
Jerry Gulke, Gulke Group - Chicago, Illinois
 





Corn Panel
Aaron Curtis, MIDCO - Bloomington, Illinois
Kevin Van Trump, Van Trump Report - Kansas City, Missouri
Mike Zuzolo, Global Commodity Analytics - Atchison, Kansas


November 21, 2016

Could Soybean Stocks Grow to 580 Million

Depending upon how you do the numbers there could be an enormous supply of soybeans in the U.S. by the time the fall of 2018 rolls around.



The large soybean crop in the United States hasn’t, yet, pummeled prices in Chicago. However, farmers are a bit worried the hammer blow will be struck. For now, much of the focus is on the potential size of the 2017 South American crops and the implications for demand for U.S. grown soybeans. Increasingly, however focus will shift to 2017 production prospects here in the United States.

The over-riding question is whether surpluses and low prices will persist for another year. Although University of Illinois Agricultural Economist Darrel Good says it is a bit early to speculate on supply and consumption prospects for the 2017–18 marketing year, he thinks some scenarios can be considered.

For soybeans, there is a general expectation that U.S. producers will increase acreage in the year ahead. An increase of about five million acres, to 88 million harvested acres, seems to be a common expectation right now. The extremely high soybean yields of the past three years raise some questions about a potential increase in the trend yield. However, if the 2017 U.S. average soybean yield is near our calculated linear trend value of 47.5 bushels and acreage is increased as expected, the 2017 crop would total 4.18 billion bushels, 181 million bushels less than the 2016 harvest. If soybean consumption during the 2017–18 marketing year remained at the elevated level of 4.108 billion bushels projected for the current year, stocks would grow by about 100 million bushels.

So, at the end of the 2017–18 marketing year there could be 580 million bushels of soybeans left in the supply category as ending stocks. The upshot writes Good in his Weekly Outlook is that with a trend yield of 47.5 bushels and a constant level of consumption, any increase of more than 2.85 million acres next spring would result in some further growth in year ending stocks.

Quote Summary - On the other hand, a five million acre increase in soybean area along with a constant level of consumption means that an average yield of less than 46.3 bushels would result in some increase in marketing year ending stocks.

There are obviously multiple potential acreage, yield, consumption, and ending stocks scenarios for the 2017–18 U.S. soybean marketing year. The most likely scenarios tend to favor a modest to large increase in marketing year ending stocks of soybeans. However, the soybean market is apparently not convinced that stocks will continue to grow next year, with the January 2018 futures price only $0.06 lower than the January 2017 price.

The soybean market, concludes Good, then appears to be reflecting some production risk. He thinks this perceived risk may stem from current drought conditions in the southeastern United States and/or uncertainty about potential impacts if a La Niña episode unfolds in South America.


Page 6 of 49 pages ‹ First  < 4 5 6 7 8 >  Last ›