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How to Connect your Site to the Prospective Business | webinar



University of Illinois Extension’s Community and Economic Development team will host a free webinar, Site Selection: How to Connect your Site to the Prospective Business, on Thursday, December 8, 2016 from Noon to 1PM, Central Time.



The webinar, a final in Local Government Education’s fall series on economic development in Illinois, will feature Cheryl Welge, who will be presenting a more detailed discussion of the site selection process. In the previous site selection webinar, we covered the state and technical aspects of Location One and site selection in Illinois. During this upcoming webinar, Cheryl will share her expertise on capacity requirements for site selection from the site selector perspective.

As a senior business development executive in Ameren Corporation’s Economic Development Department, Cheryl serves as the business development contact for a twenty-two county region in western, central and southwestern Illinois. In this role, she implements Ameren’s community and business development programs within Ameren-served communities. Cheryl is a first-line representative responsible for developing, coordinating and implementing Ameren’s proactive business development services to create and sustain revenue growth, support public strategy implementation and help foster positive community stewardship on behalf of Ameren subsidiaries.

Cheryl began her utility career with one of Ameren’s legacy companies – Central Illinois Public Service Company – in 1989. After serving in various support positions within both the Industrial Services and the Customer Expansion & Retention Departments, Cheryl assumed the role of marketing coordinator of the CIPS Marketing Programs Department in 1996 and joined the Ameren Economic Development Department in 1998. In 2013 she assumed her current position as senior business development executive.

Cheryl is a graduate of both Lincoln Land Community College and Southern Illinois University-Edwardsville, having earned a Bachelor of Science, Business Administration, with a major in Marketing. In addition, she graduated from the University of Oklahoma’s Economic Development Institute in April 1999 and became a Business Retention & Expansion International (BREI) certified BR&E Consultant in 2003. Cheryl is a Past Chairman of the Illinois Economic Development Association (formerly known as the Illinois Development Council) and a past recipient of the Distinguished Economic Developer Award.

There is no cost to attend the webinar; however, pre-registration is required. Register online or contact Ken Larimore at larimore@illinois.edu for more information.

2016 Gross Farm Revenue & Income

It looks like this year is going to be better than last year for farmers in central Illinois. Todd Gleason explores how gross income has changed for row croppers in the middle of the prairie state.



The gross revenue for corn is $292 per acre. It is tallied from three income sources. The crop is worth $262. There was a $20 farm safety net payment from the ARC-County program and a $10 crop insurance indemnity. The total, again $292, is lower than last year says University of Illinois Agricultural Economist Gary Schnitkey, “Even though we are putting in a very high yield, we are using 231 bushels to the acre for the corn average - the same as in 2014, revenues will be down for corn in 2016 as compared to 2015”.



Schnitkey calculated the gross revenue figures for the farmdocdaily website.

The soybean figures add up in a similar fashion. The gross revenue is estimated to total $718 per acre. It’s a figure much higher than the 2015 gross says the agricultural economist, “We are including very high soybean yields for 2016. Record-breaking yields, in fact, of 73 bushels to the acre. The price is above $9.50, and this may actually turn out to be low as prices continue to climb. Overall, revenue on soybeans will be up from last year and much higher than total costs. So, our bright spot for the 2016 year will be revenue and income from soybeans”.



All in all, on the highly productive soils of central Illinois, 2016 will go down as a high-yield low-income year. Another year in which farmers just-get-by says Gary Schnitkey.
Quote Summary - Get-by year, but better than it could have been without the high yields. Most farmers will maintain equity, but may see some working capital declines. The declines will be more pronounced on farms working a higher percentage of cash rented land. It is better than 2015, but still not up to sustainable levels for the long-run. We need to see higher returns, particularly for corn prices in the future.
There are a series of graphics detailing 2016 central Illinois row crop farm gross income on the farmdocdaily website.

Illinois Farm Economic Summits

The big story in Illinois agriculture in 2016 continued to be the “margin squeeze” faced by crop producers. This squeeze was brought on by low corn, soybean, and wheat prices and costs of production that are only slowly adjusting to the new price realities. At present prices, further cost of production reductions will be required. Producers and landowners face a series of difficult management challenges as they grapple with how to adjust to the changed environment. Should cash rents be lowered? And if so, by how much? How much relief will be seen through lower fertilizer and seed prices? What are the prospects for grain prices to recover from current depressed levels?

University of Illinois Extension and members of the farmdoc team from the Department of Agricultural and Consumer Economics will be holding a series of five Farm Economics Summit meetings to help producers navigate these difficult times.

LEARN MORE & REGISTER TODAY

Speakers from the farmdoc team at the University of Illinois will explore the farm profitability outlook and management challenges from several perspectives, including the 2017 outlook for prices, farm financial management in tough times, needed changes in farmland leases, updates on the farm program safety net, agricultural credit conditions, and long-term weather and yield trends. The format for the meeting will be fast-paced and allow plenty of time for questions from the audience.

EPA Renewable Fuels Standard Rallies Soybean Oil Prices

Source | Darrel Good, Agricultural Economist - University of Illinois

The price of soybeans rallied about 10 percent from mid-October to mid-November. It came,despite the record sized crop harvested in the United States.

Farmers have been in awe of the soybean market since mid-August. There have been a few reasons for it to rally; a short crop out of South America and a drought constrained supply of palm oil coming from Indonesia for instance. Still, this U.S. soybean crop is big, mighty big in fact. Yet, the price of soybeans has gone higher.

Darrel Good writes about it in this week’s Weekly Outlook. You may read it online at FarmDocDaily.

There are two unusual things about this price rally. Well, one really, but it is driven by the first. The rally has come because the world seems to be short of vegetable oils. Soybean oil is among those. Here’s the important part, soybean oil lead rallies generally do not last. Darrel Good thinks this one might and that it could change the dynamics of the soybean complex. The change is driven by the Renewable Fuels Standard. The RFS did the same thing for the corn market when it began to ramp up ethanol production in the United States more than a decade ago.

The soy complex is made up of three parts; the price of soybeans, the price of soybean meal, and the price of soybean oil. The last two are the products derived from the soybean when it is processed, crushed.

The EPA RFS announcement, made last week, initially resulted in a surge in soybean oil and soybean prices. Increasing soybean oil consumption for mandated advanced biofuels, in this case biodiesel production, this year and beyond may require the domestic soybean crush to be larger than previously thought concludes Darrel Good. He says this could lead to some long-term pricing questions.

Historically, the domestic crush has been driven by soybean meal demand. If it is driven instead by soybean oil demand, this could result in lower soybean meal prices. Soybean meal has a short shelf life. Its price would need to be low enough to for it to be used quickly.

The impact of higher soybean oil prices and lower soybean meal prices on the price of soybeans is difficult to anticipate. However, a “surplus” of soybean meal, says Good, might result in lower soybean meal prices relative to feed grain prices. It could cause the soybean meal to corn price ratio that has ranged from 2.55 to 3.2 in recent years to decline. The historical range is 2.0 to 2.5.

Could Soybean Stocks Grow to 580 Million

Depending upon how you do the numbers there could be an enormous supply of soybeans in the U.S. by the time the fall of 2018 rolls around.

The large soybean crop in the United States hasn’t, yet, pummeled prices in Chicago. However, farmers are a bit worried the hammer blow will be struck. For now, much of the focus is on the potential size of the 2017 South American crops and the implications for demand for U.S. grown soybeans. Increasingly, however focus will shift to 2017 production prospects here in the United States.

The over-riding question is whether surpluses and low prices will persist for another year. Although University of Illinois Agricultural Economist Darrel Good says it is a bit early to speculate on supply and consumption prospects for the 2017–18 marketing year, he thinks some scenarios can be considered.

For soybeans, there is a general expectation that U.S. producers will increase acreage in the year ahead. An increase of about five million acres, to 88 million harvested acres, seems to be a common expectation right now. The extremely high soybean yields of the past three years raise some questions about a potential increase in the trend yield. However, if the 2017 U.S. average soybean yield is near our calculated linear trend value of 47.5 bushels and acreage is increased as expected, the 2017 crop would total 4.18 billion bushels, 181 million bushels less than the 2016 harvest. If soybean consumption during the 2017–18 marketing year remained at the elevated level of 4.108 billion bushels projected for the current year, stocks would grow by about 100 million bushels.

So, at the end of the 2017–18 marketing year there could be 580 million bushels of soybeans left in the supply category as ending stocks. The upshot writes Good in his Weekly Outlook is that with a trend yield of 47.5 bushels and a constant level of consumption, any increase of more than 2.85 million acres next spring would result in some further growth in year ending stocks.

Quote Summary - On the other hand, a five million acre increase in soybean area along with a constant level of consumption means that an average yield of less than 46.3 bushels would result in some increase in marketing year ending stocks.

There are obviously multiple potential acreage, yield, consumption, and ending stocks scenarios for the 2017–18 U.S. soybean marketing year. The most likely scenarios tend to favor a modest to large increase in marketing year ending stocks of soybeans. However, the soybean market is apparently not convinced that stocks will continue to grow next year, with the January 2018 futures price only $0.06 lower than the January 2017 price.

The soybean market, concludes Good, then appears to be reflecting some production risk. He thinks this perceived risk may stem from current drought conditions in the southeastern United States and/or uncertainty about potential impacts if a La Niña episode unfolds in South America.

US Corn Ethanol Market | an interview with Carl Zulauf




Ethanol was a factor in both the price run-up that began in 2006 and the price run-down that began in 2013. Tepid growth replaced explosive growth. The question for the future is, “What is ethanol’s organic growth rate (growth without government policy stimulus)?” Recent history suggests growth will continue in the corn ethanol market, but it likely will be notably lower than the growth in yields. Thus, upward pressure on corn prices is less likely.

Corn Ethanol in Historical Perspective
US Department of Agriculture data on US corn processed into US ethanol begin with the 1980 crop. It is reported monthly in the World Agricultural Supply and Demand Estimates. Corn processed into ethanol grew at an average annual rate of 6% between 1985 and 2000, exploded to a 24% annual growth rate between 2000 and 2010, then slowed to 1% per year after 2010 Ethanol Growth vs. Yield Growth. The explosive growth in the first decade of this Century largely coincides with the impact of government policies. These policies first led to the use of ethanol as an oxygenate additive in gasoline, then to the use of ethanol as a substitute for gasoline and by extension oil The latter was accomplished through mandates on market size enacted by Congress in 2005 and 2007.


Figure 1 | Corn for Ethanol

Return to Equity for Processing Corn into Ethanol
Since January 2005, Iowa State University has issued a monthly report on the costs and returns to processing corn into ethanol. The report is based on (1) a model plant created using best available information and (2) current prices for corn, ethanol, natural gas, and distillers dried grain. Among the measures calculated is a return on equity. Figure 2 reports the average of monthly returns to equity by crop year. Even though growth in the ethanol market slowed dramatically after 2010, average return on equity remained positive for the 2011–2015 crop years (13%). As expected, return on equity was higher for the 2005–2010 crop years (30%). For additional discussion of the return to processing corn into ethanol, see Irwin, 2016.



Figure 2 | Iowa State Ethanol Plant Model Returns

Ethanol Growth vs. Yield Growth
A measure of growth in demand (growth in corn processed into ethanol expressed as a percent of corn production) is compared with a measure of growth in supply (growth in US corn yield). To illustrate the calculation of these measures, 3.71 billion bushels of corn was processed into ethanol in the 2008 crop year, 0.66 billion bushels more than processed in the 2007 crop year. US production of corn in 2007 was 13.04 billion bushels. The growth in corn processed into ethanol was +5.1% of 2007 corn production (0.66/13.04). US yield of corn per planted acre was 151 bushels in 2008 vs. 149 bushels in 2007. Rate of growth was +1.3% [(151/149) - 1]. These two measures were calculated for each crop year.

Yield growth strongly exceeded the growth in corn used to produce ethanol relative to corn production before 2000 and after 2010 (see Figure 3). The two measures increased at about the same rate (2%) between 2000 and 2005. Between 2005 and 2010, growth in corn used to produce ethanol relative to production strongly exceeded growth in corn yields. Not only did corn processed into ethanol increase dramatically during the latter period, but the growth in corn yields was also abnormally low. Reinforcing these bullish price factors was China’s rapidly growing demand for soybeans (see Zulauf, 2016).



Figure 3 | Ethanol Growth v Yield Growth

Summary Observations
  • From the perspective of 2016, expansion of the US corn ethanol market was largely squeezed into the 10 years from 2000 to 2010 (83% of the expansion occurred in these years).
  • The squeeze was largely driven by US policy decisions.
  • At the same time that policy was strongly pushing demand, growth in corn yields suddenly slowed, with a likely explanation being a multiple year period of suboptimal growing conditions.
  • However, the increase in demand for corn ethanol spurred by policy would have exceeded the growth in yield even during the high yield growth period of 1980 to 2000.
  • The result was not just an increase in corn price but an explosive increase in corn price.
  • This price increase increasingly looks unsustainable as yield growth returns to a path closer to history and ethanol growth returns to a level more consistent with long term organic growth due to market incentives, not policy factors.
  • If the preceding point holds, agriculture will need to make painful adjustments as it enters a world that will likely look more like 1980–2000 than 2005–2010.
  • Nothing in the historical review suggests that the corn ethanol market would not have developed. The continuing positive return to equity since 2010 suggests the market is sustainable. In particular, ethanol appears to have carved out a role as a competitive source of octane for gasoline, which is translating into a growth in exports of ethanol. For additional discussion of this topic, see Irwin and Good, 2016. But, annual organic growth is slower and unlikely to exceed the growth in yields.
  • This 35 year story does however raise caution about using policy to expand markets.
  • In particular, the design of such policy needs to respect the underlying private market, including attributes such as sustainable non-publically subsidized growth; role of competing demand components, such as livestock in the case of ethanol; and the scope and magnitude for supply growth to be uncertain and how this uncertainty may interact with policy induced demand growth.
  • Interesting, important, but probably unanswerable questions are what would be the current state of the corn ethanol market and by extension corn prices if government policy had not intervened and more narrowly if the 2007 mandate had not been enacted. The answers to these questions may tell us more about the future of corn and other field crop prices than any other set of questions.

Watch the Feed Usage Number for Corn

Last week, when USDA raised the sized of the U.S. corn crop, there was a collective gasp in farm country. Prices are already very low, and an even bigger crop wasn’t expected. All attention now has turned to how this mammoth supply will be used in hopes consumption can chew through the mountain of corn.

U.S. farmers are harvesting their largest corn crop on record at some 15.2 billion bushels. It’s the western corn belt that really came through this year with big yields. The November USDA Crop Production report shows that even in the last month those yields got bigger. Up 3 bushel to the acre in Nebraska and South Dakota. 4 bushels higher in Minnesota. And a 17 bushel to the acre increase in North Dakota that came about once farmers (the only real source for yields in that state) took a look at the yield monitors in their combines.

The increased yield for the corn crop creates a scenario says University of Illinois Agricultural Economist Todd Hubbs where the ending stocks to use ratio is 16.4 percent under current consumption projections. That’s a level, he notes, that has not been seen since the 2005/06 marketing year. And while the corn for export and ethanol numbers seem sound, the feed and residual number has Hubbs concerned.

Quote Summary - They’ve had the feed and residual use projection at 5.65 billion bushels for the few reports. It’s a big number. It is 10 percent up over last year and, with the increased livestock numbers we’ve seen, it sounds reasonable. However, when you consider the mitagating factors surround feed usage; the unseasonably warm fall; a large corn crush for ethanol which increases the availability of distillers grains; DDG’s that may not be shipped overseas because of China’s recent import restrictions; and you see lots of alternative sources for feed rather than corn. Even though there are strong livestock inventory numbers, the mitigating factors want to make you give feed a good look as we move through the marketing year.

Think of it this way. There are a lot of corn acres and lot ethanol plants west of the Mississippi River - Iowa, Nebraska, and Minnesota are three of the top five corn producing states in the nation. There are also a lot of wheat acres, and a lot of cattle, and a lot of hogs, and more than a few poultry operations. Those birds and animals eat a lot of feed, but the ranchers and farmers make decisions based on economics. Clearly it has been cheaper to leave cattle on pasture this warmer than average fall, and it may be cheaper to feed wheat and DDG’s rather than corn. We won’t really know the impact until the Grain Stocks report is released January 12 says Todd Hubbs.

Quote Summary - The grain stocks report is the only way to back out how much corn for feed is being used. We know how much corn is being crushed for ethanol. There is a pretty good figure on how much of it is being exported. The Grain Stocks let us back figure a calculation for feed usage over the first quarter of the marketing year. So, on January 12th of 2017 the report will come out giving us the December 1 stocks report. This will give us an indication of just how strong feed us is.

So, while a deserved focus has been placed on corn exports, foreign production, and corn used for ethanol, a major portion of each corn crop is fed to livestock. Given the large projected increase for feed and residual usage this marketing year, monitoring those projections will be really important to price discovery.

Trump | Now what for U.S. Corn Exports

Tom Sleight, CEO of the United States Grains Council discusses the future of U.S. grain exports under a Donald Trump administration.
 

Crop Insurance Payments - an interview with Gary Schnitkey

Harvest prices used to determine crop insurance payments for corn and soybean policies in the Midwest are based on Chicago Mercantile Exchange (CME Group) futures settlement prices during the month of October. The 2016 harvest price for corn is $3.49 per bushel. This is 10% lower than the $3.86 projected price set in February. The soybean harvest price is $9.75 per bushel. That’s 10% higher than the $8.85 projected price. For the most part it means crop insurance payments to farmers will be relatively low says University of Illinois Agricultural Economist Gary Schnitkey.

Assessing the Potential for Higher Corn Prices

The odds are against four dollar cash corn this year and next, at least for any extended period of time.

The monthly average cash price paid to farmers in the United States for their corn has been less than $4.00 a bushel for 27 consecutive months. It’s likely to stay that way well into 2017, too, says University of Illinois Agricultural Economist Darrel Good unless something changes, “Some combination of a reduction in corn supplies and increased consumption will be required in order for prices to move above $4.00 per bushel for an extended time.”

On the supply side, or how much corn is around, USDA’s next Crop Production report is due November 9th. It will contain a new forecast of the size of the 2016 U.S. corn crop. Previous history of yield forecast changes in November in years when the forecast declined in September and again in October as was the case this year, says Darrel Good, show very mixed results with 5 moving lower, 1 unchanged, and 4 of the ten getting bigger. The trade is leaning toward a smaller corn yield this time around. So, not a lot of supply side help expected from the USDA reports on this fall’s crop. That make the southern hemisphere pivotal.

Brazilian production declined from 3.35 billion bushels in 2015 to 2.64 billion bushels in 2016 due to late season drought. Early season USDA projections are for production in 2017 to rebound to 3.29 billion bushels. In addition, Argentina is expected to expand corn area due to reductions in export taxes.

It is too early in the South American growing season to assess yield potential, but production well below early projections would be required to push corn prices higher says Good in his Weekly Outlook on the Farm Doc Daily website. He also thinks a more likely source of a reduction in corn supply may be reduced corn acreage in the United States next year.

Darrel Good - Assuming a three million acre reduction in harvested acreage and consumption during the 2017–18 marketing year near the 14.525 billion bushels projected for this year, the 2017 average yield would need to be below 173 bushels in order for year-ending stocks to be reduced from the 2.32 billion bushels projected for the current year. Under the acreage and consumption assumptions made here, a yield near trend value of 169 bushels would result in year-ending stocks of about 1.99 billion bushels.

There are lot of supply side ifs in that statement. Maybe then demand for corn could be the key to higher prices. The good news here is that U.S. corn exports are up, but that’s based upon last year’s poor corn crop out of Brazil. It doesn’t appear feed usage will increase either, thinks Good, and while the ethanol grind has be increasing, USDA has already penciled in an extra 100 million bushels of usage.

It appears unlikely thinks Darrel Good that higher corn prices will be generated by a large reduction in the estimated size of the 2016 U.S. crop or stronger than projected demand for that corn. That leaves a smaller than expected South American crop or a much smaller U.S. crop in 2017 as the potential sources of higher prices. If South American production increases as projected, a large decline in U.S. acreage and/or a 2017 yield below trend value may be required to push the average corn price above $4.00 during the 2017–18 marketing year.

Illinois Water Conference | Reducing Nutrient Losses

Participants in the University of Illinois 2016 Water Quality Conference Reducing Nutrient Losses panel discuss ways in which farmers and landowners can manage water quality.

  • Laura Christianson, Crop Sciences - University of Illinois
  • Ruth Book, State Conservation Engineer - USDA NRCS
  • Jason Solberg, Illinois Fertilizer & Chemical Association
  • Debbie Fluegel, Trees Forever

Soybean Yields in Illinois

via FarmDocDaily
by Gary Schnitkey, Agricultural Economist - University of Illinois

In recent years, soybean yields in Illinois have been exceptional, leading to questions on whether technologies have caused a "jump" in soybean yields. While the 2016 state yield will be an outlier, it is too early to say that a new regime of soybean yields exists. Relative to corn yields, soybean yields must increase more to have the same relative yields as in the early 1970s.

Comparing Soybean Yields to Trend

State soybean yields for Illinois have been exceptional from 2014 through 2016. In 2014, Illinois' soybean yield was 56 bushels per acre. The 2014 yield was a record high, 4.5 bushels per acre higher than the next highest yield of 51.5 set in 2010. The 2015 state yield again was 56 bushel per acre. In 2016, a new record will be set, with state yield estimated at 62 bushels per acre in the October Crop Production report produced by the National Agricultural Statistical Service. A 2016 yield of 62 bushels per acre would be 6 bushels per acre higher than the previous highest yield set in 2014 and 2015.

Comparisons to trend further illustrate how high recent yields have been in Illinois (see Figure 1). Fitting a linear trend through soybean yields results in an increase of .48 bushels per year. The 2014 through 2016 yields are significantly above the trend: 5.1 bushels in 2013, 4.6 bushels per acre in 2015, and 10.1 bushels per acre in 2016. The 2016 yield is a statistical outlier. Only one other yield has been 10 bushels away from the 1972-2016 trend, that being in the 1988 drought year when the actual yield was 11.5 bushels below trend



Why are Soybean Yields High?

Recent high soybean yields then lead to the question of what is causing the high yields. Have growing conditions been abnormally good in the past three years, leading to the high yields? Or has technology changed such that a higher yield should be expected in the future? Perhaps genetics have improved, or farmers' use of fungicides and other inputs have been leading to higher yields.

This question - is it good weather or technology changes - is difficult to answer from just observing time series of data. Two contradictory thoughts. Recent yields have been high, and the 2016 yield is a statistical outlier, suggesting technology changes. On the other hand, historical jumps in yields or trends have rarely occurred in the last 50 years. For example, corn yields appeared to be increasing at a faster after 1995 than before 1995. Belief in an increasing yield trend decreased after the poorer yields of 2010, 2011, and 2012. The recent high soybean yields in recent years may simply be a signal of exceptional growing conditions.

Soybeans Compared to Corn Trends

While soybeans have had exceptional yielding years recently, soybeans relatively to corn yields have not been at historically high levels. Figure 2 shows soybean yields divided by corn yields. Higher levels indicate that soybean yields are higher relative to corn. In 2016, soybeans divided by corn yield is .31, which is not above average.



Over time, soybeans-to-corn yields have been trending downwards. An expected level of soybean-to-corn yields in 1972 was .32. The .31 value in 2016 is below the expectation in 1972. The Illinois state yield for 2016 is projected at 202 bushels per acre. For a .32 soybean-to-corn yield ratio to result in 2016, soybean yield would have to be 64.6 bushels, 2.6 bushels higher than currently projected.

Soybean yields have been declining relative to corn yields because of higher trends for corn. In Illinois, corn yields have been increasing by 1.8 bushels per year compared to .48 bushels per year for soybeans. Over time, the higher increase in corn yields causes lower soybean-to-corn yields

Summary

Soybean yields in Illinois have been exceptional in recent years, with yields being much higher than trend yields. It is too early to say that a permanent change has occurred, and history suggests permanent changes occur rarely.

Big Crop Strong Exports an interview with Todd Hubbs

It is likely the export markets along with South American production prospects will drive only periodic price increases for corn and soybeans says University of Illinois Agricultural Economist Todd Hubbs in this interview with Todd Gleason.

FarmDocDaily Source

Just in Time Parenting

visit Just in Time Parenting website
 

USDA October Reports



University of Illinois Agricultural Economist Darrel Good reviews the October 12, 2016 Crop Production and WASDE reports including his thoughts on how it changes off-farm storage decisions.

Sell Soybeans for Cash Needs

The United States Department of Agriculture has reported the size of this year’s soybean crop and for the second month in a row it has increased the size of what was already a record breaker. That trend is likely to continue.

USDA, in its October Crop Production report, raised the average national soybean yield by eight-tenths of a bushel. It now stands at 51.4 bushels to the acre and about 4.3 billion bushels strong. It is already a serious record breaker, but not likely big enough, yet, says University of Illinois Agricultural Economist Darrel Good.

Well, I think, taking all the evidence together, saying now that we got bigger in September, and we got bigger in October on soybeans, and the crop is already very big…I think would point to another small increase in the yield forecast in November and perhaps in January as well. So, maybe not by a lot, but I certainly wouldn’t expect the number to come down from what we are looking at right now. –Darrel Good

However, even in the face of a record crop, the price of soybeans has remained fairly strong. This tells Darrel Good farmers should be a little patient as they contemplate when to sell. It might be worth waiting to see how the South American crop unfolds. Although, the U of I number cruncher does have a few caveats.

If I had to choose to sell one or the other, I would still be a seller of soybeans. –Darrel Good

For reference USDA has established, this month, the expected mid-point national cash price received for soybeans by farmers from now until next fall at $9.05, with corn at $3.25 and wheat at $3.70.

You may read Darrel Good’s thoughts on the markets each Monday afternoon on the FarmDocDaily website.

Harrington Seed Destructor Testing

The Harrington Seed Destructor is being tested by the University of Illinois for field level efficacy to control herbicide resistant weeds.

Green Infrastructure & Stress an interview with Bill Sullivan

If you are looking for an easy way to release some of the stress in your life, you might think about taking a walk in a park or just buying some house plants.

Grain Farm Working Capital Nearly Exhausted

Four consecutive years of lower commodity prices has nearly exhausted the financial resources of U.S. grain farmers. Todd Gleason looks into the problem with an agricultural economist from the University of Illinois.

Too Early to Sell the 2017 Soybean Crop

There’s a nagging question farmers are wondering about as they harvest what is quite likely to be their best soybean crop ever. Is it so good, so plentiful, that it might be time to consider selling some of next year’s crop.

Let’s start with some plain facts. The price of soybeans from April through August was higher, on average, than it was in the prior seven months. This says Darrel Good is because the trade expected there to be a whole lot of soybeans leftover from last years harvest by the time right now arrived. Something like 450 million bushels. That didn’t happen. The South American crop failed and U.S. exports jumped by 250 million bushels. Like most of the previous years, all but one since 2008, this left fewer than 200 bushels in the bin from the previous season’s soybean crop. Here’s how Good, a University of Illinois Agricultural Economist, says that should all play out in the coming months.

With consumption during the 2016–17 marketing already projected to be record large, an increase in the average yield forecast (without an unexpected decline in the estimate of harvested acreage) would likely result in an increase in the current projection of year-ending stocks of 365 million bushels. Two additional factors point to the potential for additional weakness in soybean prices during the 2016–17 marketing year. -Darrel Good

First, and you can read this on the Farm Doc Daily website, USDA expects a modest increase in soybean acreage for harvest in South America next year. While an increase of only 1.5 percent is currently projected (mostly in Brazil), normal yield levels result in a projected 3.5 percent (220 million bushels) year-over-year increase in soybeans from the southern hemisphere. If that large crop materializes, the pace of U.S. exports would be expected to experience the normal sharp seasonal decline beginning in the spring of 2017. A second factor that could contribute to lower soybean prices, says Darrel Good, is an increase in soybean acreage in the U.S. next year.

While it is too early to form solid expectations about U.S. acreage, low prices of other commodities relative to soybeans would be expected to result in some switch away from those crops to soybeans. In particular, the large increase in corn acreage in 2016, prospects for relatively large year-ending corn inventories, and the relatively high cost of producing corn would be expected to result in fewer corn acres in 2017. Futures prices for the 2017 corn and wheat crops are higher than prices for the 2016 crop, but those prices are still low relative to prices for the 2017 soybean crop. The USDA’s Winter Wheat Seedings report released in the second week of January 2017 will provide the first indication of acreage response to current price levels. The size of the 2017 soybean crop will still largely hinge on the average yield. It will be interesting to observe if three consecutive years of above trend U.S. average soybean yields will alter early expectations for the average yield in 2017.

Here’s what Darrel Good thinks this all means at the moment. With so much production uncertainty over the next 10 months, a strong pace of Chinese buying, and the recent history of smaller than expected year-ending stocks, it is not completely surprising that the market is not yet reflecting the potential for a growing surplus of soybeans during the 2017–18 marketing year. The question for producers, he says, is whether or not current prices offer a pricing opportunity for a portion of the 2017 crop.

The answer is more likely to be yes for those who intend to increase soybean acreage in response to the current corn, wheat, and soybean price relationships.