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 tgleason@illinois.edu. 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 economist, weed scientist, entomologist, or plant pathologist of your choice. I can also put you in contact with any of the analysts you hear on WILLAg.
Todd Gleason, ILLINOIS Extension Farm Broadcaster
College of Agricultural, Consumer & Environmental Sciences

Commodity Week
- Bill Mayer, Strategic Farm Marketing
- Joe Vaclavik, Standard Grain
- Mike Zuzolo, Global Commodity Analytics and Consulting 

It is dry in the United States from Texas to Illinois.
Frankly, that’s not a big deal right now or a marketing plan. It could become something later on in the year, but the odds don’t really correlate in any fashion. Here is proof from the USDA NASS National Average Yield database. What you see is the average national corn yield for each year since 2010 imposed on a January Drought Monitor map. The U.S. Drought Monitor is produced through a partnership between the National Drought Mitigation Center at the University of Nebraska-Lincoln, the United States Department of Agriculture, and the National Oceanic and Atmospheric Administration.

Spring rains, more often than not, alleviate dry conditions. You may view the National Average Corn Yield database going back to 1866 (24.3 bpa) using this link. Here’s a quick view of the National Average Yields database for corn going back to 2002.

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 Illinois since 2006 has been about $4.50 for corn. However, Irwin says corn prices over the last four years have averaged about $3.50 per bushel. He thinks this means corn prices are due to go higher. Marketing on that belief is difficult says Scott Irwin, “If you believe conventional wisdom, you should prepare for and project sub $3.50 corn prices for as far as the eye can see. This is not my view. I will be the first to admit prices have gone lower, longer than I expected when we came off the highs, but I still believe a projected average price over the next five years closer to $4.00, rather than $3.25 or $3.50 is more realistic.” 
Admittedly, Irwin has more confidence in his ability to predict the mid-point than the movement of prices. Mostly he says the upward moves are predicated on weather problems. 

Pre-register and find full details of the upcoming Strategic Farm Marketing winter meetings at www.sfarmmarketing.com. Meetings run through mid-February. Be sure to check the full schedule online for a program near you.

Annie’s Project

Women involved in agriculture and wanting to learn more about managing risk on the farm can sign up for Annie’s Project classes this winter. Annie’s Project was originated by Ruth Hambleton before she retired from Illinois Extension.
Annie’s Project – Education for Farm Women is a 501(c)(3) nonprofit organization dedicated to providing educational programs (Annie’s Projects) designed to strengthen women’s roles in the modern farm enterprise. Currently, classes are being taught in 33 states. Annie’s Projects foster problem solving, record keeping, and decision-making skills in farm women.
The six educational sessions of the course include topics from the five risk areas. As Annie’s Project has been localized to meet the needs of farm and ranch women across the country, topics or emphases may vary.
  • Financial Risk – women and money, basic financial documentation, interpreting financial statements, enterprise analysis, USDA programs, and record keeping systems
  • Human Resource Risk – communication and management styles, insurance needs, and succession planning
  • Legal Risk – estate planning, farmland leasing, and employee management
  • Market Risk – access to market information and grain or livestock marketing
  • Production Risk – Natural Resources Conservation Service, web soil survey, and crop insurance

Todd E. Gleason, WILLAg.org
University of Illinois Extension
(217) 333–9797 or tgleason@illinois.edu