December 9, 2013
Will Corn Prices Really Be Higher Next Year?Listen to MP3 podcast
Much of the discussion in the corn market, and in crop markets in general, has become focused on the potential for a protracted period of low prices and the likely impact on farm incomes and land values. There even appears to be some competition relative to who can forecast the lowest corn prices for next year and beyond. This is just opposite the situation of a year ago when the drought-reduced U.S. crop invoked forecasts of extreme prices on the high side.
December 6, 2013
Number of Generations a Farm Has been in a FamilyOn October 23, 2013, the lead author published a farmdoc daily post titled, "Putting the Age of U.S. Farmers in Perspective". It has generated considerable attention. This follow-up post adds another perspective to this discussion by focusing on findings from a recently published survey.
December 5, 2013
Mapping the Fate of the Farm BillThe current effort to pass a farm bill has been exceedingly difficult and successful completion remains in doubt. This post is the first in a series that will examine various dynamics surrounding a farm bill and what has made the current effort so difficult.
December 4, 2013
Potential Impact of Alternative RFS Outcomes for 2014 and 2015We have had a number of previous farmdoc daily posts discussing the potential problems in implementing the Renewable Fuels Standards (RFS) due to the expanding gap between the implied mandate for renewable biofuels (ethanol) and the E10 blend wall. We argued that the EPA faced several constraints as it considered potentially momentous decisions about the RFS rules for 2014 and 2015. The EPA announced preliminary rulemaking for 2014 on November 15, 2013, and the proposal did indeed signal a significant shift in EPA policy. The most surprising and controversial aspect of the proposal was the write down of the renewable mandate from 14.4 to 13 billion gallons. This was much larger than anticipated by most analysts (at least prior to the leak of the proposed rulemaking earlier this year) and more aggressive in dealing with blend wall constraints than our own "Freeze It" proposal. The purpose of today's post is to trace through the likely implications of the proposed EPA rulemaking in the same manner that we analyzed alternative implementation options in our earlier posts. Specifically, we investigate two scenarios: 1) implementation of 2014 and 2015 rules as proposed by the EPA, and 2) implementation of 2014 and 2015 rules identical to the EPA proposal with the exception that the renewable mandate is not written down.
December 3, 2013
High Cash Rents and Farmer ReturnsListen to MP3 podcast
An open question is: How long will it take before "high" cash rents are lowered? The answer to this question will depend on the willingness of farmers to sustain losses on "high" cash rent farmland. In this post, farmer returns are estimated for average and "high" cash rents. Farmers with average cash rents are projected to have marginal returns in 2014. Losses around $60 per acre range are projected to occur with "high" cash rents.
December 2, 2013
Why Is Anticipating Feed and Residual Use of Corn So Difficult?Listen to MP3 podcast
The timeliness of U.S. corn consumption data varies by category of use. The USDA provides weekly data on the amount of corn inspected for export with a lag of only four days. The U.S. Energy information Administration provides weekly estimates of ethanol production (with corn as the predominant feedstock) with a lag of only five days. Data relative to the consumption of corn for other domestic processing uses is not readily available, but the rate of use is so consistent that consumption is not difficult to anticipate.
November 27, 2013
Insurance Coverage of Corn and Soybean Production Cost since 1980Since 2006, crop insurance has been the dominant crop safety net program. However, the prosperity that has characterized this period may be coming to an end. Thus, crop insurance may perform differently in the future than during the past few years. Therefore, this post examines the performance of crop insurance since 1980 on an important metric: how well has insurance covered the cash plus land cost of producing corn and soybeans.
November 26, 2013
Management Implications of Non-Decreasing Interest RatesSince the mid-1980s, interest rates generally have been decreasing. This downward trend is not likely to continue as it is difficult to see how interest rates can decrease from their already low levels. Since interest rates are not likely to decrease further, the possibility of having lower interest payments in the future is not likely. As a result, additional caution may be warranted when making debt-financed investments.
November 25, 2013
Corn Market Functioning as Needed?Listen to MP3 podcast
Corn prices managed a small rally following the USDA's November 8 Crop Production report that contained a corn production forecast that was not quite as large as feared. Since then, however, new lows have been established and prices are currently only about $0.10 above the pre-report level.