Benchmarking Soybean Production Systems

Soybean farmers in ten states across the Midwest are being asked twenty questions. Todd Gleason has more on a Soybean Checkoff funded project to benchmark the yield impact of different production practices.

2015 ARC-CO Payment Estimates for Corn and Soybeans
Gary Schnitkey, Agricultural Economist - University of Illinois
Nick Paulson, Agricultural Economist - University of Illinois

On February 18th, the National Ag Statistics Service (NASS) released county yield data for the 2015 crop year. This post uses the NASS county yields and current MYA price projections from the USDA to estimate 2015 payments for the Ag Risk Coverage county level program (ARC-CO). Note that the final yields and prices used to determine actual payment levels will differ from the values these payment estimates are based upon. The final MYA price for corn and soybeans will not be known until the marketing year ends in August, and the final yields FSA will use to determine ARC-CO payments will likely not be released until September. See the farmdoc daily article from December 1, 2015 for a more detailed discussion and comparison of NASS county yields and FSA county yields used for the ARC-CO program.

Current MYA Price Projections

The midpoint of the February WASDE range for the 2015/16 MYA corn price is $3.60 (range of $3.35 to $3.85). This is 32% below the 2015 ARC program benchmark price of $5.29. Since the ARC-CO program provides a guarantee equal to 86% of the county’s benchmark revenue, the projected corn price implies that the actual corn yield in a county can be up to 26% higher than the ARC benchmark yield to trigger a payment. For soybeans, the midpoint of the WASDE range is $8.80 (range of $8.05 to $9.55). This implies that the actual soybean yield in a county can be up to 20% above the 2015 benchmark yield to trigger an ARC-CO payment on soybean base. Counties where actual corn (soybean) yields are up to 11.7% (6%) above the benchmark yield for 2015 will trigger the maximum ARC-CO payment, which equals 10% of the county benchmark revenue.

Estimated ARC-CO Payments for Corn and Soybeans

Figure 1 illustrates estimated 2015 ARC-CO payments on corn base acres. The county yield data from NASS covers only a portion of the counties in the US where ARC-CO is available for corn. More than 70% of the counties in the US where a NASS yield was published are estimated to trigger an ARC-CO payment for corn base in 2015, with over 40% of those counties triggering the maximum payment equal to 10% of the county revenue benchmark.

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Figure 2 shows estimated 2015 ARC-CO payments on soybean base acres. Again, NASS reported a county yield for only a portion of the counties with the ARC-CO program for soybeans. ARC-CO payments are estimated to be triggered on over 60% of counties with a NASS soybean yield reported, with more than 30% of counties triggering the maximum payment on soybean base acres.

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Estimated ARC-CO Payments in Illinois

In Illinois the average estimated ARC-CO payment on corn base is over $65 per base acre. County level payment estimates for Illinois are illustrated in Figure 3. Payments would be triggered in over 90% of Illinois counties, and the maximum payment would be triggered for corn in roughly 2/3 of Illinois counties. Only three counties with a corn yield reported by NASS in Illinois for 2015 would not receive a payment at the current price projection of $3.60. These counties, shown in white in Figure 3, are Monroe, Piatt, and Pope. NASS reported county yield averages well above the benchmark yield levels in all three of these counties.

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Adjusting the projected MYA price for corn to the high end of the WASDE range ($3.85) would still result in ARC-CO payments on corn base averaging over $45 per base acre across the state, with more than 75% of counties triggering payments and just over 25% of counties triggering the maximum payment.

The average estimated ARC-CO payment on soybean base in Illinois is just over $28 per base acre. Payments would be triggered in more than 70% of Illinois counties, with more than 15% of counties triggering the maximum payment. A handful of counties, located mainly in southern and east central Illinois, had reported NASS yields which were high enough to result in a zero ARC-CO payment estimate on soybean base.

Increasing the projected MYA price for soybeans to the higher end of the WASDE range ($9.55) lowers the average ARC-CO payment estimate to $6.60 per base acre with less than 40% of counties triggering a payment, and no counties triggering the maximum payment on soybean base acres.

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Summary

Despite corn and soybean yields which generally above average in most areas in 2015, low price levels projected for corn and soybeans for the 2015/16 marketing year make ARC-CO payments for both crops likely across much of the US. Using county yields released by NASS last week, payments for ARC-CO were estimated at the midpoint of the price range in the February WASDE report for corn and soybeans. Using these yields and price levels, a large proportion of counties are expected to trigger 2015 ARC-CO payments for corn and soybeans, with a significant number of counties hitting the maximum payment level of 10% of the county benchmark revenue.

In Illinois, the ARC-CO payment for corn is estimated to average over $65 per base acre with only three counties not expected to receive a payment. For soybeans, the average ARC-CO payment estimate is just over $28 per base acre in Illinois, again with the majority of counties expected to receive some payment.

2015 ARC-CO payments are only provided as estimates at this time. The final yields used in calculating payments can differ from the yields released by NASS, and will also cover additional counties in the US. The final MYA price levels for corn and soybeans will not be known with certainty until the marketing year ends in August. However, where NASS yields are available, estimates for the 2015 ARC-CO payment levels can be helpful for planning purposes.

Consumption Pace of Corn & Soybeans

FarmDocDaily Article

The price for corn has traded in a 25 cent range over the last two months. The price of soybeans has mostly traded within a 40 cent range. Todd Gleason explores this sideways pattern and how the pace of consumption has contributed the stable, if low, price structure.



The sideways price pattern reflects on-going expectations of adequate supplies of both crops writes Darrel Good on the FarmDocDaily website. He says there is plenty to meet consumption needs during the current marketing

Bill Gates Billionaires Behind Clean Energy

A Weather Market for Corn in 2016

Nearby corn futures remain above the early January lows, but continue to struggle under the weight of a number of negative market fundamental factors. Todd Gleason has more on the prospects for higher corn prices later this year.

Quadrac at the Chicago Auto Show

Quiet Day at Elkhart Grain Company


I stopped by the grain elevator in Elkhart, Illinois (pop. 403) yesterday. It was quiet. Elkhart Grain owns the...
Posted by Todd E. Gleason on Wednesday, February 17, 2016

About NCSA's Blue Waters Super Computer

Blue Waters Website
view Todd Gleason’s photos

Todd Gleason tours the National Center for Supercomputing Applications Blue Waters facility on the University of Illinois campus.

FarmDocDaily Crop Insurance Tools Updated

Farmers around the nation are about to tap the birthplace of the internet browser for crop insurance data. Really! It’s a true statement. Todd Gleason has more from the University of Illinois.



Before Internet Explorer, Safari, Firefox, and Google’s Chrome, the first internet browser was called Mosaic. It was developed on the Univeristy of Illinois campus as part of the National Center for Supercomputing Applications. NCSA is one of the places the internet was born. Today it is home to Blue Waters one of the most powerful supercomputers on the planet. And as of this month NCSA is home to the data farmers will use to help them make decisions about crop insurance via the FarmDoc website says NCSA’s Scott Wilkin.
Quote Summary - The way it will work is as an interactive website. It will actually be running on the web servers sitting at NCSA. We take the data, somebody says we want to make this happen; we want to understand the costs and benefits for an Enterprise Unit in Pike County, or Piatt County, or Champaign County. It runs the numbers automatically. It does the calculations right then. So, it is very sustainable.
So big deal you might says, “The FarmDOC (farm-doc) site has been home to the default crop insurance tools farmers in twelve corn and soybean producing states have used for a longtime.” This is true, but those have been hand-updated through an enormous Excel spreadsheet. The realtime calculations are the key and the reason agricultural economist Bruce Sherrick says the FarmDOC team moved the data to NCSA.
Quote Summary - From my perspective, they may not agree, but I think it has been a blast to see how folks who think about that as a normal environment attack a problem like this. By most of the scales they are used to working at we are probably a very small problem. By the scale we are used to working at, this was a really large numeric problem. So to be able to turn it over to somebody that thinks, not in terms of… a few billions is not a large number to somebody used to working in a National Center for Supercomputing applications environment.
NCSA is handling the front and back end of the new crop insurance calculators found on the FarmDOC pages. Those calculators must handle large stress loads during the Crop Insurance decision making time from March 1 to March 15. The volume of users coupled with the volume of calculations all done in realtime is mind boggling no more. NCSA will do the heavy lifting to help farmers quickly evaluate their federal crop insurance options.

Bull Buyers Guide

blog post source

It’s that time of year when farmers and ranchers buy bulls for their herds. They’re likely sifting through stacks of bull sale catalogs. Todd Gleason has some advice on evaluating a sire’s potential.

Tillage Practices Vary Across the United States

USDA ERS, Washington, D.C. -

 

No-till and strip-till are two of many tillage methods farmers use to plant crops. In a no-till system, farmers plant directly into the undisturbed residue of the previous crop without tillage, except for nutrient injection; in a strip-till system, only a narrow strip is tilled where row crops are planted. These tillage practices contribute to improving soil health, and reduce net greenhouse gas emissions. During 2010-11, about 23 percent of land in corn, cotton, soybeans, and wheat was on a farm where no-till/strip-till was used on every acre (full adopters). Another 33 percent of acreage in these crops was located on farms where a mix of no-till, strip-till, and other tillage practices were used on only some acres (partial adopters). In the Prairie Gateway, Northern Great Plains, and Heartland regions—which account for 72 percent of corn, soybean, wheat, and cotton acreage—more than half of these crop acres were on farms that used no-till/strip-till to some extent. Partial adopters have the equipment and expertise, at least for some crops, to use no-till/strip-till; these farmers may be well positioned to expand these practices to a larger share of cropland acreage. This chart is from the ERS report, Conservation-Practice Adoption Rates Vary Widely by Crop and Region, December 2015.