June 02, 2016

Fungicide Applications Improve Corn Silage Feed Efficiency

June is National Dairy Month

Spraying a fungicide on corn in the Midwest has always been a 50/50 proposition related to cost. Half of the time it bumps yield by a couple of bushels and this can sometimes be enough to cover the cost. However, if that corn is going into silage, some new work from the University of Illinois says the improvement in feed efficiency for dairy cattle can pay for the fungicide not just once, but maybe twice.


June 02, 2016

Purdue University CME Group Ag Barometer



Purdue University’s Center for Commercial Agriculture and the derivatives marketplace CME Group are partnering to produce the Purdue/CME Group Ag Economy Barometer, a monthly nationwide measure of the health of the U.S. agricultural economy.

The introduction of this new economic indicator underscores the importance of the agricultural economy and its participants - food producers and agribusinesses - to the overall U.S. and global economies, Purdue and CME Group said Tuesday (May 3) in announcing the partnership.

“Agriculture is a critical component of the global economy and has been the cornerstone of CME Group’s business for nearly 170 years,” said CME Group Executive Chairman and President Terry Duffy. “By providing financial tools to help producers and agribusiness participants manage the risks they face, they are better able to focus on what they do best - feeding the world. We believe this collaboration with Purdue University to create the Purdue/CME Group Ag Economy Barometer will provide an essential resource for monitoring the health of the food industry and vital insight into the global economy.”

Purdue President Mitch Daniels said, “Purdue’s College of Agriculture has a long tradition of pushing us toward better food security, safety and sustainability with its cutting-edge research. We can imagine no better partner than CME Group to help us analyze and report the real-time economic health of U.S. agriculture, on which literally every citizen and the rest of the economy depends.”

Each month, the Ag Economy Barometer will provide a sense of the agricultural economy’s health with an index value. Results to calculate the index are obtained through a survey of 400 large agricultural producers on economic sentiment. In addition, Purdue will bring its research and agricultural economics expertise to measure producers’ expectations of key farm economy drivers such as farm profitability; farmland prices; capital expenditures; row crop, livestock and dairy prices; and seasonal drivers such as seed, fertilizer and feed ingredient prices.

The barometer provides a value for each month that is relative to the base period, which is the winter and spring months of 2015 and 2016, explained Jim Mintert, director of the Center for Commercial Agriculture, professor of agricultural economics and the barometer’s principal investigator. A score of 100 would mean that the sentiment is unchanged from the base period values. Higher than 100 means sentiment improved from that period, whereas lower values would indicate sentiment declined.

Quarterly, the index will be accompanied by a webinar and in-depth thought leader survey. The 100 agricultural thought leaders surveyed include agricultural lenders, business professionals, academics, consultants and commodity association representatives. This survey is separate from the results of the producer survey but serves as a supplement to the barometer.

“The barometer is the only ongoing monthly measure of the health of the agricultural economy,” Mintert said. “Also unique is that the index is calculated based on producer sentiments about both current conditions and future expectations.”
April survey results

The agricultural sentiment of U.S. producers increased to 106 in April 2016, which was an improvement in producer sentiment compared to the base period of October 2015 through March 2016. The increase was driven in part by strengthening corn, soybean and wheat prices. After months of trending lower and a sharp drop in corn prices following the USDA’s March Prospective Plantings report, crop prices moved up during April. In addition, general weather conditions across the Plains and Midwest were favorable for crop development and planting and likely contributed to the improved sentiment.

“While the most recent data show an uptick in producers’ sentiment, it is important to keep the situation in perspective,” said David Widmar, senior research associate for the Center for Commercial Agriculture and lead researcher on the Ag Economy Barometer. “Overall, the general agricultural outlook is still difficult. A strong majority of respondents, from both the producer and quarterly Agricultural Thought Leaders survey, reported expectations of the next 12 months being ‘bad times’ financially across the agricultural sector.”

A website with more information on the Ag Economy Barometer is at www.purdue.edu/agbarometer.


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.


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