June 18, 2013
Prevented Planting Payments versus Planting Soybeans
Listen to MP3 podcastSoybean planting has been delayed in many areas of the Midwest. Since final planting dates for corn have passed, farmers who have purchased the COMBO insurance policy are eligible to take prevented planting payments for corn. Soon all final planting dates for soybeans will have passed and all Midwestern farmers will be eligible for soybean prevented planting payments. In this post, returns from prevented planting payments are compared to planting soybeans. For corn, prevented planting payments almost always will be larger than expected returns from planting soybeans in late June. Prevented planting payments for soybeans are less than prevented planting payments for corn. Taking the prevented planting payments for soybeans will become more economically attractive if soybean plantings are further delayed.
Posted by Gary Schnitkey
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June 17, 2013
Anticipating the USDA June Stocks and Acreage Reports
Listen to MP3 podcastOn June 28, the USDA will release the June I Grain Stocks and June Acreage reports that will set the tone for both old and new crop corn and soybean prices. These reports have the potential to provide large surprises.
Posted by Darrel Good
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June 14, 2013
An Updated Look at the Profitability of Ethanol Production
It is no surprise to readers of farmdoc daily that ethanol production has played a major role in the grain price boom since 2006. Increasing ethanol production has been driven by a combination of market incentives and biofuels polices. Given the prominence of ethanol production it is important to track the profitability of the industry in order to assess likely ethanol production trends and potential impacts on grain market supply, demand, and prices.Posted by Scott Irwin
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June 13, 2013
Release of Revenue and Costs for Corn, Soybeans, Wheat, and Double-Crop Soybeans
The publication entitled "Revenue and Costs for Corn, Soybeans, Wheat, and Double-Crop Soybeans" has been revised and is available on farmdoc. Revisions from the last publication includes an update of 2012 results and an updated to projections for 2013.Posted by Gary Schnitkey
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June 12, 2013
What Combination of Corn and RINs Prices Makes E85 Competitive?
In a post last week, we provided an analysis of the price of corn that could result in retail E85 prices being breakeven with E10 prices based on the relative energy value of the two fuels. In that analysis, the price of ethanol was assumed to be at a level that would allow ethanol producers to cover all costs of production for a given price of corn.Posted by Scott Irwin and Darrel Good
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June 11, 2013
Farm Program Payments under Alternative Proposals
Commodity program payments under alternative House and Senate proposals are estimated for corn produced in McLean County, Illinois. Payments are estimated for 2013 through 2016 given average yields for three price scenarios: 1) a $4.50 Market Year Average (MYA) price for each year from 2013 through 2016, 2) a $4.00 MYA price, and 3) a $3.50 MYA price. Under all price scenarios, the Average Crop Revenue Election (ACRE) program has higher payments than commodity programs proposed by the Senate and House Agriculture Committees.Posted by Gary Schnitkey
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June 10, 2013
Difficult to Anticipate Corn Production
Listen to MP3 podcastThe corn market appears to be having difficulty anticipating the likely size of the 2013 U.S. crop. Over the past three weeks, December 2013 corn futures have traded from a low of $5.12 to a high of $5.735 as production expectations continue to unfold.
Posted by Darrel Good
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June 7, 2013
Market Distortion and Farm Program Design: A Case Examination of the Proposed Farm Price Support Programs
This post examines the potential for market distortions caused by the price support programs currently proposed in the House and Senate 2013 Farm Bills. It is common for discussion of market distortion to focus on the level of price supports, but the degree of distortion reflects the interaction of all of a program's parameters. One of the hot topics in business today is the role of product design. In many respects, this post is a discussion of policy design and the potential consequences of design decisions.Posted by Carl Zulauf
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June 6, 2013
Expected Price Support Payments for Corn and Soybeans
The current farm bill proposals being debated in the Senate and House continue to include price supports in the commodity title while repealing the current system of direct and countercyclical (DCP) payments. More detailed discussions of the modified price support programs - AMP in the Senate, and PLC in the House - were provided in recent posts. Today, attention is turned towards comparing the expected payments each program might generate for corn and soybean producers.Posted by Nick Paulson
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June 5, 2013
What Price of Corn is Required to Make E85 Competitive?
We and others have written extensively about the impending ethanol blend wall. The blend wall is defined as the maximum amount of ethanol that can be consumed in the domestic motor fuel market if ethanol blending is limited to 10 percent of total motor fuel consumption. The blend wall becomes an issue when the implied RFS mandated requirement for renewable or conventional biofuels consumption exceeds the size of the blend wall. Technically, there is not a mandate for conventional biofuels consumption. There is a mandate for total consumption of biofuels and a mandate for consumption of advanced biofuels. Since advanced biofuels have generally not been economically attractive, consumption of those fuels has not exceeded the mandate so that the difference between the total and advanced mandate has been met with conventional biofuels, almost entirely corn-based ethanol. It is this difference that is thought of as the mandate for conventional biofuels.Posted by Scott Irwin and Darrel Good
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