Soybean Crush Continues Strength

by Todd Hubbs, Agricultural Economist - University of Illinois
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Soybean crush levels picked up substantially over the last few months due to strong crush margins. Driven by production issues in Argentina, the increase in crush margin recently is attributed to rapid growth in soybean meal prices. For the 2017–08 marketing year, the USDA currently projects the domestic crush at 1.97 billion bushels, up 3.6 percent from last marketing year. Soybean meal use needs to build on recent progress to meet or exceed the current crush projection.



Soybean crush during the first half of the marketing year from September 2017 through February 2018 equaled 1010.6 million bushels, 3.5 percent greater than the total of the previous year. The USDA’s current projection indicates a 3.6 percent increase for the year and implies that the crush during the last half of the year will be 3.7 percent larger than the crush during the previous marketing year. The Census Bureau estimated the March 2018 crush level at 182.2 million bushels, 13 percent larger than the crush during March 2017. The March estimate implies that the crush during the last five months of the year must total 776.8 million bushels, 1.7 percent higher than the crush of a year ago, to reach the USDA projection of 1.97 billion bushels.

The pace of domestic crush accelerated in February and March on a substantial uptick in crush margin. The strengthening of the crush margin coincided with changing expectations regarding Argentinian soybean production. Current forecasts of Argentine production reflect the poor growing season and sit at 1.47 billion bushels for the 2018 crop year, down 654 million bushels from last year’s production. The potential for an additional 80 million bushel decline in production is a distinct possibility. Soybean crush projections for Argentina fell 1.95 million tons to 45.4 million tons and continued issues associated with soybean crushing in the region may lower this number over the next few months.



The growth in soybean meal prices associated with potential shortfalls saw crush margins in Decatur move from an average of $1.63 during September through February 7 to the current level of $2.63. Soybean meal prices in Decatur expanded from $327 per ton in early February to an average of $390 per ton over the last month. Soybean oil prices continue to show weakness with soy oil stocks growing to 2.44 billion pounds in March, up 0.8 percent from last year. Lower projections in the April WASDE report for biodiesel use of soybean oil and the growth in production increased marketing year ending stock projections. Soybean oil prices declined from 31.6 cents per pound in early February to an average of 29.5 cents per pound over the last month in Decatur. The continuation of crush strength in 2018 is dependent on solid soybean meal markets.

The April WASDE report increased domestic consumption of soybean meal by 250 thousand tons and expanded exports by 100 thousand tons. Total use is forecast at 47.05 million tons in April, up 4.5 percent from last year.

Domestically, large livestock supply indicates continued consumption of soybean meal throughout the spring and summer as beef, pork, and broiler production look to expand over last year’s levels on recent positive feeder and packer margins. Red meat and poultry production came in 2 percent higher during the first quarter of 2018. USDA projections set second quarter production increases at 4.4 percent. Despite the recent rise in soybean meal price, a continuation of strong domestic consumption appears feasible for 2018.



While domestic consumption of soybean meal gives added weight to continued strong crush margins, soybean meal export markets need to provide support as well. Through the first half of the soybean meal marketing year (October 2017 – March 2018), soybean meal exports increased 3.2 percent over last year, to 6.92 million short tons. The USDA’s current projection indicates a 7.8 percent increase for the year and implies that the exports during the last half of the year will be 14 percent larger than second half exports during the previous marketing year. Census Bureau estimated the March 2018 export level at 1.414 million short tons, 3 percent lower than during March 2017. Soybean meal exports during the last six months of the year must total 5.577 million tons to reach USDA projections.

While soybean exports continue to disappoint, soybean crush levels maintain a pace to set record levels of use associated with crush this marketing year. Domestic use of soybean meal appears set to maintain support for strong crush margins. The progression of soybean meal exports through the remainder of the spring and summer will provide insight into the potential for crush levels as we move into next marketing year and merit monitoring.

Discussion and graphs associated with this article available here.

Soil-borne Plant Disease Trials @ Illinois

Over the next few years, companies will release new and updated ways to use seed treatments to control soil-borne diseases in corn and soybeans. Researchers at the University of Illinois are looking to assess how well each of these might work.

One of the first steps in the scientific process is to lay out the trials. In this case that means intentionally inoculating the area with a disease says University of Illinois Extension Plant Pathologist Nathan Kleczewski, “We are putting in some different soybean and corn trials today looking at different seed treatments for controlling seed-borne diseases. So, we have some pythium trials, some SDS trials, and some rhizoctonia trials. We’re getting those in the ground.”

Kleczewski is testing how well both old and new seed-treatment products work. He’s wants to see how efficacious they are at controlling corn and soybean plant diseases, “We are also trying some existing products utilizing different mechanisms of application to see if they might be more or less effective than current ways we are applying them.”

The extension based research done on the Univeristy of Illinois farms will guide future recommendations the Land Grant makes as it relates to the use of seed-treatments.

Accident at Argentine Grain Terminal Sends Soybean Prices Higher

The price of soybeans and bean meal jumped Friday as news continues to filter in from the April 24 grain terminal port accident in Argentina. The Chinese flagged Ocean Treasure, a bulk agricultural commodities carrier, struck and heavily damaged a pier at Puerto General San Martín north of Rosario on the Paraná River.



Ocean Treasure was preparing to load up to 24,000 tons of corn and a total of 27,000 tons of soymeal, according to shipping agency data.

The incident occurred at the north dock of Terminal 6. It is grain and liquid bulk facility on the Paraná River. Video of the incident shows the collapse of a fixed conveyor belt and loading equipment after impact. Guillermo Wade, the manager of Argentina’s Chamber of Port and Maritime Activity, told Reuters that one worker suffered minor injuries. He reported that T6’s north dock sustained serious damage, but the south dock remains operational.

Bunge Grain Terminal Puerto General San Martín

Terminal 6 S.A., a joint venture of AGD and Bunge, loads out over 10 million tons of grains, protein meal, vegetable oil and biodiesel per year.

It is unclear how long repairs will take, but estimates range up to a full year.

President Trump Talks Farmers in Michigan

President Donald Trump made a speech Saturday in Washington, Michigan. Thirty-seven minutes into the speech he talked about farmers, trade with China & Japan, the guest worker immigration program, cattle, wheat, and NAFTA. You may watch the whole speech here. It is set to start at the 37-minute mark with the trade and farm issues.

A Corn Price Conversation with Todd Hubbs

The lateness of the planting season coupled with smaller acreage has put a fundamental lift into the corn market. Todd Gleason talks with the University of Illinois commodity markets specialist about what it might mean for prices.

A Corn Price Conversation with Todd Hubbs

The lateness of the planting season coupled with smaller acreage has put a fundamental lift into the corn market. Todd Gleason talks with the University of Illinois commodity markets specialist about what it might mean for prices.

Yield Implications of Delayed Corn Planting

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The late spring has many worried. Others are confident farmers can plant a corn crop in 5 working days. University of Illinois agricultural economists have gone through the USDA data to see if this is true and what impact a late planting season might have on corn yields.

The grand prairie of Illinois is still lying dormant. Its soils are just beginning to reach that magical 50-degree mark. That’s when the corn planters begin to roll. It’s a late start to the season this year, and despite the increased size of the machinery University of Illinois Agricultural Economist Scott Irwin says it’ll still take about as much time to plant the corn crop this season as it did nearly 30 years ago, “If we are operating at our maximum capacity, it takes about fourteen days and when we say days we mean field days not calendar days, to get the job done”.

The reason is simple. There are fewer farmers using bigger machines. So, it is pretty likely it will take a while to get the corn crop in the ground says Irwin, and that has some serious implications, “Our optimum window clearly closes May 1st based on the agronomic trials we have access to and by May 10th we are definitely into the late planting time frame and it is hard to see, unless we get extraordinarily lucky with a planting window opening up, that we are not going to have above average late planted acres. Certainly in Illinois, and I am 100 percent confident of that as you go north where they are still melting the snow.”

ILLINOIS analysis suggests the number of late planted corn acres could 5 to 10% more than usual. If so, the impact on the nation wide corn yield could be between a bushel and quarter to two-and-half bushels to the acre lost.

A Late Planting Season Lesson

The late start to the growing season in the corn belt and the northern plains has farmers and traders worried. But, as a commodity marketing class at the University of Illinois found out there is much more to be learned from the data.

This 400 level agricultural college class taught by Scott Irwin includes guest lectures by Illinois alum involved in price discovery. In this case, Mike Tannura from T-storm Weather in Chicago is teaching them about how the weather and the markets work together. Right now he tells them is a good example of a weather market.

The cold, the snow storms, the damp air hasn’t allowed farmers from Ohio to North Dakota to really begin the planting season says Tannura, “In an ideal world, you would plant all your corn and all your soybeans in a very timely manner. It would all be wrapped up by sometime in the middle of May. Given where we are today, if it turns out to be wet in the first week or two of May, then everybody is going to fall behind”.

The trick is to find and use the weather data which might help determine what the whole of this growing season could be like. Tannura says this April will be one of the three coldest on record in the U.S. Corn Belt. There have been seven similar years since 1960, or the modern corn-growing era. Corn yields fell short in six of the seven.

• The detrended yield for 2018 is about 171 bushels per acre. Most of those years had yields between 166 and 170. One of the worst years was 1983. That was an outlier though. We don’t think that is the one to focus on. It was much lower in the 140’s. - Mike Tannura, T-storm Weather

Those are detrended yields, which puts them on an even footing with today. The point is that this crop season is cold, wet, and late. If it stays that way, and the odds now favor late, then chances are very good that corn yield will be below the trend line.

2018 Acreage Decisions: Steady as She Goes in Rough Waters

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The price of corn and soybeans has been swinging on trade threats and changing acreage mixes in the United States. However, those price movements have yet to change the relative profitability between corn and soybeans writes Gary Schnitkey on the farmdocDaily website this week.

Soybeans remain more profitable than corn in the University of Illinois agricultural economist’s crop budgets, but the difference between them has narrowed. Schnitkey says the risks of significant price declines have increased, particularly for soybeans and that hedging a large percentage of 2018 expected soybean production seems prudent.

Current prices are higher than earlier in the winter. The central Illinois fall delivery bids on April 6, 2018 were $3.80 for corn and $10.00 per bushel for soybeans. Budgets based on these fall delivery bids are shown in Table 1.



Panel A shows budget for high productivity farmland in central Illinois. The operator and land return for corn is $256 per acre for corn-after-soybeans and $295 per acre for soybeans-after-corn, indicating that soybeans are projected to be $39 per acre more profitable than corn. Corn-after-soybeans is projected to be roughly the same profitability as soybean-after-soybeans ($256 per acre for corn-after-soybeans and $260 per acre for soybeans-after-soybeans).

In lower productive areas, soybeans dominate corn. In southern Illinois, corn-after-soybeans has an $84 per acre return at a $3.80 price compared to $141 per acre for soybeans-after-corn at a $10.00 per bushel price (see Panel B of Table 1). Soybeans-after-soybeans has a $101 per acre return, higher than the $84 per acre returns for corn-after-soybeans. These returns comparisons suggest having more soybeans than corn in southern Illinois. In recent years, southern Illinois farmers have been planting more soybean than corn. Recent price moves increased the profitability of corn relative to soybeans, but not enough for a budget to suggest switching to more corn.

Price changes have increased corn profitability relative to soybean profitability, but have not suggested shifts in acres.

Higher risks suggest a prudent risk management strategy is to forward price more of the 2018 expected soybean production. However, pricing more production introduces the possibility of hedging losses if prices increase. If farmers have purchased an insurance product with a guarantee increase such as Revenue Protection (RP), offsetting payments will be received in cases when prices rise and yields are below guarantee levels.

Farmers who purchased revenue crop insurance policies will have downside price production. Given the $10.21 projected price and yields at guaranteed levels, the harvest price must fall below the following levels for different coverage levels to trigger payments on revenue policies (e.g., Revenue Protection (RP) and RP with harvest price exclusion):

• $8.67 at an 85% coverage level ($10.21 x .85)
• $8.17 at an 80% coverage level ($10.21 x .80)
• $7.65 at a 75% coverage level ($10.21 x .75)

While these revenue products will offer downside risk protection, most farmers will face loss situations if prices fall enough to trigger insurance payments.

Low prices could also result in commodity title payments under Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC). ARC is a revenue program that makes payments based on county yields and market year average prices. Given yields near guarantee levels, ARC at the county level would begin to make payments around $8.70 per bushel for the 2018 production year. PLC has a reference price of $8.40. As a result, PLC will not make payments until MYA prices fall below $8.40 per bushel. The 2018 payments under ARC and PLC would both be made in the fall of 2019, a considerable distance into the future.

It is important to remember that ARC and PLC are based on base acres and not planted acres. As a result, planting decisions in 2018 will not impact ARC and PLC payments. Therefore, the size of ARC/PLC payments should not influence planting decisions.

Both crop insurance and ARC/PLC offer downside price protection if prices fall dramatically as the result of some event such as enactment of soybean tariff writes Gary Schnitkey. Still, he says, hedging a high percentage of production seems prudent, particularly given that a late planting season appears more likely now. The current cold and wet conditions could lead to later planting, and perhaps shifts to soybean acres. This switch could lead to further downward price pressures.

No Good Way for Perdue to Protect Farmers

President Trump has asked the Secretary of Agriculture to protect U.S. farmers from the trade dispute with China. However, there aren’t many options for Sonny Perdue.

Last week Sonny Perdue was on the road for his second RV tour of farm country. His first tour was last summer. That’s when he told producers he would be their salesman to the world. Now he’s being asked to be their protector in the face of trade restrictions, some in place others proposed, as President Trump sets about rectifying what he sees as unfair trade with China. However, Perdue isn’t saying what he’ll do for farmers and there may be a good reason that’s the case says University of Illnois Ag Policy Specialist Jonathan Coppess, “There are not a lot options for the Secretary when it comes to the covered commodities.”

Typically USDA lawyers will explain there is flexibility in the original CCC charter act and the general powers to improve prices. Yet, because Congress has stepped in and directed spending for commodities via programs like ARC and PLC, the Secretary’s administrative powers are limited.

Most of the heavy lifting to protect farmers from any trade war blowback then, says Coppess, would need to be done by congress.

Will Soybean Ending Stocks Get Larger

by Todd Hubbs, Agricultural Economist - University of Illinois
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Recent rumblings of potential tariffs by China on U.S. soybeans created a stir last week. While the market reacts to the uncertainty associated with trade policy, the upcoming WASDE report, on April 10, will update soybean use projections for this marketing year. The USDA may revise the forecast of ending stocks for soybeans during the current marketing year due to weaker than projected soybean export pace and stronger crush numbers.

The current USDA projection for soybean ending stocks during the 2017–18 marketing year sits at 555 million bushels, an increase of 130 million bushels since the November projection. The steady increase in ending stock projections is due to decreasing export projections. Current USDA soybean export projections for this marketing year are 2.065 billion bushels. On April 5, the Census Bureau released export estimates for February. The updated export estimates for soybeans brings totals for the first half of the marketing year to 1.433 billion bushels. Typically, soybean exports decline in the second half of the marketing year as South American production hits world markets. Due to this factor, the majority of soybeans tend to be exported in the first half of the marketing year.

Over the last decade, soybean exports during the first half of the marketing year averaged 76 percent of the final marketing year total. At the average pace, 2017–18 marketing year exports will come in at 1.886 billion bushels. While soybean exports should exceed this level, the current weakness in exports is reflected in five major export markets for soybeans. Through February, soybean exports to China, which typically accounts for 60 percent of U.S. exports, sit 11 percent behind the totals from the three previous marketing years during the same period. In conjunction with the lagging pace of Chinese exports, Japan and Indonesia sit 12 and 3 percent behind the pace of the previous three marketing years respectively. Mexico and Thailand imports of U.S. soybeans are up 3.2 and 110 percent under the same conditions.



Cumulative soybean export inspections through April 5 total 1.572 billion bushels. Through February of this marketing year, Census Bureau exports outpaced soybean export inspections by approximately 33 million bushels. If this difference continued, soybean exports through April 5 totaled 1.605 billion bushels. Soybean exports for the rest of the marketing year need to average 23 million bushels per week to reach the USDA projection. Soybean export inspections over the previous four weeks averaged 19.9 million bushels. Recent soybean export sales witnessed a jump last week as Brazilian export prices ran at a substantial premium to U.S. export prices. The sales indicate an expansion of purchases from buyers who typically leave the U.S. market to purchase Brazilian soybeans at this time of year.

If these buying opportunities continue, the potential for an uptick in export pace may be in order over the short run. At this time, soybean exports fall well short of the current projections and the possibility of a significant reduction in the soybean export projection appears likely.
While exports continue the weaker than projected pace, soybean crush is strengthening as the marketing year progresses. Current USDA projections for the 2017–18 marketing year crush sit at 1,960 million bushels. Estimates of monthly soybean crush from the Oilseed Crushings, Production, Consumption and Stocks report through February totaled 1.01 billion bushels. For the first half of the marketing year, USDA monthly crush numbers have run approximately 6.4 percent above last year’s crush estimates. Over the previous two marketing years, soybean crush during the first half of the marketing year averaged 51 percent of the final marketing year total. At this rate, the total crush for the marketing year would reach 1.98 billion bushels. Crush during the last half of the marketing year needs to total 950 million bushels to reach the USDA projection, 3 percent larger than last year over the same period.



In support of expanding crush levels, soybean meal exports are on pace to meet the 12.4 million short tons projected by the USDA. Through the first five months of the soybean meal marketing year, meal exports came in five percent above last year’s pace, at 5.508 million tons. Given a continuation of current soybean crush margins and export levels in soybean meal, the prospect of exceeding current USDA projections is quite high. While the USDA may not adjust crush totals in the upcoming report, the current crush pace indicates an increase of 20 million bushels in projected marketing year crush is feasible.

The potential for soybean crush levels to make up the difference for weak export totals is limited this marketing year. If the soybean export pace does not pick up substantially over the remainder of the marketing year, 2017–18 marketing year soybean ending stocks will increase. The current weather combined with trade policy issues make the soybean price susceptible to rapid changes as we move into planting season. A marketing plan for new crop soybeans should incorporate this information and provides pricing opportunities during near-term rallies.

Jonathan Coppess Breaks Down Trump Trade Issues

The first week of April has been tumultuous for American agriculture. Todd Gleason talks with Jonathan Coppess about how the Trump Administration has been handling trade with China, the NAFTA negotiations, and biofuels.

How to Properly Use Dicamba on Soybeans

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As the growing season approaches it is important for farmers to understand how to use dicamba on resistant soybean varieties. Todd Gleason has more with University of Illinois weed scientist Aaron Hager.



The following is an excerpt from the March 23 farmdocdaily article posted by University of Illinois Weed Scientist Aaron Hager.

Steps for Successful Weed Management in Dicamba-Resistant Soybean

Step 1

• plant dicamba soybean seed into a weed-free seedbed
• achieve a weed-free seedbed through the use of preplant tillage, an effective burndown herbicide(s), or a combination of tillage and burndown herbicides

Step 2:

• select and apply within 7 days of planting a soil-residual herbicide that targets your most problematic weed species; if desired (and labeled), add dicamba and an appropriate buffer
• for waterhemp or Palmer amaranth, select a product containing the active ingredients from one of the following categories of control:

Excellent	Good	Acceptable
sulfentrazone	pyroxasulfone	S-metolachlor/metolachlor
flumioxazin	metribuzin	acetochlor
fomesafen+metolachlor	dimethenamid	pendimethalin

• Excellent: greatest efficacy on Amaranthus species and longest residual control
• Good: good efficacy on Amaranthus species, residual control generally not as long
• Acceptable: stronger on grass species but with some activity on Amaranthus species

Step 3:

• scout fields 14 days after planting, apply dicamba at 0.5 lb ae/acre when weeds are less than 3 inches tall and when conditions allow for the application, consider adding an approved soil-residual herbicide to the tank mix

Step 4:

• scout treated fields 7 days after the dicamba application; if control is not complete or another flush of weeds has emerged, consider using non-dicamba options for complete control; examples include alternative herbicides, cultivation, and hand rogueing; the goal should be zero weed seed production

A New Firmer Tone for Corn Prices

Last week’s USDA reports solidified the more positive outlook the trade has had for corn. Todd Gleason has more from the University of Illinois with commodity markets specialist Todd Hubbs.

Cash Rents and the 2019 Growing Season

Professional farm managers in the state of Illinois have completed a cash rent survey. Todd Gleason reports it is a fairly go indicator of where cash rents in the state can be expected to go. He talked with University of Illinois Agricultural Economist Gary Schnitkey about the results.

Dry Cows | 10 Steps for a Successful Transition Period

Nutrition and management of the dry dairy cow has been an area of extensive research over the last 25 years. Although nutritional requirements during this phase are fairly simple, the sudden transition from non-lactating to lactating state – as well as the physiologic and metabolic processes associated with it – make the transition period a fascinating and important stage of the production cycle of the dairy cow.

read more from the Dairy Focus Newsletter

read more from the Dairy Focus Newsletter

Export Outlook for Soybeans

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Recent data on the soybean export pace indicates stronger weekly sales. This offers hope for meeting the USDA marketing year export projection. The size of the 2018 crop in South America and the competitiveness of U.S. export prices, says University of Illinois Agricultural Economist Todd Hubbs, remain essential to determining U.S. export possibilities for the remainder of the marketing year.

ILLINOIS Ag Economist Todd Hubbs discusses the potential for U.S. soybean exports to meet USDA’s stated marketing year goal with Todd Gleason.

Exceptional Corn and Soybean Yields in 2017

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Many areas of the country had above trend yields in 2017. While still not the majority, county yields of over 200 bushels per acre are becoming common and may be expected in the center of the corn-belt. Similarly, counties with over 60 bushels per acre are occurring with some regularity. Todd Gleason talks with University of Illinois Agricultural Economist Gary Schnitkey.

Designing & Planting a Windbreak

Right now may be a very good time to consider creating a windbreak for your home or farm. Todd Gleason has more on how with Duane Friend from University of Illinois Extension.

Avoid Invasives, Plant Natives this Spring

Invasive plant species in our natural areas can wreak havoc for wildlife. These invasive plants can reduce nesting sites or add confusion for birds causing them to nest too early, reduce insect and pollinator food and habitat and drastically reduce native plant populations. Todd Gleason talks with Illinois Extension’s Kelly Allsup about native alternatives to some popular landscape plants.