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Good Yields! Yes but a Warning | an interview with Gary Schnitkey



by Gary Schnitkey, University of Illinois
read farmdocDaily article

On a national basis, corn and soybean yields were near record-breaking levels in 2018, with exceptional yields in central Illinois and the eastern United States contributing heavily to those near-record U.S. yields. Other areas had below-trend yields. The county yields for corn and soybeans presented in this article illustrate these facts. Much higher U.S. yields are possible if all areas have exceptional yields. However, all areas including Illinois should not expect above-trend yields in every year.

Corn Yields

The 2018 corn yield for the United States was 176.4 bushels per acre, just .2 bushels below the record yield of 176.6 bushels per acre set in 2017 (all yields in this article are from QuickStats, a website maintained by the National Agricultural Statistical Service). From a national standpoint, corn yields were excellent in 2018.

Contributing to these high yields were counties having average yields above 220 bushels per acre. Several of these counties were in the Northwest U.S. and Nebraska where irrigation often is used in corn production (see Figure 1). In predominately non-irrigated counties, there were a concentration of counties in eastern Iowa and extending through central Illinois with over 220 bushels per acre average yields (see Figure 1). Three counties in this region, all in Illinois, had average yields over 240 bushels per acre: Douglas County (246.0 bushels per acre), Piatt (241.8), and Warren (241.7). Eleven counties – again, all in Illinois – had average yields between 230 and 240 bushels per acre: Macon (239.9), Sangamon (236.4), Logan (236.2), Tazewell (235.4), Effingham (235.2), Coles (234.2), Stark (234.0), Moultrie (233.9), Hancock (233.9), Christian (232.9), and Mercer (231.3). Eighteen counties had yields between 220 and 230 bushels per acre: 6 counties in Iowa and 12 in Illinois.



High yields are a measure of good growing conditions, but it does not take into consideration the inherent productivity of soil. Yield deviations from trend consider an area’s productivity. For each county, a 2018 trend yield was calculated using linear regression to fit a straight line through actual county yields from 1972 to 2017. The straight line then was extended to give the 2018 trend yield which represents the expected yield given approximately average growing conditions. A yield deviation then equals the actual yield minus the trend yield. A yield deviation of 20 bushels per acre means the actual 2018 yield is 20 bushels higher than the trend yield, an indicator of a very good yield. Conversely, a –20 yield deviation indicates that the county yield is 20 bushels below the trend yield, an indicator of poor growing conditions.

As would be expected, eastern Iowa and central Illinois had yields with positive yield deviations, with many counties having yield trends above 30 bushels per acre (see Figure 2). Note that yield deviations paint a broader area of excellent yields. That area includes southern Illinois, central and southern Indiana, western Ohio, western Kentucky, and parts of central Tennessee.



Other areas did not fare as well. Counties along the Iowa-Minnesota border had below-trend yields (see Figure 2). Other regions of poor yields in include Colorado, eastern Kansas and western Missouri, Texas, Arkansas and Louisiana, North Carolina, and New York.
Soybeans Yields Similar to corn, soybeans almost had a record-breaking yield. The average U.S. soybean yield for 2018 was 51.6 bushels per acre, .3 bushels below the record yield set in 2016 of 51.9 bushels per acre.

There were many areas of exceptional soybean yields (see Figure 3). Twenty-nine counties had average county yields over 70 bushels per acre. Three of these counties were in Nebraska: Gosper (75.2 bushels per acre), Dawson (73.2), and Buffalo (70.6). The remaining 26 counties were in Illinois. Three Illinois counties had average county yields over 80 bushels per acre: Sangamon County (82.3 bushels per acre), Morgan (81.6), and Douglas (80).



Yield deviations suggest that central and southern Illinois had exceptional growing conditions in 2018 (see Figure 4). Excellent growing conditions continued into Indiana, Ohio, Kentucky, and Tennessee. Other areas did not have as productive of a year. Yields were below trend along the Iowa-Minnesota board, North and South Dakota, Nebraska, Wisconsin, Michigan, Pennsylvania, and in North and South Dakota.



Commentary The U.S. had near-record yields for corn and soybeans in 2018. Above-trend yields in central and southern Illinois, central and southern Indiana, western Ohio, Kentucky, and Tennessee where large contributors to the near-record U.S. yields.

The examination of county yields suggests two warnings. Illinois farmers should note that many several areas in the country had below-trend yields in 2018. Therefore, the 2018 experience indicates that below-trend yields are still possible. Illinois farmers should not plan on having above-trend yields in every year. It is entirely possible that the area of below-trend yields centered along the Iowa-Minnesota border in 2018 could occur in central Illinois. At the same time, Iowa and Minnesota could have above-trend yields. If that reversal occurs in 2019, there would be large, negative incomes on many Illinois farms.

Somewhat counter to the first warning, the second warning is for the possibility of much larger national corn and soybean supplies. It is possible that all areas of the U.S. have above-trend yields. That is, the western Corn Belt could have had above-trend yields at the same time the eastern Corn Belt has above-trend yields. If this occurs, national yields would be record-breaking, resulting in falling corn and soybean prices, leading to very low farm incomes.

Apr 10 | CONAB Updates Corn S&D Table

@Conab_Oficial reports Brazil's second-crop corn acreage is expected to be up 6.1% from last year. An early soybean harvest and good weather are the contributing factors. The 2nd crop corn harvest is expected to be 26.4% larger than last season's climate hampered crop.



Brazil's 2018/19 ending stocks are expected to rise to 15.3mt or approximately a 2-month supply with total yearly demand at 93.5mt. @Conab_Oficial notes new crop corn supply may yet grow as production conditions are "very positive". Exports are set at 31mt.



On price - @Conab_Oficial is concerned domestic usage will not increase because the 62.5mt already includes livestock feed usage that has levelled off and it is not known if domestic corn ethanol increases will materialize as new plants have yet to come online.

...a good part of the 1st crop corn writes @Conab_Oficial has not been marketed. When taken with a big second crop corn harvest it cautions a low price scenario.

Brazil's counterpart to USDA @Conab_Oficial notes early season conditions in the United States, should the over-abundant rainfall continue, could cause a switch to soybean acres here and a lower @CMEGroup futures price.

USDA Reports Provide Surprises for Corn


Friday’s USDA reports surprised the corn market. Todd Gleason has more on how more corn acreage than expected this year coupled with more corn leftover from last year than expected will influence prices.

by Todd Hubbs, University of Illinois
read farmdocdaily article
watch post-USDA report webinar with Todd Hubbs and Scott Irwin

The USDA’s quarterly Grain Stocks report and annual Prospective Planting report delivered surprises to the corn market. A greater than expected corn stocks number combined with higher than expected planted acreage of corn gave very bearish news to corn prices. Soybean stocks and acreage came in neutral to slightly positive for soybean prices.

March 1 corn stocks came in at 8.605 billion bushels compared to an average trade guess of 8.335 billion bushels. The stocks estimate suggested feed and residual use of corn during the first half of the 2018–19 marketing year came in eight percent lower than last marketing year. Lower feed and residual use materialized despite a sizable livestock herd and reduced production of distiller’s grains on weakening ethanol grind. A higher stocks estimate suggests the potential for underestimation of the 2018 crop size and supports the notion of declining demand for corn during the second quarter of the marketing year.

Corn producers reported intentions to plant 92.8 million acres of corn this year, 3.66 million more than planted last year. The reported corn acreage exceeded trade expectations by 1.4 million acres. The intention to increase corn acreage is widespread throughout the Corn Belt. Acreage is up 400,000 acres in Iowa, 200,000 in Illinois, and 150,000 in Indiana. Significant increases in corn acreage intentions showed up in the Northern Plains with North Dakota intending to plant 900,000 additional acres and South Dakota up 700,000 acres. Overall, the top ten corn producing states increased acreage by 2.05 million acres. If the intention to plant 92.8 million acres materializes, harvested acreage for grain may be close to 85.4 million acres. A U.S. average yield near 174.6 bushels per acre leads to a projection of production in 2019 of 14.9 billion bushels. Corn production at this level exceeds current marketing year use projections by 300,000 bushels. Corn use is expected to be higher in the 2019–20 marketing year, but the current implication of slowing use in the current marketing year and a larger crop next year is higher ending stocks.

The soybean stocks report appears neutral for soybean prices. March 1 soybean stocks estimates indicated 2.72 billion bushels, which came in above trade expectations by 33 million bushels. The stocks estimate implies seed and residual use of soybeans during the first half of the marketing year at 203 million bushels. Seed and residual use is up from last year and at the highest levels since the 2014–15 marketing year. The implications for soybean use this marketing year remain at previous levels and continue to rely on a resolution to trade issues.

Soybean planting intentions indicated farmers plan to plant 84.6 million acres of soybeans, down 4.6 million acres from last year. The soybean acreage intentions came in 1.55 million acres below of market expectations. Intentions to reduce soybean acreage spans most major production regions. In major producing states, the intention to plant fewer soybean acres is indicated by 300,000 fewer acres in Illinois, 600,000 in Iowa, and 500,000 in Minnesota. If 84.6 million acres are planted, harvested acreage could be close to 83.6 million acres. At a U.S. average yield of 49.4 bushels per acre, 2019 production projects to 4.13 billion bushels, 88 million bushels larger than current marketing year use projections. Without a significant change in soybean use over the next year, ending stocks appear set to increase slightly.

In addition to the allocation of acreage to corn and soybeans, the magnitude of total principal crop acreage shows a 4.2 million acre decrease from 2018. The USDA estimates that acreage planted to principal crops totals 315.4 million acres. The planned reduction in total planted acreage from that of a year ago showed up in feed grain crops other than corn. Sorghum acreage is projected to be 555,000 acres lower than a year ago at 5.18 million acres. Wheat acreage decreased two million acres to 45.8 million acres. Oat acreage declined by 191,000 acres. Acreage of oilseeds other than soybeans is projected to fall by 15,000 acres. Harvested acreage of hay is expected to increase by 215,000 acres.

The surprise in March 1 stocks and acreage created a bearish scenario for corn prices. The large corn stock number influences the consumption of corn in the feed and residual category directly during the current marketing year. An expectation of reduced feed and residual use is prudent moving forward. Without a resolution to the trade dispute, growth in ending stocks in both corn and soybeans appears feasible over the next year. Planting intentions confirmed the belief that farmers would switch to corn production in 2019. Depending on field conditions during the planting season and the changing price relationship between crops, the possibility of greater soybean acreage than reported in March exists. The June Acreage report will provide more clarification.

Managing Nitrogen for Corn in 2019

by Emerson Nafziger, University of Illinois

The fall of 2018 and so far in 2019, there have been limited opportunities to apply nitrogen fertilizer. Average rainfall through the first 25 days of March ranged from a little less than normal in the northern half of Illinois to an inch or more above normal in south-central Illinois. But temperatures have averaged 3 to 4 degrees below normal, which slowed drying. There were several days in the first week of March when it was frozen on the surface and a considerable amount of P and K went on. This was followed by an inch or more of rain (which had been forecast) in many areas, and it’s likely that some of the nutrients—those in MAP/DAP and potash are soluble—moved from higher to lower parts of fields, or off of fields altogether. While it’s good to get P and K applied before spring work starts, we really should consider holding off the next time soils are frozen and substantial rainfall is forecast before a thaw.

N rate

Results from the on-farm trials coordinated by Dan Schaefer of the IFCA and funded in part by the Illinois Nutrient Research & Education Council (NREC) showed that at about two-thirds of Illinois sites in 2018, the N rate needed to maximize the dollar return to N was higher than we have typically seen. We think that the slow start to mineralization during the cool weather in April 2018 might have meant more dependence on fertilizer N. Yields were also higher than we’ve usually found, which meant that the crop took up more N than usual.

Adding the 2018 data to the database used by the N rate calculator to calculate best (MRTN) rates for N in Illinois, and taking out some older data, resulted in an increase in the MRTN values compared to the previous (2018) version for corn following soybean. With N priced at $615 per ton of anhydrous ammonia ($0.375 per lb of N) and corn at $3.75 per bushel, the calculator gives MRTN rates for corn following soybean of 166, 180, and 192 lb N per acre for northern, central, and southern Illinois. These rates are 11 lb higher than the 2018 rates in northern and southern Illinois, and 5 lb higher in central Illinois. Those are modest changes because the 2018 data is added to a lot of existing data, but they illustrate how generating and adding new data keeps the guideline N rates responsive to research-based changes.

MRTN values for corn following corn did not change very much, in part because there weren’t as many trials in 2018, and in part because trials over the over the past several years have shown that corn following corn has required less fertilizer N than we found in many previous trials. It’s not clear why that is the case, but as we found with corn following corn, rates are responding to research findings to stay linked to what today’s corn crop needs.

Remember that the MRTN rates (and ranges) generated by the N rate calculator include all of the N that gets applied, not just to the main application. A 3-year, NREC-funded trial at two sites that we finished in 2018 showed that N rates from DAP applied in either the fall or in the spring produced the same yield response to N as spring-applied UAN. This means that we should be able to take full credit for N from MAP or DAP, providing these are applied after soils cool in the fall (about November 1 or later) or any time before planting in the spring. If these P fertilizers are applied before soils cool in the fall, some of the ammonium will convert to nitrate and be subject to loss. It’s reasonable to subtract maybe 20 to 30% of the N from P fertilizers that are applied in early October, before soils start to cool down.

N timing

In about 90 percent of on-farm trials comparing N rates applied as ammonia in both the fall (with N-Serve) and the spring, we have found little or no difference in yield responses to N rate. That’s been the case in our N-tracking trials as well: we generally find nearly all of the fall-applied N still present in the soil at planting (although most of it is usually in the nitrate form by then), and we have rarely found a yield advantage to applying 200 lb N in the spring compared to 200 lb N in the fall. Tile-drainage studies do show a little more N loss from fall-applied compared to spring-applied N, though, and we have found in a few cases either higher yields with spring-applied N or similar yields produced with lower rates of spring-applied N.

We have also found in a few trials the opposite—that fall-applied N can sometimes give higher yields or need less N to produce the same yield as spring-applied N. This is more likely when N rates needed to maximize the return to N are not unusually high, and when spring-applied N is applied at or after planting, with some delay in how soon the crop’s roots can reach the application band to start taking up N. That is, having the N dispersed in the soil after application under better (drier) soil conditions in the fall may sometimes be an advantage compared to application into wetter soils in the spring. Wet fall weather like we had in 2018 likely means less chance of seeing such an advantage in 2019. We did not get many trials established last fall to make the comparison.

There is no reason to expect that the delay in N application in most Illinois fields so far this season will lower yield potential, but it will be important to keep a couple of things in mind as the planting season approaches. The main lesson we’ve learned from our N timing and N form studies over the past five years is that corn plants need to have a substantial amount of N available in the soil near the row after plants emerge and before their nodal (main) root system starts to develop.

Table 1 shows yield averages from 15 site-years over the past four years (2015-2018) at four Illinois sites where corn followed soybean. The highest yields (those followed by an “a”) all came from treatments with 100 or 150 lb of N applied at planting, and applied in a way that we think made N available to the plants soon after emergence. Among the treatments with all 150 lb N applied at planting, broadcast SuperU (urea with both urease and nitrification inhibitors incorporated) and ESN (polymer-coated urea with extended release) produced the highest yields. Those that included N applied between the rows—especially NH3 with or without N-Serve, which would have been accessible to the roots only once the roots grew out to the band, yielded a little less. Adding nitrapyrin (Instinct) to UAN injected between the rows lowered yield a little, and those that had UAN surfaced-applied all yielded less: these may have lost some N or the N might have moved too slowly from the surface to the root zone to maximize yield.

Treatments with 150 lb N split into 100 lb at planting and 50 lb applied in-season generally yielded a little more than applying all of the N between the rows at planting (Table 1.) Applying 50 lb N as broadcast UAN at planting (to mimic the use of UAN as herbicide carrier at or after planting) then 100 lb as UAN injected at stage V5 did not yield very well, possibly because some of the N might have been lost, but more likely because there wasn’t enough N near the root system when it was needed, before sidedress. Otherwise, most of the treatments with 100 lb injected at planting followed by 50 lb as urea with Agrotain broadcast at V5 or V9, or as UAN dribbled in-row at V5, V9, or at tassel (VT) stage did well. Waiting until V9 and dribbling all 150 lb N as UAN at V9 was the lowest-yielding treatment, likely due to development of N deficiency (whether visible or not) that lowered yield potential in earlier stages. Injecting all of the N mid-row at V5 yielded as well as injecting 100 lb at planting and 50 at V5, which is counter to the idea that the crop needs more N early. We don’t know the reason for this.


Table 1. Corn yields with different forms and timing of 150 lb N/acre in corn following soybean. Data are averaged over 15 sites, with 3 or 4 sites per years for 4 years, 2015-2018. Averages followed by the same letter are not significantly different at the 10% (error) level.

Another piece of evidence that the crop needs a good supply of N relatively early to avoid lowering yield potential comes from a part of the same N form and timing study reported in Table 1. Averaged across 18 site-years, applying 100 lb N at planting yielded 13 bushels more (214 versus 201) than applying 50 lb at planting plus 50 lb (as injected UAN) at sidedress, stage V5-6. At rates of 150 and 200 lb N/acre, applying 50 lb at planting then the rest at sidedress yielded about 3 bushels less than applying all of the N at planting. At the 200-lb rate, applying all of the N early yielded significantly more than the 50+150 split at two sites, and the split N yielded significantly more than the all-early application at one site.

In another set of trials, 200 lb N as fall-applied ammonia with N-Serve yielded an average of 5 bushels more than 50 lb N as injected UAN at planting followed by 150 lb N as injected UAN at sidedress. The 50-150 split-sidedress treatment yielded more than fall-applied N at most sites in 2015, when June was very wet, but the 50-150 split yielded less than fall-applied N at most sites in both 2017 and 2018. This shows that applying some of the N at sidedress can bring yields up close to those from all-early application of the same rate, but keeping back most of the N to apply in-season is more likely to decrease yields than to increase yield compared to applying all of the N before planting, including in the fall. If we do sidedress, we need to apply at least half of the N where the roots of small plants can get access to it in order to prevent early-season deficiency that can result in lower yields.

We also noted that when we get really wet soil conditions in June after the crop has started to grow, like we had in 2015, split-sidedress N can outperform all-early N. Under these conditions, the crop may well need more N than we have (or would have) applied. In order to respond to added N under wet conditions, the crop needs to have its root system active, which won’t be the case if it’s still standing in water or saturated soils. Also, if the lower leaves have started to die off, the plant may not be able to take up and utilize added N. Even then, a period with the roots under low oxygen conditions may not yield fully, even if soil conditions improve. It’s important to get supplemental N applied as soon as possible so that the crop can take it up as soon as it’s able. Dropping urea (perhaps with urease inhibitor) from the air is expensive, but might be in order, especially if a planned sidedress application wasn’t made before it got wet.

N form and additives

Different forms of N fertilizer need to be applied in a way that assures crop safety and maximizes the chance that the N will be available to the crop when the crop needs it. Anhydrous ammonia is usually the N source with the lowest cost (per pound of N) and at 82% N, using ammonia means less volume to store and transport. But it requires injection to depth in the soil, and so is more costly to apply. It also needs to be handled very carefully to prevent accidental release into the air. Once in the soil, it spreads (in soils not too dry or too wet) several inches out onto the soil and, by desiccating soil microbes, it limits microbial activity that converts ammonium to nitrate; that is, ammonia partially sterilizes the soil, in the process limiting its own conversion to nitrate for a period of time. Conversion to nitrate makes N mobile in the soil, and nitrate is subject to loss by leaching and denitrification. This isn’t permanent: these microbes grow back quickly in the presence of so much N, and eventually reach levels higher than before the ammonia was applied.

We normally use a nitrification inhibitor such as N-Serve or CENTURO (new from Koch Agronomic Services) when applying ammonia in the fall. The later we apply ammonia in the spring the less likely it is that a nitrification inhibitor will be needed to help keep N in the (immobile) ammonium form, and thus in rooting zone. As a biological process, nitrification is slow in cool soils, which usually means it’s slow through most of March. Illinois State Water Survey data show that at Bondville, just west of Champaign, 4-inch bare soil temperatures have been in the low 40s for the past two weeks. On average over the past five years, 4-inch soil temperatures have reached and then stayed above 50 degrees by about April 14 at this site, and it’s averaged about May 10 before soil temperature reaches and stays above 60. Nitrification is slow when temperatures are in the 50s, and begins to speed up once soil temperatures reach 60 and above. If we are able to plant more or less on time this year so that N uptake begins to accelerate in late May, and if we add in the effect of the NH3 itself in suppressing microbial activity, it’s unlikely that applications of ammonia made after April 1 will need the further delay in nitrification provided by nitrification inhibitor.

Because cool soils are slow to dry, applications of ammonia in the spring are usually done when soils are wetter than ideal. That doesn’t mean we should abandon this form of N, but applying it on wet soils means more soil compaction, and with the diameter of the ammonia band very small when application is into wet soil, its concentration is high. If the soil dries out after application, there is some danger than NH3 will begin to move up in the soil, and may damage seeds or roots. Using RTK to apply the band 6 to 8 inches away from where the row will be planted can eliminate such damage, but that means applying in the direction of the rows instead of on an angle. Tilling after ammonia application can also help disperse the band and will usually lower or eliminate the risk of ammonia injury on seedlings.

Dry urea has the advantage of being quick and easy to broadcast-apply with flotation equipment, and has the additional advantage of being safe to apply after crop emergence. If spread on the soil surface and worked in with a tillage pass before planting, it is relatively safe from loss by volatilization, which is breakdown into carbon dioxide and ammonia, which can be lost to the air. If surface-applied without incorporation, using a urease inhibitor will help decrease volatilization. Getting a half inch or more of rain will move most of the urea into the soil, where any volatilized ammonia will be quickly dissolved in soil water. Urea doesn’t “self-sterilize” the soil to limit nitrification like ammonia does, though, so with warm surface soil temperatures, nitrification will begin soon after the urea is dissolved and in the soil (as ammonium). In the results in Table 1, SuperU (from Koch), which has both urease and nitrification inhibitors, produced the highest yields of any of the forms and application methods used in that study. Urea with the urease inhibitor Agrotain yielded 5 bushels less, presumably because of some loss (or movement below the root zone) of N following nitrification; urease inhibitor has no effect on the nitrification process once the N is on the ammonium form.

N application

Application methods are discussed several places above for different N forms, so only a few additional things will be noted here. Most application methods are not new, but there have been some innovations in recent years that offer more options. One big issue 15 or 20 years ago, perhaps related to aerial imaging that showed colors patterns in corn fields, was that of uneven distribution of NH3 across the knives on toolbars. A number of engineering improvements since then have diminished, if not eliminated, this problem, and as long as older manifolds have been replaced, it’s not a major issue now.

Application depth of NH3 has some influence on back-pressure and distribution, and on how safe the ammonia is from release into the air. Under normal soil conditions (not too wet), releasing NH3 5 or 6 inches deep is a safe depth, but if it’s wet, that will place it deep enough so that roots of small plants may not get access to it as soon as they should. This can be overcome to some extent by application of some of the N in more-available forms, such as 2 x 2 placement with the planter. This should be done with enough of the N (50 lb or more) to support early growth. In-furrow application of starter fertilizer or broadcasting 10 to 15 gallons of UAN 28 (30 to 45 lb of N) with herbicide helps, but unless soils are warm enough so that mineralization has kicked in by the time plants are at the 2-leaf stage (normally 20 to 25 days after planting), these applications may not provide enough N in time to maximize yield potential.

While most in-season (or at-planting) applications of UAN solution have traditionally been made by shallow injection, the recent advent of near-row dribble (Y-Drop®) technology and similar equipment, in at least one case with the ability to apply both between-row injection and near-row dribble at the same time, offers a different option for placement. One advantage promoted for near-row dribble is the ability to apply N to corn of different sizes, from small plants to tassel stage or even beyond, using high-clearance equipment. This equipment has been promoted to some extent on the idea that “spoon-feeding”—applying N before and several times during the rapid growth/N uptake stages—can better match N to the crop’s needs, with less potential for loss, thereby maximizing yields. We have not found such an approach to be effective: as detailed above, we seldom (with some exceptions) find a yield advantage to keeping any of the N back for a single in-season application. And, we see no effective way to adjust N rates with later applications to end up lowering rates, thereby increasing N efficiency. We know beyond doubt that most soils are very effective as reservoirs for N, and this means that there is simply no yield advantage for breaking one or two N applications, including a major one at or soon after planting, into three or four applications. Without a yield advantage, the added application costs will lower returns.

As a way to apply in-season N, however, near-row dribble has some advantages over mid-row injection. Corn’s nodal roots grow down at an angle from the lower stem where they originate, so placement closer to the row means placement at less distance down to the root system. Dribbled UAN is also shaded a little more by the row so may be less prone to volatilization under high temperatures in direct sunlight. One question has been whether a near-row (or injected) UAN application made in-season will benefit from the addition of a urease inhibitor (like Agrotain) or even of a nitrification inhibitor (like Instinct). Injected UAN should never need a urease inhibitor, and if it’s dry and expected to continue to be dry, some consideration might be given to changing from dribbled to injected UAN. Until it rains, neither dribbled nor injected N will get to the roots for uptake, but at least the injected UAN-N won’t volatilize. It might make sense to use a urease inhibitor if surface application is the only option, but that won’t eliminate the risk that if it stays dry, the N won’t get into the crop in time to maximize its use no matter how we apply it. If it’s dry by early June and is projected to stay dry (as it did in 2012), it might make sense to skip the in-season N application altogether.

Dry urea can be applied across the top of emerged corn without concern for injury, although leaf edges sometimes show damage after application, especially when applied to larger plants, which catch more urea in the whorl. Some long-ago research showed that urea in the whorl didn’t decrease yield. Moderate wind tends to fold leaves over the whorl and may decrease urea capture, but of course won’t help uniformity of spread. Although urea applied to the soil surface is subject to loss by volatilization, enough rain to move the urea into the soil within a week after application will minimize losses. If it doesn’t rain, the urea may not do much good. Using Agrotain will help reduce volatilization and lower risk of loss, and might be appropriate if rain is likely to come late. Using polymer-coated urea (ESN) slows release of the urea into the soil, but in-season applications are usually made with the hope that N will get into the plants quickly, and slow-release will hinder that, and will lower effectiveness of the applied N. Polymer-coated urea can also move with surface flow of water following heavy rain, and in some cases might even leave the field.

While 2019 has so far presented some challenges in terms of applying N, a period of warm weather in April can greatly improve the prospect of getting N on this year’s crop without losing yield potential. We will need to retain flexibility, though, perhaps to the extent of changing form and timing of application to ensure that the crop gets enough N in time. One drawback to that, besides the challenges in equipment and timing, may be increased N costs that result from changing N form and application equipment. It would be good to enter revised N prices into the N rate calculator to see how this changes the amount of N to use. With expected corn prices and margins not very high, this might be the year to put off trying new and less-proven products and practices, and to focus instead on the basics of getting N to the crop in adequate amounts, both by choosing moderate rates (the MRTN should be the first option for most fields) and by applying N in a way that minimizes losses and maximizes crop access to this critically important nutrient.

Mar 29 | USDA Stocks & Acreage








- Dale Durchholz, AgriVisor LLC
- Greg Ginder, FCStone
- Mike Zuzolo, GlobalAnalytics.net
- Lance Honig, USDA NASS












Pre-Season Tar Spot Checklist for Corn

   Corn farmers in northern Illinois and across the corn belt have been dealing with a new disease. Todd Gleason has more on Tar Spot and what producers can do to mitigate its impact.

Tar spot is a relatively new disease of corn in the Midwest. It has been showing up on field corn in Iowa, Illinois, Michigan, Wisconsin, Indiana, Ohio, and Florida says University of Illinois Extension Plant Pathologist Nathan Kleczewski, "That's where it is found right now. But in terms of severity, where we have seen it the most and the pressure is the highest, if you would take the lower portion of Lake Michigan and draw a section around there, that is where we've had the greatest severity right now. That is where we've had the most pressure."

Kleczewski says this is because tar spot likes nighttime lows in the 70's and a lot of humidity. Here's a pre-season checklist for farmers in these areas concerned about the disease, "We do know that hybrids have different tolerance to this disease. They are all susceptible but some are less susceptible than others. And if you can get information from seedsman as to the tolerance rankings, go with something that is less susceptible if it fits your production needs."

 Wisconsin Extension Plant Pathologist Damon Smith has a list of some corn hybrid tolerances to tar spot. That list can be found on the Badger Crop Doc website. The address is badgercropdoc.com.

The Economic Advisability of Lowering 2019 N Rates on Corn



by Gary Schnitkey, Agricultural Economist - University of Illinois
read farmdocDaily article

Spring field operations will soon begin, and nitrogen applications on corn will commence. More nitrogen will be applied this spring than is typical because wet weather limited fall applications. University-recommended nitrogen application rates in Illinois are between 140 and 180 pounds of actual nitrogen per acre for corn-following-soybeans. For farmers applying above those rates, application reductions seem prudent this year. If a farmer is uncomfortable lowering to the University-recommended rates, experimenting by leaving strips in fields seems prudent.

Why Consider Lowering Nitrogen Application Rates in 2019?

Two economic factors suggest urgency in lowering nitrogen rates this year. First, net incomes on Illinois farms could be extremely low in 2019. Projections indicate average income on grain farms enrolled in Illinois Farm Business Farm Management (FBFM) could be -$55,000 per farm if prices maintain their current levels and yields are not exceptional (see farmdoc daily January 15, 2019). This average income would be the lowest since FBFM began collecting consistent income data starting in the 1970s. Although higher yields or higher prices could result in higher incomes, it seems more reasonable to expect very low incomes in 2019. Given these low incomes, reducing costs is crucial, particularly if those costs do not increase revenue.

Second, nitrogen fertilizer prices in 2019 have been increasing and will be above levels of the last three years (see Figure 1). On March 14th, the Agricultural Marketing Service (AMS) — an agency of the U.S. Department of Agriculture — reported an average anhydrous ammonia price in Illinois of $615 per ton, which is $97 per ton above the 2018 March average price of $518 per ton. The 2019 price also is above prices in March in 2016 and 2017 (see Figure 1). A higher nitrogen price suggests lowering applications, particularly given that the 2019 expected corn price is roughly at the same level as in 2017 and 2018.



Maximum Returns to Nitrogen (MRTNs) in Illinois

“Maximum Return to Nitrogen” (MRTN) rates are available from the Corn Nitrogen Rate Calculator, a website maintained by universities in Corn Belt states. MRTNs give the nitrogen rate that, over time, will produce the highest economic return for nitrogen use. Many nitrogen rate trials provide the basis for determining MRTNs (see the “About” section of Calculator for more detail).
Table 1 shows MRTNs from the Corn Nitrogen Rate Calculator for northern, central, and southern Illinois. These rates are shown for “corn-following-soybeans” and “corn-following-corn.” MRTNs also are given where the source of nitrogen is anhydrous ammonia and 28% nitrogen solution. Note that the rates in Table 1 include all sources of nitrogen, and credits should be given for nitrogen in DAP (see Using the N Rate Calculator).



Take Central Illinois as an example in interpreting the table. For corn-following-soybeans, MRTN rates are 174 pounds of nitrogen per acre for anhydrous ammonia and 163 pounds of nitrogen per acre for 28% nitrogen solution. Those rates are pounds of nitrogen applied per acre and not the amount of ammonia or solution applied. For anhydrous ammonia, the 174 pounds of nitrogen results in an application of 212 pounds of anhydrous ammonia (212 = 174 / .82 analysis of ammonia). For nitrogen solution, the application is 582 pounds per acre of 28% nitrogen solution (582 = 163 / .28).
Prices used in the calculations of MRTN rates in Table 1 are \(3.70 per bushel for corn, $610 per ton for anhydrous ammonia, and $280 per ton for 28% nitrogen solution. Lower MRTNs result for 28% because nitrogen costs more in 28% than in anhydrous ammonia. The costs per pound of nitrogen in anhydrous ammonia is $.37 per pound ($610 price / (2000 pounds x .82 analysis)) compared to .50 per pound cost for 28% (\).50 = $280 / (2000 pounds x .28)).

PCM and Rates

Precision Conservation Management (PCM) is a farmer service program led by the Illinois Corn Growers Association in partnership with over 30 partners. The mission of PCM is to increase conservation practice adoption using farm business management principles. With 200 farmers enrolled in its 16-county service area, PCM represents about 200,000 acres of farmland in Illinois.
Farmers enrolled in PCM provide detailed production records geo-linked to fields, with data provided including nitrogen applied and yields. Data from 2015 through 2017 have been analyzed and suggest that many farmers apply above MRTN rates, with some exceeding 200 pounds of nitrogen per acre. In 2015 through 2017, higher than MRTNs did not lead to higher yields.
Costs of Over-applying

Applications of nitrogen above MRTNs have additional costs. Given the nitrogen prices above, every 10-pound application of actual nitrogen applied above the MRTN has a cost of $3.70 per acre for anhydrous ammonia and $5.00 per acre for 28%. For anhydrous ammonia, 1.0 additional bushel of corn is needed to compensate for the higher nitrogen costs. For 28%, 1.35 bushels of corn are needed to cover the costs of 10-pounds of additional nitrogen.

Costs increase as pounds of over-applications increase. Take a application that is 50 pounds above the MRTN. For 28%, this application will have an additional cost of $25 per acre. A farm with 1,000 corn acres would have $25,000 higher costs, and $25,000 less net income.

The MRTN takes into consideration many trials, and higher yields will occasionally occur at rates above MRTNs. Over time, however, profits should be maximized at rates near the MRTN (see N rate Calculator Updated). The $25 per acre costs would have to have an addition of 6.8 bushels to cover the cost if the yield above the MRTN was obtained each year. This break-even yield goes up if the yield does not increase each year. For example, the 6.8 bushels increase to 13.6 bushels per acre if the additional application only increases yield in 50% of the years. The break-even yield further increases to 27.0 bushels per acre if the yields respond only in one in four years.

Experimentation

The MRTNs in Table 1 may be considerably below the nitrogen rates used on many farms. Over time, applying above the recommended rate will result in lower profits. Given this fact, lowering applications to the MRTN rate seem prudent. If cutting applications to the MRTN seem extreme, experimentation may be warranted. Placing strips in fields at MRTNs may provide evidence that those rates do result in the most profit.

Farmers Unlikely to Make Big Acreage Switch to Corn

The scuttlebutt in the trade, even in the numbers released by USDA at its February Agricultural Outlook Forum, is that the economics will push farmers to plant a lot more corn acres this year.

Ag Economist Gary Schnitkey has updated budgets for corn and soybeans across the state. He knows USDA increased its expectation for corn acres around the nation by about 3 million acres but says he does not expect a big shift to corn in Illinois, “What we find is that corn is projected to be more profitable than soybeans. This is the first year in a while that has happened. However, our budgets do not suggest shifting to more corn production. Particularly corn-after-corn is less profitable than soybeans. So, it is status quo for the central Illinois area with a 50/50 corn/soybean rotation being more profitable for 2019.”

This holds for northern and central Illinois. Southern Illinois still has a regionalized economic bias to plant soybeans. Soybeans make more money there says Schnitkey, “However, the big thing right now is the upcoming USDA Prospective Plantings report and whether we will see shifts from soybean to corn which some people are expecting. These budgets would say in the heart of the corn belt, or in the corn belt in general, that you won’t see shifts from soybeans to corn. So, you have to see those shifts from someplace else and there are limited opportunities there.”

USDA in its February Outlook meeting projected U.S. farmers would plant about three percent more corn acres this season than last and almost five percent fewer soybean acres. The agency will release an official estimate of acreage March 29th.

Feb 23 | WILLAg Newsletter

Changes are coming!

The agricultural sector is caught up in a storm of change. Political and economic forces have been squeezing trade on the global front and U.S. farmers have been leaning into the winds. We take up a few of these topics in this edition of the WILLAg Newsletter.
  • Trade with China
  • Profile of USTR Lighthizer
  • USDA Ag Outlook Forum
  • Corn Acreage in 2019
  • Expected Corn vs Soybean Returns
  • 2018 Ethanol Plant Losses
We’ll also explore these topics, marketing prospects, the price of farmland, and the weather during our March 5 All Day Ag Outlook. Hopefully, you can join us at the Beef House in Covington, Indiana. The cost is just $30 and includes Beef House coffee and rolls in the morning and Beef House lunch at the noon hour.

Tickets are available online or by calling 800–898–1065.

Hope to See You There!
Todd E. Gleason, Farm Broadcaster
University of Illinois Extension | WILLAg.org





Trade with China

Friday the Chinese trade delegation gathered in the Oval Office with President Trump. A letter from President Xi was read out loud. It urged a continued push toward a final trade deal. The only firm detail to come out of the week’s worth of talks in Washington was a commitment to purchase 10mmt of soybeans. USDA issued an official release on the announcement. It did not include a timeline for the purchases. CNBC reported the Chinese had offered to guarantee purchases of $1.2 trillion dollars of U.S. goods. Again, there was no timeline issued and this point has not been confirmed by any other outlet, the White House, or the Chinese.

During the week the trade discussions in Washington, D.C. pointed to five MOU’s. These Memorandums of Understanding included one on agriculture and were how U.S. Trade Representative Robert Lighthizer had decided to break down the issues in order to tackle them; agriculture, non-tariff barriers, services, technology transfer & intellectual property.

President Trump during the Oval Office meeting Friday pushed aside the MOU’s. He interrupted Trade Representative Lighthizer in front of the Chinese. Lighthizer was trying to explain how the MOUs would build the foundation of a trade deal. Mr. Trump stopped him and said, “I disagree. I think that a memorandum of understanding is not a contract to the extent that we want.” Lighthizer agreed that the term MOU would not be used again.

The important point in this exchange is likely not the MOU discussion. The President interrupted and corrected his lead trade negotiator in front of the Chinese delegation. Clearly, if a trade deal is to be struck it can only be done one-on-one between Presidents Trump and Xi. They may meet next month at Mar-A-Lago.

Mr. Trump has long focused on closing the trade gap with China. The other issues have not been of very much importance to him although he does mention China stealing and intellectual property rights. A trade deal with China is one of the President’s campaign promises. The dazzling $1.2 trillion number CNBC reported might be very enticing to a man who has had a habit of fulfilling his campaign promises.

If it is completed in this fashion, without enforcement mechanisms or real intellectual property rights protections, then as President Trump has said recently Democrats won’t go along. Republicans are likely to stay mum as the deal sets idle in Congress and simply becomes a presidential election year rallying cry. Presidents negotiate trade deals. Congress approves them.



Profile of USTR Lighthizer

NPR profiled Trade Representative Lighthizer this week. Please take six minutes to listen. It’ll be worth your while to know a whole lot more about the man leading the trade negotiations with China.




USDA Ag Outlook Forum

This week USDA put on its 95th Annual Agricultural Outlook Forum. It provides some initial numbers the trade uses to project the 2019 growing season into the markets until official USDA reports are issued. The first supply and demand report for the 2019/20 growing season will be issued in May. The March 29 Prospective Plantings report will provide survey results of what farmers think their acreage mix will look like this year. Here you will find some of the powerpoint slides U.S.D.A. Chief Economist Robert Johansson presented in the opening session and the full supply and demand tables presented Friday morning.


You may watch the full opening session of the 2019 USDA Agricultural Outlook Forum. It took place in Washington, D.C. February 21 and 22.





























Corn Acreage in 2019

read farmdocDaily article

The number of acres of corn planted this spring will be a key factor in determining where the price of corn goes. University of Illinois Agricultural Economist Todd Hubbs took up the issue in this week’s farmdocDaily article.

He starts with a historical graph. It shows the principal crop acres in the United States and how those have changed since 1997. Both corn and soybean acreage have increased. Combined they’re up about 10 percent over the past two decades.



Illinois’ Todd Hubbs uses that history to help put the number or corn and soybeans acres into perspective, “When we look at the harvest month corn to soybean futures price ratio this year it has been about 2.37. There is a definite signal in this graph from about 2006 to 2018 that if you are above 2.4 in that ratio, there will be less corn acreage. If you are below 2.3 there will be more corn acreage. We are, today, sitting right in between those. We’ve seen problems with field work in large parts of the corn belt. We’ve seen fertilizer and other input costs go up on corn. So, the idea that we are going to see a massive increase in corn acreage could happen, but under the current price structure we might not see the kind of corn acreage we think we are going to see.”



Hubbs says he used the 2019–20 futures prices to forward calculate a seasons average cash price for new crop corn. His calculation points to $3.81 per bushel. He then figured a stocks to use ratio that would fit that number, “I think an 11% stocks to use ratio in 2019–2020 would give us $3.81. If consumption is constant at 14.8 billion bushels from this marketing year to the next, that would put corn acreage around 91.7 million at a national trend line yield of 174.6 bushels to the acre.”

Finally, Hubbs says there isn’t a lot of weather premium priced into new crop corn futures. He also says there isn’t much of premium built in for a possible trade deal with China. Hubbs thinks that may be just as bullish for corn as it is for soybeans. Right now he thinks the 2.37 soybean/corn ratio feels high if the expectation is for a substantial increase in corn acreage.



Expected Corn versus Soybean Returns in 2019



by Gary Schnitkey, University of Illinois
see full farmdocDaily article and video

Two factors have changed between the planning periods in 2018 and 2019. First, expected soybeans prices are lower in 2019 as compared to 2018. A reasonable way of forming expectations of cash prices at harvest is to use current bid prices for fall delivery of grain. In 2018, fall delivery prices for soybeans in the month of February averaged about $9.80 in East-Central Illinois. In 2019, fall delivery prices are roughly $.75 per bushel less at $9.05 (see Table 1). At the same time, fall delivery prices for corn are roughly the same at $3.70 per bushel. An $.75 decline in soybean price reduces expected soybean returns by $45 per acre given a soybean yield of 60 bushels per acre ($45 = .75 lower price x 60 bushels yield).



Second, costs have increased, with a primary contributor being increases in nitrogen fertilizer prices. Throughout much of 2018, anhydrous ammonia prices were in the low $500 per ton range (see Table 2). So far in 2019, anhydrous ammonia prices have averaged $607 per ton in January and $613 in February (see Table 2). Fall applications of nitrogen were limited in 2018 due to wet soil conditions, leading many farmers to have to price nitrogen in 2019. These farmers likely will pay around $100 per ton more for anhydrous ammonia in 2019 as compared to 2018. If 220 pounds of anhydrous ammonia are applied per acre, leading to an application of 180 pounds of elemental N (180 = 220 pounds x .82 N analysis of anhydrous ammonia), nitrogen fertilizer costs would increase in 2019 over 2018 levels by $11 per acre ($100 price increase per ton x 220 pounds of anhydrous ammonia per acre / 2000 pounds per ton).



The decrease in soybean price increases the relative profitability of corn. The increase in nitrogen fertilizer price decreases the relative profitability of corn, partially offsetting the impacts if the soybean price increase.

2019 Corn and Soybean Budgets
Table 3 shows 2019 corn and soybean budgets for high-productivity farmland in central Illinois (see farmdoc for 2019 Crop Budgets). These budgets incorporate price and cost changes between 2018 and 2019. Two notes about these budgets:
  • Yields are 213 bushels per acre for corn-after-corn and 63 bushels per acre for soybeans-after-corn. These are trend yields. In recent years, yields in Illinois have been above trend. Corn yields averaged 20 bushels above trend from 2014 to 2018 (farmdoc daily, January 3, 2018) while soybean yields have averaged 6.5 bushels above trend (farmdoc daily, December 11, 2018).
  • Prices used in budgets are $3.60 per bushel for corn and $8.50 per bushel for soybeans. The corn price is near fall delivery bids while the budgeted soybean price is about $.55 per bushel below the fall delivery bid. The lower budgeted soybean price reflects a general pessimism about soybean prices resulting from expected large supplies relative to demand (see farmdoc daily, January 28, 2019). This lower soybean price will decrease soybean profitability relative to corn, suggesting more of a shift to corn than a higher soybean price.


Operator and land returns are $188 per acre for corn and $180 per acre for soybeans, suggesting that corn will be more profitable than soybeans. However, this difference in profitability does not suggest a large shift in acres to corn. Most farms in central Illinois have a corn-soybean rotation, necessitating a move to corn-after-corn to grow more corn. Corn-after-corn returns are projected at $137 per acre, which are less than the $180 per acre soybean-after-corn return. These lower corn-after-corn returns suggest maintaining a corn-soybean rotation.

Other Budget Values Operator and land returns shown in Table 3 were recalculated for two different scenarios. First, a $9.00 soybean price was used to calculate soybean returns. The $9.00 price is close to fall bids. Given that corn prices do not change, operator and land returns for corn remain the same as those shown in Table 3:
  • corn-after-soybeans: $188 per acre, and
  • corn-after-corn: $137 per acre,
while soybean returns increase to:
  • soybeans-after-corn: $211 per acre, and
  • soybeans-after-two-years-corn: $229 per acre.
As would be expected, this price scenario increases soybean profitability relative to corn. Current forward bids do not suggest a shift to corn from a profitability standpoint.

The second scenario maintains the corn and soybean prices at $3.60 and $8.50, respectively, but increases corn yields by 20 bushels per acre and soybean yields by 6 bushels per acre. This scenario reflects a situation where budgets are more optimistic than trend yields due to high yields in recent years. In this case, operator and land returns are:
  • corn-after-soybeans (233 bushels per acre): $260 per acre
  • corn-after-corn (223 bushels per acre): $209 per acre
  • soybeans-after-corn (69 bushels per acre): $231 per acre
  • soybeans-after-two-years-corn (71 bushels per acre):$248 per acre
Higher yields increase returns and also increase the relative profitability of corn. However, corn-after-scorn is less profitable than soybeans-after-corn. These projections do not suggest that growing more corn would be more profitable than maintaining soybean acres given that both crops have above trend yields at 2013–2018 levels.

Summary and Conclusions
Current fall delivery prices do not suggest that switching to more corn away from soybeans will result in higher profitability on high-productivity farmland in central Illinois. Due to high relatively corn yields, central Illinois is one of the most profitable areas to grow corn relative to soybeans, If central Illinois budgets do not suggest a switch to corn, budgets in less productive areas likely will not suggest a shift from soybeans to corn.



2018 Ethanol Plant Losses
see full farmdocDaily article

University of Illinois Agricultural Economist and noted ethanol industry specialist Scott Irwin wrote an article detailing the financial losses the industry experienced last year. Use the link above to read the full article. Here’s the paragraph Irwin penned on the potential implications for ethanol going forward.

“The ethanol industry in 2018 experienced its first losing year since 2012, thereby ending a run of five consecutive years of positive returns. The estimated loss for a representative Iowa ethanol plant in 2018 was -$2.2 million. While large, the 2018 loss was still far less than the -$6.7 million loss in 2012. The evidence points to overproduction as the driving force behind the low prices and financial losses experienced by ethanol producers during 2018. The fortunes of the U.S. ethanol industry are unlikely to improve until production and use are better balanced. This will require shuttering some production capacity, additional demand, or some combination of the two. The most optimistic scenario is additional demand for U.S. ethanol exports as part of a trade deal with China.” - Scott Irwin, University of Illinois

President Trump's Oval Office Remarks on Trade with China

Trump | Oval Office Remarks February 19, 2019

Q How confident are you that it will be finished by March 1? Or are you considering extending that deadline?

THE PRESIDENT: Well, they are very complex talks. They’re going very well. We’re asking for everything that anybody has ever even suggested. These are not just, you know, “let’s sell corn or let’s do this.” It’s going to be selling corn but a lot of it – a lot more than anyone thought possible. And I think the talks are going very well – with China, you’re referring to?

Q Yes.

THE PRESIDENT: And the talks are going very well.

Our group just came back and now they’re coming here. I can’t tell you exactly about timing, but the date is not a magical date. A lot of things can happen.

The real question will be: Will we raise the tariffs? Because they automatically kick in to 25 percent as of – on $200 billion worth of goods that they send. So I know that China would like not for that to happen. So I think they’re trying to move fast so that doesn’t happen. But it’s – we’ll see what happens.

I can only say that the talks with China on trade have gone very, very well. In the meantime, our economy is very strong. We’re doing well.

I don’t know if you noticed, but deficits seem to be coming down. And last month it was reported, and everybody was surprised, but I wasn’t surprised. We’re taking in a lot of money coming into our Treasury from tariffs and various things, including the steel dumping. And our steel companies are doing really well. Aluminum companies also. So we’re very happy about that.

I think that it’s – they’ll be coming very shortly. They’re going to have very detailed discussions on subjects that have never really been even discussed by people that sat in this chair and they should have been. Very important subjects. And I think we’re doing very well. Okay?

Corn Acreage in 2019

read farmdocDaily article

The number of acres of corn planted this spring will be a key factor in determining where the price of corn goes. University of Illinois Agricultural Economist Todd Hubbs took up the issue in this week’s farmdocDaily article.




He starts with a historical graph. It shows the principal crop acres in the United States and how those have changed since 1997. Both corn and soybean acreage have increased. Combined they’re up about 10 percent over the past two decades.



Illinois’ Todd Hubbs uses that history to help put the number or corn and soybeans acres into perspective, “When we look at the harvest month corn to soybean futures price ratio this year it has been about 2.37. There is a definite signal in this graph from about 2006 to 2018 that if you are above 2.4 in that ratio, there will be less corn acreage. If you are below 2.3 there will be more corn acreage. We are today sitting right in between those. We’ve seen problems with fieldwork in large parts of the corn belt. We’ve seen fertilizer and other input costs go up on corn. So, the idea that we are going to see a massive increase in corn acreage could happen, but under the current price structure we might not see the kind of corn acreage we think we are going to see.”



Hubbs says he used the 2019–20 futures prices to forward calculate a seasons average cash price for new crop corn. His calculation points to $3.81 per bushel. He then figured a stocks-to-use ratio that would fit that number, “I think an 11% stocks to use ratio in 2019–2020 would give us $3.81. If consumption is constant at 14.8 billion bushels from this marketing year to the next, that would put corn acreage around 91.7 million at a national trend line yield of 174.6 bushels to the acre.”

Finally, Hubbs says there isn’t a lot of weather premium priced into new crop corn futures. He also says there isn’t much of premium built in for a possible trade deal with China. Hubbs thinks that may be just as bullish for corn as it is for soybeans. Right now he thinks the 2.37 soybean/corn ratio feels high if the expectation is for a substantial increase in corn acreage.

RIVIAN | All Electric Pickup Truck

Rivian Automotive LLC expects to build an electric plug-in pickup truck and SUV starting in 2020. Todd Gleason talks with Michael McHale about the startup company and its plans to produce the vehicles in Normal, Illinois. They also take up the impact electric vehicles are having on the automotive industry and potentially ethanol made from corn.

SCO: An Insurance Option Available to More Farmers


Supplemental Coverage Option (SCO) was introduced in the 2014 Farm Bill but was limited to acres where Price Loss Coverage (PLC) was the commodity title program choice. More farmers likely will be choosing PLC for the 2019 and 2020 marketing years, leading to more acres being eligible for SCO. SCO may be attractive to those farmers who find the costs of Revenue Protection (RP) at an 85% coverage level too high. Farmers interested in SCO should discuss eligibility options with crop insurance agents.

by Gary Schnitkey

SCO Background
SCO is available to farmers who choose PLC for receiving commodity title payments. SCO is not available when Agricultural Risk Coverage (ARC) is chosen (farmdoc daily, June 16, 2015). ARC was selected on over 90% of the base acres in corn and soybeans under the 2014 Farm Bill. As a result, SCO was not an option for most Midwest farmers. Similar to the 2014 Farm Bill, the 2018 Farm Bill again gives a choice between PLC and ARC. More farmers likely will choose PLC for 2019 and 2020, increasing the acres eligible for SCO.
SCO provides protection in a band from 86% down to the coverage level of an underlying COMBO product. If, for example, a farmer selects a 75% Revenue Protection (RP) product, SCO could be purchased from 86% to the 75% RP coverage level (see farmdoc daily, December 17, 2014; April 24, 2014).

The SCO band of coverage is based on county revenue given that the underlying Combo product is RP. That is, county revenue must fall below 86% of expected revenue before SCO makes a payment. As a result, the RP-SCO combination provides mixed coverage: Farm-level coverage is provided from the RP coverage level downward while county-level coverage is provided between 86% to the coverage level of the RP product.

The primary disadvantage of the RP-SCO combination is that the county-level coverage may not match losses on a farm. Sometimes a farm may have a loss while SCO will not trigger a payment. Conversely, it is possible for the farm not have a loss while the county-based SCO product triggers a payment.

Premiums under RP-SCO Combinations
The primary advantage of using SCO is lower farmer-paid premium. The costs of a RP-SCO combination usually will be lower than an 85% RP product when RP is purchased at less than 85% in the RP-SCO combination. Compared to RP 85%, the RP-SCO premium usually is lower for two reasons. First, county yields typically are less variable than farm yields, resulting in fewer payments for a county product than for a farm-level product at the same coverage level. Lower payments then result in a lower premium. Second, the premium assistance under SCO often is higher than for RP. SCO has a subsidy rate of 65%. For a product with an expected payment of \(1, the SCO farmer-paid premium will be about $.35 (\).35 = $1 expected payment x (1 – .65 subsidy rate)). The 65% subsidy rate is higher than all subsidy levels for basic and optional units when the coverage level is above 50% (see Table 1). The 65% SCO subsidy level also is higher than the subsidy level at an 85% coverage level given enterprise units.



Table 2 shows examples of RP-SCO combinations for Sangamon and Saline Counties in Illinois. Sangamon County is a relatively low risk county while Saline County has higher risk. Premiums are shown for corn (Panels A and B) and soybeans (Panels C and D). Relationships of premiums are the same for both counties and crops.



Take corn in Sangamon County as an example. An RP 85% product has a farmer-paid premium of $21.35 per acre (see Panel A of Table 2). SCO for an RP with an 85% coverage level has a $.79 premium. For an 85% RP coverage level, the RP-SCO combination has a $22.14 per acre premium. An RP-SCO combination with an 80% RP coverage leave has a $14.02 per acre premium, with $11.03 premium from RP 80% and $2.99 from SCO from 86% to 80%. RP-SCO combinations have lower farmer-paid premium as the RP coverage level is decreased. A $22.14 combined premium result for an 85% coverage level, $14.02 premium results for an 80% coverage level, a $9.43 premium results for a 75% coverage level, and so on.

Who Should Consider SCO Farmers purchasing RP at 85% coverage levels likely will not find SCO an attractive alternative. The SCO band from 86% to 85% coverage will provide little additional coverage. Any reduction of RP coverage level with an SCO band results in a crop insurance payment structure that is less correlated with losses on the insurance unit.

Farmers purchasing lower coverage levels could find SCO useful, particularly if the lower coverage level is selected so as to result in a lower farmer-paid premium. The farmer-paid premium for RP approximately doubles from the 75% coverage level to 80% coverage level. For example, soybean RP premium in Sangamon County goes from $2.93 per acre at a 75% coverage level to $5.78 at an 80% coverage level. Premiums again double from the 80% coverage level to the 85% coverage level. For soybeans in Sangamon County, RP premiums increase from $5.78 at an 80% coverage level to $11.68 at an 85% coverage level. A farmer currently at a 75% coverage level could include SCO for $2.53 additional premium, with the $5.46 premium for the RP-SCO combination being less than for a stand-alone RP 80% premium ($5.78) and RP 85% premium ($11.68). The addition of SCO to a RP 75% coverage level would improve coverage, providing county-level coverage above the 75% coverage level of the RP.

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.