Showing posts from January, 2018

WILLAg Newsletter | January 28, 2018

January 28, 2018

It was a pretty good week for corn and soybean futures in Chicago. However, given the last six months of trade that’s not a huge accomplishment.

Presented below you’ll see two thoughts on where the markets might be headed. “Bad Weather Rising” lays out Scott Irwin’s longer term contrarian view. He’s of the opinion the markets over the next five years will reflect a higher mid-point. Irwin’s colleague at the University of Illinois, Todd Hubbs, takes the shorter term ‘marketing view’. His price outlook is less attractive. Again, one view is long-term and the other is short-term. Both have implications for farm and marketing decisions.
Further down in this letter you’ll find an article reposted from farmdocDaily. In it Iowa State’s Keri Jacobs details how the new tax law will impact grain marketing. You’ve likely heard a great deal about the 20% tax break farmers will receive if the first sale of their grain goes through a cooperative. Jacobs offers insight into how this…

Can Corn Prices Get Above the Current Range

read the farmdocDaily articleMarch corn futures continue to trade between $3.48 and $3.60. This has been the case since the release of the November USDA supply and demand tables. It continues today despite the bearish information contained in USDA’s end of year reports released January 12. Todd Hubbs says corn prices continue to stay in relatively narrow range, and that pattern may remain for the next several weeks.
Listen to Todd Hubbs discussion of his farmdocDaily article with Univesity of Illinois Farm Broadcaster Todd GleasonThe University of Illinois grain markets specialist says the present outlook projects ample corn supplies in 2018. This will likely keep corn prices in the current range until information on spring planting is released. USDA’s Prospective Plantings report is due March 29th. Hubbs says a typical price pattern suggests a price rally in late spring or early summer associated with a weather issue. Summer weather and the impact it has on corn production will eventu…

Bad Weather Rising

An agricultural economist at the University of Illinois is looking for a long-term recovery in the commodity markets. Commodity prices have been low since 2014, but the price of farmland has remained fairly strong. This is an indication thinks University of Illinois’ Scott Irwin that those buying farmland believe his contrarian view that prices will recover say to $4.00 for corn, $10.75 for soybeans, and $4.75 for all wheat. That’s at least one way to reconcile the firmness of land values. These long-run investors, whether they be farmers or outside investors, are looking for higher averages to restore profitability. Irwin says there are two reasons for commodity prices to increase. One of them is slow. It’s the return of better economic conditions across the planet. The other he says is fast and violent, “I think it will be a series, in a fairly short period of time, of really poor weather that will be the big event that pulls us out.” The ag economist is looking for the return of a …

WILLAg Newsletter | January 20, 2018

January 18, 2018 If you’ve been listening to the daily Closing Market Report you’ll know that many of the analysts have been on the road for the winter meeting circuit. I hope you get a chance to catch up with some of them or maybe me. I’ll be out next week with the folks from Farm Credit Illinois. You may see the dates and times here. These are crop insurance and marketing meetings. Strategic Farm Marketing will be doing a similar program. You may see their winter meeting list later in this letter. The farmdoc team will be out, too. Although that’ll happen in mid-February. Registration is already open for the “2018 Resilient Farm Roadshow | Building habits to become profitable Farm Managers”. If you or your organization is still planning an event contact me at (217) 333–9697 or I’ll be glad to talk with about bringing a WILLAg Marketing Panel to your meeting. Or if you’d prefer, just to give you the contact information for the University of Illinois ag economi…

Returning to the New Era Corn Price Mid-Point

The agricultural economists at ILLINOIS believe there are three recent historical commodity price eras. For grain prices, these run from post World War II to 1973, from 1973 to 2006, and from 2006 to the present. What they’ve found to date is that grain prices, unadjusted for inflation, tend to move within a range during these eras. The current range for corn is something like $3 dollars per bushel on the low end and $8.00 on the high. The highs come less frequently, usually driven by a weather-related shortfall. Consequently, prices spend more time on the lower end of the range than the top end. However, he doesn’t really know why the prices are so range-bound, “My own personal view is that it reflects relatively stable supply and demand dynamics. These are food commodity markets that don’t change very rapidly in terms of who’s producing and who’s consuming. As long as economic growth is not wildly high or low, we’ll tend to bounce around in a range.”The mid-point of that range in Il…

Returning to the New Era Corn Price Mid-Point

Returning to the New Era Corn Price Mid-Point
Scott Irwin, Agricultural Economist - University of IllinoisThe agricultural economists at ILLINOIS have been championing a new era for grain prices since the rise of ethanol as a major player in the U.S corn market. Todd Gleason has more on why.Scott Irwin is an agricultural economist…
2:44 radio
2:57 radio self-contained Scott Irwin is an agricultural economist from the University of Illinois. He and his colleagues believe grain prices have achieved a new higher plateau era. An era that started just after Congress mandated renewable fuels be ramped up in the U.S. gasoline supply over a ten year period beginning in 2005. Irwin says it is the third such era.Irwin :25 …within a range during these eras.Quote Summary - The periods that I call eras of grain prices run from post World War II to 1973, from 1973 to 2006, and 2006 to the present. What we have found to date is that grain prices, unadjusted for inflation, tend to move wi…

Looking for Anaplasmosis in Beef Cattle

Researchers at the University of Illinois are working with beef cattle producers in the southern third of the state to determine the prevalence of a disease that causes cows to become listless and die.

A cattle disease called anaplasmosis has been ramping up in southern Illinois, or at least that’s the way it appears. In short, it causes severe anemia. Illinois Extension’s Teresa Steckler, with funding from the Illinois Beef Association, has been pulling blood samples from herds in the area. She’s trying to determine if the strain of anaplasmosis is one called Mississippi that can be controlled by a vaccine, or if it is something else, “I’m just trying to see, with the movement of cattle throughout the United States, if we have a new strain? Is there a new agent transmitting the disease or is it just the tick that is causing the transmission? Is that linked to our deer population or some other population which the ticks may feast on and then move on to the cattle? It is related to the…

Corn, Soybeans, and Wheat Acres in Illinois

Between 1996 and 2017, the sum of acres planted to corn, soybeans, and wheat have varied within a tight band for the state of Illinois. It has ranged from 22.0 million to 22.7 million acres for the three crops. Over this period acreage planted to wheat has been small and declining. It has decreased from 1.7 million in 1996 to just half-a-million in 2017. University of Illinois Agricultural Economist Gary Schnitkey says most of the acreage switches in the state have been between corn and soybeans.

These are the historical facts for Illinois. In 1998, corn and soybean acres were each at 10.6 million. With some yearly variations, corn acres then increased and soybean acres generally decreased from 1998 to 2012. In 2012, 12.8 million acres of corn were planted and 9.0 million acres of soybeans. Since then, corn acres have decreased and soybean acres have increased. Corn acres declined from 12.8 million in 2012 to 11.2 million in 2016. Soybean increased from 9.0 million to that same 11.2…

IFES 2017: Crop and Livestock Price Prospects for 2018

read farmdocDaily articleby Todd Hubbs, Commodity Markets Specialist - University of IllinoisCROPSCrop prices will remain below the high levels seen in the early part of this decade due to large global inventories. Global economic growth continues to build on the momentum seen over the last year. Growth in China and emerging market in Asia is projected to remain strong throughout 2018. The prospects of improved growth support commodity demand, but the significant changes to trade policy could mitigate some of this demand growth in export markets. Lower prices are expected to continue in 2018 barring a shortfall in one of the major production regions. The following price outlook analysis assumes a good 2018 growing season.Corn prices continue to struggle with large crops and five consecutive years of growth in ending stocks. Domestic corn demand continues to see moderate growth in corn used for ethanol which has been supported by record levels of ethanol exports. Growth in livestock pr…

What Is Up with Soybean Yields

read farmdocDaily arcticle
by Scott Irwin, Agricultural Economist - University of Illinois

Soybean yields in the U.S. have been very high the last four years. The U.S. average yield set new records in a stair-step fashion each year between 2014 and 2016. The 2016 yield reached the remarkable level of 52.1 bushels. While not a record, the 2017 yield (based on the November 1 USDA estimate) was 49.5 bushels, the second largest ever. On top of the high U.S. average yields are the numerous reports of field-level yields in the 70s, 80s, and even a few in the 90s.

The high soybean yields of recent years have sparked a debate about what is driving the exceptional yields. In thinking about this debate it is important to understand that there are only three possible sources of soybean yield gain. The first is weather during the growing season. The second is genetic improvement in soybean varieties. The third is a management, which encompasses all aspects of the soybean production process. Genet…

U.S. Crop Acreage Still Moving to Soybean

read farmdocDaily article

Todd Gleason reports on the move away from wheat and towards soybeans.

Corn is king in the United States. Soybean has been on a swift move upward. And wheat acreage has been on the decline for about 40 years. About half-way through those 4 decades two important things happened. Congress passed the 1996 farm bill - often called Freedom to Farm because it eliminated the last vestiges of supply controls for program crops and Monsanto introduced Round-Up Ready soybeans, that was 1995. The latter made it a whole lot easier to raise beans and the former, says University of Illinois Agricultural Economist Gary Schnitkey, let farmers react to the market.

From 1996 to 2012 U.S. farmers increased soybean acreage by 20 percent, corn acreage was up a bit more, but not much, and wheat acreage plummeted 36 percent. Schnitkey says much of the change can be explained by just looking at the relative profitability of the crops. Corn and soybeans are more profitable than wheat. …