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Friday, August 19, 2016

2017 Looks to be Farm Losses Year 4

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2017 Looks to be Farm Losses Year 4
Gary Schnitkey, Agricultural Economist - University of Illinois Extension
Tom Tracy, CEO & President - Farm Credit Illinois

The big corn and soybean crops in the United States are putting pressure on prices for this year and next. The result, as Todd Gleason reports, could be the fourth year in a row of losses on grain farms in the Midwest.

The crop in the Midwest looks great…
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…tv to be released today

The crops in the Midwest look great! Phenomenal! Unbelievable in fact. However, with so much bounty in the field comes incredibly tight budgets on the farm. Grain farmers will lose money not only this year says University of Illinois Agricultural Economist Gary Schnitkey, but probably next year, too.

Schnitkey :25 …2017 if those in fact do turn out to be the prices.

Quote Summary - What we are looking at is 2017. The recent large crops have lowered our projected prices to $3.50 for corn and $9.00 for soybeans. If you use those in a budget you must continue to cut costs, even more-so than was done in the past because there will be very low revenues in 2017 if those in fact do turn out to be the prices.

The only option is to lower input costs - the prices paid for fertilizer, seed, and cash rent in particular.

Schnitkey :14 …a zero return to the farmer.

Quote Summary - We looked at a 200 bushel expected yield. And at that price cash rents would have to be about $220. This is a lot lower than most cash rents right now, and would still net a zero return to the farmer.

A zero return even after a significant cut in cash rent. Schnitkey says the other thing farmers should consider is planting soybeans rather than corn. , especially if corn prices stay below $4.00. On that note, taking advantage of the marketing opportunities afforded when using crop insurance is another option thinks Tom Tracy of Farm Credit Illinois.

Tracy :30 …come in there to make a significant sale.

Quote Summary - From a marketing stand point we see the ability of the farmer to take on risk earlier in the cycle when producing a crop. It is just more pronounced we people have deeper crop insurance coverage. When I was a young man you didn’t here of people making significant sales early in the crop season because you didn’t know what you were going to produce. Now, with crop insurance, you can guarantee a significant amount of that revenue and you can come in there to make a significant sale.

This year would be a case-and-point. Farmers, confident of their revenue streams because of crop insurance, could have sold corn for more than $4.00 a bushel just a month ago.

Wednesday, August 17, 2016

Illinois State Fair Sale of Champions

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Illinois State Fair Sale of Champions

Illinois Governor Bruce Rauner purchased the Grand Champion Steer at the Illinois State for a record setting $104,000.

Governor Rauner Announces Illinois State Fair Foundation

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Governor Rauner Announces Illinois State Fair Foundation
Governor Bruce Rauner, State of Illinois

The Illinois State Fair has a new funding source. Governor Bruce Rauner has announced the creation of the Illinois State Fair Foundation. He says it is a non-governmental, non-political, privately run 501c3 Not-for-Profit to be operated by farmers and community leaders.

Rauner :32 …run by the citizens of Illinois to raise money

Quote Summary - Under there proposal, which I strongly enthusiastically support, the Agricultural Director will have an honorary membership on the board, will not have any vote. And also the Director of the Illinois Historic Preservation Agency will have an honorary position. No vote. And there will be no government management or interference. This will be a strictly private, non-profit organization run by the citizens of Illinois to raise money

The private foundation was created after the Illinois State government failed to pass legislation last year to create a similar board. The private foundation will work to restore and maintain the Illinois State Fair in Springfield, and the DuQuoin State Fair in the southern part of the state.

Tuesday, August 16, 2016

Store a Big Corn Crop

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Store a Big Corn Crop
Darrel Good, Agricultural Economist - University of Illinois

Farmers are wondering when corn prices will bottom. Todd Gleason has some insight from the University of Illinois.

Last Friday the United States Department…
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Last Friday the United States Department of Agriculture released the first fall harvest Crop Production report. It showed a very big number for corn and for soybeans. It surprised the market a bit. However, Darrel Good says the market handled the 15 billion bushel plus corn crop very well.

Good :20 …that what is now being projected.

Quote Summary - They really did. We saw an initial drop in prices that was pretty sharp, but with some recovery as the day went on. I think the market is thinking that perhaps with the late season weather that the yield may actually fall just short of the USDA projection giving us a little tighter balance sheet that what is now being projected.

There is more yet to be discovered about the size of the corn crop in the United States as we move into harvest and USDA updates the Crop Production reports in the months of September and October. For now it appears the market may be headed for an early harvest season price low rather than a late one says the agricultural economist.

Good :14 …for putting a bottom in the cash market.

Quote Summary - I think an early low in the market, perhaps around the September Crop Production report to see if we verify this number or not, would probably be a prime time for putting a bottom in the cash market.

The question now on the minds of many farmers is just exactly what do they do with a big crop that is not worth a lot of money. The market, Darrel Good says, is telling them in a small way to go ahead and store.

Good :14 …I think storage is the way to go.

Quote Summary - Yeah, it is not a huge signal. The basis in Illinois is pretty strong, there is not a huge carry in the market, enough to pay on farm storage, and with prices at the level that they are I think storage is the way to go.

No doubt University of Illinois Agricultural Economist Darrel Good with flesh out that idea in one of the Weekly Outlooks he posts to the FarmDocDaily website. Those come up each and every Monday afternoon. You can find it at farmdocdaily.illinois.edu.

Sunday, August 7, 2016

2016 GDD & FROST | Emerson Nafziger, University of Illinois

Urbana - University of Illinois Extension Agronomist Emerson Nafziger discusses Growing Degree Days at mid-season, and how this relates to end of season maturity.

2016 CORN | Emerson Nafziger, University of Illinois

Urbana - University of Illinois Extension Agronomist Emerson Nafziger discusses the potential of the corn crop at mid-season.

2016 SOYBEAN | Emerson Nafziger, University of Illinois

Urbana - University of Illinois Extension Agronomist Emerson Nafziger discusses the potential of the soybean crop at mid-season.

Wednesday, August 3, 2016

New Site for August 18th U of I Agronomy Day

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New Site for August 18th U of I Agronomy Day
Aaron Hager, Extension Weed Scientist - University of Illinois
ILLINOIS Agronomy Day Website

Agronomy Day on the University of Illinois campus is Thursday August 18th. Todd Gleason has the details.

Agronomy Day at ILLINOIS has moved this year…
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Agronomy Day at ILLINOIS has moved this year. It’ll be a bit further south of campus at the new facilities on the First Street farm says University of Illinois Extension Weed Scientist Aaron Hager.

Hager :27 …biggest change is where you show up.

Quote Summary - Agronomy Day will be held at the new facilities on south First Street. So, it will be a change in venue from what most have become accustomed to through the years. It will be held August 18th with a virtually identical format with four tours, but the biggest change is where you show up.

The south First Street facility is about 3 miles or so from the usual place, however, it is in a different city on the map. The address is Savoy. Just go straight south from the U of I’s football and basketball arena’s on First Street and you’ll find the farm on the east side of the road. The doors open at 7am Thursday August 18th, with a meal at the noon hour.

Tuesday, August 2, 2016

Marketing a Low Priced High Volume Corn Crop

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Marketing a Low Priced High Volume Corn Crop
Darrel Good, Agricultural Economist - University of Illinois

The price of corn is predicted to stay low this coming year because the size of the crop should be really big. Todd Gleason has more on just how a farmer might go about marketing under such conditions.

The numbers aren’t pretty as it relates to this…
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The numbers aren’t pretty as it relates to this year’s corn crop, at least other than the number of bushels in the bin. It should be a great big one, something on the order of 15 billion bushels thinks Darrel Good. Each of those bushels will be worth a lot less than they would have been earlier in the year and now farmers must figure out how to make a lower price and a higher yield result in a sustainable income. The price is too low to call it anything more than sustainable and the crop is too big to put it all in storage says the University of Illinois agricultural economist.

Good :49 … long storage period to see a price recovery.

Quote Summary - So, some sales must be made between now and the end of the harvest period. Getting the extra bushels sold in the next few weeks is probably a good idea as pressure continue on futures and basis through harvest. So, if you are looking at an extra 20 to 30 bushels to the acre that you normally do not have, then you should get that priced and out of the way. However, storing the crop is the decision of choice, and the one I would choose at this point. The dilemma is that it may require a fairly long storage period to see a price recovery.

It won’t be quick or even large says Darrel Good, but a recovery should come as the days pass in 2017 and the trade looks forward to the next crop year. Storing corn on the farm and waiting for a higher price is a simple enough decision. Storing it at the grain elevator is a much tougher prospect.

Good :48 …storage costs than is the case for on-farm.

Quote Summary - You’ll spend about 30 cents a bushel to hold corn to next spring. Right now the carry in the market is about that. If you look at harvest time bids plus spring basis there is about a 30 cent carry in the market and this makes commercial storage a breakeven operation at this point other than just holding for higher futures prices. Still, there is likely to be an opportunity to payoff on that, but it will take a much higher price recovery to pay for off-farm storage costs than is the case for on-farm.

You may read more about marketing corn from Darrel Good on the Farm Doc Daily website. A new article on commodity marketing is posted each Monday afternoon.

Aug 1 | USDA Weekly Crop Progress Report