October 03, 2013

Crop Insurance Payments in 2013 for Corn and Soybeans

Prices set this month in Chicago will have a direct affect on the indemnity payouts for the crop insurance farmers purchased last March from the federal government. The early October price of December corn futures in Chicago suggest crop insurance policies will make payments. At least on some farms, particularly those farms covered by revenue policies at high coverage levels. There is not much chance for crop insurance payments on soybeans

Let’s do the numbers for corn. The 2013 projected price for corn is $5.65 per bushel. The projected price is used to set crop insurance guarantees. The harvest price is used to calculate revenue on which crop insurance payments are based. The harvest price for corn equals the average of settlement prices of the December Chicago Mercantile Exchange (CME) corn contract during the month of October. Settlement prices during the first two days of October suggest a harvest price of $4.40 per bushel. Obviously, the final harvest price can vary from $4.40. However, $4.40 provides a good starting point for evaluating corn payments.

The Harvest price option crop insurance at the 75% level does not make a payment at $4.40 if the guarantteed yield is 180 bushels to the acre; the 80 percent coverage level pays out $22 under that yield and price; and 85% pays $72 an acre. It is unlikely crop insurance for soybeans will make a payment.

On-the-other-hand GRIP, or the Group Risk Income Plan (GRIP) a different type of crop insurance, is likely to pay.

Most farmers who purchase GRIP do so at a 90% coverage level. To illustrate the size of payments, take a McLean County Illinois GRIP policy with an actual yield equal to the expected yield of 183.3 bushels per acre. A $4.40 harvest price results in a $209 payment given that the highest protection level was chosen. The lowest protection level results in a $126 per acre payment. The 90% coverage level for GRIP causes the larger payments for GRIP compared to the RP or Revenue Protection policy discussed at the beginning of this story.

Summary - Crop insurance payments for corn will occur on some farms, particularly on those who purchased RP policies at higher coverage levels. GRIP at the 90% coverage level likely will make payments. Soybean payments are less likely.

September 27, 2013

Bearish September Hogs and Pigs Report

The Pork Checkoff hosted a news media conference call following the USDA's Quarterly Hogs and Pigs Report on Friday, Sept. 27.  This quarterly teleconference featured three distinguished agricultural economists and their reactions to the report.  The report surprised the trade, and is expected to result in a limit lower trade Monday at the CME Group in Chicago, Illinois.

You may listen to the teleconference using the link on this page.

The panel included...

* Dr. Lee Shulz, Extension Livestock Economist, Iowa State University
* Len Steiner, President, Steiner Consulting Group, Manchester, N.H.
* Dan Vaught, Economist, Doane Advisory Service, St. Louis, Mo.

The National Pork Board has responsibility for Checkoff-funded research, promotion and consumer information projects and for communicating with pork producers and the public. Through a legislative national Pork Checkoff, pork producers invest $0.40 for each $100 value of hogs sold. Importers of pork products contribute a like amount, based on a formula. The Pork Checkoff funds national and state programs in advertising, consumer information, retail and foodservice marketing, export market promotion, production improvement, technology, swine health, pork safety and environmental management. For information on Checkoff-funded programs, pork producers can call the Pork Checkoff Service Center at (800) 456-7675 or check the Internet at www.pork.org.

September 25, 2013

Corn-to-Soybean Yield Trends:  History and the Future

The National Agricultural Statistical Service or NASS projects the 2013 yields for the state of Illinois are 165 bushels per acre for corn and 47 bushels per acre for soybeans, giving a corn-to-soybean yield ratio of 3.51 (3.51 = 165 bushel corn yield / 47 bushel soybean yield).  This 3.51 ratio in 2013 is much higher than ratios between 2010 and 2012, but below the ratio’s average from 2000 to 2009 says University of Illinois Extension Farm Management Specialist Gary Schnitkey. 

The corn-to-soybean yield ratio has trended up over time in the state of Illinois. It averaged 3.12 during the 1970s, 3.16 during the 1980s, and 3.18 during the 1990s.

The highest corn to bean yield ratio for the state of Illinois came in 2003 when it took the yield from 4.43 acres of soybeans to equal the yield, in bushels, from one acre of corn. The last three years, however, have shown the ratio in decline from the 2000-2009 average.  Farmers, over that time says Schnitkey, have followed the lead of the math, and planted a few more acres of soybeans from one year to the next.

Let’s go through the math, again. It is a simple ratio; bushels of corn per acre divide by bushels of soybeans per acre. The higher the answer goes the more profitable, most likely, it is to plant corn rather than soybeans. It has gone from the 3.12 in the early 1970’s to 3.51 (projected) for this year.

A ratio between 3.4 and 3.45 seems reasonable for the state of Illinois in the future thinks Schnitkey.  The highest ratios, by the way, have come when statewide average corn yields are above 170 bushels to the acre. It was 180 in 2004, 175 bushels in 2007, 179 in 2008, and 174 in 2009.  Since 2009, Illinois has not had a state yield over 170 bushels per acre.

September 21, 2013

Late-Season Dry Weather and Soybean Prospects

Excerpt from Emerson Nafziger
IPM Bulletin Post
September 12, 2013

Why would a few hours of decreased photosynthetic activity in a day, which would usually lower corn yields, have less effect in soybean? Soybean plants tend to have a little more leaf area than they normally need for maximum photosynthesis, and because they can’t move sugars away from the leaves fast enough, they typically form starch during the day to tie up the extra sugar. While much of that starch is converted back to sugar and goes to good use, small reductions in photosynthesis over the course of a day may not decrease the available supply of sugars enough to hurt yields. This is especially true if pod numbers are less than normal, which means less demand for sugars.

The amount of seedfilling that the soybean crop is able to do when it’s dry during the second half of the season is directly related to two things: 1) how many seeds are present to fill; and 2) how long the crop is able to maintain enough active canopy to fill seeds.

September 20, 2013

Edamame: A Future of the U.S. Soybean

There are more than 77 million acres of soybeans in the United States. Very few of these beans will be consumed directly out of the pod by us. However, there is a push to grow more varieties suitable for vegetable crop production.

Edamame: A Future of the U.S. Soybean

September 15, 2013

Delving Deep into the Crop Production Report

USDA's National Agricultural Statistics Service is responsible for keeping track of the number of bushels of corn and soybeans in the United States. Those numbers are estimated in the Crop Production and Grain Stocks reports. The agency works in concert with the World Agricultural Outlook Board (WAOB). The Board reports the supply and demand tables for commodities (WASDE).

The September WASDE (World Agriculture Supply and Demand Estimate) figures dropped the 2012/2013 ending stocks for corn. USDA NASS Director of the Statistics Division Joe Prusacki says the change is in anticipation of what his agency will report out in the September Grain Stocks report. It will be released September 30, 2013. If the change reflected in the September WAOB WASDE is not reflected in the Grain Stocks report, then the October WASDE figures will be updated again.

You may listen to our conversation with Joe Prusacki. Prusacki was our guest on the September 13, 2013 edition of Commodity Week.

One other note from our CW conversation with Prusacki. He mentioned this year, by the maturity stats, seems analogous to 2008 and 2009. We pulled the October Crop Production reports to see what the changes looked like in those two years for corn…

Corn production is forecast at 12.0 billion bushels, down slightly from the September forecast and 8 percent below 2007. Based on conditions as of October 1, yields are expected to average 153.9 bushels per acre, up 1.6 bushels from September and 2.8 bushels above last year. If realized, this will be the second highest yield on record, behind 2004, and production will be the second largest, behind last year.

Corn production is forecast at 13.0 billion bushels, up slightly from last month and 8 percent higher than 2008. Based on conditions as of October 1, yields are expected to average 164.2 bushels per acre, up 2.3 bushels from September and 10.3 bushels above last year. If realized, this yield will be the highest on record and total production will be second only to the record set in 2007.

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