Posts

CFAP Calculations, Payment Rates, & Explanation



University of Illinois ag policy specialist Jonathan Coppess and ILLINOIS Extension Farm Broadcaster Todd Gleason discuss the USDA CFAP coronavirus direct payment announcement.

CFAP payments for corn and soybeans max out at 1/2 of total production and are subject to other payment limitations. The calculation compares 1/2-of-total-production to 100% of total-unpriced-inventory on January 15th. The smaller of those two numbers is multiplied by the payment rate to attain the full CFAP payment. FSA will provide a spreadsheet for the calculation and other related paperwork starting May 26, 2020.

$0.33.5 for corn
$0.47.5 for soybeans

CFAP funds will be distributed in two checks. The first will be 80% of the full amount. The second will be up-to-the remaining 20% depending on available funding. It could be prorated to a smaller amount.


This payment rate schedule was developed by University of Illinois Ag Economist Gary Schnitkey. The payment schedule is not Illinois specific or an all-inclusive commodities list. See farmers.gov for USDA CFAP details.

Discovering How Cover Crop Termination Impacts Insect Populations

Researchers at the University of Illinois were in the field this week counting insects in cereal rye used as a cover crop ahead of corn. It's all part of the work ILLINOIS Extension Entomologist Nick Seiter is doing with cover crops.

 
This University of Illinois cover crop research is funded in part by Illinois NREC. The Nutrient Research Education Council was created by state statute in 2012 and funded by a 75-cent per ton assessment on bulk fertilizer.

Corn, Soybeans, COVID-19, & the Farm Safety Net

It sure looks like COVID–19 is going to do some serious damage to the nation’s corn and soybean farmers. A new study from the University of Illinois estimates the damage at about eight billion dollars. This was the case on May the 5th.



That eight billion is a decline of nine percent across the nation and ILLINOIS Extension Ag Economist Gary Schnitkey says it does not include losses that have already piled up for corn and soybeans still in the bin from last year, "If you look at the 2019 crop, obviously there are losses on the 2019 crop from the sales value, we were looking forward at the 2020 crop and getting a feel for the losses on the 2020 crop."

That loss Gary Schnitkey is talking about is the difference between what farmers were expecting to make pre-COVID–19 and what they are likely to make post-COVID–19 on the 2020 corn and soybean harvest, "So we took the futures prices on that date to reflect what harvest prices would look like, projected forward the market-year-average based on that harvest price, and came up with estimates of losses given those futures prices today (May 5, 2020). We kept the trend-line yields the same, so the calculations would only show the (COVID–19) price decline as what’s happened to revenue."



The farmdoc Daily article shows these projected lost revenues by crop, but notes that, conceptually, this does not work in practice because commodity programs make payments on base acres combined not actual planted acres. Still, it provides an important guidepost. The per acre revenue difference for corn from February to May is $107 per acre. Again these are national averages and do not include any government payments. For soybeans, it is $36 per acre.

Combined the total nationwide loss from February to May is about $12 billion for the 2020 corn and soybean growing season. A projected PLC payment for corn covers about one-third of that loss says one of the articles co-authors, Ohio State University Ag Economist emeritus Carl Zulauf, "The eight-billion-dollar estimate in the article is after we’ve taken out our estimate of the PLC payment. The PLC payment right now is only for corn at the average. We do two estimates. One for a low price and one for an average price relationship. But the PLC payment at the average price relationship is covering about one-third of the total cost. So, in other words, it is around twelve-billion, but if you net it out you get to the eight-billion-dollars."



The eight-billion-dollar loss uses a basis calculation related directly to crop insurance. Stay with me here. It is the Market-Year-Average Cash Price minus the Crop Insurance Harvest Price. That’s 8 under for corn and 2 under for soybeans. If you use a wider basis under a low price scenario, say where there is a burdensome ending stocks number, those are 28 under for corn and 43 under for soybeans. In that case revenue loss is over $10 billion.

You may read the article summarizing the impact of COVID–19 on a corn and soybean farm on the farmDOC daily website.

WHIP+: Farm Aid for Losses Due to Natural Disasters

farmdoc Daily article

The signup period for a program called WHIP+ (whip-plus) is open for farmers suffering losses because of natural disasters during the last two years.



WHIP+ is the continuation of a federal disaster aid program. Most farmers in the corn belt will recall it as the program used last year to bump up prevent plant payments by 15%. Congress introduced WHIP+ last summer, then during the December appropriations process, it dropped in an additional $1.5 billion dollars in funding and expanded qualifying crop losses to include losses due to excessive moisture and D3 and D4 drought.

Producers who suffered either of these types of losses in 2018 or 2019 can apply for WHIP+ assistance through a local Farm Service Agency (FSA) office today says University of Illinois Research Specialist Krista Swanson, "So, the program provides payments for yield losses but there are still a lot of unknowns. The signup period started March 23rd. However, FSA offices across the state do not have what they need to process the applications. So, there is a copy of the application online that people can look at and we are hearing that some counties are going ahead and filling those out with farmers. Other counties are just taking names and putting people on a list."

Again, although USDA opened signup March 23, 2020, county offices are not yet able to process applications and do not have an estimate on when they will be equipped to do so. Some counties are filling out the draft paperwork, others are simply taking names. The application is not difficult says Swanson, "They have provided a payment calculation and we can tell from it that a substantial yield loss will be required. It is based on the expected value of the crop to the value of the crop harvested. This is also reduced by any insurance indemnity payments. So, again you would have had to have a loss per the terms of the calculation that exceeded any crop insurance payment. We do not know what the value rate is in the calculation."

That missing value means almost every farmer should sign-up for WHIP+. Farmers can contact county FSA offices to express intent to apply and ask to be notified when applications can be processed. The USDA has not published a sign-up deadline. The WHIP+ program is not related to the coronavirus direct payments Congress funded through the recently passed CARES act.

Farmers and the Paycheck Protection Program

Congress has moved to allocate additional money to the Paycheck Protection Program and farmers could benefit.



Bob Rhea of the Illinois Farm Business Farm Management Association says some farmers should be able to apply for the government-backed SBA loans, “We believe farmers are eligible to participate in the PPP, the Paycheck Protection Program, under the CARES Act. They don’t specifically identify agriculture as a participating entity but in the very broad scope of things they say any eligible business with less than 500 employees is eligible to participate in the Paycheck Protection Program.”

PPP is administered through local banks and is available through Farm Credit offices. Bob Rhea says it is a loan but one that can be easily forgiven. Here’s how self-employed farmers and others would make the paycheck calculation, “It does include a very unique forgiveness provision for a Small Business Administration loan. It is really based on eight weeks out of 52. Approximately 15% of their 2019 income is the part can be forgiven for a self-employed person. For those that are seeking loans for their payroll, it will be measured on the payroll they incur in the eight weeks on the loaned funds after they are disbursed.”

Rhea says there are a few other pieces that can be used to generate the loan-forgiveness provisions of the Paycheck Protection Program. These include mortgage interest, rents, and utilities costs. Seventy-five percent of the disbursed funds must be used for payroll expenses. Check with your local bank or Farm Credit office to see if your farm qualifies.

US Corn, Soybeans, and Wheat in World Perspective: Importance of the US Cropped Acre Constraint

By Carl Zulauf, Agricultural Economist - The Ohio State University & Krista Swanson, University of Illinois ACES
link to farmdoc Daily article

Wide-spread concern exists over the large decline in US share of world corn, soybean, and wheat exports (see Figure 1). Moreover, quantity of corn and wheat exports have never consistently exceeded their early 1980 levels (see Figure 2). Tariff wars have heightened the concern. Long term impact of the tariff wars is a concern, but this article argues that graphs such as Figures 1 and 2 exaggerate the decline in US agriculture’s international standing and mask key relationships that frame private and public decisions. Data cited in this article come from PSD (Production, Supply, and Demand website).







Reasons for Exaggeration Growth in domestic US use is ignored. US consumption of meat, livestock products, and especially biofuels has grown, displacing exports, everything else remaining the same. Zulauf estimates US corn exports are 1.4 billion bushels smaller than if US corn market trends of 1984–2004 had continued to hold (farmdoc daily, 11/20/2019).

US policy changes are ignored. In particular, CRP (Conservation Reserve Program, which was authorized in 1985, pays for taking environmentally sensitive cropland out of production. Fewer cropped acres mean prices are higher than they would otherwise be. Higher prices reduce demand for exports more than domestic demand, resulting in fewer exports or slower growth in exports.
Broader markets in which a crop exists are ignored. Corn is a feed grain, soybean is an oilseed, and wheat is a food grain. Corn and soybeans are preferred among these crops around the world. However, their share of harvested feed grain-food grain-oilseed acres has increased more in the US (from 50% in 1972–1976 to 71% in 2015–2019 vs. 15% to 29% for rest of the world). Faster growth in preferred crops imparts an advantage to the US.

Conclusion

A more encompassing and likely more accurate measure of US agriculture’s international role is its share of aggregate world feed grain-food grain-oilseed production.
US share of world feed grain-food grain-oilseed production has declined, but by much less: from 19.3% in 1972–1976 to 16.2% in 2015–2019 (see Figure 3 and Data Note). This conclusion also holds for relative share decline. Relative decline in US share of world corn exports is –52%. It is calculated as percent change in 2015–2019 share from the 1972–1976 share, specifically [1 – (34.9% / 72.8%)] (percent values from Figure 1). Relative decline in US export share is –62% for soybeans and –69% for wheat. In contrast, relative decline in US share of world feed grain-food grain-oilseed production is only –16% (1 – (16.2% / 19.3%).




Closer Look

Because magnitude of a share matters, it is important to examine a share over its range of values (0% to 100%), as Figure 3 does. But, such a graph can mask important smaller, shorter-run changes. Figure 4, a smaller magnitude picture, clearly reveals 2 periods of decline. The first peak-to-trough is from 1982 (20.9%) to 1991 (16.3%). It closely follows the 1973–1980 crop prosperity period. The second peak-to-trough is from 2007 (17.6%) to 2015 (15.9%). It largely overlaps the 2007–2013 crop prosperity period. However, declines in 2018 and 2019 beg a question, “Have the tariff wars undone a possible stabilization in US share following large price declines since 2012?” Between the two declines, US share partially recovered, likely due in part to the large reduction in US prices due to policy changes enacted in the 1985 farm bill.




Role of US Acres Since the early 1980s, all growth in cumulative US production of feed grains, food grains, and oilseeds has come from yield as harvested acres declined by 26 million (see Figure 5). Since 2000, harvested acres have essentially not changed in the US while increasing by 301 million in the rest of the world. The constraint on US acres reflects both bioclimatic factors and public policy. It seems unlikely to change in the near future. The constraint means, if US domestic consumption grows faster than US yield, prices will increase, giving rest of the world an incentive to bring acres into production. This scenario played out as the US expanded its biofuel markets since 2000.




Summary Thoughts

A widely-expressed concern is the decline in US share of world corn, soybean, and wheat exports.
This decline however exaggerates the decline in US agriculture’s international standing. It also masks key relationships that frame private and public decisions.

A more accurate perspective is US share of world feed grain-food grain-oilseed production. This share has declined but by much less than US share of world corn, soybean, or wheat exports.
The decline occurred in two periods: 1982–1991 and 2007–2013. The second decline has, so far, been much less than the first. But, declines in 2018 and 2019 prompt the question, “Is the second decline resuming, especially in light of the tariff wars?”
A key feature of contemporary US agriculture is a constraint on cropped acres. Given this constraint, growing US demand faster than yield means most of the benefits accrue to the rest of the world as they bring more acres into production. Such has occurred since 2000 as the US expanded its biofuels markets.

The US cropland constraint prompts the following policy questions / issues. Given this constraint,
  • What is the appropriate role and funding for export promotion programs?
  • What should US biofuels policy be, in particular the size of mandated markets?
  • What should be the size and goal of US conservation land retirement programs?
  • What is the appropriate role and funding for public agricultural research?
These issues span multiple titles in the farm bill, suggesting the US cropped acres constraint could be a foundation theme directing debate over the next farm bill.

Planting Corn and Soybeans in 2020



by Emerson Nafziger, ILLINOIS Extension Agronomist

March rainfall in Illinois ranged from normal to a couple of inches above normal, but the last week of March and first week of April have been relatively dry, and field operations are getting underway. The April 6 NASS report indicates that there were 3.1 days suitable for fieldwork in Illinois during the week ending on April 5, but no planting was recorded. As is often the case in early April, soils are wet over most of the state.

The 4-inch soil temperatures at 10 AM have been close to 50 degrees in southern Illinois, and over the past week they have increased from the low 40s to the mid–40s in central and northern Illinois. The forecast is for a return to cooler weather later this week, and possibly to wetter conditions as well. Such “yo-yoing” is normal for April, and it often brings up questions about what to do when the weather forecast is for conditions to deteriorate as planting approaches. Do we plant or do we wait?

There is no question that the ideal is for seed of both corn and soybean to be planted into soils that are relatively dry, and that are warm (and warming) enough to allow germination and emergence to get started quickly, and plants to grow steadily after emergence. The most recent example of the benefits of this was in 2018, when planting was delayed until May, then May weather was very warm, and the crops “never looked back” on their way to new yield records. In 2017, early corn planting was followed by a week of cool, wet weather, which led to a lot of replanting. The replanted crop often yielded more than the first crop, almost certainly because it had warmer conditions under which to germinate and begin to grow.

Having soils stay dry after early planting into cool soils is much better than having them turn wet: the germination process is very slow at low temperatures, so seeds will bide their time until soils warm up, and dry soils are a safer place to do that. If it turns wet, seeds will last longer in cool soils than in warm ones, both because low temperatures delay the germination process (and the demand for oxygen), and because colder water contains more oxygen than warmer water. Still, seeds that spend a week or more in wet soils at temperatures in the low 40s are subject to “imbibitional chilling injury” that can mean abnormal growth and poor emergence even if seeds survive. This is considered more of a problem in corn than in soybean, in part because more soybean seeds than corn seeds tend to die under such conditions and so don’t show those symptoms.

Planting date
Now that we’ve passed the first week of April, plantings of this year’s corn or soybean crops from now on can’t be considered “very early”, but the message from some agronomists about the need to plant soybeans as early as March continues, and more producers are choosing to begin planting soybeans before they begin planting corn. With planting date responses for the two crops essentially identical on a percentage basis, which crop to start with is more or less a tossup. The deciding factor in that case should often be which fields are ready first. Fields where soybeans grew last year will often be in good shape to plant earlier than those where corn grew, and that may mean planting some corn first. It certainly makes little sense to plant soybeans when it’s too wet just to plant them earlier than corn.

I have mentioned before the possibility that soybeans planted very early—in March or early April—might occasionally yield less than those planted in late April or early May. I dug up some data from a study that we did back in 2001–2003 in which we started planting as soon as we could (without planting in mud) using different seeding rates and varieties with different maturities. Figure 1 shows yields from this study, with planting date averaged over sites. Yields were not as high as we’d expect today, but the earliest planting yielded the least of all the planting dates. This was not due to low stands, with the exception of the Urbana site in 2001, when it froze (temperatures in the upper 20s) just as the crop was emerging, and about half of the plants from the first planting date were killed. We had five sites in southern Illinois, where average yields were even lower, but the earliest planting there (average of April 15) yielded less than either the early May or late May planting.


Figure 1. Soybean planting date responses over nine trials in central/northern Illinois, 2001–2003.

While changes in seed quality, spring weather, and perhaps genetics have lowered the threat of such losses from very early planting, we can’t rule out the possibility that planting soybeans in March or early April may not always maximize yield. That’s not necessarily because of stand loss from frost or wet soils. Frost can typically kill soybean plants only in a one- or two-day window as the plants are breaking through the soil surface. Frost that occurs after the first two leaves unroll can kill the growing point, but then buds will break and form (usually two) new stems. Most low stands in soybeans follow heavy rainfall soon after planting, and chances of that happening are not closely tied to when the crop is planted. Instead, the evidence is that low temperature stress during early growth may limit node and seed number per plant, therefore limiting yield potential. The fact that the earliest planting in northern Illinois responded so much to seeding rate reflects the fact that these plants did not have as many seeds as those planted later.

One of the incentives to plant soybeans very early is that some seed companies provide free replant seed. I do not know if “free” includes the cost of seed treatments (for replant seed) that are commonly applied to soybean seed at the point of sale. Soybean seed meant for early planting is often treated with several plant protectants, including ILeVO® for decreasing the incidence of SDS. That disease is generally considered more likely to be a problem when soybeans are planted into cold soils.

The debate among agronomists regarding the merits of planting soybeans in March or early April—before the start of corn planting—is still alive, but focusing on “corn versus soybean” as if it’s a contest mostly misses the point. Both corn and soybean benefit from early planting most of the time, and both face similar risks when conditions deteriorate after we plant early. We shouldn’t decide when to start planting or which crop gets priority based on how “tough” each crop is or on trying to prove someone wrong. The goal instead is to minimize risk and to maximize yield potential. The 2019 growing season was such that that penalty from late planting was relatively less for soybeans than for corn. That doesn’t mean that corn should get first planting priority this year. Both crops should get priority, with actual planting order determined by factors such as logistics, how fast fields dry, and crop insurance.

Recent research on how both corn and soybeans respond to planting date in Illinois is summarized below in Figure 2. I’ve shown both lines on the same figure before, but here I’m including the actual data for both crops along with the curves in order to show how variability changes as planting is delayed. While we did not try to plant soybeans before mid-April in this study, note that hardly any of the April soybean plantings produced less than maximum yields in these trials. With mid-April plantings yielding the same as late-April plantings, it seems unlikely that yields from planting in March would have been higher than those from planting in April.


Figure 2. Corn and soybean planting date responses in Illinois trials. Each trial included four planting dates, and yields were converted to percent of the maximum yield in that trial.

Unlike soybean, the earliest planting dates for corn did not consistently produce the highest yields in the trials shown in Figure 2. This was not due to poor stands or frost damage, but was the result of growing conditions later in the season, and was more common when yields levels were lower. It’s difficult to untangle what happened in each of these, but in a few cases the early-planted crop experienced cool temperatures in May that might have lowered yield potential. The growing season was relatively dry in some of these sites as well, and small differences in rainfall timing could have favored the crop that was planted a little later. We added an additional planting date in mid-March in the very dry spring of 2012, and lost about half of the stand to frost during the second week of April.

Planting depth
Recent developments in automated depth and down-pressure controls on planters have brought new attention to the issues of planting depth and seed placement. While research done over a few sites often identifies a “best” depth, such results don’t very well predict what the best depth will be in a given field the next time. We can guess the best planting depth about as well as we can guess the weather, although the depth decision is easier in some soils than in others. Most studies include planting both too shallow and too deep, with a few depths in the middle, and results typically show, to no one’s surprise, that it is better to avoid planting too shallow or too deep.

An additional feature available on some planters is a sensor for soil moisture coupled with the ability to vary planting depth based on where in the soil there’s enough moisture to get germination started. This has potential for dry areas where soil moisture frequently is low during the planting season. But I think we need to be cautious with this in the eastern Corn Belt, where soils are heavier and where heavy rainfall after planting and before emergence is a much serious threat to stand establishment than dry soil at planting. Planting deeper means that emergence almost always takes longer, and that means more chances of having problems related to wet soils and surface compaction (crusting) as soils dry out after they get wet. In practice, I think this means that planting 3 inches deep or deeper in most Illinois soils (sandy soil is an exception), even if that’s where soil moisture is adequate, has a better chance of lowering stand counts than it does of increasing them. Most corn seed has the ability to emerge from 3 inches deep if soil conditions are good, but when soil conditions deteriorate after planting, those three inches can turn onto an obstacle course for seedlings. That can compromise stands and stand uniformity, both of which are needed for getting the highest yields.

Today’s planters do a good job of pressing soil against seeds for the sides and above, resulting in good seed-soil contact without compacting the soil above the seed. Good seed-soil contact forms a conduit by which water can move through the soil into the seed as germination begins. That effectively enlarges the soil volume from which seeds can draw water, which means that even soils with lower moisture content often have enough water to allow germination, especially in silt loam and silty clay loam soils without clods. Clods form when soil that was tilled when it was wet dries out. With less tillage and less time between tillage and planting today, soils often do not to dry out very much before planting. As a result, uneven stands due to uneven soil moisture is relatively rare in most Illinois fields. Those who can’t remember when they last saw uneven stands due to uneven soil moisture at planting—that is, times when some seeds had to wait for rain before they emerged—might have reason to question the advisability of having soil moisture determine how deep seeds are planted.

So where, between too shallow (let’s say one inch) and too deep (3 inches in most soils) should we plant? Soybeans planted in the first half of April with soil temperatures (2 inches deep measured at 7 or 8 AM) less than 50 should probably be planted 1.25 to 1.5 inches deep, and corn at least 1.5 inches deep. When planting into warmer soils later in April or in May, 1.5 inches is good for soybeans and 1.75 inches for corn. Manually changing planting depth on a 24-row planter is good exercise, but may not always be worth the time it takes. As long as we’re planting between 1.5 and 2 inches deep, it’s not clear that trying to fine-tune depth based on current and future soil conditions has much potential to improve stands.

Especially when planters move at speeds of 6 mph or faster and when the soil surface is not very smooth, some seeds end up shallower and some deeper than the nominal setting. Equipment and seed companies have looked at the effect of planting depth on stands and yields, and have in some cases managed to produce large yield differences by employing “mistake” settings. Measuring the uniformity of seeding depth by digging up seeds is difficult, but high-speed cameras can estimate depth as seeds drop and settle in place. One study done by digging up corn roots at maturity reported a standard deviation of about an eighth of an inch, which would mean that about 5 percent of seeds would be at least a quarter of an inch shallower or deeper than the average. That’s probably acceptable at normal planing depths. More weight and more uniform down-pressure have improved planting depth uniformity, and if 75 percent or more of plants emerge over a period of about 15 growing degree days (24 hours at average temperature, longer than that if it’s cool) and the rest within one more day, it’s unlikely that any yield has been lost due to non-uniformity of planting depth.

Uniformity of distance between seeds is good enough to maximize yield potential in most fields, and needs no further mention. Despite what yield contest winners say they do, there is no reason for most people to plant slower than they do now. If the monitor says enough seeds are being dropped, and either the monitor or previous experience (by seeing how stands look after emergence) say they’re spaced uniformly enough, they probably are.

Seeding rate
Most people have decreased the number of soybean seeds dropped per acre over the past decade or so, but seed quality has also improved, and so the number of plants needed to maximize yield has probably not decreased as much as the seeding rate. We know that seeding rate responses are highly variable: in a series of 25 seeding rate studies in Illinois between 2015 and 2018, we found that the stand (not seed) numbers needed to maximum dollar return to seed ranged from 50 to 200 thousand, and there was no correlation between yield and plant stand needed to produce that yield. That means that the best way to set seeding rates is to average over seeding rate trials to get a best-guess prediction.

Averaged over the 25 responses, the plant stand needed to maximize the net return to seed was about 107,000 plants. At 80% stand establishment, that would require planting 134,000 seeds per acre. While that seems like a reasonable seeding rate, the “best” seeding rate was higher than that in about half of the trials and less than that in the others. Responses were fairly flat in most of the trials, though, which says that moving around within a range of 125,000 to 145,000 seeds per acre won’t miss the mark by much. If you expect emergence to be higher than 80%, seeding rates can be decreased. If you’ve gotten good yields planting only 100,000 or 110,000 seeds in the past, feel free to do that again. Keep in mind, though, that yield responses to seeding rate may not be very visible. So while 100,000 seeds might produce a good yield of 75 bushels, using 130,000 seeds might increase that by 2 bushels, which won’t look like much but would increase profits by $12–13 per acre.

The response of corn to plant population is much more consistent that for soybeans. Figure 3 below shows the response to corn plant population over 44 trials in Illinois between 2012 and 2018. Each trial included four to six hybrids, with planted populations ranging from 18,000 to 50,000 per acre. Final stand closely matched seeding rate, so they’re used interchangeably. The average yield at the 100% (of maximum) yield level was 237 bushels per acre. We used a wide range of seeding rates in order to produce visible responses, even though we know that this range extends far outside the range that producers might consider. Yields at 48–50,000 plants were lower than those at 34–36,000. So what we chose as the high end of the range ending up “bending” the curve, which changed where it reaches a maximum. The curve fitted to yields from the populations up to and including 42,000 shows that the maximum yield was produced at 36,900 plants per acre, and the optimum population—where the last seeds added were paid for by the increase in yield—was 33,400 plants per acre.


Figure 3. Corn plant population response over 44 trials in Illinois, 2012–2018.

It’s also worth noting that, although we find best returns from plant populations in the 32,000 to 35,000 per acre, having them a few thousand higher or lower is not going to change yields or net returns by very much. Yield level doesn’t make much difference: yields in 2012 were about 50 bushels lower than in the highest-yielding years of this study, but the population response was about the same as in other years. Going up to 40,000 isn’t very likely to increase yields, but it won’t increase costs much, either, so it won’t do much harm in productive soils. Marlin Jeschke of Pioneer recently reported that harvest populations for non-irrigated entries in the NCGA Corn Yield Contest over the past five years was 36,700, so it’s clear that current hybrids don’t don’t require unusually high populations to produce high yields.

If planting is delayed in 2020
Should management of corn or soybean change if planting is delayed in 2020 like it was in 2019? We’re certainly hoping that any delays are not on the scale that we saw in 2019, but we did not see many signs last year of things we should change if planting is late in 2020. That may have been because of good weather and good yields even after the late planting. About the only thing we might want to consider if corn planting is delayed into June is to move to earlier–maturing hybrids in the northern part of Illinois. Hybrid strip trials planted in that region in early June last year showed lower yield for hybrids later than 107–108 days RM. We did not see this with late-planted soybeans there, nor for either corn or soybeans in central and southern Illinois.

Crude Oil Makes New Low, Ethanol Tumbles & is Corn too High

That new #crudeoil low is not good for #ethanol or #corn. I did two interviews on this at the end of last week. One with Eric Mosbey during Commodity Week and one with Geoff Cooper from @EthanolRFA @ScottIrwinUI & @jt_hubbs wrote an @farmdocDaily article, too.


The price of crude oil has reached a new contract low below $20 a barrel.


The ethanol industry is struggling under the weight of #COVID19 and the crude oil price war. I spoke with Geoff Cooper, President and CEO of the Renewable Fuels Association about the situation. With crude in the $20s, #corn is too high for ethanol.



The estimated reductions in #ethanol use are 143 million gallons in March, 391 mln in April, and 207 mln in May, for a total reduction of 741 million gallons or 256 mln bushels of read-reduction-estimate-with-caution #corn write @ScottIrwinUI & @jt_hubbs.

link to @farmdocDaily article

Lincolnland Agri-Energy’s Eric Mosbey explains how #COVID19 and the low price of #crudeoil is affecting #ethanol plants like the one he runs. He also discusses what it means for #corn and feed coproducts.

COVID-19 Guidelines Extended to April 30

President Trump Sunday extended the 15 days social distancing #COVID19 guidelines until the end of April. He made the announcement during a Rose Garden Coronavirus Task Force press conference.

Mr. Trump went on later in the press conference to say he, at this point, would not consider relaxing the guidelines for different regions sometime in April. The President mentioned parts of the corn belt as an example during this exchange. 

Here is a link to the federal COVID-19 guidelines.


Coronavirus & Ag Webinar Friday


The farmdoc team at the University of Illinois College of ACES is starting a webinar series called "farmdocDaily Live" to address agricultural issues related to coronavirus. The first webinar is this Friday.

University of Illinois agricultural economists will host a webinar on the impact of coronavirus Friday morning March 20, 2020, at 11 a.m. central. It will be the first in a series called farmdocDaily Live. Farmdoc team members including Scott Irwin, Todd Hubbs, Gary Schnitkey, Jonathan Coppess, and Nick Paulson will each spend a few minutes calling out specific issues of concern and, if possible, some solutions to consider. ILLINOIS Extension farm broadcaster Todd Gleason will moderate the series and facilitate the question and answer sessions.

The farmdocDaily Live webinars are planned to continue regularly each Tuesday and Friday at 11 a.m. The second program in the series, Tuesday, March 24, will feature University of Illinois infectious disease specialist Jim Lowe. He'll discuss what disease mitigation lessons can be learned from the livestock sector and how these are being deployed.



The farmdocDaily Live series is free and open to all. Registration is required to participate. It is possible to listen to the webinars live on a regular phone line.

You may learn more and register today at http://go.illinois.edu/fddlive.

farmdocDaily Live | Coronvirus & Ag

Friday morning at 11am central join farmdocDaily's Jonathan Coppess, Scott Irwin, Gary Schnitkey, and Nick Paulson for the first in our new farmdocDaily Live series. Todd Gleason will lead the 30-minute discussion of the coronavirus impact on ag, planting decisions, and policy
farmdocDaily Live | #Coronavirus & Ag register today go.illinois.edu/fddlive

Profitability & IL Corn/Soybean Acreage Shifts

by Gary Schnitkey, ILLINOIS Extension
link to farmdocdaily article

At its recent Agricultural Outlook Forum, the U.S. Department of Agriculture (USDA) released estimates of 2020 planted acres in the United States, with both corn and soybean acres increasing from 2019 levels (see Grain and Oilseed Outlook, February 21, 2020). When compared to 2018 plantings, USDA is projecting a 2020 shift to more corn acres and fewer soybean acres across the United States. Projecting this shift across the U.S. seems reasonable. However, most of those shifts likely will occur outside of the corn belt. Estimated 2020 profitability in Illinois suggests relatively even acres of corn and soybeans in Illinois.


A University of Illinois agricultural economist says corn is likely to be more profitable than soybeans this year across the state. However, as Todd Gleason reports, historical relationships do not suggest large acreage shifts in the state.

Projected Acreage Shifts in the U.S. For corn and soybeans, USDA is projecting higher acreages in 2020, partly because 2019 acres were reduced because of prevented plantings (see Figure 1). Corn acres are expected to increase 4 million acres from 90 million acres in 2019 to 94 million acres in 2020. Soybean acres are projected to increase by 9 million acres from 76 million in 2019 to 85 million in 2020. Wheat acres are projected to remain the same in 2019 and 2020 at 45 million acres.



Given the prevalence of prevented planting acres in 2019, comparing acreage shifts from 2018 to 2020 provide a better illustration of recent trade difficulties impacts on expected acreage. These trade difficulties lowered soybean prices while corn prices remained roughly the same. National Market Year Average (MYA) prices for soybeans reported by the National Agricultural Statistical Service (NASS) were $9.47 per bushel in 2016 and $9.33 per bushel in 2017, the two years immediately preceding trade difficulties. Soybean prices are not projected to average above $9.00 from 2018 through 2020: $8.66 per bushel in 2018, a projected $8.70 in 2019, and a projected $8.80 in 2020.

While soybean prices decreased, corn prices increased. MYA prices for corn were $3.36 per bushel in both 2016 and 2017. MYA price averaged $3.55 in 2018 and are projected at $3.80 in 2019 and $3.60 in 2020. These price changes caused corn returns to increase relative to soybean, leading to incentives to plant more corn acres. Between 2018 and 2020, corn acres are projected to grow 5 million from 89 million in 2018 to 94 million in 2020. Soybean acres are projected to decrease 4 million from 89 million acres in 2018 to 85 million acres in 2020.

Illinois Corn and Soybean Acres Because of prevented plantings, both corn and soybean plantings in Illinois were down in 2019 from 2018 levels. Corn plantings were 10.5 million acres in 2019, down from 11.0 million in 2018. Soybean planted were 10.0 million acres in 2019, down from 10.8 million acres in 2018.

Except for 2019, total acres in corn and soybeans in Illinois have remained about the same since 1990 at about 21.7 million acres. Prevented plant acres reduced this total in 2019 by 1.2 million acres. While total acres in corn and soybeans have remained the same, shifts in corn and soybean acres have occurred over time.

From 1998 to 2003, corn and soybean acres were relatively near one another, with corn acres exceeding soybean acres by less than 1 million acres (see Figure 2). During the 2007–2014 period, corn use in ethanol increased, resulting in higher corn prices relative to soybean prices, increasing the profitability of corn relative to soybeans, leading to more corn acres and fewer soybean acres. From 2007 to 2012, corn acres exceeded soybean acres by at least 2.0 million acres, with the largest difference of 4.9 million acres occurring in 2007. The build of ethanol capacity ended in the mid–2010s, while Chinese demand for soybeans continued to grow until 2018. Corn profitability fell relative to soybeans, and farmers switched acres from corn to soybeans. In 2018, 11.0 million corn acres were planted in Illinois, only 200,000 acres more than 10.8 million acres of soybean plantings. In 2019, corn acres were 10.5 million, 500,000 more than the 10.0 million of soybean planting. USDA has not projected state levels of corn and soybean production for 2020.



Profitability of Corn and Soybean in Illinois Historical shifts in corn and soybean acres in Illinois have been related to the relative profitability of corn and soybeans. Figure 3 shows corn returns minus soybean returns from Central Illinois farms having high-productivity farmland enrolled in Illinois Farm Business Farm Management (FBFM). Positive values indicate that corn was more profitable than soybeans. Conversely, negative values indicate that soybeans are more profitable than corn.



From 2000 to 2002, corn and soybean returns were roughly the same (see Figure 3). Corn-minus-soybean returns were $30 per acre in 2000, $13 in 2001, and -$6 in 2002. During this period, corn and soybean acres were relatively near one another.

From 2003 to 2012, corn returns exceeded soybean returns in all years, except 2009 (see Figure 3). Corn returns were over $50 higher than soybean returns in 2006, 2007, 2008, 2011, and 2012. During this period, corn acres in Illinois grew while soybean acres declined.

From 2013 to 2018, soybeans were more profitable than corn (see Figure 3). Soybean returns exceeded corn returns by more than $50 per acre in 2016, 2017, and 2018. During these years, farmers switched acres back to soybeans.

In 2019, corn was more profitable than soybeans by $34 per acre. Responses to 2019 profitability differences are somewhat clouded because of late and prevented planting. Both corn and soybean acres were down in 2019. In a late planting year, one expects soybean acres to increase relative to corn acres because soybeans traditionally have lower yield declines than corn in a late planting year. In 2019, corn acres may have declined more had not there been expectations of higher corn prices in June.

In 2020, corn is projected to be $21 per acre higher than soybeans. This difference between corn and soybean profitability is not large, suggesting that large acreage shifts will not occur. The $20 per acre projected difference in 2020 is roughly the same as realized differences from 2000 to 2002. During those years, corn acres exceeded soybean acres by only a small margin. Given 21.7 million acres of corn and soybean plantings in Illinois, having 11.0 million acres of corn and 10.7 acres of soybeans seems reasonable.

Summary At this point, corn is projected to be more profitable than soybeans in Illinois. However, historical relationships do not suggest large acreage shifts in Illinois. Corn and soybean acres in Illinois likely will be near one another. Major shifts in acres to corn from soybeans across the United States likely will come from outside the corn belt.

References U.S. Department of Agriculture. “Grains and Oilseeds Outlook.” Agricultural Outlook Forum 2020. Released February 21, 2020. https://www.usda.gov/oce/forum/2020/outlooks/Grains_and_Oilseeds.pdf

The Pace of Soybean Use

by Todd Hubbs, Agricultural Economist - ILLINOIS Extension
Iink to farmdocdaily article

USDA’s soybean ending stocks forecast of 425 million bushels for the marketing year may show little if any change in the upcoming WASDE report. Despite the recent strength in soybean crush, the current focus is squarely on the impacts of the coronavirus and the implications for both crush and exports as the disease continues to evolve.


University of Illinois ag economist Todd Hubbs discusses the impact coronavirus is and may have on the use of soybeans across the planet.

Soybean crush in January saw a record total for the month of 188.78 million bushels. Thus far this marketing year, crush set monthly records in October, December, and January. Even with those monthly records, the crush pace during the first five months of the marketing year, at 897 million bushels, equaled last year’s pace. The USDA’s current projection for crush indicates a 13 million bushel increase over last year. To reach the crush forecast, crush needs to total 1.2075 billion bushels over the remainder of the marketing year. Soybean crush at that level comes in higher than last year’s 1.194 billion bushel total over the same period. The recent strength in crush led many market observers to raise the prospects for soybean crush totals. The implementation of higher export taxes on soybean products in Argentina helped to bolster this narrative. While soybean crush may see an increase in marketing year use, the prospect of coronavirus issues hurting meat demand may limit the upside potential later in 2020.

Soybean meal prices in Decatur rallied from the low $290 per ton range in early February to settle near $305 last week, which coincides with the marketing year average price put forth in the February WASDE report. The forecast for domestic soybean meal use sits at 36.8 million short tons, up 708 million tons over last year. Plentiful livestock on feed supports strong domestic soybean meal use this marketing year. However, the spread of the coronavirus around the world may put a damper on meat consumption. The prospect of lower meat consumption in the U.S. remains a serious concern. At 13.2 million short tons, the forecast for soybean meal exports came in 354 million tons lower than last year. Soybean meal exports weakened significantly in January and put the pace of exports through January seven percent behind last year’s export total at 4.576 billion short tons. Total commitments through February 27 sit a little over six percent behind last year’s pace. If the expansion of export tariffs on soybean meal in Argentina impact exports, the pace of meal exports could increase.

Soybean oil prices in Decatur fell back to levels seen last September in recent weeks at between 28 and 30 cents per pound. Vegetable oil prices remain under pressure from the impacts of coronavirus spreading around the world. As Chinese crushers come back online, an expectation of growth in world soybean oil stocks over the short term seems a forgone conclusion. Weaker biodiesel production led to a decrease of 300 million pounds in the February WASDE report to 8.2 billion pounds. Through December, the EIA biodiesel production report put soybean oil use at 1.625 billion pounds, down 545 million pounds from the first quarter last year. Biodiesel production from soybean oil needs to increase by fifteen percent over last year for the remainder of the marketing year to hit the USDA’s forecast. Soybean oil exports continue to exhibit strength and provide a counterbalance to relatively weak domestic demand. At 1.9 billion pounds, the USDA’s forecast for soybean exports seems well within reach this marketing year. Census Bureau soybean oil exports through January came in at 809 million pounds. To reach the projection, soybean oil exports need to total 1.09 billion pounds over the rest of the marketing year, 110 million pounds less than the total over the same period last year and hints at an increase to the forecast for soybean oil exports this marketing year in the next WASDE report.

The large Brazilian soybean crop and the potential for expanded Chinese buying continue to be the main factors shaping the potential for soybean exports. USDA projections for soybean exports total 1.825 billion bushels. Estimates of soybean exports from the Census Bureau are available through January. Soybean exports came in at 1.02 billion bushels. As of March 5, cumulative export inspections for the current marketing year totaled 1.107 billion bushels. By using the relationship between Census Bureau data and export inspections, soybean exports total 1.153 billion bushels for the marketing year. Soybean exports need to equal 672 million bushels, approximately 26.3 million bushels per week, during the remainder of the marketing year to reach the USDA forecast. Over the last four weeks, export inspections averaged 26.1 million bushels per week.

A Brazilian crop near 4.6 billion bushels looks in the offing this year. A large crop in combination with a Brazilian real that depreciated almost fifteen percent against the dollar since the turn of the year promise competition from Brazilian soybeans in 2020. Chinese buying of U.S. soybeans remains the key to hitting export projections. For now, Chinese total commitments (export sales and accumulated exports) through February 27 sit at 449 million bushels, up from 344 million bushels over the same period last year. Census Bureau data through January showed soybean exports to China at 431 million bushels thus far this marketing year. The small growth in exports since January highlights the low level of buying from China since the onset of the coronavirus. The recent exemptions on U.S. soybean tariffs granted for some crushers in China provide support to the notion of China attempting to meet its commitments to the Phase 1 trade deal.

Uncertainty about the impacts of coronavirus looks to set market expectations over the near term. Soybean prices will reflect this uncertainty. Volatility appears set to remain high and developments in soybean product export markets seem destined to determine ending stocks this year.

A Discussion on Crop Insurance & ARC/PLC with Gary Schnitkey

This is a lengthy discussion with ILLINOIS ag economist Gary Schnitkey detailing the ARC/PLC and Crop Insurance decisions farmers throughout the nation will need to make by March 16, 2020.

March 01 | WILLAg Newsletter

March 01, 2020

The WILLAg.org All Day Ag Outlook is Tuesday. I'd really like to see you at the Beef House. Buy  your ticket now or just show up. (FYI it is way easier on us if you purchase ahead of time).

You may buy your tickets online today or by calling 800–898–1065 by noon Monday. The $30 ticket price includes Beef House rolls and coffee in the morning and your Beef House Lunch! The doors open at 8am central / 9am eastern Tuesday, March 3, 2020, at the Beef House in Covington, Indiana.

walk-ins are welcome!
Todd Gleason, Farm Broadcaster
ILLINOIS Extension
tgleason@illinois.edu or 217–390–1858




Purchase Tickets Online | $30 Each | Click2Buy
- or call 800-898-1065 by noon Monday
- the ticket price includes Beef House rolls and coffee in the morning and your Beef House Lunch!

Tuesday, March 3, 2020
Beef House
16501 Indiana 63
Covington, Indiana 47932

Registration
9:00am eastern / 8:00am central

Opening Remarks
* Todd E. Gleason, ILLINOIS Extension

The Future of Agriculture
* Steve Maulberger, Vice President Crop Risk Services, Inc.

Cash Grain Panel
* Matt Bennett, AgMarket .net
* Aaron Curtis, MID-CO Commodities
* Brian Stark, The Andersons
* Chuck Shelby, Risk Management Commodities

Global Weather
* Eric Snodgrass, Nutrien Ag Solutions

Soybean Panel
* Dave Chatterton, Strategic Farm Marketing
* Merrill Crowley, Midwest Market Solutions
* Ellen Dearden, AgReview
* Chip Nellinger, Blue Reef Agri-Marketing

ARC/PLC, Crop Insurance SCO & NASS
* Gary Schnitkey, ILLINOIS Extension
* Lance Honig, USDA NASS Crops Branch Chief

Corn Panel
* Curt Kimmel, Bates Commodities
* Wayne Nelson, L&M Commodities
* Mike Zuzolo, Global Commodity Analytics & Consulting
* Jacquie Voeks, Total Farm Marketing
* Dan Zwicker, Zwicker Consulting




Listen to WILLAg on the Radio & Online.

Radio - Draw a north/south line from Champaign across the whole state of Illinois. If you live somewhere between 50 miles west of that line or a 100 miles east then you can likely hear the live broadcast. Those are (central time) at 8:55am, 10:58am, 12:58am, and 2:06pm daily. They include eighteen different commodity analysts weekly and six meteorologists specialized in agriculture.

Web - If you visit or webpage willag.org you’ll find much of that programming in full. The content is updated not long after it airs on the radio station and in the case of Commodity Week before it airs. You’ll find the daily Opening, Mid-Morning, Mid-Day, and Closing Marketing reports plus Commodity Week. If you look at the top of the page on your desktop (or in the hamburger tab on smartphones and tablets) you’ll find a way to listen to all of these live, too. Choose the WILL-AM Live live button.

Podcasts - Pick your favorite app and you will find the podcasts. Mostly just search for Closing Market Report (CMR) or Commodity Week (CW). Here are some direct links.

Apple Podcasts
CMR - https://podcasts.apple.com/us/podcast/closing-market-report/id1033017980
CW - https://podcasts.apple.com/us/podcast/commodity-week/id78616414

Google Podcasts
CMR - https://play.google.com/music/m/Ipwniphmbezak6hbc7j66txe42y?t=The_Closing_Market_Report
CW - https://play.google.com/music/m/Ilv6ww7upenw4g5lu4binszay4i?t=Commodity_Week

Spotify
CMR - https://open.spotify.com/show/5gzoTEuKrOVezUYAGQPPNA
CW - https://open.spotify.com/show/4gqun3iXpg4ymF0S8D3mLP

SoundCloud
CMR Playlist - https://soundcloud.com/narrowrow/sets/willag-futures-archive
CW Playlist - https://soundcloud.com/narrowrow/sets/commodity-week

NPR One
Either set the app home station to Illinois Public Media or search for Commodity Week and the Closing Market Report.

URL
You may copy these URLs into your favorite podcast applications in order to add our content.
CMR - https://will.illinois.edu/closingmarketreport/rss
CW - https://will.illinois.edu/commodityweek/rss

Video
The farmdocDaily team operates a farmdocvideo YouTube channel. It includes videos I produce under the Illini Farm Report heading. More importantly you’ll find the farmdoc team’s videos.

2020 All Day Ag Outlook




Purchase Tickets Online | $30 Each | Click2Buy
- the ticket price includes Beef House rolls and coffee in the morning and your Beef House Lunch!

Tuesday, March 3, 2020
Beef House
16501 Indiana 63
Covington, Indiana 47932

Registration
9:00am eastern / 8:00am central

Opening Remarks
9:25am eastern / 8:25am central
        • Todd E. Gleason, ILLINOIS Extension

The Future of Agriculture
9:30am eastern / 8:30am central
        • Steve Maulberger, Vice President Crop Risk Services, Inc.

Cash Grain Panel
10:00am eastern / 9:00am central
        • Matt Bennett, AgMarket.net
        • Aaron Curtis, MID-CO Commodities
        • Brian Stark, The Andersons
        • Chuck Shelby, Risk Management Commodities

Global Weather
11:00am eastern / 10:00am central
        • Eric Snodgrass, Nutrien Ag Solutions

Soybean Panel
11:30am eastern / 10:30am central
        • Dave Chatterton, Strategic Farm Marketing
        • Merrill Crowley, Midwest Market Solutions
        • Ellen Dearden, AgReview
        • Chip Nellinger, Blue Reef AgriMarketing

Lunch and Trade Show
12:15pm eastern / 11:15am central

ARC/PLC, MFP, & Crop Insurance
1:15pm eastern / 12:15pm central
        • Gary Schnitkey, ILLINOIS Extension

Corn Panel
1:45pm eastern / 12:45pm central
        • Curt Kimmel, Bates Commodities
        • Wayne Nelson, L&M Commodities
        • Mike Zuzolo, Global Commodity Analytics & Consulting
        • Jacquie Voeks, Stewart Peterson
        • Dan Zwicker, Zwicker Consulting

Let us know if you are interested in sponsoring the All Day Ag Outlook.
download sponsorship form

Submit Input to NRCS on Easement Rule


The Natural Resources Conservation Service has posted a new Agricultural Conservation Easement Program rule to the Federal Register. The Assistant State Conservationist for Easement Program from Illinois NRCS explains just how easements work and what the new rules offer. Listen to Todd Gleason’s interview with Paula Hingson.


USDA NRCS Press Release

Champaign, Illinois – USDA’s Natural Resources Conservation Service (NRCS) seeks public comments on its interim rule for the Agricultural Conservation Easement Program (ACEP). ACEP is USDA’s premier conservation easement program, helping landowners protect working agricultural lands and wetlands. The interim rule – now available on the Federal Register – will be in effect until the final rule is published. These activities will make changes to the program prescribed by the 2018 Farm Bill.

“Through easements, agricultural landowners are protecting agricultural lands from development, restoring grazing lands and returning wetlands to their natural conditions,” said Ivan Dozier, NRCS State Conservationist in Illinois. “The new changes to ACEP under the 2018 Farm Bill make it stronger and more effective and will result in even better protection of our nation’s farmlands, grasslands and wetlands.”

NRCS is investing more than $300 million in conservation easements for fiscal 2020. NRCS state offices will announce signup periods for ACEP in the coming weeks. Changes to ACEP for agricultural land easements include:

  • Authorizing assistance to partners who pursue “Buy-Protect-Sell” transactions.
  • Requiring a conservation plan for highly erodible land that will be protected by an agricultural land easement.
  • Increasing flexibility for partners to meet cost-share matching requirements.

Changes to ACEP for wetland reserve easements include:

  • Identifying water quality as a program purpose for enrollment of wetland reserve easements.
  • Expanding wetland types eligible for restoration and management under wetland reserve easements.

“Conservation easements have a tremendous footprint in the U.S. with nearly 5 million acres already enrolled. That’s 58,000 square miles,” NRCS Chief Matthew Lohr said. “This is a great testament to NRCS’s and landowner’s commitment to conservation.”

Submitting Comments NRCS invites comments on this interim rule through March 6 on the Federal Register. Electronic comments must be submitted through regulations.gov under Docket ID NRCS–2019–0006. All written comments received will be publicly available on regulations.gov, too. NRCS will evaluate public comments to determine whether additional changes are needed. The agency plans on publishing a final rule following public comment review.

Applying for ACEP ACEP aids landowners and eligible entities with conserving, restoring and protecting wetlands, productive agricultural lands and grasslands. NRCS accepts ACEP applications year-round, but applications are ranked and funded by enrollment periods that are set locally.

For more information on how to sign up for ACEP, visit your state website at nrcs.usda.gov or contact your local NRCS field office.

Gary Schnitkey on the ARC/PLC Decision

Farmers will be making two government program decisions on or before March 15th. What to do about crop insurance is one of them. The other is to enroll in the updated farm safety net programs.


The 2018 Farm Bill included some changes that require farmer to do a couple of things. First, they'll want to update their yields with FSA, if and only if the current set is higher than those already on record. Second, a decision must be made about which farm safety net to use for the crop harvest last year, and the one that will be harvested this year. Gary Schnitkey from the University of Illinois has some advice, "If you have a farm that is complete Prevent Plant, I think you are going to want to do ARC-IC. One FSA farm. If they are yielding at all, you'll probably lean to PLC for corn, ARC-CO for soybeans and PLC for wheat".

You may learn more about ARC-IC on the farmdoc website. ILLINOIS has developed a set of tools farmers can use to help them make the best possible ARC/PLC decision no matter where they live. It includes, says Schnitkey, a calculator that runs on a super-computer, "The calculators are online. The Gardner ARC/PLC tool will allow you to look at the probabilities of these things making payments. Again, corn is not likely to make payments in 2019. Soybeans similarly. Wheat will make a PLC payment for 2019. So, you can look at the Gardner ARC County / PLC calculator for that. There is a 2018 Farm Bill Tool that is a Microsoft Excel speadsheet and you can use that to look at different prices and yields to see what ARC-County, ARC-IC, and PLC will do in those situations".

The ARC/PLC safety net decision is due to be made at the Farm Service Agency office by March 15th. The ARC/PLC calculators are online at https://farmdoc.illinois.edu/2018-farm-bill.

Revision of 2020 Corn and Soybean Budgets


The new trade deals have caused Gary Schnitkey to update the price outlook for the 2019 and 2020 growing seasons. As you’ll hear from Todd Gleason this really didn’t change much in the #ILLINOIS crop budgets for corn or soybeans.

by Gary Schnitkey, ILLINOIS Extension Agricultural Economist
link to farmdocDaily article

Budgets for 2020 have been revised and are now available on farmdoc. Revised budgets use a corn price of $3.90 per bushel and soybean price of $9.10 per bushel, both of which are an increase in price expectations following what appears to be softening of trade difficulties between China and the U.S. Even at those prices, returns are projected at negative levels for 2020. Before 2020 returns are positive, yields must be well above trend or Market Facilitation Program payments must continue in 2020.

Corn Returns Table 1 shows 2018 actual returns for both corn and soybeans grown on high-productivity farmland in central Illinois. These values are summarized from farms enrolled in Illinois Farm Business Farm Management (FBFM). Table 1 also shows 2019 values, which still are projections because FBFM financial statements have not been summarized. Also shown are projections for 2020.



Across FBFM farms, farmer return for corn averaged $8 per acre in 2019. In 2019, the average yield was 237 bushels per acre, and the price averaged $3.60 per bushel. Total non-land costs of $574 per acre include all financial costs of producing corn. Land costs also are subtracted. The $274 per acre land costs represent an average cash rent for high-productivity farmland in central Illinois. Share rent and owned land will differ from cash rent, and generally, be lower than cash rent costs.

Farmer return was -$4 in 2019, about the same as the 2018 level of $8 per acre. Yields were lower in 2019: 196 per acre in 2019 as compared to 237 bushels per acre in 2018. Offsetting yield declines are $82 per acre in MFP payment, an increase from the $1 level in 2018. Corn returns would have been very negative had not MFP payments occurred.

For 2020, farmer returns are projected at -$37 per acre, down from the -$4 return in 2019. In 2020, MFP payments are not included, thereby reducing corn revenue by $82 per acre. Partially offsetting no projected MFP payments are higher yields. The 2020 corn yield is projected at 211 bushels per acre, 16 bushels higher than the 195 bushels per acre yield in 2019. Prices used in return calculations are $3.90 per bushel for both 2019 and 2020. Given the same price, the 2020 crop revenue of $823 per acre is $62 higher than the $761 revenue in 2019.

There are possibilities for positive returns in 2020. Yields could again be above trend yields like in 2013 through 2018. If corn yields are at 230 bushels per acre, farmer return would be $37 per acre, with that increase assuming that the corn price remains at $3.90 per bushel, not a likely occurrence as high yields would lead to more corn supplies, which typically leads to lower corn prices. Another possibility for positive returns is another round of MFP payments in 2020.

Soybean Returns Farmer returns for soybeans were at $154 per acre in 2018 (see Table 1). Two items contribute to relatively high returns in 2018. One was a very high soybean yield of 74 bushels per acre. Even at a low soybean price of $8.85 per bushel, crop revenue was $655 per acre, higher than projected crop revenue in 2019 and 2020. The second was an MFP payment in 2018. In 2018, MFP payments for soybeans equaled a $1.65 per bushel MFP rate times production (The rate was $.005 for corn production). Production of 74 bushels per acre times $1.65 MFP rate resulted in an MFP payment of $122 per acre.

Farmer return in 2019 is at -$32 per acre, a $186 per acre decline from $154 per acre level in 2018. Even though the 2019 price of $9.10 is higher than the $8.85 price in 2018, 2019 crop revenue is lower at $501 per acre, $154 less than 2018 revenue. The 2019 projected yield is 55 bushels per acre, down from 74 bushels per acre yield in 2018. Also, MFP revenue for soybeans is $82 per acre, down by $40 per acre from the 2018 level of $122 per acre.

Farmer return for 2020 is projected at -$52 per acre, down by $20 from the -$32 level in 2019. Crop revenue is expected higher in 2020, $573 per acre in 2020, $72 higher than the $501 crop revenue in 2019. Higher projected yields contribute to increased revenue projections. The 63 bushels per acre projection for 2020 is a trend line projection.

Similar to corn, there are possibilities of higher returns in 2020. Above trend yields without a price decline would result in a higher return. For example, a higher yield of 70 bushels per acre results in farmer return of $12 per acre, given that price does not decline from $9.10 per bushel. A continuation of MFP payments could lead to higher returns as well.

Summary and Commentary
On many Illinois farms, incomes will be much lower in 2019 as compared to 2018. Illinois was hard hit by wet weather and delayed planting, which contributed to lower yields. Without MFP payments in 2019, returns would have been very low.

The 2019 returns in Table 1 are for high productivity farmland in central Illinois. Northern and southern Illinois will have much lower yields than central Illinois, resulting in much lower income projections for these areas of Illinois (projections are shown here.)

Again, projections are for a low return year in 2020. Higher incomes could result if 1) above-trend yields occur with no decline in prices or 2) another round of MFP payments are made on 2020 production. Time will tell if either happens.

Waiting for the Trade Deal


The highly anticipated release of USDA’s crop production and ending stocks reports last Friday created a somewhat negative tone in corn and soybean markets. Despite the slightly bearish tilt, prices for both commodities closed higher on Friday. The pending phase one trade agreement and South American production prospects look to set the tone for prices over the near term. - Todd Hubbs, ILLINOIS Extension



by Todd Hubbs, University of Illinois
link to original farmdocDaily article

Corn production for the U.S. in 2019 came in at 13.69 billion bushels, up 31 million bushels from the previous forecast on higher national average yields. Average corn yield of 168 bushels per acre is one bushel higher than the previous forecast. The harvested acreage estimate of 81.5 million acres is down from the November forecast of 81.8 million acres. Current production estimates for corn show eight percent of the crop still in the field and open the estimate to possible revision in the future.

December 1 corn stocks came in at 11.39 billion bushels. The estimate is 122 million bushels below trade expectations and indicates a total disappearance of 4.53 billion bushels in the first quarter of the marketing year. The USDA’s revision of the September 1 corn stocks higher by 107 million bushels along with greater production indicates a massive feed and residual use component in the first quarter.

At 5.525 billion bushels, the WASDE forecast for corn feed use and residual moved up by 250 million bushels from the previous forecast for the 2019–20 marketing year. Despite the significant boost in consumption from feed and residual, projected ending stocks fell only 18 million bushels from the previous forecast. Consumption projection for categories other than feed and residual fell 95 million bushels. While the corn use for ethanol forecast stayed steady at 5.375 billion bushels, the forecast for other industrial purposes decreased by 20 million bushels to 1.395 billion bushels. The forecast for corn exports dropped 75 million bushels to 1.775 billion bushels due to the continuation of weak export numbers through the first four months of the marketing year. The pending trade deal with China holds the promise for change in some of the consumption totals.

The phase one trade deal due to be signed sometime this week still lacks specificity. While the administration continues to tout agricultural export increases near $16 billion over 2017 totals of $24 billion, very little confirmation from the Chinese side has come forth thus far. The Chinese indicated that they would not exceed their global quota on corn imports for any individual country in 2020. The quota for corn stands at 7.2 million metric tons (near 283 million bushels). Through November of 2019, Census data indicates China imported 12.3 million bushels of corn from the U.S. during the calendar year. There remains plenty of room for increased Chinese imports of U.S. corn and corn-related products in 2020 despite the quota. Details surrounding the trade deal matter and look to help shape price prospects for corn over the next few months.

Foreign production projections for corn in the 2019–20 marketing year moved up slightly due to an increase in the European Union and Russian production. Brazil’s corn production forecast stayed at 3.98 billion bushels. Concerns about production losses for first crop corn in southern Brazil due to dry conditions continue to evolve. Strong domestic corn prices in Brazil point to producers planting the safrinha crop even if planting is later than ideal in many areas. Argentinian production forecasts stayed at 1.97 billion bushels. The forecast for Argentina and Brazil corn exports sit at 2.73 billion bushels, 335 million bushels lower than last marketing year. Given the current forecast for South American exports, the evolution of crop conditions in the region, particularly on the Brazilian safrinha crop, hold important implications for corn exports during the coming year.

Soybean production for the U.S. in 2019 totaled 3.558 billion bushels, up 8 million bushels from the previous forecast on higher national average yields. The national average soybean yield of 47.4 bushels per acre is 0.5 bushels higher than the previous forecast. The harvested acreage estimate of 75 million acres is down from the prior forecast of 75.6 million acres. Current production estimates for soybeans indicate two percent of the crop remains in the field. December 1 soybean stocks came in at 3.252 billion bushels, 66 million bushels above trade expectations.

The WASDE report maintained consumption and ending stock projections at the same levels seen in the last forecast. The crush forecast stayed at 2.105 billion bushels, reflecting the pace of soybean crush in the first quarter of the marketing year. Soybean export forecast levels of 1.775 billion bushels remained steady and mirrored the current pace of exports without the possible trade deal impacts. Unlike corn, soybeans do not face a quota scenario in China. A trade deal with specificity on soybean exports could provide support for prices.

A Brazilian crop at 4.519 billion bushels portends tough competition in world markets for U.S. exports. The Argentinian soybean production forecast stayed steady at 1.95 billion bushels. Forecasts for Brazil and Argentina soybean exports are set at 3.09 billion bushels over the marketing year, up 15 million bushels from last marketing year’s estimate. Increased U.S. soybean exports to China under the trade deal may see strong substitution buying of South American soybeans by other major buyers that may limit U.S. exports upside potential despite a trade agreement.

Additional discussion and graphs associated with this article available here.