Issues Stemming from January USDA Report

The final 2014 crop production numbers delivered by USDA in the January reports leave three issue unresolved.

The three problems, as identified by University of Illinois Ag Economist Darrel Good, center on the number of corn and soybean acres planted, the surprisingly small amount of corn used in the first three months of the marketing year, and the surprisingly large number of soybeans consumed in that same timeframe.

The difference between the total number of planted acres USDA NASS has reported over time and those officially reported by farmers to FSA , USDA’s Farm Service Agency, has grown. The number of acres planted to wheat, corn, and soybeans as tallied by USDA NASS has steadily grown larger than the number of acres farmers are telling FSA they’ve sown. USDA has not offered an explanation. The difference in 2014 is nearly 9.3 million acres over the three crops says Darrel Good.
He says the changing relationship between NASS acreage estimates and acreage reported to FSA may make early FSA reports less useful in anticipating NASS final acreage estimates.
The second issue is related to how much corn was used in the months of September, October, and November. Those are the first three months of the marketing year. USDA totals 4.25 billion bushels of disappearance of which feed and residual use accounted for 2.198 billion. This number is a 114 million bushels lower than the usage in the same period last year after it was revised down. The problem says the U of I number cruncher is that over time the range of usage represented in the first quarter figure as compared to total usage for the year has gotten wider.
First quarter use is no longer a reliable forecaster of total marketing year consumption. It means a lot of uncertainty will persist in the marketplace about how much corn is being fed to livestock.
The numbers do get better as time passes during the marketing year. The expectation is the March 31 Grain Stocks report will be more accurate.

The third issue with the January USDA figures is also in the consumption numbers. The implied residual disappearance of soybeans in the first quarter set a record. This might mean the size of the 2014 soybean crop was over estimated.
While this is an issue it will not be resolved for several months with some insight coming from the March Grain Stocks report.
Time will eventually fix all three issues, but it is important to recognize them and the potential changes these may bring to the commodity markets.

The Ethanol to Gasoline Relationship

The plummeting price of gasoline has caused a dramatic change in the relationship between the price of corn and the price of gasoline. However, this means little for how much ethanol will be produced and consumed.

Farmers May Not Benefit from Bumper Crops



Corn and soybean farmers harvested a bumper crop in 2014 — a record 14.2 billion bushels of corn and a record 3.97 billion bushels of soybeans, according to the U.S. Department of Agriculture. Here & Now’s Jeremy Hobson spoke with Chad Hart, an agricultural economist at Iowa State University, about what the record crop means for the farmers’ revenue, since they’re selling the crops at a lower price.

Here & Now airs during the noon hour on WILL AM580.

WILLAg All Day Ag Outlook March 10th








The March 10th meeting includes a continental breakfast and Beef House Lunch all for just $25 per ticket.

Riding the Feeder Cattle Roller Coaster

by Paul Peterson - University of Illinois

Futures prices were limit-down for 5 days in a row in mid-December 2014, the most limit-move days in a livestock contract since the BSE (mad cow) selloff in December 2003. Daily price limits in feeder cattle futures were increased from 3 cents per pound ($3/cwt) to 4½ cents per pound ($4.50/cwt), with provisions for additional expansions if needed; complete details are presented here.

For the 22 trading days in December 2014, the January 2015 feeder cattle futures contract had 10 days with price moves up or down of 3 cents per pound or more. And on the first trading day of January 2015, prices closed limit-up at the new 4½ cent daily limit, starting out the New Year with a bang (Figure 1). In contrast, February 2015 live cattle futures have had just 2 limit days (both down) since December 1, and February 2015 hog futures have had none.

So why have feeder cattle prices been so volatile lately? It helps to think about feeder cattle prices as the "shock absorber" between fed cattle prices on one end, and corn prices on the other. When buying feeder cattle, feedlots look at the gross feeding margin, which is

United Nations Declares 2015 the Year of Soils



International Year of Soils

The United Nations Food and Agriculture Organization has designated 2015 the International Year of Soils. The organization hopes to raise awareness of the need to protect productive soils around the planet. It has entrusted a Global Soil Partnership with this task. The partnership has five pillars of action.

The 5 pillars of action

The Global Soil Partnership will support the process leading to the adoption of sustainable development goals for soils.

It will contribute to environmental wellbeing through, for example, preventing soil erosion and degradation, reducing greenhouse gas emissions,