May 23, 2016

Will Summer Pricing Opportunities Materialize for Corn & Soybeans

The very low price of corn and soybeans, and predictions for even lower prices later in the year, has farmers worried. They’re wondering, even hopeful, if a summer weather rally could offer up a pricing opportunity. Darrel Good tries to answer this question in the May 23rd Weekly Outlook on the FarmDocDaily website.

Quote Summary - If a summer price rally does occur, producers will likely want to aggressively price the 2016 crop. In addition, history suggests that a weather market would also result in opportunities for pricing 2017 crops and beyond. A weather market would likely result in smaller price increases for those crops than for the 2015 and 2106 crops, similar to the recent price pattern. From the close on March 31 to the close on May 20, July 2016 corn futures gained almost $0.39, while December 2016 and December 2017 futures gained $0.31 and $0.24, respectively. From the close on March 1, July 2016 soybean futures gained $2.10, while November 2016 and November 2017 futures gained $1.79 and $0.88, respectively. Still, prices for those deferred crops could move to levels reflecting positive returns for most producers. How aggressively to price multiple crops depends on the magnitude of the price rally, should it occur.



Reasons to Price Soybeans Now …first, soybean acreage is likely to exceed intentions so that production could still be large even with a modest shortfall in yields. Second, soybean yields may be less vulnerable to stressful summer weather than corn yields. Third, soybean prices have increased more than corn prices in recent weeks and are now at a relatively high level compared to corn prices. Fourth, November 2016 soybean futures are now trading near $10.40, above the spring price guarantee of $9.73 for crop revenue insurance. Fifth, with trend yields, current new crop soybean prices are high enough to generate positive returns to owner -operators, those with crop share rents, and those with modest cash rents.

Reasons to Wait on Corn …acreage may be less than intentions, yields are more vulnerable to adverse summer weather, recent price strength has been modest, and December 2016 futures are currently trading only modestly above the spring price guarantee of $3.86 for crop revenue insurance. While waiting for a price that offers a positive return has some risk, the risk for corn seems limited over the next several weeks


May 17, 2016

$4.20 Corn Needed to Stabilize Grain Farm Income

Grain farmers throughout the Midwest are suffering through a third straight year of losses and prices don’t look to go high enough, yet, to stabilize net incomes. A University of Illinois study suggests the cash price of corn needs to be $4.20 a bushel to make that happen.


May 12, 2016

Marestail Control Prior to Planting

link to article online

Farmers in Illinois, other states too, are struggling to control glyphosate resistant weeds. Marestail can be one of the most challenging under no-till conditions prior to planting soybeans. More often than not farmers are using a tank mix of glyphosate and 2,4-D (two-four-dee). Sometimes the problem is that the weed is already too big to control, at others says University of Illinois Extension Weed Scientist Aaron Hager is its just that the 2,4-D isn’t doing the job any better than the glyphosate.


May 09, 2016

Summer Weather, El NiƱo, & Corn Yields

The agricultural economists at the land grant university in Illinois have gone through 56 years of weather data to see if there is any connection between the current El Niño event and trend yields for corn.



The trend yield for corn has been going up 1.8 bushels per yer for about 50 years say the number crunchers from the University of Illinois. It means, under normal weather conditions with a little adjustment upward, this year’s corn crop should average 166.2 bushels to the acre nationwide.



The 166.2 is the norm, but it lives within a range that would be indicative of really good years like 2004 and really bad years like 2012 says U of I’s Scott Irwin, “Now what we want to ask is if we should skew our expectations of this risk given this outside factor that doesn’t happen every year that we call El Niño”.

ILLINOIS’ research suggests the answer to this question is a qualified yes. The qualification is that the El Niño event is measured strictly as an effect of water temperature in the Pacific Ocean near the equator and that only the most extreme of these events, those a full degree or more centigrade above the norm for three months running, would be considered strong enough to regularly have a real measurable impact on U.S. crops.

The warmest one, to date, was 1997/98 and it peaked at 2.3 degrees centigrade above normal. If you take the same period and you estimate trend yields going back to 1960 there were 11 El Niño episodes at least one centigrade degree above normal. The Illinois agricultural economists filtered this data so these spikes had to occur in what they called the pre-season periods for corn production. This would be from September to March prior to the crop year. It is exactly what has happened this year and the spike is more than two degrees centigrade. It’s a really big one.

Irwin - What we find is, in these big spiking El Niños that occur in the pre-season period, that corn on average is about 4 to 5 bushels to the acre below trend.

Having said that, Irwin points to a large range of occurrences from 11 bushels above trend in 1992 to 23 bushels below trend in 1982. 1988 and 2012, the two worst drought years, also count under this construct.



The model used very reliably predicts summer heat waves, however, it is not so great at determining the amount of rainfall. Recall the reference Irwin made to the 1997/98 pre-season El Niño, the largest on record, similar to this year. The national corn yield was 3 bushels to the acre above trend. The heat wave came, it was just very last in August and early September after the corn crop had been made.


May 03, 2016

Wheat Quality Council 2016 HRW Tour


Crop scouts moved through Kansas, Oklahoma, and Nebraska this week to check on the condition of the hard red winter wheat crop (HRW). They found it to be a bin buster in the making averaging 48.6 bushels to the acre.


April 29, 2016

Farm Economy Beginning to Show Signs of Stress

This is the third year of a financial crunch on the farm. It follows on the heels of a series of tremendous seasons since 2006. The extra money, from then, is now starting to run out.



The financial stress in the ag sector may really begin to show this fall if low commodity prices persist says the Director of the TIAA CREF Center for Farmland Research on the Univeristy of Illinois campus, Bruce Sherrick.

Quote Summary - It is already affecting cash rents and land prices some. However, on a percentage basis not as much as the current cash prices (would suggest) for delivery within this year at least.

Sherrick says a a couple of things have happened which explain this buffering. The last several years have been really quite good for agricultural incomes. So, farmers have pretty strong balance sheets. It is easier to weather a downturn, says Sherrick, after a few good years, than a bad year after a few bad years, “We are seeing, clearly, working capital crunches beginning to hit people. This is the first year that is material, and lenders are seeing and uptick in volume. As we’ve adjusted to more normal stocks, we are into a period were we think, ”this might be the last year were people can really just stand for what’s going on without making some major changes in how they manage cash rents, or inputs, or financial structures".

This does not mean the price of farm land will plummet. Long term interest rates are very, very low and the rate of turnover in farmland is supper small. Money is cheap and farmland for sale is scarce.

Quote Summary - If you look at the number of acres that sell, maybe around 2% transfer per year within the agriculturally intense states. Only half of that moves outside of a family. The market is thin, and this helps buffer or slow down changes in farmland values because of changes in short term farm income. The low interest rates help people pay for a longterm investment with a stable cash return that can be rented for perhaps 3% of its value on a cash basis.

Farm land doesn’t look like such a dire situation, then, when you step back from it. It also has shown, very reliably says Bruce Sherrick, a positive correlation with inflation. Even if the price of commodities stay relatively low, it may be that the price of farmland, as an owned asset, will help farms stay afloat.


April 27, 2016

4-H Robotics Competition @ ILLINOIS

Did you know 4-H, that’s the world’s largest youth organization, is into robots. It is, and so are kids. Todd Gleason has more from an amazing robotics competition held in mid-April on the University of Illinois campus in Champaign, Illinois.


April 26, 2016

Wet Weather Ends in Argentina, Harvest Set to Continue


The price of soybeans have jumped in Chicago in part because of really wet weather in Argentina. That’s a done deal now says meteorologist Mark Russo of Riskpulse out of Chicago, Illinois.

Mark Russo follows agricultural growing conditions around the planet for Riskpulse. He made his comments during the Monday edition of the Closing Market Report from the University of Illinois, online at WILLAg.org.


April 22, 2016

Illinois Planting Date Studies for Corn & Soybean

It looks like more rain is coming to the corn belt. That'll concern farmers hoping to plant this year's crop. However, they've got time says University of Illinois Extension Agronomist Emerson Nafziger.
 

There's not huge losses of yield as long as you can get corn planted by the second week of May - Emerson Nafziger, University of Illinois 


The fact is Nafziger would rather wait than put a crop in the ground under not so great soil conditions, "I think it is easy at this time of year to do more harm than good by planting it when you say, " well I don't think this soil is quite ready, but I think we'll have to get started and go." And our goal is to get it planted when it is fit, and as soon as we can when it is fit".

Corn planting date response over 35 Illinois site-years, 2007-2015. Yields are expressed as a percentage of the yield produced by the highest-yielding date at that site.

Nafziger's planting date studies across the state of Illinois over the last nine years put the optimum planting date for corn at April 17th. Planting dates from April 5 to April 25 maximize corn yield within a two bushel range. Corn planted April 30th loses two bushels off the top, and a delay to May 10th puts the expected loss at 8 bushels to the acre.
 

It's clear, by the University of Illinois planting date studies, that soybeans sown in April can do well. This is the case even in southern Illinois, although it's really hard to get a good early stand. Yields in the top two-thirds of the state respond the same way to earlier planting dates. The earliest dates, starting around the 10th of April, have the highest yields and things fall off as time passes, however, Nafziger is a bit cautious about planting so very early. He simply states to start when field conditions are good to go.

Our work is showing the best time to plant soybeans is the last week of April to the first two weeks of May. - Emerson Nafziger, University of Illinois 

The average maximum yield for soybeans over the 23 site years of the study, gathered from 2010-2015, is 67 bushels to the acre. There is a two-and-a-half bushel decline from April 10 to April 30th, four bushels by May 10th, seven bushels for a delay to May 20th, 11 bushels to the end of the month, 14 by the 10th of June, and 19 by the 20th.

Soybean planting date response over 23 trials in central and northern Illinois, 2010-2015. Yields are expressed as a percentage of the yield of the highest-yielding date within each trial.

Interestingly, comments Nafziger, the usual halfway point for soybean planting in Illinois is about May 20th. That is, he says, only because of the wet conditions that keep farmers out of the field. Given all of this, the U of I agronomist says he wouldn't wait after planting corn to start planting soybeans, "We've seen some sizable yield losses with soybeans by planting too early, but by too early I mean the first half of April".

There are two ways to get lower yields from planting soybeans too early. First, there are drought years like 2012. When planting late in 2012 you picked up moisture later in the season to get better yields. In-other-words, too much dry weather during flowering can really do a number of the crop. The other is if it gets really cool early after soybeans have emerged. It can actually keep them physiologically below their maximum yield says Nafziger.

Pragmatically speaking, Emerson Nafziger says as long as soil conditions are good, he'd begin planting soybeans as soon as corn planting is completed and, after some momentary consideration, says he'd move to a soybean field if soil conditions in the next corn field weren't up to par.


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