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USDA Reports Provide Little Support for Corn and Soybeans

by Todd Hubbs, University of Illinois

The USDA finally released a set of highly anticipated reports on Friday. The results projected lower ending stocks for corn and soybeans during this marketing year. Despite lower ending stock forecasts, the results disappointed and produced a somewhat bearish outlook. The following discussion recaps developments in corn and soybean crop fundamentals coming out of the reports and price implications moving forward.



Corn ending stock projections for the 2018–19 marketing year came in at 1.735 billion bushels, down 46 million bushels from the December forecast. Reduced corn production in 2018 drove ending stocks lower despite a 165 million bushel reduction in total use during the marketing year. Corn production is down 1.4 percent from the November forecast at 14.4 billion bushels. The harvested acreage estimate of 81.7 million acres is down from the November forecast of 81.8 million acres. Average corn yield of 176.4 bushels per acre is 2.5 bushels lower than the November forecast. December 1 corn stocks came in at 11.952 billion bushels. Total disappearance came in near 4.62 billion bushels during the first quarter of the marketing year, up from last year’s first quarter use by approximately 280 million bushels. Despite the lower domestic supply numbers and stronger first quarter use, lower consumption forecasts in key categories provide little support for corn prices.

The WASDE report forecast for U.S. corn during 2018–19 lowered corn use projections for feed and residual use, ethanol crush, and other food and industrial uses. At 5.375 billion bushels, the projection for corn feed use and residual moved lower by 125 million bushels. The ethanol use forecast decreased by 25 million bushels to 5.575 billion bushels. The lower ethanol use reflected the slowing ethanol production levels over the last month. Food, seed, and industrial use other than ethanol saw the consumption forecast lowered 15 million bushels on reduced corn use for high fructose corn syrup, glucose, and dextrose. Corn export forecasts maintained the 2.45 billion bushels forecast in December. The potential for increased corn usage seems increasingly dependent on continued economic growth and the resolution of the current trade impasse.

World ending stocks for corn increased by almost 40 million bushels from December forecasts. The increase focused on stronger production in key growing areas. In particular, Argentine corn production forecasts totaled 1.81 billion bushels, up from last year’s 1.26 billion bushels. Brazil’s corn production forecast stayed at 3.72 billion bushels this year. In total, Brazil and Argentina production forecasts exceed 2017–18 production estimates by 1.04 billion bushels. Projections of corn exports from Argentina and Brazil sit at an additional 492 million bushels each above last marketing year. Given the increase in South American production, the evolution of crop conditions in the region bears monitoring as we move into 2019.

The forecast for soybean ending stocks fell to 910 million bushels. Despite the 45 million bushel reduction to ending stocks, the current projection remains record high. Soybean production came in 56 million bushels lower than the November forecast at 4.54 billion. The harvested acreage estimate of 88.1 million acres is down from the November forecast of 88.3 million acres. Average soybean yield of 51.6 bushels per acre is 0.5 bushels lower than the November forecast. While the expected reduction in soybean production materialized, consumption continues to exhibit strong crush levels and weak exports this marketing year.

The WASDE report increased the soybean crush forecast by 10 million bushels to 2.09 billion bushels. The change in the crush projection reflects strong crush numbers through January. Soybean exports saw the forecast lowered by 25 million bushels to 1.875 billion bushels. Considerable uncertainty remains in export potential in 2019 as the sporadic nature of trade talks with China unfold. Total use fell by 15 million bushels on weaker export projections to 4.092 billion bushels. The consumption for this marketing year holds the potential for deterioration if the trade war escalates and increased competition out of South America materializes.

World production forecasts for the marketing year decreased by 301million bushels to 13.26 billion bushels on the smaller U.S. and Brazilian crops. The Brazilian soybean production forecast decreased by 183.72 million bushels over the December forecast to 4.3 billion bushels. Reports out of Brazil indicate this number may fall further before the final crop estimate is complete. The Argentinian soybean production forecast fell slightly to 2.02 billion bushels on reduced acreage. The Brazilian soybean export forecast dropped by 55 million bushels reflecting the decreased crop production levels. Forecasts for Brazil and Argentina soybean exports sit at 3.15 billion bushels over the marketing year, up from last marketing year’s estimate of 2.88 billion bushels.

While the ending stock projections for both crops fell, the USDA maintained price projections for the marketing year at the December mid-point ranges for corn and soybeans at $3.60 and $8.60 respectively. Barring a resolution to the trade issues with China or a significant deterioration in the South American crop, soybean prices are untenable at current levels. Corn prices appear set to remain flat and range bound until the March Prospective Planting reports provide an initial indication of crop acreage in 2019.

Backyard Maple Syrup Production Workshop Feb 2

register by January 30th

The fourth annual backyard maple syrup production workshop will be held on Saturday, February 2, 2019 from 10am–3pm at the Dixon Springs Agricultural Center, located at 354 State Highway 145 N, Simpson, IL 62985. This program is free and open to the public.

We are offering an expanded program this year! From 10-noon come learn the basics and see firsthand the entire process of backyard maple syrup production. Following a free lunch at noon, we will have maple syrup experts on hand to discuss scaling up production and advanced techniques and demonstrating equipment from 1pm to 3pm.

During the morning session, the University of Illinois Extension will provide some activities for kids, including taste testing of real maple syrup!

Program Schedule
* 10:00am to Noon - Maple syrup basics, kids activities, field tour
* Noon to 1:00pm - Lunch (provided)
* 1:00pm to 3:00 pm - Advanced techniques and equipment demo

You can choose to come to the morning session, the afternoon session or both! Register by January 30th.

For more information: Chris Evans cwevans@illinois.edu , 618–695–3383

University of Illinois College of Agricultural, Consumer and Environmental Sciences United States Department of Agriculture. Local Extension Councils Cooperating provides equal opportunities in programming and employment.

If you need a reasonable accommodation to participate in this program, contact Dixon Springs Ag Center at 618–695–2441.

January Crop Report Yield Expectations

The January USDA reports have been delayed until further notice because of the government shutdown. It is expected once these numbers are released the changes in the national yields for corn and soybeans could be positive for price.

The last time USDA updated corn and soybean yields was in the month of November. Both crops saw a drop in predicted yield for the 2018 harvest. This drop has been since complicated by harvest problems. Todd Hubbs from the University of Illinois says history can sometimes be a guide to how the January Crop Production report might change. More often than not when the yields from October to November go down, the U of I commodities specialist says they drop again in January, “And what you see is when you see a yield change from November to October that is negative, we tend to see a similar change from January to November. Now it doesn’t always hold, but if that were to materialize we probably see a corn number around 177.2 bushels to the acre. I think it might be a little bit higher than that, but even if it is if we lose half to one bushel out of the current projection of 178.9, then that is really supportive for corn prices moving forward.”

Hubbs says a similar pattern holds for soybean yields. On average he says that’s been about a quarter of a bushel per acre… a little better than that actually… and if it came to fruition this year it would put the 2018 soybean yield at 51.8 bushels to the acre. That would clearly be supportive to price says Hubbs, even though the trade issues with China are continuing, “We could also see some acreage come out of both corn and soybeans as harvest was really tough in some places. Particularly out in Kansas and the southern plains. This has more implications for winter wheat seedings than it does for anything else. Right now, by my projections, I think winter wheat acreage will be down by one-point-five percent from last year’s 32.5 million acres. This may have implications for both corn and soybean acreage in the southern plains as we move into 2019 and think about what kind of acreage we will have.”

The implication being a potential increase in corn or soybean acreage in that area. USDA says it will announce the date for the release of the January reports once the government shutdown has ended.

January Crop Report Yield Expectations

The January USDA reports have been delayed until further notice because of the government shutdown. It is expected once these numbers are released the changes in the national yields for corn and soybeans could be positive for price.

The last time USDA updated corn and soybean yields was in the month of November. Both crops saw a drop in predicted yield for the 2018 harvest. This drop has been since complicated by harvest problems. Todd Hubbs from the University of Illinois says history can sometimes be a guide to how the January Crop Production report might change. More often than not when the yields from October to November go down, the U of I commodities specialist says they drop again in January, “And what you see is when you see a yield change from November to October that is negative, we tend to see similar change from January to November. Now it doesn’t always hold, but if that were to materialize we probably see a corn number around 177.2 bushels to the acre. I think it might be a little bit higher than that, but even if it is if we lose half to one bushel out of the current projection of 178.9, then that is really supportive for corn prices moving forward.”

Hubbs says a similar pattern holds for soybean yields. On-average he says that’s been about a quarter of a bushel per acre… a little better than that actually… and if it came to fruition this year it would put the 2018 soybean yield at 51.8 bushels to the acre. That would clearly be supportive to price says Hubbs even though the trade issues with China are continuing, “We could also see some acreage come out of both corn and soybeans as harvest was really tough in some places. Particularly out in Kansas and the southern plains. This has more implications for winter wheat seedings than it does for anything else. Right now, by my projections I think winter wheat acreage will be down by one-point-five percent from last year’s 32.5 million acres. This may have implications for both corn and soybean acreage in the southern plains as we move into 2019 and think about what kind of acreage we will have.”

The implication being a potential increase in corn or soybean acreage in that area. USDA says it will announce the date for the release of the January reports once the government shutdown has ended.

Dissecting Collin Peterson's Farm Bill Preview

Last Monday Minnesota Congressman Collin Peterson held a press conference in Moorhead. There in his home state, Mr. Peterson spent twenty-four minutes detailing the Farm Bill conference agreement. University of Illinois Agricultural Policy Specialist Jonathan Coppess listened to the discussion and has this review with farm broadcaster Todd Gleason.

Corn Exports are On Pace

Each Friday over the past three weeks December corn futures closed lower. These lower weekly thresholds have come despite a very good export pace.

USDA projects this marketing year U.S. corn exports will top two-point-four-billion bushels. So far that doesn’t look too bad says University of Illinois Agricultural Economist Todd Hubbs, “We are definitely on pace. We’ll above last year’s pace, but everybody needs to remember we got off to a sluggish start last year and it really picked up in the second-half of the marketing year. We’ve seen a little bit of weakness recently, but we are still within the 2.45 billion bushels in my opinion.”

Hubbs is okay with USDA’s corn-used-to-produce ethanol figure, too. Although he says that’ll depend on ethanol exports as plant margins are really tight. He’s hopeful the corn-used-for-feed number will look better in January. That’ll depend a lot on the December Grain Stocks report. Still he says, “Right now, from the November projections, we are on track. There is a lot of uncertainty left in that. But when we look at the corn prices over the last few weeks, it is definitely related to the soybean prices and the bearishness in the (crude) oil market. I think both of those things are holding down corn prices.”

Not that if those two items were solved corn would rally substantially. It would come up, but still be capped by the available supply and some thought that USDA’s export target is a bit robust. Todd Hubbs thinks of it this way. The market has a done a good job of front loading U.S. corn exports and it is very unlikely the second half of the 2018/19 marketing year will be a repeat of last season’s stellar pace.

Nov 18 | WILLAg Newsletter

November 18, 2018

This Tuesday you are invited to Normal, Illinois for the Farm Assets Conference. I’ve seen parts of the presentations that will be made and fully expect this to be an impactful event. The tickets are $40. Our doors open at 9:30am at the Marriott Hotel and Conference Center. If you arrive by 8am the Illinois Corn Growers Association will provide you with breakfast and you may attend their annual meeting prior to the Farm Assets Conference.

purchase your ticket by noon Monday
http://www.farmassetsconference.com

I’ve been traveling the last couple of weeks and thought you might find these three articles from the farmdocDaily website interesting.

Todd


Financial and Risk Management Decisions for 2019
Gary Schnitkey and Krista Swanson
Department of Agricultural and Consumer Economics
University of Illinois

With planning for next year’s crop underway, this article makes suggestions related to financial and risk management for grain farms. Projections for extremely low income in 2019 set the overall backdrop for these decisions. Suggestions include: 1) building working capital in 2018, 2) forgoing investments in capital items, 3) conducting 2018 tax planning, 4) preparing 2019 cash flows, 5) beginning marketing the 2019 crop, 6) discussing the economic situation with landowners, and 7) considering acreage allocations for 2019.

Income Backdrop
Currently, the most significant factor impacting longer-run income outlook on Midwest grain farms is the trade dispute with China. Events associated with this dispute caused large declines in cash and futures prices for both corn and soybeans (see farmdoc daily, October 11, 2018). Cash corn prices fell from near $3.70 in March to $3.20 in October. Cash soybean price fell from near $10 in March to near $8 in October.

Moreover, projection of prices in the future have declined, particularly for soybeans. Cash fall delivery prices for 2019 are $3.70 for corn and $8.90 for soybeans. The $8.90 fall delivery price for soybeans is about $.80 per bushel lower than average prices farmers received from 2013 through the early part of 2017.

Soybean price declines lower expectations for 2019 net incomes on farms, particularly if the trade dispute continues. Current corn and soybean prices, along with cost increases, suggest extremely low returns for 2019 (farmdoc daily, August 7, 2018). While there are a number of events that could change this outlook (farmdoc daily, October 30, 2018), planning for low 2019 incomes seems prudent.

While 2019 incomes are projected to be low, net incomes in 2018 will be above-average on many grain farms. Higher than average incomes in 2018 results from:

Market Facilitation Program (MFP) payments (see farmdoc daily, August 28, 2018). Farmers will receive MFP payments for crops produced in 2018. Currently, farmers can receive a “first” payment of $.005 per bushel for corn and $.825 per bushel for soybeans. There is a high chance of a second payments on 2018 production at the same level as the first payments. If both payments are made, MFP payments could add about $50 of income per tillable acre on a typical Illinois farm.

Exceptional yields (see farmdoc daily, September 5, 2018). State-wide yields are projected by the National Agricultural Statistical Service (NASS) at record levels for 2018. Many farms had exceptional yields.

Pre-harvest hedging. Many farmers priced grain in the spring prior to the decline in prices (see farmdoc daily, October 11, 2018). Hedging will postpone the impacts of lower prices on income into 2019.

While average incomes will be above-average in 2018, a great deal of variability in incomes will exist. Prices farmers receive will vary based on timing of pricing decisions. There are some areas that did not have exceptional yields and some farmers did not price much of the 2018 crop in the spring.

The farmers in these situations will face lower income.

Management Decisions
Given this income backdrop, the following suggestions are made.

Build working capital: The above-average incomes in 2018 should be saved and used to build working capital. Any increase in working capital at the end of 2018 will be useful in offsetting low and negative 2019 incomes.

If possible, obtaining a current ratio of 2.0 and having working capital per acre of over $300 per acre seems prudent (see farmdoc daily, October 23, 2018).

Forgo investments in capital items: Building working capital requires eliminating all but the most necessary capital investments.

Conduct 2019 tax planning: Above-average 2018 incomes and low capital investments could result in large 2018 tax liabilities. Most farmers file taxes on a cash basis. A potential way to lower 2018 tax liabilities is to shift 2018 revenue into 2019 by foregoing sales of crop and by delaying the receipt of MFP payments until 2019. Prepaying 2019 expenses in 2018 could also lower 2018 tax liability.

Shifting more than a usual amount of 2018 tax income into 2019 has a downside in that 2019 taxable incomes could be higher than expected. The outlook for significantly lower incomes in 2019 is due to yields at trend levels, lower prices, and higher costs. If this turns out not to be the case, 2019 tax liabilities could be larger than expected (see farmdoc daily, October 30, 2018, for a discussion of items that could change 2019 outlook).

Prepare a 2019 cash flow: Cash flows for 2019 operating year should be prepared. In preparing these cash flows, use cash bids for fall delivery prices and higher costs (see Revenue and Costs for Illinois Crops, for estimates of cost increases). Current prices for 2019 fall delivery are near $3.70 per bushel for corn and $8.90 per bushel for soybeans.

Two sets of yields should be used in cash flow projections

Five-year average yields, and Approved yields from crop insurance records (the yields that have been trend adjusted).

On many farms, the five-year average yields will be higher than the approved yields by 20 or more bushels per acre for corn and 5 or more bushels per acre for soybeans.

On many farms, the five-year yields will result in negative cash flows and some erosion of working capital. The lower approved yields may result in serious cash shortfalls.

Plans should be made on how to deal with the resulting cash flow from only obtaining the APH approved yields. If enough working capital exists, operating notes can be maintained at current levels.

Otherwise, contingency plans that may involve refinancing debt and selling assets need to be considered.

Begin marketing the 2019 crop: Futures prices on Chicago Mercantile Exchange (CME) contracts for fall delivery are near $4.00 per bushel for corn (December contract) and $9.35 per bushel for soybeans (November 2018). Current basis between fall futures contracts and cash delivery prices is large. Current cash prices for fall delivery are near $3.70 for corn and $8.90 for soybeans.

Pricing some of the 2019 crop should begin: Current CME futures prices on the December 2019 contract can be compared to projected prices for crop insurance in recent years. These projected prices are based on settlement prices of December contracts and are comparable to the December 2019 CME price. For corn, current futures prices are near levels that have occurred in recent years. A $4.00 future price for 2019 would be slightly above recent projected prices: $3.86 in 2017, $3.97 for 2017, and $3.96 for 2018. Over the past five years, the projected price averaged $4.11 per bushel.

For soybeans, the current $9.30 price level on the November 2019 contract is well below the projected price levels in recent years. Projected prices for crop insurance from 2014 through 2018 have averaged $10.06. Projected prices were $10.19 in 2017 and $10.16 in 2018.

Pricing soybeans at levels below those in recent years may be physiologically difficult. Many farmers have a hope that the trade dispute with China will end and soybean prices will rebound. This is a real possibility. However, there are possibilities were soybean prices could be lower. One scenario which will result in lower prices is a continuation of the 25% tariff on U.S. soybeans moving into China, good yields in South America, and another excellent yielding year in the United States. There are significant down-side price risks for soybeans, suggesting that a modest level of pricing grain may be prudent.

Discuss the economic situation with landowner: The trade dispute with China has considerably darkened the price outlook for the future. Farmers may have built soybean prices in the high $9 range into longer-run budgets. Until a resolution to the trade dispute occurs, building soybean price expectations around $9 per bushels seems prudent (see farmdoc daily, August 2, 2018 for more of a discussion).

Many landowners may wish to maintain cash rental arrangements. Preparing the landowner for a possible decline is warranted. Use of variable cash leases in this situation seems appropriate.

Consider 2019 allocations to corn and soybeans: Budgets for 2019 likely will indicate that corn will be more profitable than soybeans in 2019. This may not suggest shifting acres, particularly for those farms that have a well-established rotation. If switching is being considered, hedging more than a usual amount of corn production may be warranted. If there are large shifts from corn to soybeans, corn prices could decrease.

Summary The above management responses are defensive and are built on an expectation of longer-run lower prices caused by a continuing trade disputes with China. In addition, cost increases play a role in the management suggestions. Obviously, expectation of low incomes can turn out to be incorrect for a variety of reasons. Still, conserving cash flow now seems to have little downside for most farmers if 2019 incomes turn out to be better than expected.



What to Expect from USMCA (or NAFTA 1.01)
Yujun Zhou, Kathy Baylis, Jonathan Coppess, and Qianting Xie
Department of Agricultural and Consumer Economics
University of Illinois

After more than a year of talks, the US, Canada, and Mexico struck a new trade deal to replace NAFTA, known as the United States-Mexico-Canada Agreement, or USMCA. The agreement is still waiting for approval in Congress. After the Democrats took control of the House in the midterms last week, that approval is now in question.

Regarded as “the most important trade deal we’ve ever made” by President Trump, the USMCA is the replacement of the old NAFTA deal, which he described as “the worst trade deal maybe ever signed anywhere” (Brinkley, Oct 8, 2018). Since NAFTA was signed more than 25 years ago, there are some updates to the agreement that are arguably needed. The way countries trade with each other has transformed significantly since then. New components of trade, including digital commerce, should be addressed in the regional trade deals.

However, most of the old agreement remains intact. The new NAFTA doesn’t change the old tariff structure or the zero tariffs policy on most manufacturing and agricultural goods. There are large sections of the old NAFTA which were not touched. The most significant changes, including digital trade, were previously negotiated as part of the Trans-Pacific Partnership, from which the current administration withdrew in 2016 (Pethokoukis, Oct 17, 2018).

This article reviews the changes in USMCA and evaluates its impacts on the various parties associated with the trade agreement.

Overview of changes The first change in the country of origin rules: automobiles must have 75 percent of their components manufactured in Mexico, the US, or Canada to qualify for zero tariffs (USTR, Oct 1, 2018). It used to be 62.5 percent under NAFTA. The increased portion means that fewer cars or car components will come from suppliers elsewhere in the world. Consequently, it would impact car parts made in countries like Germany, Japan, and China. Shifting supply lines can take decades and, along with increased costs based on lack of infrastructure, consumers end up paying more (Pethokoukis and Barfield, Oct 17, 2018).

The second change is on labor provision or minimum wage. Forty to forty-five percent of automobile parts have to be made by workers whose pay averages at least $16 an hour by 2023 (USTR, Oct 1, 2018). Mexico has also agreed to pass laws giving workers the right to union representation, extend labor protections to migrant workers, and protect women from discrimination. The countries can also sanction one another for labor violations. These rules demonstrate a key U.S. ambition to benefit American workers through rebalancing the manufacturing sector (Wingrove et al., Oct. 2, 2018).

The minimum wage will not bind in Canada and U.S., but it is about three times the current typical manufacturing wage in Mexico (Long, Oct. 1, 2018). Considering that the change doesn’t happen until 2023 and with possible inflation involved in the process, the effect on Mexico’s workers may not be as significant as it seems. More automation may be the substitute for workers as a result. This is a novel effort to set a minimum wage in a specific sector through a trade agreement. Usually, minimum wages require a domestic process and, in the US, often at the state level. It is unclear what precedent having minimum wages imposed by a trade agreement sets for future labor or trade law (Pethokoukis and Barfield, Oct 17, 2018).

The third big issue is the dairy market. To get an agreement, Canada agreed to open a small portion (3.59 percent) of its dairy market to farmers in the United States (Wingrove et al., Oct. 2, 2018). This concession follows similar concessions to the EU (Comprehensive Economic and Trade Agreement or CETA) and pacific country trade partners under the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the successor to the Trans-Pacific Partnership trade agreement, which cumulatively means that Canada has opened up about 10 percent of its dairy market (CBC News, Oct 04, 2018). Also, as part of the deal, Canada will give up its unique pricing system of Class 7 milk that sets unusually low domestic prices of ultra-filtered milk (an ingredient used to increase protein content in cheese and yogurt) (Skerritt et al., Oct. 2, 2018). By allowing for low prices of this ingredient, the Canadian policy effectively subsidized Canadian dairy processors and made the imports of ultra-filtered milk uncompetitive (Wingrove et al., Oct. 2, 2018). Canada’s concessions will boost the amount of milk, cheese, and cream that the U.S. can export without paying the tariff.

As a result, Trudeau agreed to compensate the Canadian dairy farmers to soften the blow (CBC News, Oct 04, 2018). Considering the 500 billion dollars of annual trade flows going between these two countries, the dairy market is relatively small: in 2017, Canada imported around 368 million dollars of dairy products from the U.S. while exporting 112 million dollars (Skerritt et al., Oct. 2, 2018). President Trump, however, had insisted on changes to U.S. access to Canada’s dairy market as a symbolic gesture on behalf of American farmers.

A significant new section in the new NAFTA is the digital trade section. When WTO and NAFTA were negotiated in the early 1990s, the internet was relatively new and far less critical. The digital trade section covers trade rules in the digital economy, including prohibiting duties on music and e-books, and protections for internet companies, so they’re not liable for content their users produce (Kirby, Oct 3, 2018). The deal also extends the terms of copyright to 70 years beyond the life of the author (up from 50). It also extends the protection period of pharmaceutical drugs from generic competition.

Key Democratic Demands The current consensus is the USMCA will not be passed easily (Alemany, Nov. 15, 2018). Generally speaking, news reports indicate that Democrats are in favor of the changed labor requirements (Byrd H. Nov. 13, 2018), but remained concerned about the ability to enforce the deal. House Minority Leader Nancy Pelosi released a statement on USMCA saying without enforcement, the deal could just be rebranding NAFTA (Alemany, Nov. 15, 2018). Second, labor activists have demanded a change in the clause regarding minimum hourly wages for Mexican autoworkers since the current deal does not include an adjustment for inflation. They fear the that the $16 wage may not be enough to curb the movement of jobs flowing out of the U.S. (Wasson and Mayeda, Nov. 14, 2018).

There are also concerns about the steel and aluminum tariffs, which remain in place for Canada and Mexico despite the new agreement (Byrd H. Nov. 13, 2018). Some of the newly elected Democrats in the House Representatives came from the Midwest, for example, “where the pain from the president’s tariffs is being felt the most” and they would be expected to push for the removal of the tariff in the USMCA debates (Alemany, Nov. 15, 2018).

Summary In summary, there are significant updates to NAFTA in the automobile and dairy industry, but other changes are relatively minor. There is also little evidence that it will significantly alter trade balances among the three countries (Martin Feldstein, April 25, 2017). Although U.S. Trade Representative Lighthizer remains “very confident” in ultimately getting the votes needed to pass the USMCA, it appears unlikely to happen in a lame duck session; passage will be up to the new Congress where the concerns on the steel and aluminum tariff adds uncertainty.



Nitrogen Loss Reduction Practices: What Do They Cost?
Laura Christianson
Department of Crop Sciences
University of Illinois

Subsurface tile drainage networks significantly underpin agriculture across the US Midwest with Illinois alone possessing nearly 10 million tiled acres. However, nitrogen that leaves Midwestern fields in tile drainage water can impair local water bodies used as drinking water sources and is known to contribute to the hypoxic zone (or, “dead zone”) that forms seasonally in the Gulf of Mexico. Growing global food and biofuel demand combined with increasing societal pressure for clean water mean the agricultural community must be offered workable solutions to meet productivity goals in ways that don’t result in nutrient-impaired waters.

A variety of agricultural conservation practices are available to reduce the amount of nitrogen leaving fields and travelling downstream. The practices are generally grouped into three categories: management practices that can be done in-field, structural practices that can be built at the edge of a field, and land use changes (Table 1). While each individual practice is valuable, the nitrogen removal effectiveness will be site specific and the acceptability of each individual approach will differ between producers. No given conservation practice will be capable of addressing drainage water quality concerns in entirety; as such, a suite of approaches used across the landscape will be required.

As substantial investments in drainage systems continue to be made across the Midwest, there is an increasing need to provide relevant decision making information to agricultural producers and landowners so they can assess the best way to better incorporate conservation practices into the local landscape.

Each practice’s effectiveness for reducing nutrient loss in terms of a “percent effectiveness” can be compared. For nitrogen loss through tile drains, research shows that practices addressing the drainage system itself tend to be more focused and have relatively high practice efficiencies. For example, woodchip bioreactors and wetlands are rated at 25% and 50%, respectively, in the Illinois Nutrient Loss Reduction Strategy, meaning they keep one quarter and one half, respectively, of the nitrogen that would otherwise move downstream from doing so. The most effective practices for reducing nitrogen loss through tile drains tend to be land conversion practices which require switching production to perennials like pasture or bioenergy crops (90% N loss reduction). While Table 1 presents average values, nitrogen loss reduction effectiveness of any practice can vary by soil type, topography, landscape position, and weather.

Another way to compare these practices is cost efficiency, both in terms of dollars per acre and dollars per pound of nitrogen that is being kept from moving downstream (Table 1). While the land use change practices are the most effective in terms of percent nitrogen loss reduced (90%), they do no tend to be some of the most cost effective practices. However, beyond the cost efficiencies listed in Table 1, it’s very important to note that some practices provide additional benefits beyond reducing nitrogen loss in tile drainage. For example, there is evidence that long-term use of certain cover crops can improve soil health, and constructed wetlands are known to provide pollinator habitat and can be of interest to hunters for providing wildlife habitat.



To compare these practices based on cost, a few additional considerations include:
  • When do the major costs of the practice occur? Constructed edge-of-field practices like constructed wetlands or bioreactors have high up-front costs, while other practices like cover crops are implemented annually, and thus have repeatable costs occurring every year.
  • What is the lifetime of the practice? Continuing with the above example, a constructed wetland can have a design life of greater than 100 years, but it may not be reasonable to assume a cover crop will be done in a given field consecutively for 100 years.
  • Are there other benefits of the practice, beyond water quality improvement, that are important? The practice of cover crops, for example, is typically not done solely to reduce nitrogen loss in drainage water.
  • Are there local or seasonal price differences for costs of these practices?
  • Are government incentives or cost-share programs available to assist with the cost? There may also be local funds available in certain watersheds through conservation groups or watershed planning processes.
In summary, all the recommended nutrient loss reduction practices are unique in how they work, how well they work to reduce nutrient loss, ease of implementation, and cost. While no single practice will be suitable for every acre across the US Midwest, every single acre needs at least one new conservation practice.

2018 Farm Assets Conference

November 3, 2018

Dear Subscriber,

I hope your harvest season has gone well. As it winds down please consider making a trek to Normal, Illinois for the 2018 Farm Assets Conference. This is a pivotal year for agriculture. Things from this point forward will be different. Changes are coming rapidly. We’re going to address some of the possibilities.

Please come and listen. Please come and ask questions. Personally, I use these events as learning experiences to help tailor the daily WILLAg radio programming. It is a direct reaction to the questions you ask.

The cost is only $40 and we’ve put together a fantastic agenda. Do scroll down to find out more. The 2018 Farm Assets Conference is in Normal, Illinois at the Marriott Hotel and Conference Center on November 20th. Our doors open at 9:30am. The Illinois Corn Growers Association annual meeting precedes it at 8:00am.

buy your tickets now

Todd E. Gleason, Farm Broadcaster
University of Illinois Extension | WILLAg.org
tgleason@illinois.edu or (217) 333–9697





Farm Assets Conference
9:30am (doors open) - 4:00pm
Tuesday, November 20, 2018

BUY TICKETS ONLINE or 800–898–1065

Marriott Hotel and Conference Center
201 Broadway Avenue
Normal, Illinois 61761

get directions

PLEASE NOTE - The Illinois Corn Growers Association’s annual meeting is held just prior to the Farm Assets Conference in this same venue. It begins at 8:00am. Contact ICGA for more details.

8:00 am | Illinois Corn Growers Association Annual Meeting

9:30 am | Farm Assets Registration Desk Opens

10:30am | The Supply Chain Wants You - premiums & contracts
- Angie Slaughter, Vice President Procurement - Anheuser-Busch InBev
- Rickette Collins, Sr. Director Global Supply Chain - McDonald’s Corporation
- Ken Dallmier, President and COO - Clarkson Grain Company
- Brad Allen, AgriEdge Specialist - Syngenta

Noon | Lunch

1:00pm | Agriculture at Research Park
- Laura Weisskopf Bleill, Associate Director, University of Illinois Research Park

1:15pm | Trade, Tariffs, Grain Flow, Policy, & the Farm Economy
- Gary Schnitkey, University of Illinois
- Jonathan Coppess, University of Illinois
- Bruce Sherrick, ILLINOIS TIAA Center for Farmland Research

2:15pm | Break

2:30pm | WILLAg Commodity Marketing Panel
- Pete Manhart, Bates Commodities
- Bill Mayer, Strategic Farm Marketing
- Merrill Crowley, Midwest Market Solutions
- Wayne Nelson, L and M Commodities
- Todd Hubbs, University of Illinois



Media Registration
Members of the press should contact Lindsay Mitchell lmitchell@ilcorn.org or (309) 557–3257 at the Illinois Corn Growers Association to register for the Farm Assets Conference.



The Supply Chain Wants You - premiums & contracts
“The Supply Chain Wants You” will focus on how large corporations are reaching all the way through the supply chain to the farmer and will cover the direct impact on premiums paid for commodities and production practices. Panelists will project what the next 5 to 10 years may look like on farms in Illinois and in other parts of the Midwest, discuss how it impacts decisions to get bigger and what it means to stay medium-sized. The panel includes representatives from McDonald’s, Clarkson Grain, Anheuser Busch, and Syngenta.
  • Angie Slaughter, Vice President Procurement - Anheuser-Busch InBev
  • Rickette Collins, Sr. Director Global Supply Chain - McDonald’s Corporation
  • Ken Dallmier, President and COO - Clarkson Grain Company
  • Brad Allen, AgriEdge Specialist - Syngenta
Agriculture at Research Park
Research Park at the University of Illinois is home to 120+ companies, employing 2,100 people in high-technology careers. At any given time more than 800 student interns are working in these companies gaining valuable work experience while making real contributions to internal corporate R&D and product development programs. It is the birthplace of successful agricultural start-ups like Granular & Agrible and houses office space for many corporations including ADM, AB InBev, Caterpillar, CME Group, Deere & Company, Dow AgroSciences, and Syngenta.
  • Laura Weisskopf Bleill, Associate Director, University of Illinois Research Park
Trade, Tariffs, Grain Flow, Policy, & the Farm Economy
The flow of grains and other goods across the planet has been intentionally interrupted by the Trump Administration in an effort to create a more fair and balanced trading schematic. We’ll examine the short and long term effects, exploring how these changes project into future crop rotations, export routes, U.S. farm policy, and the health of the farm economy. The farmdocDaily team from the University of Illinois will guide our discussion.
  • Gary Schnitkey, University of Illinois
  • Jonathan Coppess, University of Illinois
  • Bruce Sherrick, ILLINOIS TIAA Center for Farmland Research
WILLAg Marketing Panel
Commodity analysts are the bedrock of WILL Radio’s agricultural programming. During our final session of the day, we’ll tie all the other panel discussions into a meaningful look at commodity prices. Our experts will try to help lay out a road map of how old crop corn and soybean prices may change over the winter months while exploring pricing opportunities for the 2018 crop. We’ll also dip into an early discussion of new crop pricing as U.S. and global acreages shift to counter changes in trade route distributions across the planet.
  • Pete Manhart, Bates Commodities
  • Bill Mayer, Strategic Farm Marketing
  • Merrill Crowley, Midwest Market Solutions
  • Wayne Nelson, L and M Commodities
  • Todd Hubbs, University of Illinois

WANL181031

October 31, 2018
  • Market Facilitation Payments Program a Go for December
  • How will the 2019 Acreage Mix Change
  • Unwinding New Era Crop Acreage and Prices




Register for the Farm Assets Conference today. The cost is just $40 and includes the price of parking and your noon meal. Come to learn more about how large corporations like Anheuser Busch and McDonald’s are reaching all the way through the supply chain to tap farmers on the shoulder looking for production practices and seed characteristics which meet their needs. It is likely to change how commodity crops are marketed over the next decade. The CME Group, ADM, Cargill, Bunge, and Louis Dreyfus are already preparing for this eventuality. However, might it be possible the middleman in the system will become a distribution system rather than the marketing arm? We’ll explore these concepts during the 2018 Farm Assets Conference.

Register Online today or by calling 800–898–1065

Click here to see the full agenda or scroll to the bottom of this letter. The conference will be held Tuesday, November 20th in Normal, Illinois.



Market Facilitation Payments Program a Go for December


During a Champaign County, Illinois listening session U.S. Secretary of Agriculture Sonny Perdue confirmed the second round of Market Facilitation Program payments for farmers will be coming in December.

U.S. Secretary of Agriculture Sonny Perdue last week told farmers at an event in Champaign County, Illinois that it was likely the second round of MFP payments would come in December. USDA confirmed that in a press release Monday. USDA says those payments are expected, but not yet fully confirmed, to fill out the full amount off compensation producers will receive for markets lost to China as a result of the Trump Administration’s trade battle. This would push the soybean payment to $1.65 per bushel and the corn payment to $0.01. Half of that amount for each commodity has already been approved and distributed (if actual 2019 production numbers have been turned into FSA).

Secretary Perdue says his agency unsuccessfully looked for ways to vary the payments from region to region across the nation based on the impact of Chinese imposed tariffs. There had been some speculation, for instance, farmers in the Dakota’s might end up with bigger payments because soybean exports out the PNW to China have stopped.

The Secretary also made it very clear farmers should not expect another Market Facilitation Program next year. He says this season the trade battle was imposed on them after their planting decisions had been made and so Washington felt obligated to set that right. There will be no such obligation for the 2019 growing season. He puts it in trade terms saying the United States became too dependent on China as a soybean market and that it must “diversify”.

Consequently, U.S. farmers will need to diversify their operations and crop acreage mixes in order to avoid the market disruptions caused by the rebalancing of trade.

How will the 2019 Acreage Mix Change

Those decisions to diversify are driven largely by price and crop rotation. University of Illinois Agricultural Economist Todd Hubbs has done some calculations as it relates to corn and soybeans. He expects, based on price today, U.S. farmers will plant 91.1 million acres of corn in 2019 and 85.7 million acres of soybeans.

Here’s how Todd Hubbs sees that playing out across the nation for corn, soybeans, cotton, and wheat, “We are going to see some wheat acreage expansion. Particularly spring wheat because those prices are relatively strong. Maybe some cotton acreage expansion. We aren’t talking tens-of-millions of acres. Some of the small grains might also see some expansion. So places in the south and the western corn belt may shift back to their more traditional crops.”

Hubbs’ calls this an unwinding of the “new era” crop acreage. His forecast, like USDA’s 2019 planting season advice, does not include a resumption of trade with China.



Since the middle of the last decade agricultural economist, farmers, and policy makers have talked about a new era of agricultural prices at a higher plateau. That era may or may not be coming to an end.

Unwinding New Era Crop Acreage and Prices

The last ten years have seen the build out of the ethanol infrastructure in the United States and the push for red meat production in China. The first caused U.S. farmers to raise more corn to grind for ethanol. The second pushed the expansion of soybean acreage to feed hogs in China. Both drove prices higher and caused acreage to change here and around the planet. That era may coming to an end says University of Illinois Agricultural Economist Todd Hubbs, “I mean we talk about the new era prices. It lead to a new era of acreage allotments. I think we may be at the start of unwinding this build of corn and soybean acreage.”

There are two reasons for the unwinding.

First, the federal legislation which drove the increase in corn acreage has capped out. It actually did that in 2015. Now the Trump Administration is calling to open up the whole gasoline supply to 15% ethanol blends rather than 10%. Because the infrastructure is not in place for that to happen and seems highly unlikely to be built out by a resistant oil industry, it won’t move the dial on corn usage enough to really matter say the ag economists at Illinois. Driving the price of corn higher based on new domestic ethanol demand is probably over.

Second is the trade war with China. This one nation had consumed more than 30% of the U.S. soybean crop. It has essentially shut that gate in a struggle with the United States to determine which nation is likely to be the world’s number one economic superpower in the future. China wants to do it with a combination of capitalism and a planned economy under Communism. The United States uses Democracy and capitalism. The distinction is important because it may give China the upper hand in the short-run. It can simply choose without political ramifications how to organize resources. Those choices are right now reallocating acreage in the United States because farmers are making next year’s cropping decisions today. It’s exactly what the U.S. Secretary of Agriculture last week said they should do, “So the market will equilibrate over a period of time and farmers will look at the market and make their marketing and planting decisions the way they always do.”

What farmers do is to make their planting decisions based on crop rotation needs and price. The price of soybeans won’t be high on that list for next year says Hubbs, “It really does change the allotment. What do we rotate with? If we keep expanding corn acreage and continue to see these unbelievable yields across the country. We may have knocked ourselves out of prices in that new era. Or at least we are going to be pegged in the low end of the range of that new era of prices for the foreseeable future.”



Sponsor the Farm Assets Conference

There are several ways to sponsor the 2018 Farm Assets Conference. Booth spaces are available as are reserved tables. Check out the complete details here or contact Jill Clements at Illinois Public Media (217) 333–7300.



2018 Farm Assets Conference

call 1–800–898–1065 or online at BUY TICKETS NOW | $40 each

Marriott Hotel and Conference Center
201 Broadway Avenue
Normal, Illinois 61761

The noon meal is included. Parking is free in the deck next to the Marriott. There are a large number of vendors available for you to talk with prior to and during the breaks. Come and check out the whole of the event.



8:00 am | Illinois Corn Growers Association Annual Meeting

9:30 am | Farm Assets Registration Desk Opens

10:30am | The Supply Chain Wants You - premiums & contracts
- Angie Slaughter, Vice President Procurement - Anheuser-Busch InBev
- Rickette Collins, Sr. Director Global Supply Chain - McDonald’s Corporation
- Ken Dallmier, President and COO - Clarkson Grain Company
- Brad Allen, AgriEdge Specialist - Syngenta

Noon | Lunch

1:00pm | Agriculture at Research Park
- Laura Weisskopf Bleill, Associate Director, University of Illinois Research Park

1:15pm | Trade, Tariffs, Grain Flow and the Farm Economy
- Gary Schnitkey, University of Illinois
- Jonathan Coppess, University of Illinois
- Bruce Sherrick, ILLINOIS TIAA Center for Farmland Research

2:15pm | Break

2:30pm | WILLAg Commodity Marketing Panel
- Pete Manhart, Bates Commodities
- Bill Mayer, Strategic Farm Marketing
- Merrill Crowley, Midwest Market Solutions
- Wayne Nelson, L and M Commodities
- Todd Hubbs, University of Illinois



Media Registration | Members of the press should contact Lindsay Mitchell (309) 557–3257 at the Illinois Corn Growers Association to register for the Farm Assets Conference.

Corn and Soybean Acreage Prospects for 2019


As US farmers finish the fall harvest, considerable speculation will occur over the next few months about the acreage decisions they’ll make for 2019. Todd Gleason discusses how current market conditions support an acreage increase next year for corn and a reduction for soybeans with University of Illinois agricultural economist Todd Hubbs.

farmdocDaily article
by Todd Hubbs, University of Illinois

Prospects for 2019 crop acreage levels begin with expectations about planted acreage for principal crops. In 2018, acreage planted in principal field crops expanded to 322 million acres, up 2.9 million acres from the previous year. A large share of increased acreage came from an expansion of spring wheat acreage by 2.18 million acres, cotton acreage by 1.4 million acres, and hay acreage by 1.28 million acres. Corn and soybean acreage decreased by 1.03 and .997 million acres respectively. Illinois increased planted acreage by 188,000 acres like most of the primary Corn Belt states. A significant exception came in South Dakota which lowered acreage by 343,000 acres, driven mostly by lower corn acreage. In conjunction with the increase in principal crop planted acreage, prevent plant acreage is small thus far in 2018. The Farm Service Agency reports 1.88 million acres of prevented plantings as of October 1, down from 2.59 and 3.4 million acres in 2016 and 2017 respectively.

As we move into 2019, the prospects of large adjustments to crop acreage increasingly focuses on soybean acreage. Acreage adjustments in many major growing areas may be in the form of crop adjustments instead of acreage losses. The current price environment across principal crops points to constant or modest changes in total planted acreage in 2019 and holds the potential for less overall soybean and corn acres.

Since the inception of the Renewable Fuels Standard and growth in Chinese soybean imports, a noticeable shift in principal crop acreage created increases in corn and soybean acreage at the expense of wheat and small grains. Corn and soybean acreage increased from 158.3 million acres in 2006 to 178.3 in 2018 with a peak acreage of 180.3 million in 2017. Over the same period, wheat acreage declined from 57.3 million acres to 47.8 million projected in 2018. The low for wheat acres came in 2017 at 46.02 million acres. Similarly, small grain acres fell from 18 million acres to 14.88 million with a low of 14.5 in 2017. These acreage adjustments stand out when analyzing the data from the three western Corn Belt states of North Dakota, South Dakota, and Kansas.

In 2006, the states mentioned above planted 20.54 million acres of corn and soybeans. Since that year, corn and soybean acreage grew by over eleven million acres with a peak year of 32.52 million acres in 2017. In 2018, 31.15 million acres of corn and soybeans were planted in those states. Conversely, wheat acres contracted dramatically in those states continuing a long run trend. In 2006, the three states planted 21.9 million acres of wheat. Since that year, wheat acreage fell by over four million acres with a low year of 16.2 million acres in 2017. In 2018, 17.3 million wheat acres were planted in those states.

Narrowing profitability margins appear to be shifting away from the expansion of corn and soybean acreage and back to wheat, small grains, and cotton in many areas. Current projections by industry analysts place 2019 corn acreage in a range from 90 to 93.7 million acres. Soybean acreage projections come in between 82.3 and 87.5 million acres. In essence, if the current margins continue, we may be at the beginning stages of unwinding the acreage shifts seen over the last decade. In 2018, corn and soybean acreage in total reversed a three-year trend of increased planted acres. While soybean and corn acreage decreased in 2018, many crops saw planted acreage increases. In particular, spring wheat, cotton, barley, rye, oats, and hay recorded increases. In the main corn producing states during 2018, Missouri, Michigan, Nebraska, and Ohio increased corn acreage over 2017 planting decisions. None of those states increased corn acreage by more than 100,000 acres. Decreases in soybean planted acreage came from North Dakota, Kansas, Arkansas, Minnesota, and Missouri. As we move into 2019, corn and soybean acreage shifts depend on the evolution of corn and soybean prices between now and planting.

Expectations about corn and soybean acreage will continue to evolve. Preliminary surveys of farmer’s planting intentions indicate an intention to decrease soybean acreage and increase corn acreage. Using current market prices, projections for corn and soybean acreage place 2019 corn acreage at 91.1 million acres and soybean acreage at 85.7 million acres. Data availability on acreage begins with the USDA’s Winter Wheat Seedings report in January to be followed by the March Prospective Plantings report.

Take a Good Hard Look at Selling Soybeans



The price of soybeans rallied out of the October USDA Crop Production report. This is because it showed fewer acres of the crop would be harvested this season. University of Illinois analyst Todd Hubbs thinks the upside potential is limited, “I don’t know if this thing is sustainable. It doesn’t feel that way to me. Moving through the rest of the harvest year and towards the start of 2019, I think we are going to have to see some kind of production issues in the South American crop or if China breaks and doesn’t hold out completely on taking U.S. soybeans before we see a sustained upward movement. I think the upside potential is limited.”

Limited because, even if this year’s crop is hurt some by the poor harvest conditions so far it will remain a record breaker. Right now USDA has it at 4.7 billion bushels. There are plenty of soybeans in the world. That makes it a buyers market and price is going to depend a whole lot upon how many U.S soybeans can be exported says Hubbs, “Basically it doesn’t look like other importers are picking up the loss of the Chinese market like we would like them to.”



When you look at last year and the huge amount of exports Brazil did in the second-half of the marketing year, and even the strength in the latter quarter of the U.S. marketing year, you can see tariff action picking up in forward buying and movement of soybeans thinks the U of I number cruncher. So far in this marketing year we haven’t seen much Chinese movement. In the last export inspections report about 5 million bushels went to China. Still, they seem to be sitting it out and not buying soybean from the United States. This is happening even though the price of U.S. soybeans, when compared to the price of Brazilian soybeans delivered to China, are very competitive.



It all brings Hubbs back to that word “limited”. He sees the upside price potential in soybeans as limited by an enormous supply in the United States and around the world, “If you are thinking about marketing soybeans, I’d take a good hard look at the price we are seeing right now because ending stocks are set at 88 5 million bushels for the 2018/19 marketing year and barring some kind of uptick in exports from the U.S. that may be the low end of reasonable projections depending on what the crop ends up doing here in the U.S.”

You may read more about commodity marketing from Todd Hubbs on the farmdocDaily website.

A Good Year for Pumpkins

This year’s pumpkin crop is the best in the last two decades. That means there will be plenty of jack-o-lanterns for Halloween and lots of pie filling for Thanksgiving.

When the pumpkin crop in Illinois is big that means the whole nation can celebrate fall says Mohammad Babadoost from the Univeristy of Illinois, “We are number one in both of them, jack-o-lantern and processing pumpkins. Far, far ahead of any other state.”

More than 90% of the pumpkin pie filling sold in the United States comes from two processing plants located near Peoria, Illinois. This year the pumpkins feeding into those plants are yielding a record breaking 27 tons per acre. The average is about 23. This is pretty amazing given that a plant disease nearly wiped out the whole industry in the state a couple of decades ago.

Babadoost is naturally proud of his University of Illinois work to salvage the industry from the disease and he continues to work with farmers today to provide them crop production and protection advice. He says pumpkins are a high value crop that work well into a row crop rotation, “Very well. In fact pumpkin rotated with corn or even soybean is a very good crop rotation program.”

Even better, pumpkins can provide two sources of income should the farm want to diversity into a little agro-tourism.

Reviewing Prices and Market Facilitation Payments

read farmdocDaily article



As the trade conflict with China continues, prices for many agricultural commodities remain relatively low. Illinois corn and soybean prices dipped to new lows in September, coinciding with the latest rounds of tariffs.



The difference between selling an entire crop at spring forward bid prices compared to the September average cash prices makes a substantial difference in income on an average central Illinois grain farm.



University of Illinois Agricultural Economist Gary Schnitkey reviews how this plays out on a 1700 acre corn and soybean farm in Illinois this year, and what the prospects look like for next year.

Trump Admin Still Has Some Biofuels Work to Do

Last Tuesday President Donald Trump made a campaign trip to Council Bluffs, Iowa. There he told a very excited crowd his administration would be backing corn farmers and ethanol.

The President leaned into the mic and gave corn farmers a little insider news they’ve been clamoring to hear since U.S. EPA pronounced gasoline blended with 15 percent ethanol would be ok to use in all cars made since 2001, “We are a little bit early. I shouldn’t say it now, but we are going with E15 year-round.”

Mr. Trump is a little early. Today E15 can be used about 9 months out of the year in much of the nation. During those other three months, the summer months, it has been prohibited. U.S. EPA will need to write some rules about how to make the year-round use happen. Those will need to be approved, and clearly the oil industry will mount court challenges.

If all goes well more corn will be used to make ethanol for E15, but it won’t make a difference in the balance sheets for corn says University of Illinois Agricultural Economist Scott Irwin, “Not for this year and I am confident not for next year.”

So the E15 announcement, while a long run win for corn ethanol, rings a little hollow. The Administration’s other big farm country biofuels problem is EPA’s use of the Small Refinery Exemptions or SRE. The good news here, says Illinois’ Irwin, is that ethanol usage has been holding strong despite EPA letting some refineries out of the mandate to produce gasoline blended with a home grown fuel like ethanol made from corn.

However, there is a problem with oil pressed from soybeans to make biodiesel says Irwin, “And the total amount of biodiesel, because of the Small Refinery Exemptions, has probably gone down at least 10 percent. So, there has been real demand destruction from the Small Refinery Exemptions, but it is in biodiesel and not ethanol.”

US EPA has through November to announce its final decisions related to the volume of biofuels it will require in the nation’s gasoline supply in 2019. It may or may not include some guidance on how it expects to use the Small Refinery Exemptions going forward. So far, it has said it will make no comment on that point.

Expected E15 Announcement No Big Deal

President Trump at his Council Bluffs, Iowa rally Tuesday is expected to announce a waiver to allow year-round use of gasoline blended with 15% ethanol (E15). Todd Gleason reports it may make little difference in how much corn is used to make ethanol.

2019 Illinois Crop Budgets are Dismal

The numbers look bad for Illinois grain farmers next year.

That’s the only conclusion Gary Schnitkey can draw when he puts the costs up against the incomes for corn and soybeans in 2019. Schnitkey, an ag economist at the Univesity of Illinois, says fuel and fertilizer costs are expected to go up. Prices aren’t and that’s the dismal part says Schnitkey, “Probably the one thing that has changed relative to recent years is that corn is expected to be more profitable than soybeans. Again, that is largely due to our use of $3.60 for a 2019 corn price and $8.50 for soybeans. This switches the profitability around. That’s driven by trade concerns, particularly with China and what that has done to commodity prices.”

Here’s an example of the bottom line for next year’s budget. A northern Illinois farmer might expect to have $174 to split between the farmer and the landowner for corn and $143 for soybeans. This return is considerably below the cost of cash rent and roughly, says Schnitkey, near the 2005 returns.

Turner Hall Transformation | the smart classroom

Six years after more than 100 alumni, faculty, students, and friends of Illinois gathered to kick-off a 5 million dollar fundraising campaign, the University of Illinois Turner Hall transformation has been completed. 1964 ag sciences grad William Kirk and his wife, Lillian, made a $500,000 donation to seed the project.

Turner Hall West Lobby
Phase I of the Turner Hall Project transformed the crop science and soil science laboratories into 21st-century learning environments. Undergraduate courses are taught in these two labs. Donors also funded a two-story renovation of the west lobby. In total, Phase I renovated 7136 square feet. These renovated spaces allow for active learning, utilizing new technologies. The Dow AgroSciences Crop Sciences Laboratory and the Monsanto Soil Science Laboratory welcomed students for the first time in fall 2015.



Phase II construction began in 2017 and will conclude in 2018. This 38,377 square foot, three-floor renovation will fully transform classrooms on the first and second floors of Turner Hall, as well as advanced laboratories in the basement. Transformed classrooms feature new technologies, state-of-the-art equipment, new flooring, HVAC and lighting. It encompasses a new computer lab, new “smart” classroom, new conference room and student collaboration areas.

New Lab Dedicated to Commodity Crop Bioprocessing


The market for commodity crops processed into new products is expected to more than double in the next six years to some 490 billion dollars. The IBRL building on the Univesity of Illinois campus in Urbana-Champaign is investing in the future of these agricultural innovations.

The last week of September a new building was dedicated on the University of Illinois campus in Urbana-Champaign. The Integrated Bioprocessing Research Laboratory is designed to bridge the gap between discovery and commercialization. IBRL’s director, Vijay Singh, says every year some 250 invention disclosures are filed at the University of Illinois. Most are never commercialized because there isn’t a proof of concept facility to scale up new ways to process ethanol or other agricultural biofuels.



The labs in IBRL, Singh says, will do just that, “This facility is also a link joining academia with business development. With plug and play utilities and flexible equipment offerings, IBRL is agile enough to serve a variety of needs across the bioprocessing industry.”

However, it’s not just the IBRL building on the University of Illinois ag campus that creates this commercialization synergy. There’s the Food Science pilot plant, the Institute for Genomic Biology, the array of greenhouses, the energy farm where all kinds of crops are explored for biofuels, and Research Park where big data technology is fused with the hard sciences. Together, Vijay Singh believes, these create an unmatched eco-space that can drive a bio-economy in Illinois and beyond.

2019 Crop Budgets Suggest Dismal Corn and Soybean Returns

Even with cost-cutting and savings measures, University of Illinois Agricultural Economist Gary Schnitkey says, for the moment, it seems unlikely farmers will have positive returns on rented farmland in 2019. Todd Gleason has more…

Small Refinery Exemptions and Ethanol Demand Destruction

farmdocDaily article

There is widespread interest in whether small refinery exemptions (SREs) under the RFS have “destroyed” demand for ethanol in the physical market. Todd Gleason discusses the point with University of Illinois agricultural economist Scott Irwin.