November 20, 2017

Weekly Outlook | Soybean Export Prospects for 2017-18

U.S. soybean exports need to continue to build on the strength seen in the 2016–17 marketing year. The ability to exceed the current USDA export projections in 2017–18 is a possibility, but it is heavily dependent on South American production and the continued growth in demand from importers.


November 18, 2017

Nitrogen Fertilizer Prices and Costs Lower for 2018

Nitrogen fertilizer prices are averaging lower now than in any time since September 2008. These lower prices could translate into roughly a $10 per acre saving in nitrogen fertilizer for the coming 2018 production year. Further savings may be possible for those farms who are applying above recommended nitrogen rates and are willing to cut fertilizer application rates. University recommendations suggest nitrogen application rates well below 200 pounds in northern and central Illinois.

Todd Gleason talked with University of Illinois agricultural economist Gary Schnitkey about his farmdocDaily article.

Average anhydrous ammonia prices in Illinois are reported approximately twice a month in the Illinois Production Cost Report, a publication of the Agricultural Marketing Service, an agency of the U.S. Department of Agriculture. In the November 10th report, the anhydrous ammonia price was reported at an average of $405 per ton, with an offer range from $343 per ton up to $440 per ton. Anhydrous ammonia prices have averaged $404 per ton during the months of September, October, and November of 2017.



The $404 per ton average in 2017 is considerably lower than fall prices in recent years. AMS has been reporting anhydrous ammonia prices since 2008 (see Figure 1). This year’s $404 per ton price is the lowest fall price since reporting began in 2008.



Farmers can leverage this lower price even more by using the MRTN to optimize yield. The online N-Rate Calculator is the work of seven corn state Land Grant universities. The calculator uses the prices of nitrogen and corn to optimize yield for the highest revenue. This is different than maximizing yield. It seeks to maximize dollars.

Through the lower cost of nitrogen and use of the N-Rate Calculator northern and central Illinois farmers may save approximately $10 per acre writes Gary Schnitkey on farmdocDaily.


November 18, 2017

EWG Claims Farmers Double Dipping

The Environmental Working Group is pushing Congress to eliminate the ARC-County farm program. Todd Gleason asks EWG's Anne Weir Schechinger why this is the case.



NOTE: EWG is the organization that publishes USDA's farm bill payments database online.


November 18, 2017

Using the Productivity Index to Figure Cash Rents

Right now farmers are in the middle of negotiating 2018 cash rents. This while their incomes have been depressed for four years. Agricultural economist Gary Schnitkey has been working up a way for landowners and their tenants to feel better about bringing cash rents down.



The University of Illinois number cruncher has developed a formula to derive cash rent from a fields P.I.. That's the Productivity Index. It is benchmarked, in a fashion, to USDA's Cash Rents Survey and uses a geographic adjustment tied to the CRD, that's USDA's Crop Reporting District. This allows for demand patterns in an area to show up in the formula. Schnitkey, in a farmdocDaily article says the P.I. and CRD adjustment explains 91% of the variability in the average cash rents as reported by USDA. Here's how the formula, he says, works in the state of Illinois, "Just to give you an example, if you are in east-central Illinois, in the eastern CRD, the CRD index is 26. This means you take your P.I. multiplied by 2.79, then subtract 147 and add 26 to it that will give you an average cash rent for that parcel.

Again, the formula is... Cash Rent = (2.79 x PI) - 147 + the CRD Adjustment... ...in this case 26.

If you fill all those numbers in for a farm in Champaign County with a P.I. of 134 the expected average cash rent for that farm with a 134 P.I. would be $253 per acre. This...benchmark...says Schnitkey provides a jumping off point from which farmers and landowners can discuss adjustments based on current economic conditions. By the way, the P.I. of farmland in Illinois, many farms around the nation, can be found in a free online tool called Acre Value. Look for it at www.acrevalue.com.


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