University of Illinois: Department of Agricultural and Consumer Economics, University of Illinois Urbana-Champaign
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September 19, 2014

Watching Your Instrument Panel

Harvest is on us and it's time to give serious thought to how this year will end financially if you haven't done so already. Coming off of a period of years of sustained profitability, the prudent manager will consider the past (without dwelling on it - you can't change it) while thinking about the future...it's hard to move forward in the manner you want if you only have a rear view mirror to guide you.

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Posted by Dwight D. Raab   Permalink  

September 18, 2014

ARC-CO and PLC Payment Indicator for 2014 Crop Year: September 2014 WASDE U.S. Yield and Price

This article updates our August 12, 2014 farmdoc daily article, "ARC-CO and PLC Payment Indicator Using August WASDE U.S. Price and Yield." The update reflects U.S. yield and U.S. price estimates in the September 11, 2014 World Agricultural Supply and Demand Estimates (WASDE) for barley, corn, oats, long grain rice, medium (and short) grain rice, sorghum, soybeans, and wheat. The estimated payments for ARC-CO and PLC are indicator estimates because they use U.S. yield not the county yield used by ARC-CO or farm payment yield used by PLC. The estimates are not payments an individual FSA farm owner will receive. Nevertheless, the indicator estimates using U.S. yields should help frame perspectives and questions for FSA farm owners regarding program choices.

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Posted by Carl Zulauf and Gary Schnitkey   Permalink  

September 17, 2014

Owning Corn and Soybeans beyond Harvest in 2014/15

Corn and soybean prices have declined sharply in recent months based on prospects of very large U.S. crops and increasing year-ending stocks. Prices have declined faster and to lower levels than generally expected and are now near the lows experienced since the recent price boom started in 2007. As a result, many producers have judged current prices to be "too low" and will choose to own some of their production beyond harvest. The purpose of this article is not to determine if ownership should be retained, but to explore the expected cost of retaining ownership in various forms. The goal of producers will be to select the lowest cost form of ownership that is available. The magnitude of those costs, however, does provide some guidance on the magnitude of price increases needed to make ownership profitable.

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Posted by Darrel Good and Scott Irwin   Permalink  

September 16, 2014

Will Non-Land Costs Decrease in 2015?

Corn and soybean revenues in 2013 and 2014 will be much lower than revenues from 2009 to 2012, leading to hopes that non-land costs also may decrease. After a decrease in revenue during the early 1980s, non-land costs did decrease by 18% from 1982 through 1986. Modest decreases in costs are projected for 2014. It is, however, difficult to identify where further large decreases in costs will occur in 2015. Fertilizer and seed costs need to decrease if non-land costs are to continue to lower levels.

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Posted by Gary Schnitkey   Permalink  

September 15, 2014

Update on Corn and Soybean Acreage

The USDA's Crop Production report to be released by the National Agricultural Statistics Service (NASS) on October 10 may contain revised estimates of planted and harvested acreage of corn and soybeans. Revisions would be based on information revealed in the October Agricultural and Objective Yield surveys as well as other administrative data. Other administrative data consist primarily of certified acreage estimates received by the Farm Service Agency (FSA). The Farm Service Agency requires that producers participating in several federal commodity programs submit an annual report regarding all cropland use on their farms. Acreage is reported in three categories: planted, prevented planted, and failed.

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Posted by Darrel Good   Permalink  

September 12, 2014

Small Farms and the ACA

Under the rules of the Affordable Care Act (ACA), farm employers are generally subject to the employer mandate if, under special rules for counting employees, there are 50 or more full time employees. Briefly, the employer mandate requires these larger farm employers to offer coverage to full time employees or pay a penalty. A small farm employer with under 50 full time employees is not subject to the employer mandate.

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Posted by Marc Lovell   Permalink  

Cattle at the Crossroads

The year-long across-the-board rally in cattle prices has been driven by a combination of favorable supply and demand factors which have aligned to push prices to record levels. On the supply side, the starting point is cattle numbers. Beef cow numbers are the lowest since 1962, and last year's calf crop was the smallest since 1949. Cows are the "factory" where beef production begins. Over the years, a combination of poor returns, weather problems in key areas, and strong cull cow prices to satisfy the demand for processing beef encouraged the industry to "tear down" much of its production capacity. Obviously, this situation didn't develop overnight, but it did set the stage for what has happened in the past 12 months. Rising carcass weights have partially offset the decline in cattle numbers, but the net result has been tight beef supplies.

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Posted by Paul Peterson   Permalink  

September 11, 2014

2014 Farm Bill Decisions: Program Choice - A Big Picture Perspective

The 2014 farm bill gives Farm Service Agency (FSA) farm owners a 1-time opportunity to elect their Title 1 crop program for the 2014 through 2018 crop years. Three program options exist: Agriculture Risk Coverage-individual (ARC-IC), Agriculture Risk Coverage-county (ARC-CO), and Price Loss Coverage (PLC) with the choice to buy the Supplemental Coverage (insurance) Option (SCO). This article examines the choice between ARC-CO and PLC.

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Posted by Carl Zulauf, Gary Schnitkey, Jonathan Coppess, and Nick Paulson   Permalink  

September 10, 2014

Do Big Soybean Crops Always Get Bigger?

The USDA's August Crop Production report forecast the 2014 U.S. average soybean yield at 45.4 bushels per acre. That exceeds the previous record yield of 44.0 bushels in 2009 and is 1.7 bushels above our calculation of the 2014 (unconditional) trend yield based on actual yields from 1960 through 2013. Comments by traders and market analysts indicate there is a widespread expectation that the forecast will increase in subsequent Crop Production reports. This would explain the weakness in soybean prices since the release of the August report.

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Posted by John Newton, Scott Irwin and Darrel Good   Permalink  

September 9, 2014

Cash Rents in 2014 and Expected Cash Rents in 2015

In recent weeks, two sources released cash rent information for Illinois. The U.S. Department of Agriculture released county average cash rents for 2014. The Illinois Society of Professional Farm Managers and Rural Appraisers released 2014 and expected 2015 cash rents for professionally managed farmland. Expected 2015 rents point to decreasing cash rent levels on professionally managed farmland. Whether or not other cash rents follow professionally managed cash rents down is an open question.

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Posted by Gary Schnitkey   Permalink