publication archive: podcasts
June 17, 2013
Anticipating the USDA June Stocks and Acreage ReportsListen to MP3 podcast
On 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.
June 10, 2013
Difficult to Anticipate Corn ProductionListen to MP3 podcast
The 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.
June 3, 2013
Hog Profits Return but Delayed Planting Keeps Producers WaryListen to MP3 podcast
Hog production has returned to profitability as hog prices rallied from the mid-$50s per live hundredweight in March to the low $70s today. Moderation in feed prices after the USDA's March Grain Stocks report was released in late March also helped reduce costs of production with second quarter costs averaging about $67 per live hundredweight compared to an estimated $70 in the first quarter. Delayed planting that is raising concerns about fewer planted acres and reduced yields has most recently sent corn and meal prices trending to the upside, raising concerns that hog production costs will not drop as much as some had anticipated.
May 28, 2013
Focus Shifts to Soybean Planting ProgressListen to MP3 poscast
The late start to the 2013 corn planting season has created concerns about the likely magnitude of planted acreage and likely yield potential. The rapid planting progress during the week ended May 19 alleviated some of the corn production concerns. Still, a larger than average percentage of the crop will be planted later than is considered optimal for maximum yield potential. Recent and upcoming heavy precipitation, particularly in Iowa and parts of Illinois and Missouri, suggest that some corn acreage will be planted extremely late, switched to soybeans, or not planted at all so that production uncertainty persists.
May 20, 2013
Corn and Soybean Prices Continue to Retrace 2012 Drought RallyListen to MP3 podcast
Corn and soybean prices rallied sharply beginning in July 2012 as U.S. drought conditions unfolded. It was generally expected that prices would follow the pattern experienced in other "short crop" years, with prices peaking near harvest and then returning to pre-drought levels later in the marketing year. That pattern has generally unfolded, with some differences between corn and soybeans and between old crop and new crop prices.
May 13, 2013
Market Size for US Corn and SoybeansListen to MP3 podcast
The USDA's May 10 WASDE report contained supply and consumption projections for the 2013-14 marketing year for U.S. corn and soybeans. For the most part, the market focused on the projections of crop size, but the most important information is in the projections of marketing year consumption.
May 1, 2013
Late Planting and Tools in FASTListen to MP3 podcast
Little planting so far this spring and the continued prospects of rain bring on the potential for farmers to shift from corn to soybeans. The Planting Decision Model, a part of FAST Microsoft Excel spreadsheet series, includes a "Returns by Planting Date" module which calculates projected returns from corn and soybeans by planting date in northern, central, and southern Illinois. There also is an online version of this tool. According to projections in this tool, corn will be the more profitable to plant in all areas until late May. In central Illinois, corn is projected more profitable than soybeans into June.
April 29, 2013
How Large Does the Corn Crop Need to Be?Listen to MP3 podcast
Based on corn planting intentions of nearly 97.3 million acres (implied harvested acres for grain near 90.2 million) and a trend yield of 161.5 bushels, the 2013 season started with expectations of a record U.S. crop near 14.6 billion bushels. A crop of that size would be 1.5 billion bushels larger than the previous record crop of 2009 and the record large consumption during the 2009-10 and 2010-11 marketing years.
April 23, 2013
The 2013 ACRE DecisionListen to MP3 podcast
Farmers and landowners have until June 3rd to enroll their Farm Service Agency (FSA) farms into the Average Crop Revenue Election (ACRE) program, an alternative within the 2008 Farm Bill to the Direct and Counter-Cyclical program (DCP). While ACRE likely will pay less than DCP, enrollment in ACRE may still be advisable as ACRE will make large payments if revenue is low. Hence, ACRE provides significant risk protection.
April 22, 2013
Will Weak Cattle Prices Continue?Listen to MP3 podcast
I thought finished cattle prices were going to have a very bullish year with prices well into the $130s by now. Live cattle futures started the year with the same enthusiasm, but have deflated since. What went wrong?
April 15, 2013
Early Season Corn Production ConcernsListen to MP3 podcast
December 2013 corn futures prices have demonstrated a very erratic pattern since early February, with a trading range of about $0.70. Prices have reflected both old crop and new crop fundamentals, including expectations about producer planting intentions and the likely timeliness of planting.
April 1, 2013
Another Surprising Corn Stocks EstimateListen to MP3 podcast
The USDA's quarterly estimates of U.S. corn inventories have become a source of substantial surprises for the corn market. Dating from March 2010, 11 of the past 13 quarterly stocks estimates have deviated from expectations by enough to generate large price movements. During that period, USDA stock estimates have been both much larger and much smaller than generally expected.
March 18, 2013
Mid-Year Soybean StocksListen to MP3 podcast
The 2012 U.S. soybean crop was 79 million bushels smaller than the 2011 crop. Because of smaller beginning stocks, the 2012-13 marketing year supply was 121 million bushels (3.6 percent smaller) than the previous year supply. Consumption of U.S. soybeans during the first quarter of the marketing year, however, was record large and the pace of consumption remained high during much of the second quarter. The rapid pace of consumption reflected continued strong export demand for soybeans and soybean products and the drought reduced South American harvest in 2012.
March 11, 2013
Anticipating the USDA's March 1 Corn Stocks EstimateListen to MP3 podcast
On March 28, the USDA will release an estimate of U.S. corn stocks as of March 1, 2013. That estimate is based on a survey of all commercial storage facilities and a large sample of farmers. The estimate will be used to gauge the pace of domestic feed and residual use of corn during the second quarter of the 2012-13 marketing year. In addition the magnitude of stocks on March 1 will reveal the supply of corn available for consumption during the last half of the marketing year and will serve as the basis for judging the pace of consumption as it unfolds over the next several months.
March 4, 2013
Spring Pork Price Recovery ThreatenedListen to MP3 podcast
Hog prices have dropped sharply in the past month, falling from about $67 per live hundredweight in early February to $58 recently. Futures prices have followed suit, with April lean hog futures dropping about $7.50 since the beginning of February. These declining prices raise concerns over the spring price recovery and whether that recovery will be strong enough to push hog prices up to breakeven levels as had been expected.
February 25, 2013
A Review of the USDA's 2013-14 Projections for Corn and SoybeansListen to MP3 podcast
The USDA's Interagency Commodity Estimates Committees prepared projections for the 2013-14 U.S. marketing year for corn and soybeans (as well as other crops) presented at the USDA's 2013 Agricultural Outlook Forum on February 22.
February 18, 2013
Soybean Price Prospects - Near Term and Long TermListen to MP3 podcast
Soybean prices reached record high levels in late August and early September 2012. Those high prices were generated by a combination of a drought-reduced harvest in South America earlier in the year, drought conditions in much of the U.S. production region, and on-going strong Chinese demand for soybeans. Prices declined by about $2.00 per bushel in September and October as the U.S. crop turned out to be larger than expected.
February 12, 2013
GRIP-HR: A Good Product for 2013Listen to MP3 podcast
Group Risk Income Plan with the Harvest Revenue Option (GRIP-HR) has features that make it an attractive crop insurance product this year. GRIP-HR will make large payments in a drought year, a concern of many farmers as dryness extends across much of the western corn-belt and Great Plains. GRIP-HR also will make large payments if prices decline, a distinct possibility given large projected plantings of corn. Large planting, combined with normal yields, would lead to large supplies and potentially large price declines. Under the price decline scenario, GRIP-HR will make larger payments than Revenue Protection (RP), the most popular crop insurance product. Herein, payments of GRIP-HR and RP are compared under different yield and price scenarios.
February 11, 2013
Evaluating Corn and Soybean Consumption ProjectionsListen to MP3 podcast
On February 8, the USDA released new projections for marketing year consumption of U.S. corn and soybeans. Prices will now be at least partially influenced by how closely the rate of consumption tracks these projections.
January 28, 2013
Update on Corn ConsumptionListen to MP3 podcast
March 2013 corn futures are currently trading about $0.25 above the closing price on January 10 and about $0.10 below the high reached on January 16. The spot market basis also remains very strong in most markets. The USDA's Grain Stocks report released on January 11 confirmed that feed and residual use of corn from June through November 2012 had been large, implying that consumption had not been sufficiently rationed following the small crop of 2012.
January 23, 2013
More Corn in 2013?Listen to MP3 podcast
In the next several months, planting decisions will be finalized, with one of the central question being how much corn will be planted. Herein, the corn versus soybean planting decision for 2013 is examined for high-productivity farmland. If more corn acres are to be planted in 2013, more corn likely needs to be planted on high-productivity farmland. In most cases, switching to more corn on high productivity farmland means a reduction in 2013 soybean acres. While planting corn is projected more profitable in 2013, a longer run perspective indicates that planting more corn in 2013 may reduce profits in future years.
January 22, 2013
Early Focus on the Prospective Size of the 2013 U.S. Corn CropListen to MP3 podcast
The drought reduced U.S. corn crop of 2012 suggested that corn prices might behave in a pattern generally described as "short crops have long tails." The phrase depicts the expectation of rapidly rising prices that peak near harvest time, decline in an unspecified pattern over the next several months, and return to pre-drought levels as early as the following marketing year. The decline in prices is expected as a result of a slowdown in consumption and a return to normal production.
January 14, 2013
USDA Reports Provide Some Price DirectionListen to MP3 podcast
On January 11, the USDA released a series of reports that provide important fundamental information for the crop markets. The information included the final estimate of the size of the 2012 U.S. corn and soybean crops, estimates of December 1 crop inventories, a winter wheat seedings estimate, and updated U.S. and world supply and consumption forecasts for the current marketing year.Listen
January 7, 2013
Pork Profits on the HorizonListen to MP3 podcast
Pork producers have begun the chant "four more months" as they can now see the light of profits as they are set to emerge from a tunnel of losses. That tunnel of darkness stretched from the spring of 2012 through the winter of 2013, with average estimated losses of $18 per head, primarily due to high feed prices.
January 4, 2013
IFES 2012: Overview and Impacts of Proposed Changes in the 2012 Farm BillListen to MP3 podcast
The main issue shaping the political debate around the 2012 Farm Bill is the desire to cut spending for deficit reduction. While farm programs do not represent the biggest piece of the Farm Bill pie, they are the main targets for program modifications and reductions in overall support as they become more difficult to justify with farm incomes reaching record levels.
January 3, 2013
IFES 2012: Crop Insurance - 2012 Performance and Updates for 2013Listen to MP3 podcast
Though final numbers will not be known until early 2013, crop insurance policies resulted in very large indemnity payments over a large region of the Corn Belt for both corn and soybeans for the 2012 crop. Policies that included the harvest price option benefitted significantly from the increased harvest prices (corn = $7.50 and soybeans = $15.39) relative to March projected prices (corn of $5.68 and soybeans of $12.55), and the resulting increased guarantees. Producers without claims benefitted from the higher market prices that accompanied the lower production due to drought. The Risk Management Agency has announced several important changes to available crop insurance programs for the 2013 crop year as well and these will be identified and discussed including substantial changes to group policies, extensions and expansions of the Trend Adjusted APH endorsement, impacts of rerating, and the likely impact of the payouts from this year's policies.
January 2, 2013
IFES 2012: Crop Insurance - Tax Reporting OptionsListen to MP3 podcast
Approximately 80% of Illinois farmers purchased various types of crop insurance on their 2012 crops. The total premiums for these policies were over $770 million. It is projected that the total claims will exceed twice the amount of the premiums.
December 28, 2012
IFES 2012: The Impact of Biofuels Mandates on Grain and OilseedListen to MP3 podcast
Minimum volumes of biofuel usage were first mandated for the U.S. in the 2005 Energy Policy Act and then revised in the Energy Independence and Security Act of 2007. The current legislation sets annual minimum volumes through 2022 in four categories of biofuels: cellulosic, biomass-based diesel, undifferentiated advanced, and renewable. There is a hierarchy among these different categories based on their life-cycle contribution to reducing "green house" gas (GHG) emissions. Most people are surprised to learn that there is not an explicit mandate for corn-based ethanol. Instead, corn-based ethanol has been the cheapest alternative to date for fulfilling the renewable component of the mandates.
December 27, 2012
IFES 2012: Crop and Livestock Price Prospects for 2013Listen to MP3 podcast
The crop price environment will likely remain very volatile in 2013, reflecting production uncertainty and unsettled economic issues. However, a transition to lower prices is anticipated as production rebounds. The extent of the price decline will depend heavily on the outcome of the 2013 crops.
December 17, 2012
Difficult to Anticipate December 1 Corn Stocks EstimateListen to MP3 podcast
The USDA's estimate of December 1, 2012 inventories of corn, to be released on January 11, 2013, will be one of the more important factors influencing the price of old crop corn in the first quarter of the new year. The estimate of soybean stocks may be somewhat less important because more is known about the level of consumption during the first quarter of the 2012-13 marketing year.
December 10, 2012
Will Corn and Soybean Prices Return to Pre-Drought Levels?Listen to MP3 podcast
March 2013 corn futures dropped below $5.50 in early May 2012 and were drifting lower when U.S. drought conditions turned prices higher starting in mid-June. The price of that contract peaked in early August, just short of the $8.50 mark. March 2013 soybean futures dropped below $11.50 in December 2011before South American drought conditions and then U.S. drought conditions sent that contract above $17.25 by mid-September 2012. conditions sent that contract above $17.25 by mid-September 2012.
December 3, 2012
Continued Support for Corn PricesListen to MP3 podcast
Corn prices peaked in August, moved sharply lower in September, and have been in a sideways pattern over the past two months. Within that sideways pattern, prices have moved higher over the past two weeks, with March 2013 futures trading within $0.10 of the post-September high. The recent rally has been fueled by some supply concerns and more optimism about near-term demand.
November 26, 2012
Focus on Soybean OilListen to MP3 podcast
The sharp increase in soybean prices that began in June 2012 and peaked in early September 2012 was carried more by soybean meal prices than by soybean oil prices. From the June low to the September peak, January 2013 soybean futures increased by 43 percent, January soybean meal futures increased by 51 percent, and January soybean oil futures gained 20 percent. Soybean oil futures are now back to the level of early June, while soybean futures are 13 percent above the early June level and soybean meal futures are 21 percent higher.
November 19, 2012
Pork Producers Did Not PanicListen to MP3 podcast
Here is some good advice: If you are in a crisis, DO NOT PANIC! Pork producers were facing a drought driven crisis late last summer. December corn futures had risen as high as $8.49 per bushel, December soybean meal futures had reached $540 per ton. Markets anticipated a fairly rapid period of sow liquidation which depressed the December lean hog futures price to $70 per hundredweight. The bleak outlook called for losses of as much as $50 to $60 per head in the final quarter of this year. A panic response might have been to cover substantial amounts of feed needs at record high prices, to forward price lean hog futures before the outlook worsened, or just sell out altogether.
November 12, 2012
Corn and Soybean Prices Following Short-Crop PatternListen to MP3 podcast
The USDA's November forecasts of the size of the 2012 U.S. corn and soybean crops were larger than expected, particularly for soybeans. As a result, the general downtrend in soybean prices since mid-September has accelerated, with January futures now at the lowest level since June 29. Corn prices have moved into the lower half of the trading range that has been in place since mid-September and December futures are at the lowest level since September 28. So far, prices seem to be following the classic pattern associated with small crops -peaking early in the marketing year and then declining as the year progresses.
November 5, 2012
Which Way for Soybean Prices?Listen to MP3 podcast
Soybean prices reached a peak on September 4, with November 2012 futures trading to $17.89 per bushel. The price of that contract declined to about $15.50 by the end of September and has been in a range of $14.86 to $15.74 since then. The price is currently in the lower half of that range.
October 29, 2012
Monitoring Corn ConsumptionThe price of corn, like the price of other commodities, is influenced by a wide array of factors that reflect a combination of current and expected supply and consumption. The market continually judges whether the price of corn is adequate to ration the available supply. While expectations about demand over the course of the marketing year influence that judgment, the on-going pace of consumption reveals the adjustments that are being made to accommodate the available supply. A pace of consumption that cannot be supported implies the need for higher prices, while a slower pace than required implies the need for lower prices.
October 23, 2012
Landowner and Farmer Returns under Share Rental Arrangements with Differing Prices
Operator and farmland returns, which represent the amount that can be split between the landowner and farmer, vary considerably with corn and soybean prices that are likely to occur over the next several years. Herein, landowner and farmer share of returns are shown under share rent and a 40% of crop revenue leases, two arrangements that exists in practice. Resulting returns will show the variability in returns likely to be experienced, and also illustrate the downward pressure cash rents may face when prices decline to likely long-run levels.
October 22, 2012
Cattle Prices Will Continue to RiseThe impacts of the 2012 drought continue to play out in a beef industry discouraged by high feed prices and large cattle feeding losses. In the latest Cattle On Feed report, the USDA confirmed that placements into feed lots dropped sharply in September following substantial declines in July and August. As a result, on-feed numbers are now down nearly three percent as the beef industry is doing its part to reduce corn and other feed usage.
October 16, 2012
Cash Rents Given Differing Price LevelsCorn and soybean prices have been high in recent years, leading to high farmland returns and increasing cash rents. In the following article, the ability to pay cash rent is examined under differing corn and soybean price scenarios that are likely to occur over the next several years. These price scenarios include 1) 2013 price estimates, 2) long-run price estimates, and 3) low price estimates. The 2013 price projections yield returns that can sustain high cash rents. Lower prices likely will lead to downward pressure on cash rents.
October 15, 2012
Beyond the October Production Forecasts for Corn and SoybeansListen to MP3 podcast
At 10.706 billion bushels, the USDA's October forecast of the U.S. corn crop was about 100 million bushels larger than the average trade guess and about equal to the September forecast. The October soybean forecast, at 2.86 billion bushels was about 90 million bushels larger than the average trade guess and 126 million larger than the September forecast. Prices of both commodities increased immediately after the forecasts were released.
October 8, 2012
Corn and Soybean Prices Searching for SupportListen to MP3 podcast
December 2012 corn futures declined by $1.44 (17 percent) from the high on August 10 to the recent low on September 28. That contract has managed a recovery of about $0.40 so far this month. November 2012 soybean futures declined by $2.85 (16 percent) from the high on September 4 to the low on October 3 and have rebounded about $0.45 since then.
October 1, 2012
Large Losses Still Loom for Pork IndustryPork producers are expected to continue to suffer very large losses in the next six months after already operating in the red for the last six months. These large losses have been brought on by the extreme feed prices due to the drought. There is little producers can do to change the overall situation for the industry since the pigs that will represent these large losses are already on-feed. The pigs that are here today represent producers' plans earlier this year when they were hopeful for $5 corn prices.
September 24, 2012
Soybean Prices Tumble, but There are Some Positive DevelopmentsListen to MP3 podcast
November 2012 soybean futures reached a high of $17.89 on September 4, but have declined sharply since then. The USDA's September 12 Crop Production report containing a smaller yield and production forecast provided some brief support, but that contract has traded under $16 and is currently about $1.90 below the high. Basis levels have also weakened over the past three weeks. The average cash bid in central Illinois, for example, was $0.03 over November futures on September 4 and $0.13 under on September 21.
September 17, 2012
Early Corn Harvest and September 1 StocksListen to MP3 podcast
A larger percentage of the U.S. corn grain acreage was harvested in August this year than is typically the case. The availability of large new crop corn supplies during the last month of the previous marketing year makes it more difficult to anticipate the magnitude of old crop stocks on September 1.
September 11, 2012
Cash Rents in 2012 and 2013Listen to MP3 podcast
According to the National Agricultural Statistical Service (NASS), Illinois cash rents in 2012 increased by 16% over 2011 levels. Cash rents increases between 2012 and 2013 likely will not be as large. Results from a midyear survey by the Illinois Society of Professional Farm Managers and Rural Appraisers suggest increases between 1% and 3%.
September 10, 2012
Renewed Focus on U.S. Crop ExportsListen to MP3 podcast
Crop markets continue to be heavily influenced by the prospective size of the U.S. corn and soybean crops, with the USDA's September 12 Crop Production report to provide an important update on prospective crop sizes. With prospects for very small crops, the potential strength of export demand for wheat, corn, and soybeans is of increasing importance as crop problems have also been experienced in other parts of the world.
September 4, 2012
Questions About Corn AcreageListen to MP3 podcast
The pace of consumption of U.S. corn has been slowing, as evidenced by small weekly exports and export sales, smaller weekly estimates of ethanol production, declining cattle feedlot placements, and increased slaughter of dairy cows and the hog breeding herd. The extent of rationing required in the current marketing year that has just begun, however, is still not clear since the size of the 2012 crop is not yet known.
August 27, 2012
Pork Industry Faces Record LossesListen to MP3 podcast
A tsunami of red ink is about to wash across the pork industry which is facing losses unseen even in the fall of 1998 when hog prices at times approached zero value. The stressors include: more hogs than expected, rapid sow liquidation now underway, and record feed prices. Losses in the final quarter of this year could be $60 per head, exceeding the previous record quarterly losses of $45 per head in the fall of 1998.
August 21, 2012
Projected 2013 Corn and Soybean BudgetsListen to MP3 podcast
Budgets for corn and soybeans grown in Illinois for 2013 are now available on farmdoc. Below, the 2013 budgets are compared to 2011 results and 2012 projections for crops grown in central Illinois on high productivity farmland. Overall non-land costs are projected to be roughly the same in 2013 as in 2012. Projected 2013 returns for corn are projected to be between 2011 and 2012 returns. Projected 2013 soybean returns are lower than 2011 and 2012 returns.
August 20, 2012
Rationing the 2012 U.S. Soybean CropListen to MP3 podcast
The small South American soybean crop of 2012 will result in much smaller inventories of that crop by the end of the year. However, that draw down in stocks in combination with the much larger harvest expected in 2013 suggests that the pace of consumption of South American soybeans will not have to slow. In contrast, the small U.S. harvest this year will require a substantial reduction in consumption over the next year.
August 13, 2012
Corn and Soybean Forecasts, What's Next?Listen to MP3 podcast
The USDA's August Crop Production report confirmed prospects for small U.S. corn and soybean crops and the need for consumption of both crops to decline sharply in the year ahead. Prices will now begin to reflect expectations for any changes in the production forecasts and confirmation that the necessary rationing is occurring. Indications of the pace of consumption will be provided by weekly reports of exports, ethanol production, and broiler placements and monthly reports of the domestic soybean crush, cattle feedlot inventories, and dairy cow numbers. New production forecasts will be released in September, October, and November and the final estimate will be released in January.
August 6, 2012
Drought and the Cattle IndustryListen to MP3 podcast
The beef industry has already experienced a number of difficult years characterized by falling cow numbers and declining per capita beef supplies. There was hope in the first-half of this year that this downward production phase was coming to an end, but the drought of 2012 has erased those hopes. So, where is the cattle industry today, and what do we know about the impacts of this year's drought?
July 30, 2012
Anticipating the Size of the 2012 Corn and Soybean CropsListen to MP3 podcast
The National Agricultural Statistics Service (NASS) of the USDA will release the first yield and production forecasts for the 2012 U.S. corn and soybean crops on August 10. The first forecasts of the season are always highly anticipated, but none more than this year as widespread drought conditions have resulted in a wide range of yield and production expectations.
July 24, 2012
Consider Hedging RP Guarantee before HarvestListen to MP3 podcast
During short crop years, corn and soybeans prices often peak early and then decline throughout the remainder of the marketing year. This suggests that producers may wish to consider pricing some grain before harvest. This is particularly true for farmers who insured using Revenue Protection (RP) insurance, as there may be concern that the harvest-time contracts will peak before the harvest price determination period during October, leading to lower crop insurance payments than implied by current levels of futures prices. Futures markets can be used to hedge up to the yield guarantee implied in RP policies.
July 23, 2012
Are Soybean Prices High Enough?Listen to MP3 podcast
Much of the recent attention in commodity markets, at least in the popular press, has focused on the U.S. corn crop and the potential impact of drought conditions on production and prices. The focus has been warranted since corn is the largest U.S. crop; corn is used in a wide variety of food, feed, and industrial products; and corn yields are most susceptible to drought conditions.
July 16, 2012
Expected Price Pattern for Corn and SoybeansListen to MP3 podcast
Widespread drought conditions continue to reduce the 2012 U.S. corn and soybean yield potential. Yields are now expected to be well below trend value so that this year's production will qualify as "short crops".
July 9, 2012
Pork Industry Faces Financial Disaster?Listen to MP3 podcast
Drought and the impact on feed prices may be on the verge of creating a financial disaster for the pork industry and other livestock species. The crop stress which began in Indiana and Illinois is now spreading further to the west. Most of the media attention has been focused on crop producers who face large yield losses; however the animal industries may ultimately fare even worse.
July 2, 2012
Considerable Uncertainty About Both Corn Supply and DemandListen to MP3 podcast
July 2012 corn futures are currently trading about $1.00 below the peak reached in August 2011, but $1.40 above the low reached a month ago. December 2012 futures are trading $1.50 above the low of June 15, 2012 and within $0.15 of the high reached on August 31, 2011.
June 28, 2012
Grain Farm Income Prospects Given Drought Conditions in 2012Listen to MP3 podcast
Low corn and soybean yields are increasingly likely as hot, dry weather is forecast to continue over much of the corn-belt during the critical corn pollination period. Lower yields then lead to questions about grain farm incomes in 2012. Grain farm incomes likely will be above projections made in winter of 2012, assuming that crop prices increase if crop yields are below trend-line levels. However, some farms will suffer losses. Farms that did not purchase crop insurance could face losses. Also, grain farms that have hedged a great deal of expected production could have lower incomes than those farms that have not pre-harvest hedged as much grain.
June 25, 2012
Soybean Fundamentals Remain StrongListen to MP3 podcast
Soybean prices began moving higher in July 2010, starting from about $9.50. July 2012 soybean futures reached a high of about $14.70 in late August 2011, declined to a low near $11.25 in mid-December 2011, and reached a high of $15.12 in early May 2012. Prices have been very choppy the past two months, but the July futures contract is now trading within about $.30 of the early May high. November 2012 futures prices have been lower than July futures, but have followed a similar pattern and are now trading at a contract high near $14.30.
June 18, 2012
Anticipating the Estimates of June 1 Stocks of Corn and SoybeansListen to MP3 podcast
The USDA will release the estimates of June 1 corn and soybean inventories on June 29. The level of those stocks will reveal the rate of consumption during the third quarter of the 2011-12 marketing year and the available supply for consumption during the fourth quarter.
June 13, 2012
Differences across Crops in Spending Under the 2012 Senate Agriculture Committee Farm BillListen to MP3 podcast
The Farm Bill passed by the Senate Agriculture Committee has commodity program payments tied to risk management through such program as Agricultural Risk Coverage (ARC) and cotton STAX. This emphasis differs from the 2008 Farm Bill where most commodity title payments are direct payments. The emphasis shift from direct payments to risk management changes the mix in spending across crops. Wheat, cotton, rice, and peanuts have larger proportional spending reductions than corn and soybeans. Given a risk management focus, it will be difficult to avoid having some crops taking larger spending reductions.
June 11, 2012
Update on Export ProgressListen to MP3 podcast
Much of the attention in the crop markets is rightly focused on the potential size of the northern hemisphere crops. Still, the on-going pace of consumption is an important measure of demand strength and the likely level of year ending stocks. Here we focus on the U.S. export sector for wheat, corn, and soybeans.
June 5, 2012
Performance of the Super Committee Target Price ProposalListen to MP3 podcast
A target price program that pays when national market year average price falls below a target price may be included as choice for farmers in the next Farm Bill. Farmers would then be able to choose between the target price program and other revenue alternatives. In this post, an analysis is presented of the target price option contained in the Farm Bill proposal made as part of Super Committee deliberations last year. Frequency of payments will vary across crops because the relationship between the proposed target price and long-run price varies across commodities. A target price program would not necessarily make payments in years of low revenue
June 4, 2012
Soybean Price Roller Coaster
Listen to MP3 podcast
November 2012 soybean futures reached a high of $14 in September 2011, declined to about $11.20 in December 2011, rebounded to almost $14 in early April and again in early May 2012, and traded to a low of $12.45 in the current trading session. The wide price swings reflect ever -changing supply and demand expectations.
May 29, 2012
The Season for Determining Corn Yields is UnderwayListen to MP3 podcast
The 2012 U.S. average corn yield will be one of the dominant factors in determining the level of corn prices over the next year. Expectations about that yield have started at a pretty high level, but the critical period for yield determination is really just beginning.
May 22, 2012
Net Returns with ARC under Differing Price ScenariosAgricultural Risk Coverage (ARC) is a revenue-based, proposed Farm Bill program passed by the Senate Agriculture Committee. In this post, net returns for corn are examined using prices and ARC payments detailed in a May 9, 2012 post. At $4.00 per bushel and below corn prices, ARC will make payments, aiding in cushioning revenue losses. However, ARC payments are not large enough is assure profits, as farmers who cash rent will face losses at prices below $4.00 per bushel.
May 21, 2012
Pork Producers Ask, What Happened?listen to MP3 podcast
There is an old saying that, "Life is what actually happens when you're planning on something else!" That adage is playing out for pork producers this spring. The spring hog price rally has not occurred and feed costs have now pushed to record high levels. This combination is resulting in a disappointing period of financial losses this spring and summer that was not anticipated earlier this year.
May 14, 2012
Corn Market Direction Unfolding, Magnitude Still UncertainListen to MP3 podcast
The USDA's projections of U.S. and world corn and feed grain supply and demand conditions presented in the May WASDE report set the benchmark by which the corn market will judge unfolding events. Those events are continually unfolding, with some of the more important ones to be revealed this summer.
May 9, 2012
ARC and Multi-Year Price DeclinesListen to MP3 podcast
The Senate Agriculture Committee recently passed a version of the Farm Bill that now moves for debate in the entire Senate. This Bill replaces direct, counter-cyclical, and SURE payments with Agricultural Risk Coverage (ARC), a revenue-based program that is further described in yesterday's post by Carl Zulauf (see here). In today's post, ARC payments are computed for cases in which prices are low for several years. This emphasis is taken as ARC is specifically designed to provide protection in cases of multi-year revenue losses, cases in in which crop insurance often provides limited protection. ARC payments are computed for corn in Champaign County, Illinois, as further described in the the article.
May 7, 2012
Corn Prices in Three PartsListen to MP3 podcast
Corn prices have recently moved in three distinct patterns. These include the patterns for new crop futures, old crop futures, and old crop cash prices.
May 1, 2012
Impacts of Limits on Crop Insurance Risk SubsidiesListen to mp3 podcast
Discussion has centered on limiting crop insurance risk subsidies. In a March 2012 report, for example, the General Accounting Office (GAO) used a $40,000 limit on risk subsidies to calculate the number of farms impacted by the limit (see here). In this post, the acres required to reach a $40,000 limit is examined for Illinois farms. Because risk subsidies vary by year, acres required to reach the limit also will vary. Between 2006 and 2012, acres required to reach the limit for average farms in Illinois are between 1,600 and 2,700 acres, not particularly large grain farms. More detail on risk subsidies and acre limits are provided in the following sections.
April 30, 2012
Is The Cattle Market Too Cautious?Listen to MP3 podcast
The beef industry was stung by two negative events in the past two months that have left market traders uncertain about their longer term impacts. For now, market participants are taking a cautious approach until consumers more clearly define if they will reduce beef consumption.
April 23, 2012
Expectations for the 2012-13 Corn Marketing YearListen to the MP3 podcast
December 2012 corn futures reached a high of $6.735 on August, 31, 2011, declined to a low of $5.23 on March 30, 2012, and are currently trading near $5.40. The steady decline in prices over the past few months reflects, in part, expectations for a large 2012 U.S. corn crop and some re-building of inventories during the year ahead.
April 16, 2012
Has the 2011 Corn Crop Been Rationed?Listen to MP3 podcast
Corn prices declined substantially over the past week. May and December 2012 futures have declined by $.26 and $.22, respectively, following the release of the USDA's WASDE report on April 10.
April 9, 2012
Pork Profit Outlook Gets TrimmedListen to MP3 podcast
The nation's pork producers are largely holding back on expansion even though the industry returned to profitability in the spring of 2011. However, higher feed prices in the past few months as a result of crop damage in South America has increased costs and reduced the profit outlook for 2012.
April 3, 2012
Little Change in Where Corn is Planted in the United StatesListen to MP3 podcast
On March 31st, the U.S. Department of Agriculture reported that 95.9 million acres of corn are projected to be planted in 2012. If these acres are planted, the 95.9 million acres will be 3.9 million acres more than were planted in 2011 and 16.7 million more acres than the average 2001-2005 plantings. Prospective 2012 planted acres are 21 percent higher than the 2001-05 average. While planted acres have increased, where corn is produced in the United States has not changed much. Over the past decade, there have been modest shift in plantings from the eastern to western corn-belt. North Dakota has increased share of acres. Overall though, there is remarkable stability in shares of planted corn acres across states. This suggests that national expected yield should not change much because of where corn is planted and that continued planting of 95.9 million or more acres of corn depends on success with more corn intense rotations.
March 27, 2012
Projected Corn-Soybean Returns Do Not Suggest Shift to Corn in Illinois: An Application of the Planting Decision ModelListen to MP3 podcast
Returns projected using default budgets in the Corn-Soybeans Rotation Tool indicate that corn-soybean rotations have higher projected returns than continuous corn, given that commodity prices are at current harvest-time bids. These projected returns do not suggest shifts in acres from soybeans to corn in Illinois. In this article, the Corn-Soybean Rotation Tool used to make these projections is described. Then, commentary on 2012 planting decisions is given.
March 26, 2012
March USDA Reports and BeyondListen to MP3 podcast
Corn and soybean prices continue to be influenced by a wide range of fundamental factors. Currently, those factors include prospects for the rate of economic growth and commodity demand in China, prospects for the size of the current South American crop, and prospects for the 2012 growing season in the Northern Hemisphere.
March 19, 2012
Corn Yield ProspectsListen to MP3 podcast
With 2011-12 marketing year-ending stocks of U.S. corn expected to be near pipeline levels, the size of the 2012 crop has substantial price implications. Acreage intentions will be revealed in the USDA's March 30 Prospective Plantings report, but much of the current discussion centers on prospects for the U.S. average corn yield.
March 13, 2012
Will ACRE Pay in 2011 and 2012?Listen to MP3 podcast
Average Crop Revenue Election (ACRE) - the counter-cyclical revenue program included in the 2008 Farm Bill - is not likely to make payments for corn, soybeans, or wheat in Illinois for the 2011 crop year. For ACRE to make payments on the 2012 crop year, prices would have to decrease precipitously from 2011 levels. If the 2012 actual corn yield is at its benchmark level, the market year average price for 2012 would have to be below $4.20 before ACRE payments would be received on corn in Illinois. In Illinois, 2012 market year average prices would have to be below $10.35 for soybeans and $5.81 for wheat before ACRE would make payments, given that 2012 actual yields are at their benchmark values.
March 12, 2012
Continued Focus on Corn Consumption and StocksListen to MP3 podcast
May 2012 corn futures have traded in a range of about $1.00 per bushel since last fall. Since late January, the trading range has been about $.40 per bushel and the current price is near the top of that range. The narrowing of the trading range for old-crop corn prices may point to a breakout from the long standing sideways trend. The central question for the direction of old-crop prices is whether consumption has slowed enough to ensure a minimum level of year ending stocks.
March 5, 2012
Anticipating the March 1 Corn Stocks EstimateListen to MP3 podcast
It is widely anticipated that the 2012-13 corn marketing year will be a transition from the current environment of tight stocks and high prices to one of a large crop, increasing stocks, and lower prices. The futures market reflects that expectation as the March 2013 futures price is currently trading $0.80 to $0.85 below the March 2012 price.
February 28, 2012
Crop Insurance Use in 2011 and Suggestions for 2012Listen to MP3 podcast
In 2011, most corn and soybean acres in Illinois were insured using Revenue Protection (RP) at a 75% or higher coverage level. At these coverage levels, most acres where insured using enterprise units. For those choosing RP at a 75% or higher coverage level with enterprise units last year, a similar choice in 2012 seems prudent given that the Trend-Adjusted Actual Production History (TA-APH) yield endorsement is added to the RP policy. Some consideration to RP with the harvest price exclusion (RPwExcl) may be warranted. Group Risk Income Plan (GRIP) users may wish to re-evaluate choices as GRIP premiums have gone up will RP premiums have come down. GRIP still has attractive features, but relative costs have changed.
February 27, 2012
Will Consumers Come Back to Pork? Yes!Listen to MP3 podcast
Per capita pork consumption in the U.S. has declined sharply in the past several years due primarily to strong pork export growth. Per capita pork consumption in the U.S. averaged 50.1 pounds in 2006 and 2007 when $2 per bushel corn was still the rule. That dropped to a low of 45.8 pounds by 2011, a nine percent decrease.
February 24, 2012
GRIP Payments in 2011Listen to MP3 podcast
On February 23rd, the National Agricultural Statistical Service (NASS) released county corn and soybean yields for 2011. From these yields, 2011 Group Risk Income Plan (GRIP) payments can be estimated. For corn, GRIP with the harvest revenue option (GRIP-HR) at the 90% coverage level will make payments in 43% of Illinois counties while GRIP without the harvest price option (GRIP-NoHR) will pay in 20% percent of Illinois counties. For soybeans at the 90% coverage level, both GRIP-HR and GRIP-NoHR will pay in 49% of Illinois counties.
February 21, 2012
Is RP with the Harvest Price Exclusion a Good Option for 2012?Listen to MP3 podcast
I have been asked whether Revenue Protection with the Harvest Price Exclusion (RPwExcl) should be considered as an alternative to Revenue Protection (RP). Unlike RP, RPwExcl does not allow its guarantee to increase if harvest price is above projected price. If RPwExcl is used, I suggest considering a coverage level 5 percent higher than the RP product. These two products have roughly the same premiums. However, payments will vary between the two alternatives. RPwExcl will provide more price protection while RP will provide more yield protection.
February 20, 2012
Corn and Soybean Export ProgressListen to MP3 podcast
In December 2011, the USDA judged total corn production prospects in Argentina and Brazil at 3.54 billion bushels. That forecast was reduced by 120 million bushels in January and by an additional 160 million bushels earlier this month. All of the reduction has been for the Argentine crop. Similarly, combined soybean production in those two countries was forecast at 4.67 billion bushels in December, but was reduced by 90 million bushels in January and an additional 165 million bushels earlier this month.
February 13, 2012
Soybean Export and Acreage Prospects Support PricesListen to MP3 podcast
Among the major crops, the corn market has received the lion's share of attention over the past two months. The attention has been the result of the surprising USDA December 1 stocks estimate, adverse weather conditions in South America, the demise of the ethanol blenders' tax credit, and prospects for small year-ending stocks. The soybean market, however, has become the focus of more attention in recent weeks.
February 6, 2012
Corn Market Remains UnsettledListen to MP3 podcast
The 2011-12 corn marketing year is approaching the half-way point. At this time of year, prospects for marketing year consumption and ending stocks are often fairly clear and the market begins to focus more on new crop prospects.
January 31, 2012
Corn-Soybean Planting Decisions and Longer Run ReturnsListen to MP3 podcast
In many areas of central Illinois, corn-after-corn yields were substantially below corn-after-soybean yields in 2010 and 2011. These yield drags, along with large increases in corn costs, have led some farmers to reevaluate corn-soybean cropping decisions. For land productivities that predominate in Illinois, corn-after-corn and continuous corn usually have higher budgeted returns than soybeans. However, more intense corn rotations reduce corn-after-soybeans acres, often some of the most profitable acres on a farm. Reduction in corn-after-soybean acres will impact returns in future years. This article examines the longer-run return impacts of corn-soybean rotations.
January 30, 2012
Cattle Producers Show Surprise Interest in ExpansionListen to MP3 podcast
While beef supplies will be very short for several more years, the USDA's Cattle report indicated that the very early stages of beef cattle expansion has begun as beef heifer retention has increased a modest one percent. However, the big picture is that beef cow numbers dropped 3 percent last year and this will mean a smaller calf crop in 2012 that will keep cattle slaughter small for 2013 and 2014. If producers follow through with more heifer retention in 2012 and 2013, slaughter supplies will decline over the next two years and increase finished cattle prices even more.
January 24, 2012
Group Risk Income Plan (GRIP) in 2012Listen to MP3 podcast
Ratings changes made by the Risk Management Agency (RMA) will cause premiums for Group Risk Income Plan with the Harvest Price option (GRIP-HR) to be higher in 2012 as compared to 2011. For 90% coverage level policies, 2012 premiums will average 10% higher than 2011 premium for corn across Illinois and 11% higher for soybeans. Higher GRIP-HR premiums, along with lower COMBO product premiums (see here), suggests that farmers who have purchased GRIP in the past may wish to evaluate crop insurance decisions, as relative costs of the products have changed. The remainder of this article first describes GRIP use, and then details changes to expected yield and premium occurring to GRIP in 2012.
January 23, 2012
Corn Price Swings to Continue?Listen to MP3 podcast
Since early October, corn prices have bounced in a wide trading range. March 2012 futures have traded between about $5.75 and $6.75 while December 2012 futures have been between about $5.35 and $6.20.
January 17, 2012
Understanding the Surprise in the USDA Corn Stocks EstimateListen to MP3 podcast
The corn market was surprised by the USDA's final 2011 corn production estimate and the estimate of December 1, 2011 corn stocks. The March 2012 futures price declined by $0.52 per bushel in the two sessions following the release of the reports.
January 9, 2012
Focus on South American Weather, USDA ReportsListen to MP3 podcast
Corn and soybean prices declined sharply in mid-November and remained at the lower level through mid-December. From mid-December through early January, the cash price of corn in central Illinois increased by $0.78 while the cash price of soybeans increased by $1.21 per bushel.
December 19, 2011
2011 IFES: Crop and Livestock Price Prospects for 2012Listen to MP3 podcast
Crop prices continue to trade in wide ranges, reflecting factors ranging from U.S. and world production uncertainty to world economic and financial conditions. The price environment will likely remain very unsettled in 2012.
December 12, 2011
Continued Weakness in Crop PricesListen to MP3 podcast
Crop prices are heading to year-end on a weak note. Corn prices are near the level that existed in the first week of January and well below the late summer highs. Soybean prices are well below the level at the start of the year and at the lowest level since early October 2010. Prices of soft red winter wheat are at the lowest level since July 2010.
December 6, 2011
Trend-Adjusted APH Yield EndorsementListen to MP3 podcast
New Trend-Adjusted Yield Endorsement for Federally Sponsored Crop Insurance Products: Beginning with the 2012 crop year, farmers purchasing crop insurance for corn and soybeans in fourteen Midwestern states will have the option to use the Trend-Adjusted Actual Production History (TA-APH) Yield Endorsement. The TA-APH yield endorsement allows farmers to increase yields used in calculating crop insurance guarantees. The product concept submission to RMA was sponsored by the Illinois Corn Marketing Board, and developed in conjunction with faculty from the University of Illinois.
December 5, 2011
Anticipating Crop Prices in 2012Listen to MP3 podcast
Crop prices during 2011 were influenced by a wide range of factors that resulted in extremely large trading ranges. The price patterns, however, were very different for corn, soybeans, and wheat. As the year ends, thoughts turn to likely price levels in 2012.
November 28, 2011
Corn and Soybean Demand and Acreage Prospects for 2012Listen to MP3 podcast Corn and soybean prices have declined sharply since the release of the USDA's November Crop Production report that contained smaller forecasts of the size of the 2011 harvest for both crops. In addition, the historically strong corn basis has begun to weaken in many markets.
November 21, 2011
Hogs: 2012 the Best Year in High-Priced Feed EraListen to MP3 podcast
The pork industry is expected to have a profitable year in 2012! In fact, the level of profitability could be the most favorable during the high priced feed era. Profits in 2012 are currently forecast to be near $17 per head, which would be the highest since 2006. That was the last year of the low feed price era when corn prices received by farmers averaged about $2.30 per bushel for the calendar year and estimated hog profits were $27 per head.
November 15, 2011
What is in an Average Cash Rent?Listen to MP3 podcast Published average cash rents mask the variability that exists in the farmland rental markets. To quantify variability, 2010 cash rents from individual farms in the Illinois Farm Business Farm Management (FBFM) are subtracted from average cash rents published by the National Agricultural Statistical Service (NASS). In 2010, 35 percent of the farm cash rents are within $20 of the average county cash rent. Nineteen percent are between $20 and $60 per acre higher than the average county rent while 10 percent of the farm rents are $60 higher than the average county rent. Twenty-six percent are between $20 and $60 lower than the average county rent and 10 percent are over $60 below the average county rent.
November 14, 2011
Corn and Soybean Prices Continue to StruggleCorn prices have traded in a sideways pattern since mid-October, but are currently in the lower end of the recent range. Soybean prices have trended lower over the past month, with January futures now back near the early October lows.
November 7, 2011
Soybean Export ProgressListen to MP3 podcast
Since the first of October, November 2011 soybean futures have traded in a range of $1.20, with a high of $12.72. The price of that contract is currently about in the middle of the recent trading range and $2.50 below the contract high reached on August 31.
November 1, 2011
Break-Even Corn-After-Corn Yields and Yield DragsListen to MP3 podcast
Many Illinois farmers have been disappointed with 2011 corn-after-corn yields, reporting significantly lower corn-after-corn yields compared to corn-after-soybean yields. So as to provide guidance for 2012 planting decisions, break-even corn-after-corn yields are calculated for farms in northern, central Illinois with high-productivity farmland (central-high), central Illinois with low-productivity farmland (central-low) and southern Illinois regions. Break-even corn-after-corn yields are between 24 and 35 bushels lower than corn-after-soybean yields.
October 31, 2011
Crop Prices Treading WaterListen to MP3 podcast
Following wide swings in September and early October, the prices of corn, soybeans, and wheat have traded in relatively narrow ranges in the last half of October. Narrow trading ranges reflect the lack of new information and, in some cases, conflicting demand indicators.
October 25, 2011
Commodity Prices Resulting in $50,000 Net Farm IncomeListen to MP3 podcast
Corn and soybean prices that result in $50,000 of net farm income are estimated for a 1,200 acre farm in central Illinois. A $3.70 per bushel for corn and $8.51 per bushel for soybeans results in $50,000 of net income on a grain farm that purchases crop insurance and owns 15 percent, share-rents 45 percent, and cash rents 40 percent of its farmland.
October 24, 2011
Cattle Can Eat Corn TooListen to MP3 podcast
Cattle feeders are going to use more corn than previously expected according to USDA's latest Cattle on Feed report that showed five percent more cattle in the nation's feedlots. The real surprise was the higher number of placements in September that has resulted in over one-half million more cattle being fed than a year ago. Feed grains used by cattle in feedlots from the 2011 crop will now likely be more than five percent higher than was fed from the 2010 crop.
October 18, 2011
Relationship between Anhydrous Ammonia and Natural Gas PricesListen to MP3 podcast
Retail anhydrous ammonia prices again are on the rise. The October 13, 2011 Illinois Production Cost Report by the Agricultural Marketing Service placed the average Illinois price of anhydrous ammonia at $853 per ton, up $52 per ton from the July 7th price of $801 per ton. While anhydrous ammonia prices have been rising, natural gas which is the major cost of producing anhydrous ammonia price has not been rising. This has caused the anhydrous ammonia-to-natural gas price ratio to increase dramatically.
October 17, 2011
Corn and Soybean ConsumptionListen to MP3 podcast
With the USDA's October Crop Production report, corn and soybean supply forecasts for the 2011-12 marketing year are likely close to the final estimates. Prices will be primarily influenced by the current rate of consumption and expectations about consumption during the remainder of the marketing year. The actual rate of consumption will be revealed sporadically, and in some cases, slowly. Expectations about future consumption will likely vary widely.
October 10, 2011
Revisiting Recent Corn Stocks EstimatesListen to MP3 podcast
While the USDA's estimate of the September 1, 2011 inventory of old crop corn is old news, there are ongoing questions surrounding the quarterly stocks estimates. For corn, quarterly stocks estimates have not been well anticipated since June 2010.
October 3, 2011
Pork Outlook BrightensListen to MP3 podcast
Finally, pork producers have some positive news that has increased optimism for greater profitability in the coming year. That good news came from USDA in two forms. The first was the September Hogs and Pigs report which indicated little change in the size of the breeding herd. The second was the feed price lowering impacts of higher than expected corn inventories revealed in the September Grain Stocks report. The combination of stronger hog prices and lower feed prices has put the pork outlook back into solid black for the coming year.
September 27, 2011
Cash Rent with Bonus Leasing Arrangement: Description and ExampleListen to MP3 podcast
A "cash rent with bonus" leasing arrangement is a variable cash rent lease that has a base rent and the potential for a bonus if crop revenue exceeds target revenue. Variable lease rental arrangements have become more popular in recent years as crop prices have become more variable, thereby making it more difficult to determine satisfactory cash rents. This document describes details of cash rent with bonus arrangements.
September 26, 2011
Soybean Production and Consumption UncertaintyListen to MP3 podcast
Soybean prices, along with the prices of many commodities, have come under considerable pressure in the month of September. November 2011 futures reached a high of $14.65 on August 31 and traded to a low of $12.26 in the September 26 overnight session before settling at $12.50.
September 19, 2011
Will the Corn Production Forecast Change?Listen to MP3 podcast
Corn prices have declined sharply so far in September. After reaching a high of $7.79 on August 29, December 2011 corn futures traded to $6.76 early in the trading session on September 19. The lower prices have occurred even as USDA lowered the 2011 production forecast by more than 400 million bushels, suggesting that consumption during the 2011-12 marketing year will be restricted and that year ending stocks will be minimal.
September 13, 2011
Cash Rent Information Available for Setting 2012 RentsListen to MP3 podcast
When setting 2012 cash rents, there are two sets of information that have been recently released that many will find useful. First, the National Agricultural Statistical Service (NASS) released average 2011 cash rent levels by county. Second, the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA) released average 2011 cash rents and 2012 projected cash rents for different land productivity classes.
September 12, 2011
Smaller Corn Crop ConfirmedListen to MP3 podcast
The USDA's September 12, 2011 Crop Production report confirmed expectations of a smaller U.S. corn crop than forecast in August. The September soybean production forecast, however, is larger than the August forecast and the forecast size of the foreign wheat, coarse grain, and soybean crops also exceed the August forecasts.
September 6, 2011
Economics of Corn and Soybean StorageListen to MP3 podcast
With smaller grain and oilseed supplies than those of a year ago and increased storage capacity, there should be fewer crop storage issues than in recent years. The decision by producers to store corn and soybeans, however, should be based on expected returns rather than on capacity to store.
August 29, 2011
Early Price Peak for Corn and Soybeans?Listen to MP3 podcast
The 2011-12 corn and soybean marketing years will be characterized by the need to reduce consumption of both crops. The magnitude of those needed reductions are not yet known and the prices needed to make those cuts will depend on the strength of underlying demand.
August 15, 2011
No Room to Increase Corn ConsumptionListen to MP3 podcast
The USDA projects that 13.245 billion bushels of U.S. corn will be consumed during the marketing year that ends on August 31, 2011. That forecast is 60 million bushels below the July forecast, but is 179 million bushels above the record consumption in the previous year.
August 8, 2011
Corn and Soybean Production ProspectsListen to MP3 podcast
The 2011-12 corn and soybean marketing year officially begins on September 1. As pointed out last week, the 2010-11 marketing year is ending with a slowdown in the consumption of both corn and soybeans, suggesting that year ending stocks could be larger than projected in the USDA's July WASDE report. Those stocks will not be known until September 30 and the estimates in the September Grain Stocks report often deviate from expected levels. The USDA will release updated forecasts of 2010-11 marketing year consumption and ending stocks on August 11.
August 2, 2011
Wheat/Double-Crop Soybeans Competitive in Southern Illinois for 2012Listen to MP3 podcast
Recently compiled 2012 southern Illinois crop budgets have projected operator and farmland returns for wheat/double crop soybean at $359 per acre. This $359 per acre return compares to $418 per acre from corn-after-soybeans and $315 per acre for soybeans. In 2012 budgets, corn is projected more profitable than wheat/double-crop soybeans. Wheat/double-crop soybeans are projected more profitable than soybeans.
August 1, 2011
Corn and Soybean Consumption Coming Up ShortListen to MP3 podcast
Much of the corn and soybean market attention is appropriately focused on the prospective size of the 2011 U.S. crops and speculation about the USDA's August 11 Crop Production report. The size of these crops will obviously largely determine the magnitude of supplies available for consumption during the 2011-12 marketing year. The magnitude of old crop stocks on September 1 will also contribute to next year's supply. As the 2010-11 marketing year enters the final month, there are indications that both soybean and corn consumption will fall short of the most recent USDA projections.
July 25, 2011
Beef Shortage Means Hold On To The CowsListen to MP3 podcast
The quantity of beef available to consumers in the U.S. has declined a startling amount in recent years and that trend is going to continue. The declining supplies are related to continuing liquidation of the cow herd in the past few years due to high feed prices, a weak U.S. dollar that is spurring beef exports, and of course drought in the southwest and southeast. Declining supplies will support prices across the cattle complex at new record highs in 2011 and again in 2012. Unfortunately, even higher retail beef prices can be expected for consumers.
July 20, 2011
2012 Corn and Soybean BudgetsListen to MP3 podcast
Table 1 contains 2012 corn and soybean budgets for high-productivity farmland in central Illinois. Budgets for other Illinois regions are shown in the appendix. Along with 2012 budgets, Table 1 contains actual results for 2009 and 2010, as summarized from farms enrolled in Illinois Farm Business Farm Management (FBFM). Also shown are 2011 projections. Costs in 2012 are projected to increase, leading to high break-even commodity prices. Projected 2012 commodity prices suggest that 2012 will be a profitable year. Of course, economic situation could change between now and 2012 harvest. Chicago Mercantile Exchange (CME) options contract suggest that prices resulting in very low returns are possible.
July 18, 2011
How Much Risk to the Corn Crop?Listen to MP3 podcast
A number of factors combine each year to determine the U.S. average corn yield. Among those factors, temperature and precipitation during July are the most important. Crop yield models have long confirmed the large yield impact of July weather. The most favorable weather conditions in July in the heart of the corn belt consist of temperatures that are modestly below average and precipitation that is about 25 percent above average. These are the kind of conditions that were experienced in 2009 and contributed to the record high U.S. average yield that year. Historically, such conditions over large areas have been rare.
July 11, 2011
Corn Market Waiting on August Production ReportListen to MP3 podcast
Corn prices have made a modest recovery following the sharp declines stemming from the USDA reports released on June 30. The recovery has reflected a combination of continued strong corn demand and a few concerns about yield potential.
July 5, 2011
Sorting Out the June 1 Corn Stocks EstimateListen to MP3 podcast
It is an understatement to say that last week's USDA estimate of June 1, 2011 corn stocks was a surprise to the market. At 3.67 billion bushels, the estimate was about 370 million bushels larger than the reported average trade guess.
June 27, 2011
Pork Outlook Looks Up as Corn Prices Go DownListen to MP3 podcast
Pork producers are maintaining the size of the breeding herd in the face of a very uncertain financial outlook. This cautious position would be expected given the wide swings in both hog and feed prices evident this spring. In addition, little change should be expected in the hog herd until the feed supply situation is better known this fall.
June 20, 2011
USDA Stocks and Acreage ReportsListen to MP3 podcast
A large number of factors have contributed to the higher prices of corn and other commodities over the past year. The beginning of the price increase can be traced to the USDA's forecast of 2010 corn planted acreage and the estimate of June 1 corn stocks released on June 30, 2010.
June 13, 2011
Attention Shifting from Acreage to Corn and Soybean YieldsListen to MP3 podcast
In the monthly report of World Agricultural Supply and Demand Estimates (WASDE), the USDA's World Agricultural Outlook Board (WAOB) reduced the forecast of U.S. planted and harvested acreage of corn and rice,. Forecasts for the other major crops were not changed from the forecasts in the March Prospective Plantings report.
June 6, 2011
Can Corn and Soybean Crops Overcome Late Planting?Listen to MP3 podcast
For much of the Corn Belt, optimum planting dates for both corn and soybeans are generally identified as occurring in late April or early May. Agronomic research has clearly documented the negative yield impacts of planting corn and soybeans "late". The yield response of late planting is estimated to be nonlinear. That is, yield losses generally accelerate as planting dates get later.
May 31, 2011
Crop Markets Reflect Both New and Missing InformationListen to MP3 podcast
Prices of corn, soybeans, and wheat continue to move erratically, reflecting both new information and the lack of some information. The markets are supplied with a steady flow of data on consumption in some markets, particularly the export markets and the ethanol market. Less frequent information is available about consumption in other markets, particularly the domestic feed market.
May 25, 2011
Economics of Prevented Planting in CornListen to MP3 podcast
Farmers will be able to take prevented planting payments once the "final planting date" is reached in late May or early June. In this article, net returns from taking a prevented planting are compared to expected net returns from planting corn and soybeans. Examples suggest prevented planting have returns competitive with planting corn or soybeans. Hence, farmers could have large incentives to take prevented planting payments once the final planting date has been reached. Number of acres on which prevented planting are taken will depend on 1) weather and 2) expected commodity prices at harvest-time.
May 23, 2011
Corn Market Continues to Focus on Production ProspectsListen to MP3 podcast
Two weeks ago, corn prices were declining rapidly and we pondered the likelihood of a recovery similar to those of September 2010, November 2010, and March 2011. The answer came quickly. By May 23, July 2011 futures traded within $.14 of the contract high and December 2011 futures traded within $.07 of the contract high on May 19.
May 18, 2011
Will Hedging 2011 Corn Now Reduce Downside Revenue Risk?Listen to MP3 podcast
In this paper, graphs show how hedging different proportions of expected corn production impact the chance of having revenue below three benchmarks. Four analyses are presented: one for no insurance and three for Revenue Protection (RP) crop insurance policies with 65, 75, and 85 percent coverage levels. With no insurance, the chance of revenue below $850 per acre is minimized when 71 percent of expected production is hedged. Use of crop insurance lowers the amount hedged needed to minimize risk. Chance of revenue below $850 per acre is minimized with 61 percent hedged for a 65 percent RP policy, 42 percent with a 75 percent RP policy, and 7 percent for an 85 percent RP policy.
May 16, 2011
A Rebound in World Grain Production ExpectedListen to MP3 podcast
The USDA's report of World Agricultural Supply and Demand Estimates (WASDE) released on May 11 refocused the market's attention on world crop production and the implications for re-building U.S. and world stocks. The report reflects prospects for some modest increase in world feed grain stocks and prospects for maintaining world wheat and soybean stocks. However, substantial uncertainty remains.
May 9, 2011
Can Corn Prices Rebound Again?Listen to MP3 podcast
The corn market has been the "poster child" for the sharp increase in agricultural commodity prices that began last summer and extended into the spring of 2011. Higher corn prices were driven by a combination of shortfalls in crop production, including the U.S. corn crop, and strong demand.
May 2, 2011
Corn and Soybean Prices Continue an Erratic PatternListen to MP3 podcast
As expected, corn and soybean prices continue to move erratically in a very wide range. Just in the past week, both May 2011 corn and soybean futures had a $.56 trading range. As the markets make the transition from old crop to new crop dominance, a lot of factors are influencing price expectations.
April 27, 2011
Planting Delays and Switching to Soybeans: A New FAST SpreadsheetListen to the MP3 podcast
Recent wet weather again raises concerns about planting delays, potentially leading to questions on whether to plant corn or soybeans on farmland that was scheduled to be planted to corn. We have developed a FAST spreadsheet named the Planting Decision Model that calculates corn and soybean returns by date of planting. Using current commodity prices and costs, switching to more soybeans seems several weeks away. For northern and central Illinois, corn is projected to be more profitable than soybeans throughout May. In southern Illinois, corn is projected to be more profitable than soybeans through the last part of May. Commodity prices play a key role in return differentials. Current commodity prices favor corn compared to what one would expect with more typical prices.
April 25, 2011
Cattle Prices Move Past Seasonal HighsListent to MP3 pocast
Cattle prices have had a remarkable run to the upside, with finished steers reaching the low $120s per hundredweight in early April. Now there are signs that those lofty prices will not be maintained into the spring and summer.
April 18, 2011
Corn and Soybean Prices to Reflect Substantial UncertaintyListen to MP3 podcast Old crop corn prices declined sharply in the first half of March as it appeared that high prices had sufficiently slowed the rate of consumption. However, a continued high rate of ethanol production, a resurgence of export sales, and larger livestock inventories provided evidence that consumption had not slowed.
April 13, 2011
Performance of Publicly-Traded Agricultural Firms Since 2007Listen to MP3 podcast
The crop farming sector has been relatively profitability in the past several years while the general economy has gone through a great deal of turmoil. As financial difficulties became apparent in 2008, most publicly-traded companies saw their stock prices decline. In this article, we examine how the stock prices of publicly-traded companies dealing with agriculture performed since 2007. Did agricultural companies experience declines similar to most other companies? Or did their stock prices perform better as a result of profitability within the crp farming sector?
April 11, 2011
Questions Still Remain About Corn and Soybean DemandListen to MP3 podcast
The USDA's monthly update of prospective supply and demand for U.S. corn and soybeans released on April 8 contained some changes from the March report, but re-affirmed the tightness of supply.
April 4, 2011
Focus Remains on Corn DemandListen to MP3 podcast
The USDA's March 1 Grain Stocks report revealed a surprisingly small inventory of corn. The smaller than expected inventory implies that consumption during the second quarter of the 2010-11 marketing year was larger than expected. It appears that consumption is progressing at a rate that cannot be sustained by available supplies.
April 3, 2011
Production of Bioenergy Crops in the MidwestListen to the MP3 podcast
The Energy Independence and Security Act of 2007 mandates that 79 billion liters of biofuels must be produced annually from non- corn starch feedstocks by 2022. Perennial grasses, switchgrass and miscanthus, could provide the needed biomass with additional benefits that they increase soil carbon, have better nitrogen fixation, provide higher biofuel yield per unit land and can be grown productively on low quality land. Switchgrass and Miscanthus are two of the more promising bioenergy crops because they are relatively higher yielding and have low input requirements. The purpose of this report is to determine the breakeven costs of producing these two energy crops in the Midwest.
March 28, 2011
Hog Price Peak Coming Soon?Listen to MP3 podcast
The highest hog prices on record will soon be arriving. These may be the highest hog prices for the next several years as well, especially if corn and soybean shortages can be reduced somewhat this summer with favorable growing conditions. On the other hand, if 2011 turns out to be a short crop production year, then the previous statement will be invalid as surging feed prices will force added liquidation of the hog herd this fall. But, you already knew how much was riding on upcoming crops.
March 25, 2011
Corn Profitability Higher than Soybean Profitability in the Corn-belt: Will Corn Acres Increase?Listen to MP3 podcast
The current supply and demand situation suggests a need for more corn acres in the upcoming 2011 production year. If corn acres are to increase, a sizable amount of the growth likely will come from the corn-belt. In the corn-belt, increases in corn acres cause reductions in soybean acres, as these two crops compete for acres. As farmers decide the proportion of corn and soybeans to plant, relative profitability of corn and soybeans likely enter into the decision-making process.
March 23, 2011
USDA Corn and Soybean Acreage Estimates and Yield Forecasts: Dispelling Myths and MisunderstandingsListen to MP3 podcast
The U.S. is the world's largest producer and exporter of corn and soybeans. As a result, the size of the crops in the U.S. has a substantial impact on the price of corn and soybeans. During the planting and growing season, market participants form expectations about the potential size of these crops from a variety of private and public sources of information. The National Agricultural Statistics Service (NASS) of the U.S. Department of Agriculture (USDA) is the primary provider of public information relative to potential crop size. These reports are among the biggest market movers year-in and year-out.
March 21, 2011
Update on Corn ConsumptionListen to MP3 podcast
The corn market, along with most other commodity and financial markets, was negatively impacted by the uncertainty created by the natural disaster in Japan and on-going conflicts in North Africa and the Middle East. The Japanese situation is especially important for corn since Japan is the largest importer of U.S. corn.
March 18, 2011
Measuring Indirect Land Use Change with Biofuels: Implications for PolicyListen to MP3 podcast
Biofuels have gained increasing attention as an alternative to fossil fuels. The three main motivations for increasing biofuel production include: reducing greenhouse gas (GHG) emissions, decreasing reliance on foreign oil, and stimulating rural development. The Energy Independence and Security Act (EISA) of 2007 established a Renewable Fuel Standard (RFS) that aims to increase the volume of renewable fuel from 9 billion gallons in 2008 to 36 billion gallons by 2022. The RFS imposes volumetric requirements for different types of biofuels based on their GHG emissions and sets an upper limit on corn ethanol of 15 billion gallons from 2015 onwards in order to encourage a transition to advanced and cellulosic biofuels which could reduce GHG emissions by more than 50% compared to gasoline.
March 14, 2011
Corn and Soybean Prices - Mission Accomplished?Listen to MP3 podcast
In our newsletter of January 18, it was suggested that corn and soybean prices had the dual objectives of allocating old crop supplies so as to maintain pipeline supplies at the end of the year and directing spring planting decisions. Specifically, prices needed to ensure an increase in corn acreage and to maintain soybean acreage at the 2010 level.
February 28, 2011
Pork Industry Walking Tight RopeListen to MP3
The pork industry in 2011 will be walking a tight rope between high hog prices and high feed prices. Consumers will be paying record high prices for pork. Producers will be receiving record high prices for their hogs, but also paying record high prices for feed. The outlook is in balance right now as hog prices are expected to be high enough to cover feed prices. However, the consequence of losing that balance could have extreme financial consequences on producers if consumers balk at high pork prices or weather threatens 2011 crops.
February 23, 2011
Higher 2011 GRIP Premiums Still Below Expected PaymentsListen to MP3
Group Risk Income Plan with the harvest price option (GRIP-HR) will have higher premiums in 2011 as compared to 2010. Premiums were estimated for corn using a projected price of $6.00 and a volatility of .29. This price and volatility will not be final until the end of February. Hence, actual premium could vary from estimates shown in this paper. Over all counties in Illinois, GRIP-HR premiums will be about 75% higher in 2011 as compared to 2010. Even with these increased premiums, the estimated expected payments exceed farmer-paid premium in most counties of Illinois.
February 14, 2011
Mixed News for Corn and Soybean ExportsListen to MP3
The USDA's weekly Export Sales report and weekly reports of export inspections provide timely information about export demand for U.S. agricultural commodities. The U.S. Census Bureau, however, is the official source of export estimates. The monthly Census Bureau reports are not as timely as USDA reports, but provide an opportunity to reassess export progress during the marketing year.