Six years after more than 100 alumni, faculty, students, and friends of Illinois gathered to kick-off a 5 million dollar fundraising campaign, the University of Illinois Turner Hall transformation has been completed. 1964 ag sciences grad William Kirk and his wife, Lillian, made a $500,000 donation to seed the project.
Turner Hall West Lobby
Phase I of the Turner Hall Project transformed the crop science and soil science laboratories into 21st-century learning environments. Undergraduate courses are taught in these two labs. Donors also funded a two-story renovation of the west lobby. In total, Phase I renovated 7136 square feet. These renovated spaces allow for active learning, utilizing new technologies. The Dow AgroSciences Crop Sciences Laboratory and the Monsanto Soil Science Laboratory welcomed students for the first time in fall 2015.
Phase II construction began in 2017 and will conclude in 2018. This 38,377 square foot, three-floor renovation will fully transform classrooms on the first and second floors of Turner Hall, as well as advanced laboratories in the basement. Transformed classrooms feature new technologies, state-of-the-art equipment, new flooring, HVAC and lighting. It encompasses a new computer lab, new “smart” classroom, new conference room and student collaboration areas.
The market for commodity crops processed into new products is expected to more than double in the next six years to some 490 billion dollars. The IBRL building on the Univesity of Illinois campus in Urbana-Champaign is investing in the future of these agricultural innovations.
The last week of September a new building was dedicated on the University of Illinois campus in Urbana-Champaign. The Integrated Bioprocessing Research Laboratory is designed to bridge the gap between discovery and commercialization. IBRL’s director, Vijay Singh, says every year some 250 invention disclosures are filed at the University of Illinois. Most are never commercialized because there isn’t a proof of concept facility to scale up new ways to process ethanol or other agricultural biofuels.
The labs in IBRL, Singh says, will do just that, “This facility is also a link joining academia with business development. With plug and play utilities and flexible equipment offerings, IBRL is agile enough to serve a variety of needs across the bioprocessing industry.”
However, it’s not just the IBRL building on the University of Illinois ag campus that creates this commercialization synergy. There’s the Food Science pilot plant, the Institute for Genomic Biology, the array of greenhouses, the energy farm where all kinds of crops are explored for biofuels, and Research Park where big data technology is fused with the hard sciences. Together, Vijay Singh believes, these create an unmatched eco-space that can drive a bio-economy in Illinois and beyond.
Even with cost-cutting and savings measures, University of Illinois Agricultural Economist Gary Schnitkey says, for the moment, it seems unlikely farmers will have positive returns on rented farmland in 2019. Todd Gleason has more…
There is widespread interest in whether small refinery exemptions (SREs) under the RFS have “destroyed” demand for ethanol in the physical market. Todd Gleason discusses the point with University of Illinois agricultural economist Scott Irwin.
China, the number one destination for all U.S. soybeans, has stopped buying because of the President’s trade policies. Normally those bushels would be exported via the PNW (the Pacific Northwest) grain export terminals. That gate has closed says NDSU’s Frayne Olson and now all those bushels are expected to try and move through the other export gate at the Port of New Orleans.
Olson says “The challenge we have in the soybean market is that the basis levels are trying to choke off the inflow of grain. Local basis is all about what’s the inflow rate versus the outflow rate. The problem is our out-flow rate is very slow. So, the local basis level is going to continue to fall until it chokes off that inflow and where that magic number depends upon where you are.”
Fall 2019 Soybean Basis
If you look at a fall 2018 map of soybean prices across the United State you can see how grain flow is backing up into the St. Louis export terminals. The PNW can handle about 25 train loads of soybeans a day. St. Louis can manage 5. Because of this, cash prices from the Dakotas all the way to Illinois River - it feeds the export market & St. Louis - are miserably low. Those farmers east of the Illinois River are impacted, too. If the map includes Canadian export terminals you can see that farmers in far western North Dakota are getting a $1.90 a bushel less for their soybeans than their counterparts near London, Ontario. Farmers in parts of Illinois, Indiana, and Ohio are getting about 60 cents less.
The evolving developments with tariffs between the U.S. and China continue to influence the outlook for soybean prices. The relationship between U.S. and competitor export prices along with the changing nature of trade flows merit monitoring during the 2018–19 marketing year.
The implementation of tariffs on Chinese goods and the subsequent retaliation led to an adjustment of trade flows in world soybean markets over the last few months. As the tariffs, went into effect, a price gap opened between Brazilian and U.S. export prices. The gap continuously widened when comparing an index of soybean prices at the port of Paranagua and New Orleans prices since early June.
This chart illustrates how the price of U.S. soybeans for export at the port of New Orleans has dropped below the price of Brazil sourced soybeans from the port of Paranagua since June of 2018.
The gap reached its broadest level late last week at approximately $1.90 per bushel difference. New Orleans prices came in near $8.50 per bushel. It is difficult to predict future changes in the spread between the two prices, but it directly relates to the tariff level in China on U.S. soybeans. The development of this price gap indicates the impact of tariffs on soybean markets and highlights switches in Chinese soybean buying this year. Brazilian soybean exports attained record levels in May with exports coming in at 453.7 million bushels. Soybean exports from Brazil continued to show strength through August with the Brazilian export pace exceeding the previous five-year average by 47.5 percent according to Brazilian export data. Meanwhile, the large drop in U.S. soybean prices led to a jump in soybean exports over the last quarter of this marketing year from the U.S.
Both U.S. and Brazilian soybean exports exceeded the five-year-averages in the month of August. However, ILLINOIS’ Todd Hubbs cautions the U.S. increase, derived from countries other than China, is likely not to make up for the expected losses in soybean trade to that nation if the Trump Administration trade row persists.
The USDA soybean export estimate for the 2017–18 marketing year currently sits at 2.11 billion bushels, an increase of 45 million bushels since the June estimate. An expectation of additional bushels added to soybean exports for the 2017–18 marketing year looks probable based on recent export reports. Census Bureau export estimates through July placed soybean exports at 2.051 billion bushels. Census Bureau export totals came in 56 million bushels larger than cumulative marketing year export inspections over the same period. As of August 30, cumulative export inspections for the current marketing year totaled 2.068 billion bushels. If the same difference in export pace continued through the remainder of the marketing year, soybean exports would total 2.124 billion bushels for the 2017–18 marketing year, 14 million bushels above the current estimate. During the last four weeks, export inspections of soybeans averaged 30.6 million bushels per week. Low soybean prices encouraged exports to destinations other than China in the previous two months.
These pie charts illustrate how the final destination of U.S. soybean exports for the month of July changed this year from the previous four years.
A detailed look at July export totals by country, the first full month under the new tariffs, provide a glimpse of how trade flows appear to be adjusting. While Chinese imports fell by 10.7 million bushels from last July, numerous countries increased soybean purchases at the lower prices. Egypt, the European Union, and Taiwan saw the highest increases over last year at 10.9, 5.7, and 8.7 million bushels higher respectively. U.S. soybean exports to China typically reach the lowest levels of the marketing year in the summer and build strength as U.S. harvest progresses. A large pullback in Chinese demand for U.S. soybeans appears set to continue indefinitely. The growth in soybean exports around the world relies on the lower prices in place since June.
A large amount of uncertainty surrounds soybean exports in the 2018–19 marketing. Currently, the USDA forecasts 2.06 billion bushels of soybean exports. Export sales for the next marketing year sit at 510.4 million bushels as of August 30, down 54.8 million bushels from last year. Sales to China came in at 46.5 million bushels, down 80 percent from the same time last year. Stronger sales figures to Mexico, Canada, and Pakistan mitigated weaker sales totals. The ability for the rest of the world to make up for typical Chinese exports in the first half of the 2018–19 marketing year, when U.S. exports to China are at the highest levels, seems unlikely. The USDA reduced the Chinese soybean import forecast to 3.491 billion bushels in the last WASDE report. Recently, the spread of African swine fever saw China indicate an even further reduction in soybean imports over the next year to 3.2 billion bushels, down 9.5 percent from last year. While decreased Chinese import projections may be optimistic, the prospect of substantial increases in U.S. and South American soybean production next marketing year under a lower export demand scenario would keep U.S. prices under pressure.
The growth of the U.S. trade deficit to China in August and the high likelihood of another round of tariffs between the two nations makes a resolution of trade issues a low probability event for the near future. U.S. exports of soybeans jumped over the last quarter of the marketing year as lower prices spurred demand around the world. A large U.S. crop with lower export demand over the next marketing year set up a bearish picture for soybean prices.
This fall farmers will harvest a record sized soybean crop. USDA says about 4.7 billion bushels. They’ll need a home and farmers in North Dakota are really worried. About 2/3rds of their crop is shipped by rail to the Pacific Northwest for export to China. The Trump administration trade policies have mostly closed that market says North Dakota Senator Heidi Heitkamp, “What I would tell you is not only have you disrupted the markets and we have taken a haircut, you may not be able to sell them which is something I’ve been talking about for a long time.” Heitkamp was speaking to farmers in Fargo at the Big Iron farm show this week.
The cash price of soybeans has tumbled across the whole of the Midwest and some elevators are telling farmers not to bring their beans to town. Those soybeans from the Dakota’s and Minnesota are going to try and find another way out of the country. That’s probably through St. Louis and down the Mississippi River. It’s a brutal cash price situation that backs right up into Illinois says Todd Hubbs, “I hope some people put in at $10 to $10.30. Now it is just a lot of damage limitation and hopefully you get a good yield and you can market some of those soybeans right across the scale, but you are looking at really low prices.”
Hubbs, a commodity marketing specialist from the University of Illinois, thinks the only other option is for farmers to store soybeans on the farm and to hope for an end to the trade dispute with China or for a weather problem in Brazil, or both. Though he admits hope is not a strategy.
Sign up for the trade and tariff compensation package from the United State Department of Agriculture is open. Todd Gleason has more on how and when farmers and landlords should fill out the paperwork.
The dramatic fall in the price of corn and soybeans earlier in the year has put farmers in a unique marketing position. They must decide how much of the drop is due to the expected bumper crop size of the harvest and how much comes from the Trump Administration trade policies. University of Illinois Agricultural Economist Todd Hubbs says determining when those disputes might be settled is key to making good marketing decisions.