May 27, 2016
2015 Estimated ARC-CO Payments
Payments for the 2015 Agricultural Risk Coverage at the county level (ARC-CO) program will be made this fall, providing much-needed funds for many farms with short cash flows. At this point, not all data needed to calculate ARC-CO payments are known with certainty; however, reasonable estimates of payments can be made at this time. In this article, ARC-CO payments are shown for corn and soybeans in Illinois counties. Maps showing corn and soybean level of payments across the United States also are provided. As indicated in the final commentary section, farmers and land owners should not expect as large of ARC-CO payments for 2016, unless 2016 revenues are below 2015 revenues.
May 26, 2016
The EPA's Proposed 2017 RFS Standards: Is a Push Still a Push?
The EPA released the final rulemaking for 2014-2016 RFS standards on November 30, 2015. That final rule making reflected a change in EPA policy in that the implied mandate for conventional biofuel (ethanol) in 2016 was large enough to imply a measurable "push" beyond the E10 blend wall. The magnitude of the push was apparently not well understood as there was some confusion about the mechanism of enforcement of the mandate. Specifically, the mandate is not enforced as a strictly volumetric mandate, but instead is enforced as a fractional mandate. That is, the mandate is enforced as a blend rate rather than in volumetric terms. The likely magnitude of the push contained in that final rulemaking was examined in the farmdoc daily article of December 4, 2015, with the conclusion that the push likely approached one billion gallons for 2016.
May 25, 2016
New Corn and Soybean Pricing Models and World Stocks-to-Use Ratios
In a series of recent farmdoc daily articles we offered a new specification for the relationship between the marketing year ending stocks-to-use ratio and the marketing year average farm price for corn and soybeans. The new models were first presented in an April 6, 2016 article. We then used the models in an article of April 13, 2016 to make price forecasts for the 2016-17 marketing year based on alternative corn and soybean balance sheet projections. We next used the models in an April 22, 2016 article of to make projections of "new era" average prices and found that these were very consistent with earlier projections based on a simpler methodology. Finally, we explored the sensitivity of the new models to changing the functional form in an article of April 29, 2016. One issue we have not investigated to date is the use of world stocks instead of U.S. stocks in the pricing models. The logic for considering world stocks is straightforward. Since grain and oilseed markets are obviously global in nature, it follows that world stocks-to-use ratios may do a better job of predicting prices than only U.S. stocks-to-use ratios. In this article, we first review the new models introduced last month and then compare estimation results for models with U.S. stocks-to-use ratios versus models with world stocks-to-use ratios.
May 24, 2016
Late Planting Decisions in 2016
In most areas of the Midwest, planting is very near completion on corn and well along its way for soybeans; however, progress lags in some areas. Weekly progress reports suggest that southern Illinois, Indiana, and Ohio are behind on both corn and soybean plantings. In this article, economic considerations of late plantings are discussed. At this point, soybeans are projected to have higher returns than corn, suggesting that planting soybeans on remaining unplanted acres may be prudent from an economic standpoint. Prevented planting considerations related to crop insurance also are described.
May 23, 2016
Weekly Outlook: Will Summer Pricing Opportunities Materialize for Corn and Soybeans?
Following increases over the past two to three months, corn and soybean prices have traded in a choppy pattern over the past week. Prices have incorporated the information in the USDA's May 10 WASDE report that pointed to larger consumption and smaller stocks than expected for both the 2015-16 and 2016-17 marketing years. A number of factors, however, continue to percolate in these markets.