September 06, 2017

Storing Corn and Soybeans in 2017

The current price structure of corn and soybean futures markets indicate positive carry in both markets and raises the question of whether producers should make decisions about grain sales. The decision by producers to store corn or soybeans should be determined by the returns to storage.

There will be a lot of corn around this fall. USDA projects about sixteen-and-half billion bushels when you add what’s leftover from last year to this year’s harvest. It is projecting about four-point-eight billion bushels of soybeans. That’s a lot of both crops, but University of Illinois agricultural economist Todd Hubbs isn’t worried about running out of space to store it. In fact, the market is urging farmers to go ahead and store both crops at the moment by pricing futures contracts for later in the year a bit higher than the nearby months. The difference is called the carry says Hubbs. Having said that, he says the carry probably doesn’t pay out for commercial storage like you would see for on-farm storage, but there is a nice carry in the market for both crops.

The carry probably doesn’t pay out for commercial storage like you would see for on-farm storage, but there is a nice carry in the market for both crops. - Todd Hubbs, University of Illinois

Harvest bids says Hubbs for corn and soybeans possess a weak basis. This means the difference between the futures price in Chicago and the local cash prices across the nation are generally wider than normal. In central Illinois, for example, that bid is about 7 cents wider than usual. It seems there could be some room for improvement.

When we look at the fundamentals of the corn and soybean markets they’ve been poor says Hubbs, “We are looking at higher yields than expected and large crops in South America. Still, on the corn side, it looks like demand through the 2017/18 marketing year should be really good. Ethanol grind will be really strong, exports should be there especially at these price points, and I believe feed usage should be up across the board. I think there is some strength in corn demand.”

Demand for soybeans may be a slightly different story. However, the domestic crush has been strengthening and exports to China remain super strong. The ag economist explains, “when we think about storing into next year and hedging the storage, basis is a real issue. This is particularly true in Illinois. This year we should see a typical basis pattern for corn because of the supply and demand factors. There may be a lot of basis risk in soybeans. There is really no discernible pattern for spring basis in soybeans. Some years we have a positive basis. This year we had a really weak basis for soybeans. So, I think there is a lot of basis risk when you think about storing and hedging soybeans and you should take that into consideration.”

The uncertainty surrounding corn and soybean yield projections for 2017 says Todd Hubbs may encourage a patient approach to pricing crops. By storing corn and soybeans unpriced, one holds an expectation of prices increasing by more than the cost of owning and storing them. Over the short term, significantly higher prices require a large reduction in the production forecasts by the USDA on September 12 or October 12. Over a longer horizon, higher prices may occur if demand is stronger than currently forecast. Southern hemisphere crop problems could also materialize to provide a price increase.


September 03, 2017

Farm Progress Show Interviews

How Harvey Will Impact Fuel Supply Infrastructure

Monday Todd Gleason spoke with Dave Chatterton at the Powerline Group about how Hurricane Harvey is impacting the nation’s fuel supply infrastructure.

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Southern States Crop Tour Review

The corn crop in the south is good. Very good in fact. Todd Gleason talks with Jeremy Wilson from Crop IMS.



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Discussing Dicamba Damage with Robb Fraley

Monsanto’s Robb Fraley dropped by the University of Illinois tent at the Farm Progress Show to talk about dicamba and soybeans. Todd Gleason has more…

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Recruiting Higher Ed Ag Students to IL Universities

Recruiters from Illinois State, Southern Illinois, Western Illinois, and the University of Illinois are planning to work together to keep more agricultural students in state. Todd Gleason discussed the reasons why with them during this year’s Farm Progress Show.

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House Ag Committee Members on the Farm Bill

Members of the U.S. House of Representatives Committee on Agriculture held a farm bill listening session at the 2017 Farm Progress Show. Todd Gleason spoke with them afterwards and asked about the compromises which might need to be made to accommodate additional crops and the food & feeding programs.

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The New IBRL Building Good for Corn Growers

The University of Illinois has built a biofuels processing facility on campus to pilot test new energy concepts. Todd Gleason has more with the Director of the Integrated Bioprocessing Research Laboratory.

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Trump Admin USDA Nominee Ted McKinney

Todd Gleason has a conversation with Director Ted McKinney of the Indiana State Department of Agriculture. McKinney has been nominated by President Donald Trump to the post of Under Secretary for Trade and Foreign Agricultural Affairs.



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Trade & Farm Bill Issues with @ILCorn

Illinois corn growers Ken Hartman from Waterloo and Roger Cy from Newman talk with Todd Gleason at the 2017 Farm Progress show about the next farm bill and trade issues.


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What’s Next for @FieldView Software

Big data tools like Climate Corp’s Field View are harnessing crop development and agronomic information from farmers and their equipment. Todd Gleason has more with Rick Myrup.

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@NationalCorn Spurlock Discusses NAFA & Farm Bill

NAFTA and the Farm Bill are the hot topics for NCGA. Todd Gleason has more with the Wesley Spurlock from Texas. He is the president of the National Corn Grower’s Association.


August 22, 2017

Owned & Share Cropped Land Making up Cash Rent Losses

The high price of cash rent for corn ground in Illinois has been a loser over the last three seasons. It looks like that may continue for two more years. Todd Gleason has more on how owned ground, and share cropped acres have been making up the difference.




August 22, 2017

Assessing the Prospects for 2017 Corn Production

The August Crop Production report surprised many market observers by forecasting 2017 corn production at 14.153 billion bushels. In particular, the corn yield forecast of 169.5 bushels per acre came under scrutiny due to higher than expected yield forecasts in major producing states. The question is whether the corn production forecast will change enough to result in higher prices than those currently reflected the market.



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August 16, 2017

CME Group Provides Scholarships for Agriculture

Agricultural companies are always on the hunt for good employees, but those with college educations can be hard to find. Todd Gleason reports from the Illinois State Fair that the world’s largest options and futures exchange is hoping to inspire a few more kids to further their education.


August 14, 2017

NAFTA Negotiations Start Wednesday

Trade negotiators from Mexico and Canada will gather in Washington, D.C. this week to update NAFTA, the North American Free Trade Agreement. Todd Gleason has more…


August 12, 2017

Google Makes $1.5 Million Gift to 4-H

Google, through its philanthropic arm, has made a $1.5 million gift to 4-H across the nation. The company is providing both funding support and virtual reality equipment to 4-H youth computer science programs. It made the announcement at the Illinois State Fair Friday, August 11, 2017.


August 10, 2017

USDA August Reports

Excerpt from August USDA Crop Production report.

Corn production is forecast at 14.2 billion bushels, down 7 percent from last year. Based on conditions as of August 1, yields are expected to average 169.5 bushels per acre, down 5.1 bushels from 2016. If realized, this will be the third highest yield and production on record for the United States. Area harvested for grain is forecast at 83.5 million acres, unchanged from the June forecast but down 4 percent from 2016.

Soybean production is forecast at 4.38 billion bushels, up 2 percent from last year. Based on August 1 conditions, yields are expected to average 49.4 bushels per acre, down 2.7 bushels from last year. Area for harvest in the United States is forecast at a record high 88.7 million acres, unchanged from the June forecast but up 7 percent from 2016. Planted area for the Nation is estimated at a record high 89.5 million acres, also unchanged from June.

All wheat production, at 1.74 billion bushels, is down 1 percent from the July forecast and down 25 percent from 2016. Based on August 1 conditions, the United States yield is forecast at 45.6 bushels per acre, down 0.6 bushel from last month and down 7 bushels from last year.







...see USDA Reports page for more complete detail.


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