April 04, 2017

farmdocDaily Webinar | USDA March Grain Stocks & Acreage


Darrel Good, Todd Hubbs, Scott Irwin - University of Illinois ACES



by Todd Hubbs, Agricultural Economist - University of Illinois

The high March 1 stock numbers provide some bearish sentiment for old crop corn and soybean prices in 2017. The larger than expected soybean stock number may have some implications for the size of the 2016 soybean crop, but the final estimate will not be known until September. The large corn stocks number impact the consumption of corn in the feed and residual category directly during the current marketing year and an expectation of reduced feed and residual use is prudent moving forward. Planting intentions confirmed the belief that farmers would switch to soybean production in 2017.

The large Brazilian soybean crop this year combined with stable demand over the next marketing year gives an indication of lower prices for soybeans next marketing year. The lower corn planting intentions provide some support for corn prices despite the large March 1 stock estimate. If consumption maintains its current pace, the 2017–18 marketing year should see stable to higher corn prices.




April 01, 2017

Corn & Soybean Planting Date Recommendations

by Emerson Nafziger, University of Illinois
see The Bulletin article

Relatively dry weather in recent weeks throughout much of Illinois and an early start to fieldwork might provide the unusual opportunity this year of letting us choose corn and soybean planting dates instead of having to wait until it’s dry enough.

There are reports that some corn and possibly some soybeans were planted as early as February this year. The main motivation for such plantings is often the excitement that comes (or doesn’t) from having the crop survive “against all odds.” While that may be satisfying, it doesn’t offer much profit potential. If the crop survives it hardly ever produces yields as high as those from planting at the normal time, and planting very early affects insurability and can also increase the cost of replant seed.

In the warm, dry March of 2012, we planted one date of our planting date study at Urbana on March 16. The crop emerged uniformly and grew well until frost on April 11–12 killed the tops of the plants to the ground. About 75% of the plants survived and grew back, though, and to our surprise this planting also yielded about 75% as much as the April plantings. Most corn planted in mid-March in 2012 (about 5% of the state’s corn was planted by April 1 that year) had to be replanted.

Most people avoid taking insurance coverage risks by planting before earliest allowable planting dates under the federal crop insurance program. Those dates for corn are April 10, April 5, and April 1 for northern, central, and southern Illinois, and for soybean are April 24, April 20, and April 15 in northern, central, and southern Illinois.

Having the earliest insurable dates for soybean about two weeks later than for corn reflects what until recently we considered to be the greater danger from planting soybeans very early compared to planting corn very early. In fact, with better seed handling and treating today, soybean seed produces acceptable stands with mid-April planting about as often as corn does.

Contrary to what many believe, soybean is no more vulnerable to frost than corn after emergence. The only time we’ve seen soybean seedlings killed by frost is when it gets near freezing at the time the hypocotyl hook is exposed to the cold sky, before the cotyledons are pulled from the soil. This period of vulnerability typically lasts no more than a day or two; after the hypocotyl straightens and the cotyledons open, soybean plants are fairly cold-hardy. While corn plants have been considered safe from frost until the growing point is near the soil surface, we have seen corn plants killed by low temperatures (often below 30 degrees) even if they have only two or three leaves exposed.

The primary cause of stand loss in both crops is having heavy rainfall soon after planting. Stand loss from wet soils before or during germination is greater for corn when soil temperatures are low. For soybean, having warm soil under wet conditions speeds up the germination process and mean that seedlings run out of oxygen before emergence. But chances of having heavy rainfall soon after planting are not higher with early planting, and stand problems due to wet soils are as common with May planting as with April planting.

Between 2007 and 2016, we ran planting date studies for corn at a total of 22 Illinois site-years, and between 2010 and 2016, at a total of 26 site-years for soybean. There were four planting dates in each trial, ranging from early April through late May for corn and mid-April through early June for soybean. Data are expressed as percentage of the yield at the highest-yielding date within each site-year.

As shown in Figure 1, planting date responses expressed as percent of maximum yield within each site-year are surprisingly similar for corn and soybean across recent trials. Both crops showed near-maximum yields when planted in mid-April to early May, and yields dropped to 95, 91, and 86% as planting was delayed to May 10, May 20, and May 30, respectively.

Figure 1. Planting date responses over 22 corn and 26 soybean site-years in Illinois.

What should we take from the fact that yields of both crops declined at about the same percentage rates as planting was delayed through May? The main message is that we need to give similar priority both crops in terms of getting them planted on time. For those with more than one planter, that may mean planting both crops simultaneously, as fields get ready to plant. Our long-held idea of planting corn first them starting to plant soybean requires rethinking and possible adjustment. At the same time, the penalty for late planting of corn is a little lower once we get to late May and into June compared to that for soybean, so in fields that stay wet longer, soybeans may still be a slightly better choice.

We also see from the data in Figure 1 that neither crop is likely to yield more when planted in early April than when planted in mid- or late April. If fields for both crops are ready to plant in central Illinois on April 6, there are two reasons to plant corn first: 1) it’s insurable; and 2) corn seed is somewhat better able to emerge at high percentage when planted early than is soybean seed.

On the other hand, we generally expect about 85% of soybean seeds and 95% of corn seed to establish plants, so corn can be a little more vulnerable to less-than-desired stands if conditions turn bad after planting. In neither crop, however, would dropping desired stands by 5 percentage points cost much yield.

Finally, we should take care not to be overly influenced by what happened in 2016, a season when growers reported much higher yields from early- compared to late-planted soybeans. Statewide, over the past 20 years or so, the average date by which we get 50% of the crop planted is about May 1 for corn and May 22 for soybean. It would be good if we could move both of those dates up some, and even better if we could move the two dates closer together. Still, with years like 2012 when planting was very early but lack of rain lowered yields by a lot, there’s little relationship between average statewide planting date and average statewide yield.

Most planting delays are due to wet soils, and so are more or less beyond our control. Mudding in either crop, especially in April, is usually a mistake, given the slow rate at which yields for both crops fall as planting is delayed into May, and given the prevent-plant provisions of crop insurance in effect. We should be diligent at starting to plant when all (not just soil) conditions are right, but there’s little reason to panic when planting isn’t as early as we’d like


March 28, 2017

American Soybean Association Message for Congress

The president of the American Soybean Association was in Washington, D.C. Tuesday. Ron Moore, an Illinois farmer - along with his counterparts from many agricultural commodity organizations, testified at a House ag subcommittee hearing. Moore says there are a few items on the top of the farm bill agenda for the ASA.


March 27, 2017

Corn Prices Moving Forward | an interview with Todd Hubbs

May corn futures’ prices tumbled to the lowest price level since December during the week ending March 24. Large crop estimates from around the world placed downward pressure on the corn market despite some positive domestic consumption numbers in exports and corn used for ethanol. Still, Todd Hubbs from the University of Illinois is hopeful there could be some support left in the corn market over time.

read full article on farmdocDaily


March 26, 2017

Historical Planted Acre Changes for Corn and Soybeans | an interview with Gray Schnitkey

Friday, March 31, 2017, USDA will release the Prospective Plantings report. The survey of U.S. farmers will estimate how many acres of corn and soybeans will be sown this spring. University of Illinois Agricultural Economist Gary Schnitkey talks with Todd Gleason about the historical changes in planted acres.



by Gary Schnitkey
see farmdocDaily post

At its annual Agricultural Outlook Conference in February, USDA projected that planted acres of corn would decrease from 94.0 million acres in 2016 to 90.0 million in 2017, a decrease of 4 million planted acres. At the same time, soybean acres are projected to increase from 83.4 million acres in 2016 to 88.0 million in 2017, an increase of by 4.6 million acres. Herein, we evaluate historical changes in acres across counties, thereby providing perspective on where likely 2017 acreage changes may occur.

U.S. Planted Acres

In 2016, planted acres to corn in the United States was 94.0 million acres (see Figure 1). This acreage level was the third highest number of planted acres since 2000, only being exceeded by 2012 (97.3 million acres) and 2013 (95.4 million acres). The 2017 projection of 90 million acres would be a 4.0 million acre decrease from the 2016 level. Plantings of 90.0 million acres would be about the same level as occurred in 2014 (90.5 million acres) and would be below the average planting for the last ten years.



In 2016, planted acres to soybeans was 83.4 million acres, the highest amount ever planted in the United States. Before 2014, planted acres to soybeans never exceeded 80 million acres (see Figure 1). Planted acres exceeded 80 million acres in each year since 2014: 83.2 million acres in 2014, 82.6 million in 2015, and 83.4 million in 2016.

In the following maps, acreage changes from 2011 to 2016 will be shown. In 2011, U.S. corn acres were 91.9 million, 1.9 million acres higher than in 2016. Reversing the corn acre increases during this five year period would go part way to reaching the decreases projected for 2017. The soybean acreage increase from 2011 to 2016 of 8.4 million represents twice the change projected from 2016 to 2017.
Corn Acre Changes

Figure 2 shows a map color coded to give changes in acres from 2011 to 2016. Counties colored blue had increases in acres, counties coded in orange had decreases in acres. Those counties that are yellow had essentially the same acres in 2016 as they did in 2011.



Several areas had pronounced increases. In particular, the northern Great Plains had sizeable increases. Between 2011 and 2016, North Dakota increased acres by 1.2 million, South Dakota by .4 million, and Minnesota by .4 million. Another area of sizable increase was Texas, with the planting .9 million more acres in 2016 than in 2011. Counties along the Mississippi River, especially in Arkansas, increased acres as well.

There were areas of notable decreases as well. Sizable decreases in corn acres occurred in Illinois. Between 2011 and 2016, planted acres in decreased by 1.0 million in Illinois. Indiana and Iowa had modest decreases as well.

Soybean Acre Changes

Figure 3 shows a map with planted acre changes for soybeans. Similar to corn, soybean acres increased in the upper Great Plans. Planted acres increased by 2.0 million acres in North Dakota, 1.1 million acres in South Dakota, and .5 million acres in Minnesota.



Other areas of significant increase were Illinois with a 1.1 million acres increase in planted soybeans. Planted acres also increased along the Mississippi River, parts of Kentucky and Tennessee, as well as areas in North and South Carolina.

Perspective on Changes for 2017

Areas with large acreage changes in the past likely will contribute in a significant way to acre changes from 2016 to 2017. These areas include the upper Great Plans, Texas, and the corn belt.

It seems conceivable that total corn and soybean acres could continue to increase in the upper Great Plains in 2017. Much of the acreage increases of corn and soybeans between 2011 and 2016 came from acres previously planted to wheat. In 2017, wheat acres could continue to decrease, leading to increases in corn and soybean acres. Whether corn acres will decrease while soybean acres increase in this region is an open question. One event that could lead to acre decreases is higher incidence of prevented planting. Prevented plantings were low in 2016, leaving open the possibility of increases in prevented planting acres in 2017.

Texas could see acreage shifts away from corn. Cotton prices look favorable, and an increase in cotton acres could contribute to fewer acres in corn.

Illinois and the corn belt in general could see shifts from corn to soybeans. Returns from crop budget suggest soybeans will be more profitable than corn (farmdoc daily, December 6, 2016), suggesting a shift is possible.

While budgets suggest the possibility, acre shifts have been slow in coming. Perhaps the most likely area where a shift will occur is where corn acres exceed soybean acres by a considerable margin. Corn acres divided by soybean acres exceed 1.0 in many counties in southern Minnesota, Iowa, northern and central Illinois, and western Indiana (see Figure 4). Bringing these areas back closer to a 50% corn - 5% soybean rotation, indicated by 1.0 corn divided soybean value, could increase profits suggesting that switches are possible.



Summary

Areas that experienced large acre changes in the past likely will be the ones where acres changes occur in 2017. This suggests focus on the upper Great Plains, Texas, and Illinois and the corn belt more generally. Continued corn and soybean acreage increases in the upper Great Plains seem reasonable to expect, except if prevented planting acres increase significantly. Texas could experience reduced corn acres. Budgets suggest switches to more soybeans from corn in the Midwest, although this is the case in previous years. Further indications of planting attentions will be received with the release of NASS’s Prospective Plantings report on March 31.


March 20, 2017

Anticipating the March 1 Soybean Stocks Estimate

USDA, at the end of this month, will let us know how much of the nation’s soybean crop there is left in the bin. It “should” be a fairly uneventful number.

by Todd Hubbs
read full farmdocDaily article

On March 31, the USDA will release the quarterly Grain Stocks report, with estimates of crop inventories as of March 1, and the annual Prospective Plantings report. For soybeans, the stocks estimate is typically overshadowed by the estimate of planting intentions. Usually, the quarterly stocks estimates for corn garners more interest because these reports reveal the pace of feed and residual use which is a large component of total corn consumption. The March 1 soybean stocks estimate this year may not provide much new information despite recent growth in marketing year ending stocks and concerns about the size of the South American crop… continue reading the full article by clicking here.

Generally, Todd Hubbs says it is pretty easy to figure out how many soybeans have been consumed. There is a regular reporting system for how many bushels are exported and one for how many are crushed. That second report, the crush, calculates how many soybeans are crushed in the United States into its two components. These are soybean meal and soybean oil. Hubbs, an agricultural economist at the University of Illinois, says the reports make it easy enough to calculate disappearance, consumption, usage, whatever you want to call, and consequently come up with a number that approximates how many bushels are left to use. Hubbs’ March 1 grain stocks figure for soybeans is 1.68 billion bushels. Here’s the math he used to get there.

Quote Summary - Exports for the first quarter were 932 million bushels. For the second quarter, I have them pegged at about 721 million bushels. I have the second quarter crush at 491 million bushels. This brings the total crush for the first half of the marketing year to 976 million bushels. We’ve been crushing a really good rate, but we have a lot of soybeans. So, with USDA raising ending stocks to 435 million, if that number holds and we don’t drive those numbers down, and if the March 1 stocks number is 1.68 billion, it means the last half of the marketing year we are going to have to consume about 1.23 billion bushels.

Hubbs thinks that is a reasonable number. It depends, though, he says mostly on what happens in the export market through August.



March 17, 2017

On the Value of Ethanol in the Gasoline Blend

Read farmdocDaily Article

There has been much debate and much written about the likely costs and benefits of including ethanol in the domestic gasoline supply. Costs and benefits fall into two major categories–environmental and economic (e.g., Stock, 2015). One economic consideration is the potential impact on domestic gasoline prices from augmenting the gasoline supply with biofuels. A second economic consideration, and one that has received the most attention, is the cost of ethanol relative to petroleum-based fuel. What has been missing from the analysis of the value of ethanol in the gasoline blend is an estimate of the net value of ethanol based on: i) an energy penalty relative to gasoline; and ii) an octane premium based on the lower price of ethanol relative to petroleum sources of octane.

This farmdocDaily article provides an analysis of that net value since January 2007.


March 16, 2017

Building Extension 3.0


Kim Kidwell, Dean of the College of ACES - University of Illinois

Extension personnel facilitate the translation of many of the fantastic discoveries made at land-grant universities to people around the world. Oftentimes, this is the only way that this valuable information reaches people so they can make good decisions that improve the qualities of their lives. Kim Kidwell, Dean of the University of Illinois College of ACES, believes Extension embodies the essence of the land-grant mission because this is where transformation happens. She discusses, with Todd Gleason, how the future of Extension in the state of Illinois can provide the basis through which the discovery process can continue to help change people’s lives.

Read more from College of ACES Dean Kim Kidwell’s blog post here.


March 15, 2017

2016 Corn and Soybean Yields in Perspective


read the full article

The National Agricultural Statistical Service (NASS) recently released 2016 county yields for both corn and soybeans. In this article, maps are produced showing actual 2016 yields minus 2016 trend yields. Examination of these maps shows areas of above trend and below trend yields for 2016. Areas of above trend yields will have higher 2016 incomes relative to those areas with below trend yields.


Individual county trend yields are calculated using data from 1972 through 2016. A linear line is fit through these yields using ordinary least squares. The 2016 trend yields were based on these linearly fit relationships.

The following maps report actual minus trend yields. By calculating trend yields, the inherent productivity of the farmland is taken into consideration, and actual yields are stated relative to that productivity.






Schnitkey reports those areas with above trend yields will have relatively higher incomes than those areas with below trend yields. In 2016, lower grain farm incomes will be more pronounced in the eastern corn belt and particularly in Indiana and Ohio.


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