Using Social Media to Market Locally Grown Foods
University of Illinois Extension Educator Andy Larson talks about using social media like Facebook and Twitter to build a clientele base for locally grown foods and Know-Your-Farmer campaigns.
markets and weather for the farming world | Todd Gleason, Farm Broadcaster
University of Illinois Extension Educator Andy Larson talks about using social media like Facebook and Twitter to build a clientele base for locally grown foods and Know-Your-Farmer campaigns.
Todd Gleason tours the Illinois Speciality Crops, AgroTourism Conference trade show floor to demonstrate diversity within the industry.
A University of Illinois developed online database and marketing tool for farmers has matured into an independent business. MarketMaker is now working to better connect food to consumers through the Illinois Farmers Market Association.
This is the 30th anniversary of the CRP. It’s a federal program that assists agricultural producers with the cost of restoring, enhancing and protecting certain grasses, shrubs and trees to improve water quality, prevent soil erosion and reduce loss of wildlife habitat.
As of September 2015, 24.2 million acres were enrolled in CRP. CRP also is protecting more than 170,000 stream miles with riparian forest and grass buffers. That’s enough to go around the world 7 times.
The U.S. Secretary of Agriculture calls CRP one of the most successful conservation programs in the nation’s history saying it has helped farmers, ranchers, conservationists, hunters, fishermen and other outdoor enthusiasts to set aside lands that otherwise might be put into production agriculture.
USDA, for its part, suggests when commodity prices are low, enrolling sensitive, low-quality and marginal lands in CRP can be especially attractive to farmers and ranchers, as it softens the economic hardship for landowners at the same time that it provides ecological benefits.
Contracts on 1.64 million acres of CRP are set to expire on Sept. 30, 2016. Producers with expiring contracts or producers with environmentally sensitive land are encouraged to evaluate their options under CRP. The current enrollment period closes in February.
Commodity traders are generally thinking last week’s EPA RFS rule making will cause more bushels of corn to be turned into ethanol next year. Todd Gleason reports University of Illinois Agricultural Economist Darrel Good is more doubtful.
Let’s start by building a corn for ethanol baseline to see why. The EIA, the U.S. Energy Information Administration, says U.S. production of fuel ethanol in 2014 totaled 14 billion 313 million gallons. That was about a billion gallons more than in 2013, and nearly 400 million gallons more than the record setting year of 2011. So, 14.313 billion gallons of ethanol were produced in 2014. During the first nine months of this year, writes Darrel Good on the Farm Doc Daily website, EIA shows production 3.6 percent larger than during the same 9 months last year. It appears October and November were on that same track, and while December looks to be off a bit, it should leave the yearly consumption at a whooping and record setting 14.745 billion gallons says U of I’s Good.
Quote Summary - Production at that level will require about 5.25 billion bushels of feedstock, mostly corn, for conventional ethanol production in 2015.
So the baseline is big, but let’s start back figuring for 2016 corn usage to make ethanol. U.S. EPA just released biofuels volumes for 2016. Those standards point to conventional ethanol consumption of 14.5 billion gallons for 2016. It’s about a 500 million gallon year-to-year increase says Good, however there is a second related factor. That factor is the blend wall, or how much gasoline is actually consumed in the United States .
Quote Summary - Based on EIA projections, consumption is expected to increase from 139.38 billion gallons in 2015 to 139.96 billion gallons in 2016. That expected increase of 580 million gallons follows an expected increase of 2.9 billion gallons in 2015. The conventional ethanol mandate of 14.5 billion gallons, then, reflects an expected small increase in the E–10 blend wall and a “push” to include larger quantities of higher ethanol blends (E–15 and E–85) in the domestic fuel supply. If the 2016 gasoline consumption forecast is correct, the E–10 blend wall will be 13.996 billion gallons.
Now, since some gasoline is consumed without ethanol and some with higher ethanol blends, the effective E–10 blend wall is actually thought to be 9.9 percent of consumption or 13.856 billion gallons. Here’s the back figure. Subtract from this number imported ethanol, add in a few additional E85 gallons, and total 2016 consumption of conventional ethanol says Darrel Good is not roughly 500 million gallons more than this year, but rather about the same as this year - though that 500 million gallon gap will still have to be filled.
Quote Summary - The difference between the RFS requirement of 14.5 billion gallons and the projected consumption of 13.903 billion gallons (597 million gallons) would have to be met with some combination of retirement of RINs stocks, additional quantities of E–85, or blending of additional quantities of advanced biofuels.
This outcome is very different from the initial reaction that an increase in the implied conventional ethanol requirement from the preliminary to final rule making for 2016 of 500 million gallons would result in a measurable increase in feedstock - corn - consumption.
Since the 1960’s farmers have been using herbicides to control weeds. Frankly, herbicide formulations haven’t changed that much and the weeds have managed to find ways to adapt. Todd Gleason has this four step plan from the Univesity of Illinois to control them in corn or soybeans.
Some weeds have become resistant to the herbicides farmers use to control them. Others have lengthened their germination period, emerging later in the season, avoiding early spring control methods. University of Illinois Extension Weed Scientist Aaron Hager has a four step plan farmers can use to maintain a competitive edge in corn or soybeans. It starts by planting into a weed free seedbed.
Quote Summary - It is easy to achieve a weed free seedbed by either replant tillage, burndown herbicide or a combination of those two. Given the challenges of weather and of resistant populations it is advisable not to plant into existing weed populations or any green vegetation without adequate control ahead of time.
Step two in the plan is to select an appropriate residual herbicide. Be sure it provides very good control of the most problematic weed species in a given field. Pay attention to the label, says Hager, and always apply the recommended rate for the spectrum of weeds in the field.
> Quote Summary - The third step is to make timely post emergence applications. Base those on just not the number of calendar days after planting, but rather base those post decision on adequate scouting. So, return to the fields about two weeks after crop emergence. Scout the fields and determine the weed size, crop development stage and make the decision on a timely application of a post herbicide.
The final and fourth step is to go back to the field seven to ten days later and evaluate how well the post emergence herbicide application worked. It may be that another germination of a weed species warrants a second application. This won’t be know without a return trip.
If we fail to go back and look at how well the product performed, or the level of crop injury we see soon after that application, we could have some very significant challenges later in the growing season.
The days of set-it-and-forget weed control have ended. Todays farmers must scout fields for competitive weeds before during and after the growing season.
The United States Environmental Protection Agency is beginning to comply with the letter of the law as it pertains to biofuels. Todd Gleason reports this could be a boon for biodiesel made from soybeans.
EPA this week announced it would force oil companies to find more ways to use renewable fuels. This is something the oil industry has resisted saying it was too difficult to use much more than the ten percent ethanol blend already found in gasoline. This is called the blend wall and is actually less than the total number of gallons of renewable fuels congress mandated be used in 2016 when it originally wrote the law.
Since not all cars can burn greater than 10 percent ethanol in gasoline, and the amount of gasoline used in the United States is less than the renewable fuels mandate required by law, there is a renewable fuels gap left…something like a billion and half gallons. EPA hasn’t moved to force oil companies, yet, to find a new ways to fill that whole gap, but it closed it up big time and that’ll leave companies scrambling says University of Illinois Agricultural Economist Scott Irwin.
Quote Summary - And so, the really interesting question is what will fill the gap. Will it be higher ethanol blends, E15 or E85 or biodiesel.
There’s an easy answer to this question says Irwin.
Quote Summary - At least for the next couple of years, biodiesel. Soybean oil prices since the low last August are up 25% and soybean prices are up just 3%. And meal has tanked over that same time period. One way or another it is beneficial to ag. Either I’m wrong and you get more ethanol in the form of E85 or you get more biodiesel with soybean oil and other animal fats.
The market is and has been for sometime forecasting the next winner in the biofuels industry and it appears at this point to be biodiesel made mostly from the soybean.
Monday the United States Environmental Protection Agency put forward the rules mandating how much of each type of renewable energy can be used in the nation’s liquid fuel supply. Just a few minutes after the announcement Todd Gleason spoke with University of Illinois Agricultural Economist Scott Irwin about the new numbers.
Scott Irwin believes the U.S. EPA in this rule making is moving swiftly towards the congressional mandated volumes for ethanol and other renewable fuels.
There are some big differences between the farm crisis of the 1980’s and the current situation in middle America. Then, as now, commodity price had slumped after soaring for a few years. The price of farmland had skyrocketed, too, just like now. However, unlike today interest rates were high and farmers were deep in debt when the price of farmland finally bottomed 42 percent below its high. Gary Schnitkey wanted to know what would happen today in that kind of worst case scenario. So he ran the numbers.
They say it is best to keep your friends close and your …let’s go with competitors in the soybean market… even closer. Todd Gleason has this story on how weather patterns in Brazil generally unfold year in and year out.
It is very difficult to give up a farm, even one that is losing money because the cash rent is too high. Todd Gleason has a few simple guidelines one might follow to help them make that decision.
The nations of Africa have struggled to feed themselves for decades. There are some places, like South Africa, that have successfully adapted some of world’s primary crops. Corn is a good example. Soybeans are also grown in Africa, but they’re not particularly high yielding varieties. Todd Gleason reports soybean breeders from three African institutions have been visiting the United States in hopes of making some improvements.
After the Crop Production report was released last week some of the trade began to discuss the possibility USDA had overestimated the size of the U.S. corn crop. This is not very likely.
USDA’s October 9 Crop Production report forecast the 2015 corn crop at about 13.6 billion bushels. That was down 30 million bushels from September and 660 million bushels smaller than last year.
Commentary following the release of the report suggests some believe the corn crop is even smaller. One of the factors cited as evidence the crop may be smaller than forecast is the strong basis levels in many markets. This seems the make some sense. The argument is that a crop as large as forecast, particularly in the face of a rapid pace of harvest and a large soybean crop, would not support such a strong basis due to the resulting strong demand for storage space. That argument, however, is not completely supported by the current estimates of crop supplies thinks University of Illinois Agricultural Economist Darrel Good.
Basis levels are generally determined by the supply of storage space and an array of factors that determine the demand for storage capacity. Harvest-time basis levels at the point of producer delivery may be receiving some additional support this year from the recent expansion in grain storage capacity. The USDA’s December Grain Stocks report, for example, estimates that permanent storage capacity (on- and off- farm) increased by nearly 550 million bushels from December 1, 2012 to December 1, 2014.
Additional capacity has been added in the past year. Basis levels at the farm may also be receiving support from the lack of widespread transportation delays and the increasing use of delayed pricing contracts. Both of these factors allow for more rapid movement of corn through the marketing channel. Darrel Good says the lack of widespread transportation issues may reflect, in part, the dominance of the domestic corn market relative to exports resulting in a larger portion of the crop moving by truck rather than by rail where delays are more common.
Basis levels are also influenced by the pace of corn consumption. A more rapid pace of consumption, all else equal, tends to strengthen basis in order to make storage less attractive. Domestic ethanol production in September and early October 2015 was nearly five percent larger than that of a year earlier, supporting the domestic demand for corn. Domestic feed demand for corn has also likely been supported by the four percent increase in the hog inventory this fall and the slightly larger number of cattle on feed, dairy cattle, and broiler placements. On the other hand, the pace of export shipments is well below that of last year. The relative pace of consumption in the various segments of the corn market may explain part of the regional differences in basis patterns this year.
Since corn basis levels and patterns are determined by a complex set of supply and demand factors, it seems to be a stretch to conclude generally strong harvest time basis levels this year point to a smaller corn crop than currently forecast writes Good in his Weekly Outlook. It can be found on the Farm Doc Daily website.
He says history is also not on the side of a smaller yield forecast than the 168 bushel forecast of last week. In the 40 years from 1975 through 2014, the USDA yield forecast increased from September to October, as it did this year, in 24 years. The January yield estimate was below the October forecast in only four of those 24 years. While higher corn prices as the marketing year progresses are possible, then, price increases are not likely to be generated by a smaller U.S. production forecast. Instead, Darrel Good says prices will be influenced by the pace of consumption and the development of the South American crop.
Low commodity prices are quickly eating into the reserves farmers built up over the last several years. Todd Gleason has more on agriculture’s ‘working capital’.
The hurricane bearing down on the east coast of the United States may find new strength from a system in the middle part of the country.
Joaquin is a unique weather system as hurricane’s go. First, it has developed really fast. In less than three days its gone from nothing to really something says meteorologist Mike Tannura from t-Storm weather in Chicago, Illinois.
Quote Summary - This hurricane, at this point, is expected to have sustainable of 140 miles per hour. It would need to get to 155 miles per hour to reach a category five status.
Category five is the highest level possible. The key to it maintaining strength is the eye of the hurricane. If it stays in tact then Joaquin will be dangerous. Even if it doesn’t the system is going to move northward and interact with a different weather system already moving through the Midwest. If the two combine Tannura says a worst case scenario develops for the east coast.
Quote Summary - Then we would end up with a storm system similar to hurricane Sandy back in 2012. Now hurricane Sandy was a major storm. It was really big. We aren’t expecting that big, but something similar where you take a nontropical system in the Midwest and combine it with a tropical system in the Atlantic Ocean and striking somewhere along the east coast from North Carolina to Washington, D.C.
The other scenario has the two remaining independent systems. If this happens then Joaquin would run a parallel line to the east coast, but remain off shore. Either way heavy rains will fall, three to six inches, from South Carolina to New York City. Tannura says we won’t know until tomorrow, or maybe Saturday morning, if the storms will combine.
The nation’s hog farmers have done a nice of job of not over reacting to last year’s record profits. They’ve limited their expansion plans and consequently should see a good bottomline again for this year, and maybe next.
For all of 2015, pork supplies are expected to be seven percent higher than in 2014. That year the price of pork averaged $76 mostly because the PED virus wreaked havoc on the industry. This years supplies have been farm more stable and supplies for 2016 should only be about one percent higher than in 2015. Hog prices are expected to average about $51 on a live weight basis for this year. Current projections for 2016 are for a similar average price and it means hog farmers will make money says Purdue Extension Agricultural Economist Chris Hurt.
After the record profits of 2014, there has been concern that the industry would over-expand. At this point that concern has not developed with supply and demand anticipated to be in balance for the coming 12 months. This also serves as a warning to the industry to make sure that further expansion plans remain moderate.
There seem to be growing threats in the future for the meats sector. Those include, says Chris Hurt, the continued expansion of total meat supplies into 2016 and 2017 with a rapid ramp up of poultry and increased beef production.
The large drop in finished cattle prices in recent weeks suggest that retail beef prices could begin to drop this fall and provide added competition for pork. In the longer run, beef supplies will continue to expand for multiple years. Potential weakness of meat and poultry exports is also a concern with slowing world economic growth and a strong U.S. dollar.
A strong dollar makes it more difficult to sell U.S. products overseas as they become higher priced. Speaking of price, feed prices will remain low for the next 9 months due to strong yields for 2014 and 2015 crops and weakened exports. Animal product producers will want to take advantage of harvest price lows this fall states Hurt. However, he thinks longer-term, managers need to remain aware that low feed prices are not guaranteed if weather should turn more adverse in some important growing areas.
Cash rents on professionally-managed farmland are set to decrease next year. That’s the conclusion of a survey in the state of Illinois.
Wednesday (September 16, 2015) the Farm Service Agency released a new set of numbers. While these are preliminary figures of acreage and crops, they do offer a hint of things to come in future official USDA estimates.
First, it is really important to understand these numbers are raw and come with no explanation. They are simply a monthly dump of the aggregated acreage figures reported to the FSA by those participating in federal farm programs. Participation requires them to report the number of planted, failed, and prevented plant acres of each program crop. These numbers are updated by FSA from August to January. University of Illinois Agricultural Economist Darrel Good explains how the raw numbers make their way into the official USDA reports.
Quote Summary - NASS, the official estimator of major crops, basis their estimates on surveys of producers with the final estimated based on a very large agricultural survey in December, but they do use what they call administrative data, primarily this FSA data, to tweak their own estimates of planted acres. This is because theirs is based on a sample. They are not doing a census of acreage. Historically there has been a close relationship between the acreage reported to FSA an actual planted acres as reported by NASS. They use those numbers and so by definition they tend to come together at the end of the season.
Remember that’s not until January. So, it makes reading too much into the latest FSA numbers difficult, but it does offer what Darrel Good calls ‘hints’ as to what changes might be coming. USDA NASS will incorporate the FSA figures into the October 9 Crop Production report. However, that will be from an updated set of FSA figures that the public won’t actually see until October 14.
Quote Summary - At this juncture, I think there is a tendency to try and read too much into what the FSA reports are saying in terms of trying to anticipate how NASS is going to change final acreage. Having said that, we do see through September of this year that the difference between the estimated of planted areas by NASS (for soybean) and certified acres reported to FSA so far is a quite large margin. Whether it narrows considerably in October or not is the question. If it doesn’t then there is may be a bit of a clue there that NASS will have to lower its estimated of planted acres of soybeans this year. But again that is just a clue you are trying to read out of the data and we’ll see in October whether that happens or not.
Typically the FSA acreage for soybeans is 1.5 to 2 million acres lower than USDA’s final number. The current FSA figures are off by 4.6 million acres. The October 9 Crop Production report could change, but we won’t know exactly why or if it needs to change more until the FSA report is released five days later.
Quote Summary - When you made the election decision back in the spring you still had to signup for the program in order to receive the payment. That signup period is closing September 30th. So, farmers if you have not signed up, then you need to get into the FSA (Farm Service Agency Office) right away to get that taken care of.Payments, if any, from last year’s ARC and PLC program will be cleared to go out starting October 1st, 2015. The payments, as outlined in the contract language, are subject to sequester cuts. If congress fails to deliver a budget, payments for the 2014 crop will be reduced by more than 7%.
This morning (Friday) USDA updated crop production numbers for corn and soybeans. Todd Gleason discussed the report with University of Illinois Agricultural Economist Darrel Good.
The U.S. Secretary of Agriculture held nothing back on the University of Illinois campus this morning (Thursday Sept 10) when he talked about bio fuels and blender pumps for 21 states.
Farm income this year is going to be dramatically lower than in the past. Next year doesn’t look any better even on highly productive central Illinois soils. Todd Gleason reports farmers must cut costs to survive, and that cash rents may need to come down by as much as one-hundred-dollars per acre.
I’m Todd Gleason for University of Illinois Extension with a history of Labor Day in the United States. It’s adapted from a story found on the United States Embassy to Sweden’s website.
Eleven-year-old Peter McGuire sold papers on the street in New York City. He shined shoes and cleaned stores and later ran errands. It was 1863 and his father, a poor Irish immigrant, had just enlisted to fight in the Civil War. Peter had to help support his mother and six brothers and sisters.
Many immigrants settled in New York City in the nineteenth century. They found that living conditions were not as wonderful as they had dreamed. Often there were six families crowded into a house made for one family. Thousands of children had to go to work. Working conditions were even worse. Immigrant men, women and children worked in factories for ten to twelve hours a day, stopping only for a short time to eat. They came to work even if they were tired or sick because if they didn’t, they might be fired. Thousands of people were waiting to take their places.
When Peter was 17, he began an apprenticeship in a piano shop. This job was better than his others, for he was learning a trade, but he still worked long hours with low pay. At night he went to meetings and classes in economics and social issues of the day. One of the main issues of concern pertained to labor conditions. Workers were tired of long hours, low pay and uncertain jobs. They spoke of organizing themselves into a union of laborers to improve their working conditions. In the spring of 1872, Peter McGuire and 100,000 workers went on strike and marched through the streets, demanding a decrease in the long working day.
This event convinced Peter that an organized labor movement was important for the future of workers’ rights. He spent the next year speaking to crowds of workers and unemployed people, lobbying the city government for jobs and relief money. It was not an easy road for Peter McGuire. He became known as a “disturber of the public peace.” The city government ignored his demands. Peter himself could not find a job in his trade. He began to travel up and down the east coast to speak to laborers about unionizing. In 1881, he moved to St. Louis, Missouri, and began to organize carpenters there. He organized a convention of carpenters in Chicago, and it was there that a national union of carpenters was founded. He became General Secretary of the United Brotherhood of Carpenters and Joiners of America.
The idea of organizing workers according to their trades spread around the country. Factory workers, dock workers and toolmakers all began to demand and get their rights to an eight-hour workday, a secure job and a future in their trades. Peter McGuire and laborers in other cities planned a holiday for workers on the first Monday in September, halfway between Independence Day and Thanksgiving Day. On September 5, 1882 the first Labor Day parade was held in New York City.
The retail price of a pork chop is getting cheaper. The price of soybean meal is one of the reasons for the decline.
Soybean meal is an important but an “economically” secondary feed ingredient in hog diets compared to corn. Purdue University Agricultural Economist Chris Hurt thinks soybean meal costs, as a feed ingredient, have been about 22 percent of the total costs of raising hogs over the past decade. This compares to 32 percent for corn. In recent years soybean meal has been high priced. For the calendar years of 2012, 2013 and 2014 USDA reports that Decatur, Illinois high-protein meal has had annual averages between $440 and $480 per ton. But with a record U.S. soybean crop in the fall of 2014 and with the second largest crop likely coming this fall, Decatur prices may drop to about $350 per ton and then, as fall turns to winter, even further to average near $325 per ton for calendar year 2016. He says it would be the lowest annual meal price since 2007.
How much have lower soybean meal prices contributed to lower hog production costs? From 2014 highs at $480 per ton to the projected $325 in calendar 2016, costs of production would drop by $5.40 per live hundredweight due to the meal price reduction.
Livestock producers may adjust the corn to meal ratios in diets somewhat depending upon the prices of these two primary feed ingredients. For example, the 2012 drought caused corn prices to be very high relative to soybean meal prices. This relationship caused some shifting to higher protein diets because meal was relatively lower cost than corn. Then for the 2013 and 2014 crops, corn shifted to be cheaper relative to meal. This caused some to reduce their protein levels. In the coming year, corn and meal prices are returning to a more normal long-term relationship.
Estimated total costs of production for a hundredweight of live hogs reached the highest calendar year average in 2012 at $67 per live hundredweight. That dropped to an estimated $51 for 2015. Current projections for 2016 are that total costs will remain about $51. For 2016, lower meal costs are offset by somewhat higher anticipated corn costs, keeping total costs similar to 2015. Clearly a $16 per hundredweight drop in feed costs from 2012 to 2015 and 2016 is a major reduction.
Record costs of production was a contributor, says Purdue University’s Chris Hurt, to higher retail prices. These topped out in September 2014 at $4.22 per pound for USDA’s composite pork average. Of course, PED death losses also contributed to reduced pork production in 2014 as well. Lower priced feed and better control of PED has resulted in higher pork production and as a result consumer pork prices have now fallen to $3.77 per pound.
Given this, Hog producer margins are expected to be near breakeven for both 2015 and 2016. Estimated costs are near $51 and expected live hog prices are near $50. This means a $1 to $2 loss per head. Breakeven implies that supply and demand are close to an equilibrium and that all resources are receiving a “normal” rate of return. This implies that producers have little financial incentive to expand, or to contract. It also means that the lower feed costs over the past few years have been built into more pork production and consumers will now be the beneficiaries of reduced retail prices.
Nine states in the Mississippi River basin have developed strategies to control the amount of nitrogen and phosphorous making its way to the Gulf of Mexico. These plant nutrients contribute to the Hypoxia Zone. During the Farm Progress Show the Illinois Corn Growers Association is offering free tile line water sample testing to help make farmers aware of the plan and the problem.
Let’s start with the problem. The fertilizers used on lawns, gardens, and farms doesn’t always stay put. It leaches into streams and rivers and is carried to the Gulf of Mexico where the plant nutrients cause great algae blooms. These deplete the water of oxygen and aquatic life.
The plan is to voluntarily reduce the plant nutrient load. The first step says Illinois Corn Growers Director of Communications Tricia Braid is to make farmers aware of just how much nitrogen is being lost from their fields. That’s why the Corn Growers are offering free water sample testing at the Farm Progress Show.
Quote Summary - Because farmers want to keep the nutrients applied for the crop where the crop needs it. If it is starting to move out of your tiles, that is lost money for the farmer and also a potential problem for the water quality. So we are working at awareness here and helping people get an understanding of what nitrogen movement means on their farms.
This awareness campaign is also related to the recent release of the Illinois Nutrient Reduction Loss strategy. It is a document put forth by the Illinois Environmental Protection Agency and the Illinois Department of Agriculture that sets some clean water goals for all the stake holders in Illinois to achieve.
Quote Summary - So, agriculture plays a big part in that. We are not the only people involved. We understand that, but we certainly do have a role to play. The example we have for the Decatur area, the site of the Farm Progress Show, is that on average tile drained ground in the Sangamon River Watershed loses about 26 pounds of nitrogen per acre per year. That adds up. If it is leaving the tile, it is not helping the crop, and it is going somewhere unintended. We really want folks to understand how nutrients are moving at different times of the year.
Those wanting to have their tile line water tested can bring an 8 ounce sample to the Illinois Corn Growers Association tent at the Farm Progress Show. Collect the sample within 48 hours of arriving. Keep it refrigerated until you leave for the show. If you’d like more results you can do a flow test. Just count off how many seconds it takes the tile line to fill a five gallon bucket.
December corn futures have been on roller coaster ride up and down this year. First it appeared there would be way to much of the grain, and then - because of the rains - maybe too little, and now it feels like the too-little might become just enough.
The just enough to meet the need has put pressure on the market to move lower. This weakness, writes Darrel Good in this week’s online Farm Doc Daily article, is coming from the supply side. There is a general agreement USDA’s corn production forecast will not increase. It, in August, put this fall’s corn harvest at 13.686 billion bushels. Instead, market commentary seems to suggest the trade is expecting the yield forecast to decline by as much as three to four bushels to the acre. So the crop is getting smaller, but so’s the price. It’s about demand says Good.
Continuing weakness in corn prices reflects perceived demand weakness. Concerns about demand may stem from two sources. First is the concern that exports of U.S corn will fall short of the current USDA projection of 1.85 billion bushels. Second, is the concern about slow economic growth domestically and globally.
Clearly, domestic consumption of corn during the 2015–16 marketing year is not of immediate concern. The USDA projection of 5.25 billion bushels of corn used for ethanol production is consistent with the 5.2 billion expected for the marketing year just ending and a modest increase in domestic gasoline consumption next year. The projection of 5.3 billion bushels for feed and residual use next year equals the projection for the current year. Another large crop implies large residual use of corn and low corn prices along with steady to higher animal numbers should support actual feed consumption of corn.
On-the-other-hand USDA projects corn exports during the 2015–16 marketing year that begins on September 1 at 1.85 billion bushels, equal to the projection for the current year. However, total outstanding sales of U.S. corn for export during the 2015–16 marketing year are relatively small says Darrel Good.
It is recognized that the magnitude of early sales is not a good predictor of marketing year exports. Since 2005, sales as of mid-August as a percentage of marketing year exports have ranged from about eight percent (2005–06) to 42 percent (2012–13) and averaged 18 percent. Current sales represent 12 percent of the USDA projection for the upcoming marketing year. Still, the small export sales total is concerning in the context of potentially weak world demand, the relatively strong U.S. dollar, and expectations of large supplies of corn in other exporting countries.
Factually, with nearly 55 weeks remaining until the end of the 2015–16 marketing year, export sales need to average about 30 million bushels per week in order for exports to reach 1.85 billion bushels. Here’s how this all plays out on the farm. Producers will need to evaluate the corn storage decision says Darrel Good. Current low prices mean farmers will likely choose to store much of the crop that has not yet been priced. The current basis in the cash market and the carry in the futures market give some indication about the potential return to storing corn. In central Illinois, for example, the average cash bid for harvest delivery reflects a basis of about -$.30 relative to December 2015 contract and -$0.52 relative to July 2016 futures. Good says if the July basis improves to about -$.05 by June 2016 (as it did this year) the market is offering about $0.47 per bushel to store corn for about nine months.
That return would cover the out of pocket costs of farm storage, but may be closer to breakeven for commercial storage costs for some producers. The only way to capture the storage return, however, is to forward price the stored crop in the cash or futures market. The spot price of corn will have to increase by more than $0.47 by next spring in order for the return on corn stored unpriced to exceed the likely return to a storage hedge.
To this point in the season USDA seems satisfied there will be plenty of corn around for the coming year and it won’t be a worth a whole lot. However, possibilities remain that the crop could shrink in size, and that the price might consequently rally.
The price of corn can rally for two reasons. The trade might think the size of this year’s harvest is getting smaller, or there could more demand for the crop - no matter its size. Darrel Good has decided to take up both of those issues. Today we’ll hear what he thinks about the possibilities that corn crop might be smaller than predicted in August. The University of Illinois agricultural economist says a smaller supply projection could result from some combination of a lower estimate of harvested acreage or a smaller yield forecast.
The estimate of planted and harvested acreage should become more precise in October as the USDA’s National Agricultural Statistics Service (NASS) has a chance to review acreage data reported to the Farm Service Agency (FSA) by producers enrolled in federal farm programs. Last year, for example, the forecast of harvested acreage declined by 742,000 acres from August to October. For now, the FSA monthly reports of planted and prevented acreage will be monitored to form expectations about likely changes in NASS acreage estimates. The first of those reports was released today, with producers reporting 83.147 million acres planted to corn compared to the current NASS estimate of 88.897 million.
That’s a big difference, but the FSA acreage figure will grow as acreage reporting and processing is completed. It is important to remember the final FSA figure will be less than the final NASS estimate since not all producers are required to report acreage to the Farm Service Agency. So far FSA shows 2.3 million prevent plant corn acres have been certified. That compares to 1.54 million acres reported in August last year and the final 2014 report of 1.6 million. While big, Darrel Good doesn’t that that difference is significant.
The magnitude of prevented plantings reported so far this year does not point to a substantial decline in the NASS estimate of planted acreage of corn. It is possible, however, that the NASS forecast of corn acreage harvested for grain will decline. The current forecast of the difference between planted acreage and acreage harvested for grain of 7.8 million acres is only 300,000 acres larger than the 1996 to 2014 average.
The NASS August forecast of the 2015 U.S. average corn yield of 168.8 bushels was about four bushels above the average trade guess reflected in news service surveys. History suggests that the forecast will likely change in the coming month by enough to alter the expectations of year-ending stocks.
In the 40 years from 1975 through 2014 the yield forecast, says Darrel Good, changed by less than two bushels through the August to November forecast cycle in only five years. Since the August forecast was higher than expected this year, many have argued that subsequent forecasts will be lower. Looking specifically at the change in the yield forecast from August to September, the forecast has declined in 19 of the previous 40 years. The decline exceeded one bushel in 14 of those years and exceeded two bushels in nine years. None of this, unless weather conditions change, lead Darrel Good to believe USDA will find much different to report this September.
At this juncture, a case for a substantially lower USDA corn production forecast next month is difficult to make. That picture could change a bit based on actual weather conditions and crop condition ratings over the next three weeks.
The September USDA Crop Production Report is due Friday the 11th.
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Will the Corn Production Forecast Get Smaller
Darrel Good, Ag Economist - University of Illinois
To this point in the season USDA seems satisfied there will be plenty of corn around for the coming year and it won’t be a worth a whole lot. Todd Gleason has more on the possibilities that the crop could shrink in size, and that the price might consequently rally.
The price of corn can rally for two reasons…
3:49 radio
4:08 radio self contained
The price of corn can rally for two reasons. The trade might think the size of this year’s harvest is getting smaller, or there could more demand for the crop - no matter its size. Darrel Good has decided to take up both of those issues. Today we’ll hear what he thinks about the possibilities that corn crop might be smaller than predicted in August. The University of Illinois agricultural economist says a smaller supply projection could result from some combination of a lower estimate of harvested acreage or a smaller yield forecast.
Good :42 …compared to the current NASS estimate of 88.897 million.
Quote Summary - The estimate of planted and harvested acreage should become more precise in October as the USDA’s National Agricultural Statistics Service (NASS) has a chance to review acreage data reported to the Farm Service Agency (FSA) by producers enrolled in federal farm programs. Last year, for example, the forecast of harvested acreage declined by 742,000 acres from August to October. For now, the FSA monthly reports of planted and prevented acreage will be monitored to form expectations about likely changes in NASS acreage estimates. The first of those reports was released today, with producers reporting 83.147 million acres planted to corn compared to the current NASS estimate of 88.897 million.
That’s a big difference, but the FSA acreage figure will grow as acreage reporting and processing is completed. It is important to remember the final FSA figure will be less than the final NASS estimate since not all producers are required to report acreage to the Farm Service Agency. So far FSA shows 2.3 million prevent plant corn acres have been certified. That compares to 1.54 million acres reported in August last year and the final 2014 report of 1.6 million. While big, Darrel Good doesn’t that that difference is significant.
Good :31 …is only 300,000 acres larger than the 1996 to 2014 average.
Quote Summary - The magnitude of prevented plantings reported so far this year does not point to a substantial decline in the NASS estimate of planted acreage of corn. It is possible, however, that the NASS forecast of corn acreage harvested for grain will decline. The current forecast of the difference between planted acreage and acreage harvested for grain of 7.8 million acres is only 300,000 acres larger than the 1996 to 2014 average.
The NASS August forecast of the 2015 U.S. average corn yield of 168.8 bushels was about four bushels above the average trade guess reflected in news service surveys. History suggests that the forecast will likely change in the coming month by enough to alter the expectations of year-ending stocks.
In the 40 years from 1975 through 2014 the yield forecast, says Darrel Good, changed by less than two bushels through the August to November forecast cycle in only five years. Since the August forecast was higher than expected this year, many have argued that subsequent forecasts will be lower. Looking specifically at the change in the yield forecast from August to September, the forecast has declined in 19 of the previous 40 years. The decline exceeded one bushel in 14 of those years and exceeded two bushels in nine years. None of this, unless weather conditions change, lead Darrel Good to believe USDA will find much different to report this September.
Good :17 …crop condition ratings over the next three weeks.
Quote Summary - At this juncture, a case for a substantially lower USDA corn production forecast next month is difficult to make. That picture could change a bit based on actual weather conditions and crop condition ratings over the next three weeks.
The September USDA Crop Production Report is due Friday the 11th.
The numbers from the August USDA Crop Production report have farmers reeling. They did not expect them to show bigger number for corn or soybeans and neither did University of Illinois Agricultural Economist Darrel Good.
Quote Summary - My reaction is much like the market. USDA projected larger corn and soybean crops in its August Crop Production report than what we were looking for. That came from higher than expected yields for both corn and soybeans and probably from higher than expected harvested acres for soybeans. So, the net affect is that the balance sheet for the upcoming marketing year now looks plentiful. There doesn’t appear to be prospects for a shortage of either corn or soybeans and it will be difficult for prices to rebound from the low levels coming into the fall of 2015.
USDA’s figures show a corn crop two bushels to the acre better than expected last month and 156 million bushels bigger. The soybean number was up nearly a bushel to the acre and is now projected to be a little less than four billion bushels in size. Darrel Good is not so sure the soybean crop will stay so big and urges patients as it relates to making flat price bean sales. Corn is a different animal.
Quote Summary - In terms of flat price prospects, there is probably not much room for movement in terms of corn prices until we get into the spring of next year and then we start the weather game all over again. So, if we are thinking of storing corn unpriced, it must be a longterm decision. If there is sufficient carry in the market to cover storage cost, then storing and forward pricing is still and opportunity on corn.
The carry in soybeans - that’s the premium paid to a farmer to store a crop for delivery at a later date - is rarely sufficient to cover storage cost says Darrel Good. But he adds there may be a little more room for the price of soybeans to rally in the near term.
Quote Summary - If we do loose a few of those expected harvest acres and if the yield is not quite as high as currently forecast, then we could see a near term bounce in soybean prices.
This bounce could occur just before or just after harvest dependent upon future USDA production reports.
USDA’s National Agricultural Statistics Service (NASS) will release the first survey-based yield and production forecasts for the 2015 corn and soybean crops this Wednesday (tomorrow/today). Even though a description of the NASS crop production forecast methodology is widely available, there always seems to be some misconceptions about how NASS makes corn and soybean yield forecasts. University of Illinois agricultural economists Darrel Good and Scott Irwin put together a brief overview of that methodology and posted to the FarmDocDaily website.
While they say their summary does not do full justice to the very comprehensive forecasting methodology, it is useful to place the upcoming yield forecasts in the proper perspective.
NASS corn and soybean yield forecasts are made in August, September, October and November. The final yield estimate is released in January based on the comprehensive December Agricultural Survey of producers. Two types of surveys are used each month to collect the forecast data.
The Monthly Agricultural Yield Survey (AYS) of producers is conducted in 32 states for corn and 29 states for soybeans with a total of about 25,000 producers surveyed for all crops in August. The Objective Yield Survey (OYS) is conducted in 10 states for corn and 11 states for soybeans. The surveys are generally conducted in a two week period ending about a week before the release of the forecasts.
For the Agricultural Yield Survey, a sample of farm operations to be surveyed is drawn from those who responded to the June acreage survey. While the sample of operations to be surveyed changes from year-to-year, for any particular year the same operations are interviewed each month from August through November. Survey respondents are asked to identify the number of acres of corn and soybeans to be harvested and to provide a forecast of the final yield of each crop. Based on these responses, average yields are forecast for each survey state and for the nation.
The goal of the Objective Yield Survey program is to generate yield forecasts based on actual plant counts and measurements .The sample of fields (1,920 for corn and 1,835 for soybeans) is selected from farms that reported corn (soybeans) planted or to be planted in the June acreage survey. A random sample of fields is drawn with the probability of selection of any particular field being proportional to the size of the tract. Two plots are then randomly selected in each field.
Data collected from each corn plot during the forecast cycle are used to measure the size of the unit and to measure or forecast the number of ears and grain weight. These data include (as available based on maturity) row width, number of stalks per row, number of stalks with ears or ear shoots per row, number of ears with kernels, kernel row length, ear diameter, ear weight in dent stage, weight of shelled grain, moisture content, total ear weight of harvested unit, lab weight of sample ears, weight of grain from sample ears, and moisture content of shelled grain from sample of mature ears. Corn yield is forecast based on the forecast (or measurement if maturity allows) of the number of ears, the weight per ear, and harvest loss.
Data collected from soybean plots (as available based on maturity) include row width; number of plants in each row; number of main stem nodes, lateral branches, dried flowers and pods, and pods with beans; weight and moisture content of beans harvested by enumerator; and weight and moisture content of harvest loss. The data collected are used to forecast yield based on a forecast (or measurement if maturity allows) of the number of plants per acre, the number of pods with beans per plant, the average bean weight, and harvest loss.
For both corn and soybeans, the state average yield forecast based on the Objective Yield Survey is the simple average of the yields for all the sample fields. In addition, a state yield forecast is also made by first averaging the forecast or actual yield factors (such as stalk counts, ear counts, and ear weight) and then forecasting the state average yield directly from these averages. This forecast is based on a regression analysis of the historical relationship (15 years) between the yield factors and the state average yield. State average yields are combined to forecast the U.S. average yield.
The NASS corn and soybean survey and forecasting procedures produce a number of indictors of the average yield. In August these indicators include: average field level yields from the Objective Yield Survey, average state level counts from the Objective Yield Survey, and the average yield reported by farmers in the Agricultural Yield Survey. Each of the indicators provides input into the determination of the official yield forecasts by the USDA’s Agricultural Statistics Board.
The accuracy of the USDA yield forecasts, write Darrel Good and Scott Irwin, relative to the final yield estimates varies from year to year, but as would be expected, improves each month through the forecast cycle as the crops become more mature.
CME Group December Corn Futures - Daily Chart |
Darrel Good - Based on the current pace of ethanol production, for example, the use of corn for ethanol production during the current marketing year (ending August 31) could be about 10 million bushels more than the current USDA projection of 5.2 billion bushels. Similarly, exports could be slightly larger than the projection of 1.85 billion bushels if Census Bureau export estimates for June, July, and August exceed the USDA export inspection estimates as was the case in the first nine months of the marketing year. However, for carryover stocks to be lower than the current projection of 1.79 billion bushels by enough to meaningfully alter the 2015–16 supply and demand balance would require larger than expected feed and residual use of corn during the final quarter of the marketing year.This won’t be known until the Grain Stocks report is released September 30th. A tighter supply and demand balance sheet for corn could also result from larger than expected consumption during the year ahead. Such a development would obviously take time to unfold, but opportunities for consumption to exceed the current projection appear to be limited thinks Good. This leaves the size of the crop in the ground as the primary lever by which prices might be pushed higher.
Darrel Good - The trade's average yield expectation appears to be near 165 bushels, 1.8 bushels less than projected in the July 10 USDA WASDE report. The August production forecast will also reflect the estimate of harvested acreage, but a large change from the June acreage forecast is not expected. Based on the projection of 81.1 million acres harvested for grain, a yield of 165 bushels would result in a crop of 13.38 billion bushels, about 150 million bushels less than projected in the July WASDE report. Still, if 2015–16 marketing year consumption is near the current USDA projection of 13.735 billion bushels, year-ending stocks would be abundant at about 1.45 billion bushels. On the other hand, a yield forecast of 161 bushels or less would likely be sufficient to push prices back to the mid-July highs.Recent corn price declines indicate, says Darrel Good, that the market is removing the production risk premium from the price structure in anticipation of another year of surplus. The question is whether that removal is premature. The USDA’s Crop Production report to be released on August 12 will contain the first survey-based yield and production forecasts for the 2015 crop.
FarmDocDaily Article by Darrel Good, University of Illinois
It looks like this year’s U.S. soybean crop may be a bit smaller than expected, but at the same time it appears there is a corresponding drop in need.
Although “need” might be a pretty strong term.
U of I ag economist Darrel Good has put the price tug of war related to supply and demand into context as positives and negatives. Here’s a list of items supporting a higher price for soybeans.
First, on the supply side, the smaller than expected June 1 USDA stocks estimate. It resulted in the agency lowering the projection of this year’s ending stocks (what’s going to be leftover when we get to the fall) to 255 million bushels. That’s 75 million bushels less than the month earlier and 220 million bushels less than what USDA thought might be left when the first projections started coming out last year.
Second on the list is the June 30 USDA Acreage report. It predicts harvested acreage of soybeans this year will be about 700,000 acres more than projected based on the planting intentions reported in March. However, there is a general consensus that not all of the intended acreage was actually planted due to extremely wet conditions in Missouri, Illinois, Indiana, and Ohio. In addition, flood damage may result in more than the usual amount of abandonment of acreage that did get planted. So while the acreage number is the largest on record right now, it is expected that will drop.
Thirdly, those same wet conditions should result in a lower average U.S. soybean yield. Something below the projection of 46 bushels per acre in the July 10 WASDE report.
In short, the 2015 crop is expected to be smaller than the current USDA projection of 3.885 billion bushels, but expectations are in a pretty wide range. USDA will release the first survey based production forecast in the Crop Production report August 12. That report will reflect the results of the re-survey of soybean planted and harvested acreage in Missouri, Kansas, and Arkansas.
Fourth, consumption of old crop soybeans remains strong and on track to reach record levels. This goes for domestic usage, called the crush, and the export market. Unshipped sales of 94 million bushels as of July 9 were sufficient to supply the necessary shipments to meet the export goal.
This brings us to the concerns, or the negatives, Darrel Good puts on the ledger.
The concern about soybean demand centers on potential export demand for the 2015 crop. USDA puts it 50 million bushels smaller than this year, but on-the-other-hand, this year is a record high.
Still sales for next year are dismal. They only represent 14 percent of the projection. Over the past three years, at this time, sales have been at least twice that big, and as much as three times. And, the number one destination is the cause. Sales to China, by far the largest customer for U.S. soybeans, stood at only 89.5 million bushels as of July 9. Sales to unknown destinations, which likely include China, totaled 120 million bushels. In the previous three years, combined sales to China and unknown destinations averaged 457 million bushels, compared to only 209.5 million bushels this year.
It is possible, says Darrel Good, that the slow pace of new crop export sales so far this year reflects a shift away from the recent seasonal pattern of export sales back to the pattern that prevailed during the period from 2006 through 2010. During those five years, new crop export sales as of about July 9 accounted for an average of only 14 percent of marketing year exports.
So, those are the positives and the negatives of the soybean market as detailed by Darrel Good on the Farm Doc Daily website.
Rain from Missouri to Ohio has kept farmers from planting part of this year’s soybean crop, but nobody knows for sure - yet - just how many acres have been idled.
USDA has a term for land farmers planned to, but failed to sow because of the weather. It is “prevent plant”. This year rain has prevented farmers throughout the Midwest from planting some acres of soybeans. USDA has one figure already, but it is surveying farmers in Kansas, Missouri, and Arkansas to see if it needs to be updated. The figure is not for prevent plant, but rather for planted acreage. This year that is expected to be a record high 85.1 million acres. But there has been a lot of rain and the number will probably change. Gary Schnitkey wanted to know if history could act as a guide to how many acres might eventually not be planted to soybean.
Quote Summary - Just to give you a feel, from 1996 through 2014 on average there were 759 thousand prevented plant acres for soybeans in the U.S. There were four years when this number topped a million acres. The highest was 2013 at 1.69 million acres
The other three years in which prevent plant exceeded one million acres for soybean include 2001, 2010, and 2011.
Quote Summary - The common thing in all those years was either North Dakota, South Dakota, or Minnesota or some combination of the three having a large number of prevent plant soybean acres. Following those three it was Minnesota. The rank order is South Dakota, North Dakota, Minnesota, and then Missouri. These are typically the states you look at for large numbers of soybean acres going to prevent plant.
The Dakota’s and Minnesota are not the problem this year. It leaves, mostly, Missouri. And, historically, the highest number of soybean prevent plant acres in this one state is only 200,000.
Quote Summary - We are looking at something larger than that. The largest we’ve ever seen in the United States for a single is 450 thousand. So if we see something over half-a-million acres in Missouri, which we could well see, that would be record setting and a million would be way out there.
USDA will update the soybean acreage figures for Missouri, Kansas, and Arkansas August 12th along with the release of the Crop Production report and the monthly supply and demand tables.
Crescent City, Illinois corn field July 15, 2015 |
Quote Summary - In years with substantial production uncertainty, prices tend to be above the subsequent marketing year average during the growing season, offering producers the opportunity to forward price a portion of the crop. That pattern seems to be unfolding this year. New crop corn prices are currently above both the spring price for crop revenue insurance and above the upper end of the range of the USDA’s marketing year average price projection. Still, prices could trade in a relatively wide range over the next 10 weeks. Pricing decisions remain difficult for producers, particularly for those with substantial production uncertainty.This price risk for corn, says Darrel Good can be mitigated with a combination of incremental sales at higher prices and options-strategies that provide a floor above the crop revenue price of $4.15 for December futures.
The rainfall in May and June has put the corn crop in a difficult position this growing season. Late in June the corn crop in eastern Illinois north of Interstate 74 was under water. It looked bad, really bad. Oh there was some of it that looked pretty good, but not much. Things across the border in Indiana aren’t much better, and neither, apparently, is a large part of Missouri and southern Illinois. The crop has just gotten way to much water says University of Illinois Extension Agronomist Emerson Nafziger.
Quote Summary - This is one of those times when the consequences of having a foot of rain in June is not something we would want to ever have and this year it is going to have a serious affect on the crop.
There are two primary concerns related to corn. The moisture is a great haven for the development of disease. The other concern, and this may be more important moving through July and August, is that the root system of the crop hasn’t had any need to develop…not just the roots of the corn under water, but of the whole corn crop from Missouri to Ohio.
The closer we get to pollination the slower this root regrowth is and the less potential there is to recover a healthy root system on this crop say Nafziger,
This could come back to hurt the crop later in the season because it won’t be very resilient during periods of dry weather. A crop in the first week of August cannot grow its root system deeper. It does not have that capability.
If the system has been damaged, even if there is nitrogen and water left deep in the soil, it may not be able to access it and produce higher yields. There in lies a new concern for the water logged corn crop. It looks now as if there may be a change in the weather pattern. Mike Tannura of tStorm Weather in Chicago has been talking about this on the radio.
Quote Summary - A hot area of upper level high pressure is going to drive the U.S. weather pattern over the next couple of weeks and probably beyond that. It’s location is key. Right now we think it will center somewhere near Nebraska / Kansas and on to the west, which would just keep things warm, but not too warm. Any deviation in that system would lead to dramatic changes in weather forecast over the next few weeks.
So, too much rain has stressed the corn crop from Missouri to Ohio. It’s about to pollinate, and then begin grain fill. Even if the weather only turns hot, it could be a compounding problem.