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Friday, April 29, 2016

Farm Economy Beginning to Show Signs of Stress

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Farm Economy Beginning to Show Signs of Stress
Bruce Sherrick, Director Center for Farmland Research - University of Illinois

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. Todd Gleason reports the extra money, from then, is now starting to run out.

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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 (share-ick).

Sherrick :14 …for delivery within this year at least.

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.

Sherrick :29 …manage cash rents, or inputs, or financial structures.

Quote Summary - 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.

Sherrick :53 …perhaps 3% of its value on a cash basis.

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.

Thursday, April 28, 2016

National New Era Cash Price Midpoints for Corn & Soybeans

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National New Era Cash Price Midpoints for Corn & Soybeans
Scott Irwin, Agricultural Economist - University of Illinois

The ag economists at the University of Illinois have updated their work predicting the “New Era” long range cash prices for corn and soybeans. Todd Gleason has more from the Urbana Champaign campus.

Seven years ago Darrel Good and University of…
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Seven years ago Darrel Good and University of Illinois colleague Scott Irwin predicted the average cash price for central Illinois corn and soybeans would be $4.60 and $11.20. It started with a simple idea. The last time the price of corn and soybeans had really changed was during the 1972/73 crop marketing year says Scott Irwin.

Irwin :49 …are $4.35 on corn and $10.44 on soybeans.

Quote Summary - Right. The first era was a $1.28, the second era was $2.36. The price jumped about 90%. We took that as our starting point and then realized this magnitude of jump made some sense given the market and other modeling exercises. We decided it seemed a reasonable estimate and to go with them. The equivalent numbers now are $4.35 on corn and $10.44 on soybeans.

As it turns out, those are pretty close to the actual national average monthly cash price over the first eight years of the new era. Corn has averaged $4.39 and soybeans $10.61. The fundamental question today, says Irwin, is “are these numbers still good or was the ”new era“ a temporary uptick in the market”. He is confident the numbers are solid, but cautions it was a one time move up from the old era. Pragmatically he means farmers cannot market their crop today the way they did as the move was happening.

Irwin :49 …wouldn’t expect that to last a long time.

Quote Summary - And you were rewarded for waiting, almost all the time, to do your marketing as that curve shifting occurred. I think we see the kind of opportunities in the grain markets that might be presented as the more traditional short-crop long-market-tail. If you do get that situation emerging… say corn prices, and I am not forecasting this… but let’s say there is a substantial production problem in the U.S. and corn rallied to $5.00. We wouldn’t expect that to last a long time.

There would be a quick and decisive production response in reaction to such a move in the market. The higher price then, would need to be rewarded sooner rather than later. The current rally in soybeans could be indicating just such a move, however, it would be based on poor weather conditions in South America rather than in the United States.

Irwin :23 …execute when those opportunities arise.

Quote Summary - Warning lights are flashing, that there may be opportunity ahead. Be prepared with a marketing plan, where you have some really well thought through pricing targets for your operation and be ready to execute when those opportunities arise.

You may read about the new era cash prices Scott Irwin and Darrel Good are projecting on the Farm Doc Daily website. The address is www.farmdocdaily.illinois.edu.

Wednesday, April 27, 2016

4-H Robotics Competition @ ILLINOIS

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4-H Robotics Competition @ ILLINOIS
Jessica Zarate (age 14), - Tigers Robotics 4-H Club - Aurora, Illinois
Caleb Widner (age 12), Power Surge Robotics 4-H Club - Normal, Illinois
Ross Schmidgall (age 15), - Power Surge Robotics 4-Club - Normal, Illinois

TV Downloads

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.

How many kids do you think might show up…
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Tuesday, April 26, 2016

Wet Weather Ends in Argentina, Harvest Set to Continue

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Wet Weather Ends in Argentina, Harvest Set to Continue
Mark Russo, Riskpulse - Chicago, Illinois

I’m Univeristy of Illinois Extension’s Todd Gleason. The price of soybeans have jumped in Chicago in part because of really wet weather in Argentina. That’s a done deal now says meteorologist Mark Russo of Riskpulse out of Chicago, Illinois.

Russo :61 …nine days of dry weather in Argentina.

Mark Russo follows agricultural growing conditions around the planet for Riskpulse. He made his comments during the Monday edition of the Closing Market Report from the University of Illinois, online at WILLAg.org. I’m Todd Gleason.

Monday, April 25, 2016

Are Large Corn and Soybean Price Swings Finished or Just Started

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Are Large Corn and Soybean Price Swings Finished or Just Started
Darrel Good, Agricultural Economist - University of Illinois

The recent, and dramatic swing upwards in the price of corn and soybeans has many caught off guard. Most had felt self-assured the looming prospects of another year of record crops would keep prices under pressure. Now those same folks are wondering if this move is the big one for the year. Todd Gleason has more from the University of Illinois on how one agricultural economist sees the marketplace for corn and soybeans.

There is a simple rule of thumb Darrel Good…
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There is a simple rule of thumb Darrel Good from the University of Illinois uses when thinking about each and every crop year. Start the marketing plan by plugging in a normal crop, then adjust as facts about the summer weather pattern become available.

Factually most weather forecasters have come a long way as it pertains to one long range item. There is a much agreement that a strong El Niño, which begins to fade in November or December, is a precursor to a warmer summer in the Midwest, and very dry conditions at some point in June, July or August. Although, that part isn’t abundantly clear. This is followed by a drought in South America. It’s just a forecast, but pretty solidly based on actuals. Solid enough that Darrel Good is willing to take a marketing stance not only for this year, but next.

Good :31 …to establish targets for pricing a portion of the 2016 and 2017 crops.

Quote Summary - We have previously made the case for an elevated risk of yields falling below trend value this year as summer weather is influenced by the fading El Niño episode. Even after the recent rally, new crop prices may still understate that risk. It will not be surprising to see periods of volatile prices, similar to that just experienced, continue through the summer. Now is the time for producers to establish targets for pricing a portion of the 2016 and 2017 crops.

Good means corn and soybeans. The price of both crops are experiencing a sharp rally this month. There are a number of contributing factors; excessive rainfall in parts of Argentina has likely resulted in a measurable, but unknown, reduction in the size of the soybean crop due to flooding; heat and dryness in Brazil has threatened the size of the corn crop in those areas that produced bumper crops the past two years; and a weaker U.S. dollar has raised expectations for increased export demand for U.S. corn and soybeans.

So where do prices go from here? In the short term, much will depend on how much corn and soybean production potential has been reduced in Brazil and Argentina says Good.

Good :12 …of U.S. export sales.

Quote Summary - The magnitude of the reduction will not be known for a while, but some evidence of the market’s expectation about South American crop size will likely be revealed in the pace of U.S. export sales.

Demand then, for the big crop from last year seems really strong, and when you couple this with production problems in South America, and the better than average chance of a production problem in the Corn Belt this summer, it points towards marketing opportunities. Meaning, Darrel Good is of a mind farmers should have price targets in place not only for this year’s corn and soybean crops, but also for next year’s crops. If those are reached, he thinks sales would be appropriate.

Friday, April 22, 2016

April Planting Dates Work for Soybeans in Illinois

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April Planting Dates Work for Soybeans in Illinois
Emerson Nafziger, Extension Agronomist - University of Illinois

Farmers are pretty used to not thinking about planting soybeans anywhere in the state of Illinois until May. Todd Gleason reports University of Illinois studies beg to differ.

First things first, the south third of Illinois is…
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First things first, the south third of Illinois is just different than the rest of the state. It’s clear, by the University of Illinois planting date studies, that soybeans sown in April can do well there, it’s just really hard to get a good stand. Yields in the top two-thirds of the state respond the same way to earlier planting dates. The earliest dates, starting around the 10th of April, have the highest yields and things fall off as time paces. University of Illinois Extension Agronomist Emerson Nafziger is a bit cautious about this so, he simply states he’d start when field conditions are good to go.

Nafziger :10 …to the first two weeks of May.

Quote Summary - Our work is showing the best time to plant soybeans is the last week of April to the first two weeks of May.

The average maximum yield for soybeans over the 23 site years of the study, gathered from 2010–2015, is 67 bushels to the acre. There is a two-and-a-half bushel decline from April 10 to April 30th, four bushels by May 10th, seven bushels for a delay to May 20th, 11 bushels to the end of the month, 14 by the 10th of June and 19 by the 20th.

Interestingly, comments Nafziger, the usual halfway point for soybean planting in Illinois is about May 20th. That is, he says, only because of the wet conditions that keep farmers out of the field. Given all of this the U of I agronomist says he wouldn’t wait after planting corn to start planting soybeans.

Nafziger :50 …keep them physiologically below there maximum yield.

Quote Summary - Sure, no problem with that at all. We’ve seen some sizable yield losses with soybeans by planting too early, but by too early I mean the first half of April. The two ways you can get lower yields from planting too early in soybeans are years like 2012, when planting late you picked up moisture later in the season to get better yields. In-other-words, too much dry weather during flowering can really do a number of the crop. The other is if it gets really cool early after soybeans have emerged. It can actually keep them physiologically below their maximum yield.

Pragmatically speaking Emerson Nafziger says, as long as soil conditions are good, he’d begin planting soybeans as soon as corn planting is completed and, after some momentary consideration, says he’d move to a soybean field if soil conditions in the next corn field weren’t up to par.

Thursday, April 21, 2016

Is Fall-Applied Nitrogen Still Present

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Is Fall-Applied Nitrogen Still Present
Emerson Nafziger, Extension Agronomist - University of Illinois
The Bulletin Source Arctle

Corn growers are concerned about the amount of fall-applied nitrogen that might have been lost through the winter and how this might change nitrogen management this spring. Todd Gleason has more on how the warm, wet winter may or may not have moved the nitrogen.

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The first question that needs to be asked on nitrogen management is simple says University of Illinois Extension Agronomist Emerson Nafziger. You need to know how much nitrogen the crop will need, then how much is naturally available, and finally, how much should be applied.

Nafziger :34 …this will get back into the soil, some won’t.

Quote Summary - Our best estimate, and this is a bit of a floppy number, is the crop will take up about a pound of nitrogen for each bushel it produces. About two-thirds of that is going to be in the grain and removed by harvest of the crop. The other third will be in the residue. Some of this will get back into the soil, some won’t.

The amount of nitrogen needed then is about 1 pound for every bushel expected. If the expected yield is 200 bushels to the acre, then it will need 200 pounds of nitrogen.

Pay attention to this part.

Nafziger wrote in an article for the U of I’s pest management bulletin on April 18th that the more productive soils in Illinois contain about 3.5% organic matter. A rule of thumb calculation, read it online in The Bulletin, puts the N from this organic matter at 140 pounds. In some years this is apparently all available to the crop, and in others it isn’t.

The N Rate Calculator, which you may find online, tries to average out the low and high organic N years. N added as fertilizer for corn following soybeans in southern and central Illinois should be about 170 pounds, 20 pounds less in northern Illinois.

As for nitrogen loss, Nafziger has this to say in The Bulletin as it relates to his recent nitrogen treatment studies, “ these results show both the risk of N loss and the benefit from delaying some of the N or using inhibitors may be a little less than we’ve thought. Getting data from another year or two will help paint the picture more fully, but these results give some reason to be confident that the N management systems in common use all have good potential to provide the crop with N. Adding costs by changing N management, for example by making another trip over the field to apply late N, may not provide a positive return compared to applying all of the N in one or two earlier trips.”

One other note, Nafziger says the corn crop takes up most of its nitrogen in June.

Wednesday, April 20, 2016

Soybeans, the Switch is On - TV

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Soybeans, the Switch is On - TV
Darrel Good, Agricultural Economist - University of Illinois

Ever since USDA released the Prospective Plantings report March 31st, many have been wondering if farmers will decide to switch a few corn acres to soybeans. The higher price of that crop, as Todd Gleason reports, seems to make this more likely.

Farmers told USDA in March they would plant about 82.2…
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Farmers told USDA in March they would plant about 82.2 million acres of soybeans this season. This is one percent less than last year, and a million acres or so less than the trade had really expected. Prices have rallied since then and University of Illinois Agricultural Economist Darrel Good thinks that million acres could be back in play, but that it won’t really change much.

Good :33 …alter the supply expectation very much.

Quote Summary - I tend to think there will be some modest switching given the price reaction we’ve had since that report was released. Soybeans are considerably stronger than when the survey was done and corn prices are steady to weaker than when farmers were surveyed. I wouldn’t be surprised to see up to a million acres, perhaps, move away from corn to soybeans or perhaps some other crops.

Darrel Good and colleague Scott Irwin at ILLINOIS put together a supply and demand table for this year. They added 800,000 planted acres to soybeans, putting the figure at 83 million even.

It’s important to note that while the ILLINOIS projection uses a larger planted acreage figure, it also includes a much lower average yield. Good says there are two reasons for this.

Good :43 …fade that bushel or so based on the El Niño.

Quote Summary - Our calculated trend yields for both corn and soybeans would be a little less the USDA. So, we start a little lower than they start. And then we monitor the El Niño episode that tends to be fading pretty quickly right now. This suggests to us an elevated risk of below trend yields this year. We start with a lower trend yield on corn, 166.2, and I would want to fade that three or four bushels in my expectations right now. We’d start at 45.2 bushels on soybeans and fade that bushel or so based on the El Niño.

USDA will release its first projection of the current growing season supply and demand tables May 10th. Those numbers most assuredly will not yet update acreage, nor are they likely to include a deviation from trend line based on summer weather predictions.

4-H Honey Bee Challenge Kicks Off this Weekend

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4-H Honey Bee Challenge Kicks Off this Weekend
Judy Mae Bingman, Illinois State 4-H Office

4-H in Illinois is working to make people aware of the importance of the honey bee to our food production system. There is a Honey Bee Challenge kickoff event this weekend.

4-H State Robotics Competition on Campus

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4-H State Robotics Competition on Campus
Judy Mae Bingman, Illinois State 4-H Office
4-H Robotics Competition Web Page

The statewide 4-H Robotics Competition is this weekend, Saturday April 23 2016, at the ARC on the University of Illinois Urbana Champaign campus.

Tuesday, April 19, 2016

Soybeans, the Switch is On

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Soybeans, the Switch is On
Darrel Good, Agricultural Economist - University of Illinois

Ever since USDA released the Prospective Plantings report March 31st, many have been wondering if farmers will decide to switch a few corn acres to soybeans. The higher price of that crop, as Todd Gleason reports, seems to make this more likely.

Farmers told USDA in March they would plant about 82.2…
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Farmers told USDA in March they would plant about 82.2 million acres of soybeans this season. This is one percent less than last year, and a million acres or so less than the trade had really expected. Prices have rallied since then and University of Illinois Agricultural Economist Darrel Good thinks that million acres could be back in play, but that it won’t really change much.

Good :33 …alter the supply expectation very much.
Quote Summary - I tend to think there will be some modest switching given the price reaction we’ve had since that report was released. Soybeans are considerably stronger than when the survey was done and corn prices are steady to weaker than when farmers were surveyed. I wouldn’t be surprised to see up to a million acres, perhaps, move away from corn to soybeans or perhaps some other crops. Again, a million acres doesn’t alter the supply expectation very much.
However, very much, can result in a pretty good rally. Darrel Good and colleague Scott Irwin at ILLINOIS put together a supply and demand table for this year. They added 800,000 planted acres to soybeans, putting the figure at 83 million even. The two project this could result in a 267 million bushel ending stocks number with an average cash price of $9.45 a bushel for the year. USDA season’s average cash price for soybeans for the 2015 crop is $8.75. It’s important to note that while the ILLINOIS projection uses a larger planted acreage figure, it also includes a much lower average yield. Good says there are two reasons for this.

Good :43 …fade that bushel or so based on the El Niño.
Quote Summary - Our calculated trend yields for both corn and soybeans would be a little less the USDA. So, we start a little lower than they start. And then we monitor the El Niño episode that tends to be fading pretty quickly right now. This suggests to us an elevated risk of below trend yields this year. We start with a lower trend yield on corn, 166.2, and I would want to fade that three or four bushels in my expectations right now. We’d start at 45.2 bushels on soybeans and fade that bushel or so based on the El Niño.
Actually, the projection is down 1.2 bushels to the acre for a projected nationwide average yield of 44.

University of Illinois 16/17 Soybean Balance Sheet Projection - April 13, 2016
USDA will release its first projection of the current growing season supply and demand tables May 10th. Those numbers most assuredly will not yet update acreage, nor are they likely to include a deviation from trend line based on summer weather predictions.

Monday, April 18, 2016

Implications of Corn and Soybean Planting Progress

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Implications of Corn and Soybean Planting Progress
Darrel Good, Agricultural Economist - University of Illinois

Each Monday afternoon during the growing season USDA releases the Planting Progress report. Todd Gleason files this report on how it is assessed by the trade; and how really it is summer weather that make the difference, not the pace of planting.

Each spring the corn and soybean markets react…
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Each spring the corn and soybean markets react to the pace of planting, reflecting expectations that an unusually fast or slow pace of planting may impact acreage decisions and/or yields. The rains this spring, first in the Delta, now in the Plains, and forecasts for a stormier pattern in the Midwest have triggered the annual discussion of the production implications for corn and soybean planting progress.

The definition of what constitutes early or late planting varies by geographic region and has likely changed over time writes University of Illinois Agricultural Economist Darrel Good on the FarmDocDaily website. It makes it hard to characterize planting progress on a national basis.

Still, the economist at ILLINOIS have done some work in this area arguing that for the period from 1986 forward, planting in the major producing states that occurs after May 20 for corn and after May 30 for soybeans should be considered late in terms of the potential impact on national average yields. Here’s what Darrel Good says that shows.

Good :39 …difficult to form expectations for this year.

Quote Summary - It is not yet known whether a relatively large or small percentage of the 2016 corn and soybean crops will be planted late. Producers still have more than a month to plant corn and six weeks to plant soybeans before planting would be considered late by our definition. Observations since 1986 suggest that there is a tendency for corn acreage to exceed intentions in years when a small percentage of the crop is planted late and for acreage to fall short of intentions when a large percentage of the crop is planted late. However, the large variation in the direction and magnitude of acreage deviations from intentions makes it difficult to form expectations for 2016.

Deviations in planted acreage of soybeans from intentions have shown no clear pattern based on the lateness of planting writes Good in the FarmDocDaily article. He says there has also been a tendency for the national average corn and soybean yields to fall below trend value in years when a large percentage of the crop was planted late.

Good :11 …the yield impact of summer weather.

Quote Summary - The variation in the direction and magnitude of deviation, however, is an indication that the effect of planting date on yield is dominated by the yield impact of summer weather.

Darrel Good thinks commodity market traders, then, should be more focused on growing season weather prospects rather than on planting progress. Still the reports, released each Monday afternoon at 4pm eastern time by USDA NASS, provide a guide post by which the trade makes decisions.

Thursday, April 14, 2016

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Darrel Good on Marketing 2016 Crops
Darrel Good, Agricultural Economist - University of Illinois

University of Illinois Agricultural Economist Darrel Good discusses the 2016 growing season, including crop size and price expectations.

Irwin & Good Explore El Niño Year USA Yields

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Irwin & Good Explore El Niño Year USA Yields
Scott Irwin, Agricultural Economist - University of Illinois

El Niño can have an impact on summer weather in the United States. Work at the University of Illinois points to poorer crop yields the summer following a strong El Niño that begins to fade late in the previous calendar year.

Irwin & Good Develop New Price Forecasting Mode

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Irwin & Good Develop New Price Forecasting Model
Scott Irwin, Agricultural Economist - University of Illinois

University of Illinois agricultural economists have developed a new price forecasting model for corn and soybeans. Todd Gleason talks with Scott Irwin about the model and how it reflects the “new era” of commodity prices.

Tuesday, April 12, 2016

Nafziger on 2016 Growing Season

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Nafziger on 2016 Growing Season
Emerson Nafziger, Extension Agronomist - University of Illinois

Up next Univeristy of Illinois Extension Agronomist talks with Todd Gleason about the amount of nitrogen available to the corn plant during the growing season, how that fertilizer faired over the warm wet winter months, when to plant corn, and if it is ok to plant soybeans earlier than normal.