Black Cutworm Early Season Threat to Corn

Corn farmers should pay attention to the spring migration of the black cutworm. The moths wing their way into the Midwest every year.

The black cutworm rides the southerlies north into the Corn Belt. The female moths look for farm fields lush and green mostly with weeds. Winter annuals are the favored nesting ground says University of Illinois Extension Entomologist Mike Gray.

Quote Summary - They go into those fields and lay eggs. They lay eggs on those weeds. Eventually, once the fields are planted with corn, many of the surviving black cutworm larvae will move off the weed hosts onto corn seedlings. Corn fields in the one-to-four-leaf stage are very susceptible to cutting.

If those cuts are made below the growing point of the corn plant, then it dies. Most of the cutting, says Mike Gray, takes place over night or occasionally on a very overcast dark cloudy day.

Quote Summary - Growers are encouraged to look for early signs of black cutworm activity. This would be small pin hole areas on leaves that have been removed by the caterpillars in their one to three instar stage. Once they caterpillar reaches the fourth larval instar stage it can begin to cut plants.

Many insecticides can be used as rescue treatments if needed to combat the black cutworm. Most Bt corn is also capable of protecting the crop, but not in equal measure.

Quote Summary - Not all Bt hybrids offer the same level of protection when it comes to black cutworms. Some are quite good, but finding that trait can be confusing. I encourage growers to use the Handy Bt Trait table put out annually by Michigan State University. Search Google for “Handy Bt Trait Table ”. It is very informative and identifies if the hybrid chosen offers black cutworm protection.

If the hybrid chosen does not protect against the black cutworm, then the farmer will clearly, urges Gray, need to pay much more attention to the lifecycle of the insect and potentially gear-up for rescue treatments as needed.

2015 Gross Revenues for Corn Using RP85% + ARC Co

A University of Illinois Ag Economist has back figured how the new farm program would have performed over the last 40 growing seasons when coupled to crop insurance. The calculations can be used as a guidepost to 2015 farm incomes.



The exercise coupled RP crop insurance at the 85% level to the ARC County farm program to see how it would have supplemented farm income on a highly productive central Illinois farm located in Logan County. The numbers were run for crop years starting in 1975 all the way through 2014 says Gary Schnitkey. He’s an ag economist at the University of Illinois and explains, to begin with, how this combination would have handled the years farmer are most likely to remember; 1980, 83, 88, and 2012.

Quote Summary - So those are the drought years, and while in 1988 we didn’t have the crop insurance products we do now, we can figure what income would have looked like if a producer had purchased RP at the 85% level and took ARC County. Those years would not be bad from a gross revenue stand point. Crop revenues would be low, but crop insurance and ARC County payments would bring those back so that if, for instance 2015 looked like 1988 or 2012, the gross income would be at the top end of our distribution over the 40 year period.

Yields and prices in each of the 40 years are calculated using 2015 projections, but the actual year offsets. 2012, then. would show a lower actual price (because this years crop insurance price is lower than 2012’s) but a higher actual yield. Essentially you pick a year, adjust for 2015, and calculate the gross income.

The middle point (where the distribution is not quite evenly split above and below but close) is $828 per acre. The low revenue year forecasts correlate mostly with trend yields and lower corn prices. So, with a somewhat normal growing season that has below average prices. That could be caused by large residual supplies, big carryouts, or by poor demand.

Quote Summary - Poorer demand or something along that lines. Those types of years will be the ones that cause low revenues in 2015.

The ten middle years of the set project 2015 gross revenues from $825 to $831 per acre for corn. They were each characterized by harvest prices and yields relatively close to expected levels - the February crop insurance price and trend yield. Those years include 1984, 1990, 1991, 1996, 2002, and 2009.

Link to original FarmDocDaily article

Corn Market Expects Large Supply & Weak Demand

The price of corn is as low as it has been since last fall. It reflects the large size of last year’s crop, and surprisingly little concern about this year’s crop.

December corn futures in Chicago, at the time of this writing, were priced in the low $3.80’s. That’s about twenty cents better than the contract low set last fall, but still not nearly strong enough to reflect the $4.25 season’s average cash price the University of Illinois ag economists are using in their supply and demand table for the coming year. Darrel Good sums it up this way.

Quote Summary - Current prices appear to reflect minimum production risk and surprisingly weak demand prospects.

Let’s take that statement apart. We’ll start with price. The price of old crop corn, while at the lowest level since last October at the futures exchange in Chicago, isn’t nearly so cheap in the country. Last fall corn for July delivery in central Illinois was priced 70 cents under the July contract. It is 14 under now. Here’s what that, in relative terms, means. The cash price for the same delivery time, at this point, could be as much as 70 cents better today than it was last fall. The supply and demand of corn have changed since last fall, too. However, looking forward Darrel Good says the current price of corn reflects expectations for a combination of prolonged demand weakness and another year of ample supplies.

Quote Summary - Expectations for demand weakness center on the ethanol and export markets. It is generally argued that plateauing domestic ethanol consumption, a stronger dollar that could favor ethanol imports and discourages exports, and low crude oil prices will limit the price of ethanol and the demand for corn. Similarly, abundant world grain supplies and a stronger dollar are expected to create a weak demand environment for U.S. corn in the world market. In contrast, domestic feed demand for corn should be supported by ongoing expansion in livestock and poultry numbers, even with some loss of poultry numbers to bird flu.

The combination of expanding livestock numbers and low corn prices, writes Good in his FarmDacDaily website posting of April 27th, should generate a high level of consumption. That’s demand. Supply will be largely dependent on the number of acres of corn farmers plant this spring, and weather this summer. We’ll no more June 30th when USDA releases the Planted Acreage report. Here’s how those numbers have changed from March to June since 1996.

Quote Summary - From 1996 (the beginning of the freedom to farm era) through 2014, the final estimate of planted acreage of corn exceeded the March intentions estimate in seven years and was less than the March estimate in 12 years. In most years, the difference was within the range of sampling error, estimated at one to three percent. The exception was 2007 when actual planted acres exceeded intentions by nearly 3.1 million acres.

There is already a lot of discussion again this year about the direction and magnitude of the difference between actual and intended acreage of corn. Chances are, says Darrel Good, the difference will not substantially alter production expectations.

All else equal, the larger percentage of the crop that is planted in a timely fashion the higher the U.S. average yield potential. However, all else is rarely equal Good claims, with the magnitude of yield ultimately determined by summer weather. Unless an unusually large or small percentage of the crop is planted late this year, yield expectations should continue to focus on trend value in the range of 164 to 165 bushels. The USDA will report an expected yield in the May 12 WASDE figures. That yield expectation is based on a weather adjusted trend model that reflects expected planting progress at mid-May.

As for current prices, these appear to reflect minimum production risk and surprisingly weak demand prospects.

Protect Backyard Chickens from Avian Flu

More people than you might think are keeping chickens in their backyards. These birds, just as those grown commercially, are at risk to the H5N2 Avian Influenza virus. Todd Gleason has more on why and what keepers of backyard flocks can do to protect their birds.



Turkeys and chickens along the Mississippi River flyway in the Midwest are at risk to catching the flu every year. This year a new highly contagious version of the virus called H5N2 has developed. It’s nasty and a bird killer. This is why the U.S. government is taking so much care to control its spread. The farm manager of the University of Illinois’ poultry research facilities, Chet Utterback, says commercial flocks aren’t the only birds at risk.

Quote Summary - I would encourage everyone, whether you have two chickens or twenty chickens or two-hundred chickens, or two-hundred-thousand chickens or two-million chickens to be very, very diligent in staying away from areas where there are Canadian geese nesting, where there are any water fowl what-so-ever.

Migratory birds of all types stop along their routes at water sources. It doesn’t matter much how busy the area is, if there is a pond there are likely to be at least few Canadian Geese around. They could be carrying the flu, and it could be the H5N2 version and you could walk right through it… though that, to this point, wouldn’t be a problem for your personal health… it could be a load of problem for your birds.

Quote Summary - The biggest thing people need to be aware of is how many viruses are there. According to a microbiologist at Penn State involved with the outbreak in 2006, in one gram positive sample of manure from a wild waterfowl, about the size of a dime, there can be more than one-million flu viruses with the potential to affect other birds.

The point is bio-security measures need to be taken to protect backyard flocks as well as commercially raised birds. It’s a big word, but in this case simply means not wearing the same clothes or shoes into the coop that you might have just been wearing at the shopping center, or the pond, or any place wild waterfowl gather.

Will Soybean Consumption Reach USDA Projection

Last year U.S. farmers harvested a record sized soybean crop. The price of soybeans plummeted, but not yet as far as the most negative nellies expected. There is a glimmer in some of the USDA numbers that might explain why.



This glimmer won’t raise the current cash price of soybeans. There are plenty of them around, and that’s not going to change writes University of Illinois Ag Economist Darrel Good in his April 20th Weekly Outlook. You can find it online at the Farm Doc Daily website.

It could lend a supportive hand, however, to the price of new crop soybeans. Frankly this isn’t very clear, but here is the short version. If USDA has consumption of soybeans for this year right, and the uncertainty in the March 1 stocks on hand for soybeans has correctly hinted at a smaller harvested crop last fall, then a correction would be due in the September 30th release of the Grain Stocks report. This happened last year says Darrel Good.

Quote Summary - September 1, 2014 stocks were 38 million bushels smaller than expected just three weeks before the release of the stocks report. The level of uncertainty this year is magnified by the March 1, 2015 stocks estimate that hinted that the 2014 crop may have been overestimated.

How much of an over estimate remains to be seen. It’s a glimmer of hope for the price of new crop soybeans. A glimmer that depends greatly on the pace of old crop soybean consumption. About 45 percent of the soybeans raised in the United States are exported. So we’ll focus only on that number. USDA in the April estimates said this marketing year 1.79 billion bushels of soybeans would be shipped out of the country. The total export commitments have already reached this number says Good.

Quote Summary - However, some current outstanding sales may be cancelled and it is typical for some sales to be carried into the next marketing year. Additional net sales of about 60 million bushels are probably needed if exports are to reach the USDA projection for the year.

So the export number looks safe as does the domestic crush figure. USDA could adjust either of these going forward in the monthly reports, but today this looks unlikely. It leaves the quarterly grain stocks number as the tipping point. There are two more of those reports remaining for the old crop - June and September. Even when those numbers come out, it isn’t clear how USDA will use them until the following WASDE or supply and demand table is released. So it will be October before any glimmer could be truly identified.

RFS Matters for Biodiesel

Soon the United States Environmental Protection Agency should release its annual update to the Renewable Fuel Standard mandates. This year’s RFS is really important to the biodiesel industry.

More often than not when the federal government’s Renewable Fuel Standard is discussed people are thinking about corn based ethanol or other feedstocks that can produce ethanol. However, when U.S. EPA finally releases the RFS mandates - supposedly sometime this month - it may be the biodiesel industry that pays the most attention.

Quote - The industry for which the RFS is really a life or death matter is biodiesel.

That’s University of Illinois Ag Economist Scott Irwin. Biodiesel, by-the-way, is mostly produced from soybean oil.

Quote Summary - Because if the EPA would choose to go back to the RFS statutory level mandates, at least for a few years in the short run, it would launch - likely - the biggest boom in biodiesel’s history. But, if they choose to stay on the path of the proposals from 2013 it would cut the knees out from under the industry. The biodiesel industry is waiting on the edge to find out what happens.

This edge made the industry unhappy with the federal government earlier this year when it opened the door for biodiesel imported from Argentina to qualify as an advanced biofuel under the U.S. RFS mandates. Scott Irwin sees this move far more favorably the industry.

Quote Summary - I favor the position that EPA is likely to move the mandate levels back up near or to the statutory levels this year, or at least by 2016. This would necessitate a tremendous boom in biodiesel production. It would be more than current U.S. production capacity. So, one view of the Argentine biodiesel announcement is that it is a precursor of the statutory requirements and related documentation of enough registered biodiesel both inside and outside the United States to fill the mandates.

It may be, then, that the January announcement allowing Argentine biodiesel to qualify as an advanced biofuel in the United States sets the stage for U.S. EPA to follow the letter of the law as written by congress. It is not possible to do so without additional gallons of advanced fuel from some source.

2014 Loss Experience for Revenue Protection Products

by Gary Schnitkey

Most of the 2014 insurance payments on COMBO products have been entered into Risk Management Agency’s Summary of Business, allowing us to calculate loss performance for individual products accurately. This article describes loss performance for Revenue Protection (RP), a revenue insurance plan used to insure most acres in the United States.



Corn, soybeans, and wheat had loss ratios of 1.04, .54, and 1.12, respectively. Loss ratios were above 1.0 in many counties of Iowa and Minnesota for corn and soybeans. Counties in the southern Great Plains had loss ratios above 1.0 for wheat. In Illinois, RP loss ratios were .40 for corn and .24 for soybeans.

Corn

In 2014, RP was used to insure 69.9 million acres of corn in the United States, representing 88% of total acres insured with crop insurance. Total premium on RP products was $3,350 million and total crop insurance payments were $3,484 million, giving a loss ratio of 1.04 ($3,484 in losses divided by $3,350 in total premium). A loss ratio above 1.0 means that insurance payments exceeded premiums. Over time, average loss ratios should equal near 1.0. On a per insured acre, insurance payments equaled $49.86 per acre (see Table 1).

Loss experience varied tremendously across states. For the eleven states with the most insured acres, RP’s loss rate was the highest for Minnesota at 3.01 and the lowest for Missouri at .11 (see Table 1). Iowa had a loss ratio of 2.21 while Illinois had a .40 loss ratio.

For Midwest states, the 2014 projected price was $4.62 per bushel while the harvest price was $3.49 per bushel. The harvest price was 75% of the projected price, meaning that coverage levels of 80% and 85% would have crop insurance prices if the actual yield did not exceed the guarantee yield. While much of the country had above average corn yields, there were areas of the country where yields were at or below guarantee yields. These areas included northern and central Iowa, Minnesota, and Wisconsin. As a result, RP products had high loss ratios in these areas, as illustrated in Figure 1 which shows RP loss ratio by county (see Figure 1). In most other areas of the country, loss ratios were well below 1.0. As one would expect, loss ratios were higher in areas with lower relative yields.

Soybeans

In 2014, RP was used to insure 65.2 million acres of soybeans in the United States, representing 88% of total acres insured with crop insurance. Total premiums were $2,092 million and total payments were $1,126 million (see Table 2). Total payments were far less than total premiums resulting in a loss ratio of .54. Since 2008, loss ratios for soybeans across all policies have not exceeded 1.00. On a per insured acre basis, insurance payments equaled $17.27 per acre.

Loss experience for soybeans had less range than those for corn. For the eleven states with the most insured acres, RP’s loss ratio was the highest for Minnesota at 1.25 and the lowest for South Dakota at .18. Iowa had a loss ratio of 1.07 while Illinois has a .24 loss ratio.

For Midwest states, the 2014 projected price was $11.36 per bushel while the harvest price was $9.65 per bushel. The harvest price was 85% of the projected price. Even at an 85% coverage level, farmers had to have actual yields below guarantee yields before insurance payments were made.
Most counties across the United States had loss ratios well below 1 (see Figure 2). Areas with loss ratios above 1.00 included counties in northern and central Iowa, Minnesota, northern Wisconsin, and some counties in Michigan, and New York.

Wheat

In 2014, RP was used to insured 40.8 million acres of wheat, representing 85% of total acres insured with crop insurance. Total premiums were $1,330 million and total payments were $1,490. The loss ratio was 1.12 and payments averaged $36.60 per insured acre.

Figure 3 shows a map of county loss ratios for wheat RP polices. As can be seen, many counties in Texas, Oklahoma, and Kansas had loss ratios above 1.00. Many farms in this area had low yields. Other areas of payments occurred in Washington, Wisconsin, Illinois, and along the Mississippi Delta. Large areas with low loss ratios include Montana, North Dakota, South Dakota, Virginia, North Carolina, and South Carolina.

Summary

Lower prices for corn and soybeans resulted in RP payments for corn and soybeans. These payments were made in northern and central Iowa and Minnesota. Because of above average yields, loss ratios were low in most of Illinois, Indiana, and Ohio.

LINK to FarmDocDaily Article: 2014 Loss Experience for Revenue Protection on Corn, Soybeans, and Wheat

More Hogs than Expected

The USDA March Hogs and Pigs report did little to help explain why numbers were high, other than to simply admit that hog inventory counts from previous surveys were too low.



Pork supplies in the first quarter of 2015 were expected to rise one percent. In reality, first quarter pork production was up five percent. This is because they were 4.5 percent more hogs that weighed about a half percent more than their year earlier counterparts. More hogs at heavier weights has pushed prices down says Chris Hurt, and that’s not the end of it.

Quote Summary - There is an even more price depressing force coming to the market as the number of hogs coming to market in the most recent four weeks has remarkably been ten percent higher than year-ago levels. Higher than expected current numbers may mean that the breeding herd expansion is larger than USDA surveys have indicated and/or that PED death losses were smaller than producers reported to USDA.

If there has been an undercount of animals, the possibility remains says Chris Hurt for higher market numbers than anticipated for the rest of the year.

As a result of the higher actual marketings in the first quarter, USDA revised last summer’s pig crop upward by nearly three percent. As always, “the proof is in the pudding” meaning that if actual winter slaughter is higher than accounted for by last summer’s pig crop, last summer’s pig crop has to be revised upward. USDA did this by increasing the estimated number of farrowings. Hurt has been wondering, based on USDA’s numbers, if the breeding herd has been expanded.

While USDA raised the size of last summer’s farrowings, the size of the breeding herd was not increased. This still leaves unanswered the question of whether the breeding herd is actually higher, which would indicate that the breeding herd has expanded more rapidly than indicated by USDA survey numbers. If the breeding herd has expanded more rapidly than future animal numbers may also be higher than indicated by the USDA counts.

More pigs coming to market in the first quarter than expected must have come from a larger breeding herd thinks Hurt. He says current marketing numbers have been averaging ten percent higher. If the marketing herd is larger, then marketing numbers could continue to surprise the market on the high side and hog prices will stay depressed.

April WASDE Big for Corn

The March 31 USDA reports resolved some questions for the corn market, but left a couple of items hanging. The April 9 supply and demand tables will give the report some true balance.



Most traders saw last week’s USDA reports as a bad sign for the price of corn. The acreage figure was on the high end of trade expectations and the grain stocks number appears to show a slower than estimated pace of consumption. University of Illinois Ag Economist Darrel Good has a different take.

Quote Summary - Taken at face value the corn stocks number implies less feed and residual usage during the first half of the marketing year than the trade expected. It is about 69 percent of USDA’s projection for the year, 5.3 billion bushels. Over the last four years the first half feed use has been 74 percent and if the market assumes the actual uses is factually 74 percent then the 5.3 billion is not reachable.

However, Darrel Good goes on, if you look at the history prior to the past four years, which he considers anomalous, first half feed usage averaged something between 65 and 68 percent - not 74 percent .

Quote Summary - If we are on that path this year, then 5.3 billion bushels is still reachable, and we might do even more given the expansion in livestock numbers. Broiler numbers are up 3 to 4 percent. The winter pig crop is 7 percent larger than last year. It mens core feed demand should be very robust the last half of the marketing year.

Clearly says the ILLINOIS ag economist the market did not interpret USDA’s Grain Stocks report in this fashion. It, he says, likely expects the April 9 WASDE estimates to show a lower feed usage number and consequently an increase in the year ending stocks for corn.

Quote Summary - Personally, I wouldn’t be surprised if the WASDE number is a bit lower in the April report. They may come down 100 million bushels on the feed and residual use projection and put all of that into the projected year ending stocks number. I think that is the way the market is leaning. Unfortunately, we won’t get another real read on that until we get the June Grain Stocks report three months from now.

Between now and then the trade will mostly forget about old crop corn feed usage as it concentrates more energy on divining how the 2015 corn harvest will affect the price of corn.

The Footprint of Chinese Demand for U.S. Soybeans

One out of every four bushels of soybeans harvested by U.S. farmers last fall, if the trend continues, will be shipped to China.



Two University of Illinois agricultural economists have measured the footprint of Chinese demand for soybeans. John Newton, along with Todd Kuethe (keeth-ee), say this one nation takes 13 bushels from every acre of soybeans produced in the United States.

Quote Summary - The Chinese are bringing in more than a billion bushels of soybeans a year from the United States. That’s more than the states of Illinois and Iowa produced combined. Their total needs from around the world amount to more than 60 million acres. Twenty-one million of those come from the U.S. This is more soybean acres than can be found in Illinois, Iowa, and Michigan. The Chinese have a very large footprint in the U.S. soybean market.

Large today, but twenty years ago China imported just 18 million bushels of soybeans from the United States, or 2 percent of U.S. soybean exports. Demand from this one nation grew from that meager amount to more than a billion bushels, 65 percent of the exports, because of double digit growth in its economy. This growth has slowed, and for some it is now a caution sign…but not for John Newton, yet.

Quote Summary - The world bank is projecting the Chinese economy is going to grow at about 6.9 to 7.4 percent through 2017. This is greater than the United States. Their economy is still growing at a significant rate. They have just plateaued some in recent years. So, you look at the growth rate in the Chinese economy as one indicator. Another indicator is crushing margins in China. Part of the reason they’ve increased their consumption of U.S. soybeans is because they’ve increased crushing capacity in mainland China. So long as their crushing margins are favorable it is still possible to bring U.S. soybeans to China and crush them.

These projections support China maintaining soybean consumption at or above current levels.

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Darrel Good on the March 31 Reports

USDA Extends Farm Bill Sign Up One Week

The United States Department of Agriculture has extended the farm bill sign up period, again. A month ago USDA opted to allow the two farm bill deadlines to be consolidated into one ending date. It was scheduled to close Tuesday March 31st.

The sign up period has been extended a full week says U.S. Secretary of Agriculture Tom Vilsack. The deadline is now April 7th.

The secretary reports 98 percent of farm land owners have updated information needed to calculate payments made under the new farm programs, but only 90 percent of the farms are enrolled.

Those farms not enrolled by the deadline will receive no 2014 crop year payments and the farm will default to the Price Loss Coverage enrollment option for the 2015 through 2018 crop years.
Sign up can be completed at local Farm Service Agency offices.

Winter Feeding & the Cow Calf Operation

Winter nutrition for the cow calf operation is key. It may be the best opportunity to positively affect real income.

This was the message heard during the annual Beef & Beyond conference. It was clear and concise. The winter feeding program at a cow calf operation separates profitable farms from less profitable operations. It depends a lot on stored feed says University of Illinois Beef Cattle Specialist Dan Shike.

Quote Summary - How much stored feed are they having to purchase and what is their winter feeding program. We would like to graze as many days as we can, but if we can’t graze we have to feed them something. What’s the least cost approach.

Least cost only works if the cows meet acceptable performance standards. These are to maintain appropriate body condition, to calve once a year, and to wean off as heavy a calf as possible, but there’s more.

Quote Summary - We’ve not given much consideration in the past to the fetus. We’ve focused on the cow. We’ve focused on the calf that is nursing on her, but she’s also been bred and has a developing fetus inside of her. So, the nutrition management of the cow impacts the development of the fetus. There is plenty of data from human epidemiological studies and other animal models that maternal nutrition, or nutrition during gestation, has lifelong impacts on the progeny.

The results with beef cattle are mixed in this area of study and varies from region to region mostly as it relates to available forages. This seems obvious, but the clear message is if the cows are in poor body condition and not being fed enough there is a great deal of risk to hurting the calf. Under winter feedlot conditions this means the properly managed cow produces a calf which eventually yields better marbling. Heifer calves kept for breeding benefit from good nutrition in the womb, too. They weigh more, mature earlier, and have better conception rates.

Quote Summary - All these benefits come later in life at a year or two of age. It was set when the fetus was 3 to 4 months of age during mid-to-late gestation. All because the cow was in good body condition. A condition score of 5 or 6. On the flip side, a short term restriction in nutrition of a cow already in good condition isn’t particularly harmful. If the cow is already thin, say a body condition score of 4 or less, you should anticipate you’re restricting the fetus. If she is in good condition, even if her nutrition is restricted, the cow will mobilize body reserves to supply the appropriate nutrients to the fetus.

The body condition score runs from one to nine with scores of five or six considered optimum. Scores of eight or nine are too fat, scores below four are too thin.

The Final Days of the USDA Report Data

Tuesday the Department of Agriculture will release one of its most anticipated reports of the year. It began collecting data from farmers at the beginning of this month. The crop acreage data is compiled, encrypted and transferred to Washington, D.C.

USDA contacts more than 80,000 farmers across the United States in March. It asks them a series of questions. One in the series is about which crops and how many acres of each they expect to plant this season. The agency sends all those farmers a letter to do this. Those not responding get a phone call, and then if they still don’t respond receive a face-to-face visit. The collection was completed Wednesday March 18th. Last Friday the Illinois and Missouri National Agricultural Statistics Service staffs, if the schedule went as Mark Schleusener expected, should have been reviewing the information.

Quote Summary - The last few days before publication there is an analysis period. Friday morning we are going to look at a balance sheet. We’ll add up all the corn, soybeans, wheat, hay, etcetera, and CRP. In Illinois the total is pretty constant across years with the mix of crop acres changing from one year to the next. So, we’ll make estimates on acreage in each, add them up, and compare it to previous years to see if the sum of the parts makes sense. We’ll do that Friday morning and then submit our estimates in an encrypted file to our Washington, D.C. headquarters. There will be more analysis done under secure conditions and the report comes out March 31.

This analysis is done by National Agricultural Statistic Service staff. Schleusener says the staff is primarily gifted in two area; statistics and agriculture. And he says the sum of those two qualifications is what’s required to do a good job for NASS. Schleusener serves at the NASS Illinois State Statistician.

Quote Summary - So, we are looking at what the number shows. What comes out of the computer, and how that compares to previous surveys and other factors. For instance, this balance sheet approach is a way to make sure we don’t go off-the-rails by being a little bit too high on each crop and a lot too high overall. The balance sheet makes sure we don’t go in that direction.

It gives the analysts a chance to see errors before the Prospective Plantings figures are reported up the chain or out the door. The Prospective Plantings report will be released in Washington, D.C. at noon eastern time Tuesday March 31, 2015.

Soybean Stocks Overshadowed by Prospective Plantings

March 31st traders and farmers are likely to pay a great deal more attention to the number of soybean acres USDA expects will be planted this season than the number of soybean bushels left in the United States. However, the stocks figure may hold some surprises.

Last December the United States Department of Agriculture reported a surprisingly low Grain Stocks number for soybeans. The agency counts up available bushels of most crops once a quarter; in December, March, June, and September. University of Illinois Ag Economist Darrel Good says the December 1 soybean stocks number implied a record large residual use of soybeans during the first quarter (September-November) of the 2014–15 marketing year.

Quote Summary - Some have explained this low figure by suggesting a larger number of bushels of soybean were in transport on December 1 than in previous years. This explanation was apparently favored by the market and caused March 2015 soybean futures to close 36 cents lower on the day of the surprisingly small estimate. Another possible explanation is that the size of the 2014 soybean crops has been overestimated.

This argument might be supported by higher than expected soybean prices this year given the estimated size of the surplus projected to be generated by the large 2014 crop. In addition, basis levels have been generally strong for most of the year. Basis is the difference between the price of a futures contract in Chicago and the local cash bid.

USDA’s March 1, 2015 estimate of soybean stocks may add some clarity to this debate writes Darrel Good in his Weekly Outlook posted to the Farm Doc Daily website. Expectations for the magnitude of March 1 stocks are based on the estimate of December 1 stocks, imports during the quarter, and estimates of soybean consumption during the quarter.

If the size of the 2014 soybean crop has been accurately estimated, the March 1 stocks estimate should imply a large negative seed and residual use during the second quarter of the 2014–15 marketing year. That was the case in previous years of very large implied residual use during the first quarter of the marketing year. Seed and residual use during the second quarter of the marketing year, for example, was estimated at –38 million bushels last year, –22 million bushels in 2012–13 and –42 million bushels in 2009–10. A reasonable expectation this year might be near –90 million bushels. A March 1 stocks estimate near 1.41 billion bushels, then, would be consistent with the estimated size of the 2014 crop and known use of soybeans through February.

Given this, if the USDA’s Grain Stocks report shows something substantially different than 1.41 billion bushels on hand, then it should renew the debate over the size of last fall’s soybean harvest. Such a debate, however, would not be resolved for another six months. The USDA’s estimate of the crop size is frequently revised, but not until the release of the September 1 stocks estimate. It comes on September 30th this year.

Good says, historically, implied seed and residual use of soybeans during the first half of the marketing year has not been a good predictor of the size or direction of any subsequent change in the estimated size of the crop.

The March 31 Grain Stocks Report

The reports USDA releases March 31 will set the tone of agricultural trade for three months in Chicago.



Once every quarter the National Agricultural Statistics Service takes a census of the available bushels of corn, soybeans, and wheat. It is called the Grain Stocks report. It is not exactly a survey, but rather more of an actual accounting, in his case of what’s stored in Illinois, says NASS State Statistician Mark Schleusener, “…to measure the whole supply of grains and oilseeds USDA NASS does on farm surveys. Those are done with producers to find out what they have in their grain storage bins. Off farm storage tallies bushels in the mills and the elevators using a census as of March 1. All commercial storage facilities are contacted”.

Nationwide more than 9000 commercial storage facilities are contacted for the census side of the Grain Stocks report. The survey side - that done with farmers - is sent to more than 80,000 producers with an 80 percent response rate. The goal is to get a very accurate accounting of the bushels available for use.

Where the bushels are stored changes across the season. December 1 it is stored on farm. Through the winter months these bushels slowly move to the elevators and mills and eventually, in the case of corn, the bushels are shipped down the river for export, or fed to livestock, or turned into ethanol. The bushels are used.

If you add what’s used to what’s left - the Grain Stocks number - the sum should be the total available supply for the year. However, tracking the middle usage number for corn - bushels fed to livestock - isn’t possible. That’s why USDA calls this number Feed & Residual. This season it is supposed to be 5.3 billion bushels. The question is how much of that 5.3 billion has already been consumed. There in lies the guess says University of Illinois Ag Economist Darrel Good.

Quote Summary - If the most recent pattern is being followed this year and USDA’s 5.3 billion bushel usage for the year is correct, then use for the first half the year should total 3.9 billion bushels with 1.7 of that used in the second quarter. If that is the case, the total use during the second quarter would have been 3.75 billion bushel and leave March 1 stocks at 7.45 billion.

On-the-other-hand, if the usage pattern is more like it was prior to 2010, there could be another 200 or 300 million bushels of corn accounted for in the Grain Stocks figure because it hasn’t yet been consumed. It will still be consistent with a 5.3 billion bushel usage figure for the year.

The Grain Stocks report for corn has a wide range then of acceptable figures from around 7.4 to 7.7 billion bushels. It makes the Grain Stocks number not so important, and puts a great deal more weight on the Prospective Plantings report to be released on the same date, March 31.

How Much Would a Corn Acre in 2015 Make

The ag economists at ILLINOIS have done an interesting exercise to see how much an acre of corn might gross in 2015. Or maybe it might be better explained as what would happen in 2015 if this year was like 1979.



Or what if it were like 2012, or 1983, or 1995, or just pick a year. The idea is to give farmers some hard data on how variable gross revenue from a corn acre is over time by moving that time into 2015. So that’s what U of I ag economists Gary Schnitkey did.

He wanted to look and see what gross revenues would be like for 2015 considering crop revenue, crop insurance, government payments, and price risk. The goal was to know under what conditions would a corn acre produce higher gross revenues this year?

The question then is, “In 2015 what would revenue be like this year if a year like 1972 happened?”.

"When we looked at it, 50% of the revenues were above and 50% of the revenues were below $825 per acre."

Schnitkey put those all into a table on the Farm Doc Daily website from 1972 to 2014. It shows how much of gross revenue would come from price x yield, crop insurance, and government payments.

At $825 most $300 an acre cash rented farms in central Illinois would lose money. Over the span of the years this would happen about 75% of the time and a big yield does not solve the problem - it takes higher prices from some other force. You may read the “Gross Revenues in 2015” article on the Farm Doc Daily website.

How USDA NASS Counts Acres

USDA has just wrapped up its survey of more than 80,000 U.S. farmers. The agency uses the information to develop the March 31st acreage forecast.

In the spring USDA’s National Agricultural Statistics Service division contacts farmers in hopes of learning how much of each crop they expect to plant. The agency contacts farmers across the United States. Corn and soybean farmers are of particular interest. This year more than 4000 Kansas farmers were tapped, along with around 3700 in Nebraska and about 3000 in each of the Dakotas, Iowa, and Illinois. Another 2000 farmers each were contacted in Indiana and Ohio.

Quote Summary - Our goal is to make sure we are measuring small, medium, and large farms. So, we use what’s called a stratified sample.

That’s NASS Illinois State Statistician Mark Schleusener.

Quote Summary - That is a fancy way of saying for the biggest farms, we are going to talk to all of them; for the large, but not biggest we will talk with one out of three of those and for the medium, maybe one out of ten; and for the smaller farms we might measure one out of twenty-five of those.

Each farmer surveyed is asked how many acres they operate. How much of that land they intend to plant to corn or soybeans, and how much might already be in wheat. They’re also asked about oats, sorghum, and hay. The response rate goal, and usually achievement, is an amazing eighty percent.

Quote Summary - Yes, our goal is an 80% response rate on all surveys and we use several methods of data collection. Every producer in the sample receives a letter with a planting intentions questionnaire. The letter also has instructions for reporting to a secure internet website. These are both inexpensive ways of gathering data. The people that do not respond will be called. If this doesn’t work then someone will make a farm visit for a face to face. Both these methods are more effective, in general, but also are more expensive.

The biggest problem NASS faces when taking the acreage survey is that farmers usually haven’t yet made all their planting decisions. The agency knows this and is satisfied with best estimates. The individual reports are confidential by law and the data collected is exempt from legal processes.

The data can be aggregated at the county, state, and national level. Computers flag any large acreage changes at the individual level so that an analyst can check for a data entry error or make a follow up call. The state statisticians review the total number of crop acres for any major changes - total crop acres generally remain constant - and then submit the estimates in an encrypted file to USDA NASS in Washington, D.C. There more analysis is done and the final report is produced for release March 31.

Cold Weather Maintenance Diets for Dairy Calves

Feeding a heifer dairy calf properly during cold weather can mean up to 1500 extra pounds of milk during her first lactation period. Todd Gleason has more on the increased cold weather maintenance diet that results in such a gain.

You can get more milk from a cow if you treat it right as a calf says University of Illinois Dairy Specialist Phil Cardoso. This is especially the case if those calves are fed a proper maintenance diet during periods of cooler (not necessarily cold) weather when they are very young.

Quote Summary - The maintenance diet supplies all the energy needed for the development of the immune system, for growth, and for the calf to live. There is a thermal neutral zone in which the calves nutritional needs are flat, outside of this zone it needs more energy to generate more heat the winter or to cool down in the summer. During the winter the calf needs to generate energy to heat themselves.

The temperature at which additional feed is needed to keep the calf operating at a maintenance level for growth isn’t so low. It starts at 59 degrees fahrenheit. To this end ILLINOIS uses a simple table to guide dairy farmers in how much extra milk replacer a young calf would need when it is cold stressed. The table has temperatures on one side of the graph and the calf’s weight on the other.

The supplemental energy is provided by the standard 20 percent fat / 20 percent crude protein milk replacer. An example of how the table works would be to find the weight of the calf, say 110 pounds, and the temperature outside. If it is 50 degrees the calf needs four quarts of milk replacer. If it is colder, 41 degrees, it would take 4.26 quarts.

The colder it gets the more milk replacer the calf needs in its regular maintenance diet, at least if the goal is to achieve an extra 1500 pounds of milk once the calf becomes a cow. Those wanting to view the easy to use University of Illinois dairy calf maintenance diet table will find it on the Dairy Focus website.

The Next Mile Post for Soybeans & the Crush

Farmers and the trade are very concerned the price of soybeans will fade over the next six months.

There are a couple of mile posts indicators most will be watching as it relates to the production of soybeans. University of Illinois Ag Economist John Newton says the next one up is the Prospective Plantings report due March 31st from the United States of Department of Agriculture.

Quote Summary - The Prospective Plantings report is a big one. It will give us an idea of how many acres of soybeans U.S. farmers expect to sow this spring. I’m also going to continue to watch the domestic soybean crush and U.S. soybean exports. The nation is on pace to export a record volume this year and USDA maintains this number will increase next year. This would be back to back record soybean export years and certainly worth monitoring. Can the world consume soybeans and the current level? If this is possible, then that should provide some price floor, even some positive price pressure from where we are today.

Exports are reported weekly by USDA and starting in August the ag department will begin reporting the soybean crush totals monthly. The agency is picking up and tweaking a discontinued Census Bureau report.

Quote Summary - The monthly numbers will aid the trade in monitoring the pace of the domestic soybean crush. Another item to keep in mind is the importance of the RFS (Renewable Fuel Standards). It may, at some point, cause soybeans to be crushed for oil. This would have implications for soybean meal and soybean meal prices and this may offset corn fed in the residual balance sheets. These are all things to watch. Some are long run and some are short run; the pace of consumption and soybean crush being the two short run things I’m watching.

You may read more from the University of Illinois ag economists on the Farm Doc Daily website. A new article is posted there each business day of the year.