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2020 All Day Ag Outlook




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- 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.
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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.

Hog Numbers are Up & Profits Should Come

The number of hogs being raised in the U.S. has been going up since mid–2014. However, it isn’t necessarily because profits are great.

The last Hogs and Pigs report released by USDA, back in December, was a record-setter at 77 million 338 thousand. That’s three-percent more than year ago. The expansion comes despite unprofitable margins and uncertainties related to trade issues says Jason Franken of Western Illinois University. The fact is there will be more hogs going to market from January to May. One of the reasons, Franken says, is that the litter size has grown on average and is now over 11 piglets per sow, “The continuation of the upward trend in pigs per litter, combined with reported farrowing intentions suggests more hogs going to market in 2020.”

Winter farrowing intentions are up 1 percent from actual farrowings last year and 5% from two years ago. The spring farrowing intentions are also up slightly from last year and up 3 percent from 2 years back.

All of these numbers point to a somewhat higher supply of hogs and pork in 2020 thinks Franken. And, he says, with higher production, one might expect lower prices, but there are additional items to consider on the demand side. For instance, we’re eating more pork per person. Last year’s mark at 52.7 pounds each is the highest number since 1981. Exports are good, too, even to China, “On the world market, all eyes are on Asia, and China in particular, due to their production losses from African Swine Fever. Although held back by China’s retaliatory duties, U.S. pork exports to China increased throughout 2019. In September and October, China surpassed Japan to become our second largest foreign customer after Mexico.”

USDA, by-the-way, is forecasting U.S. pork exports in the first three quarters of 2020 to be 21%, 7.5%, and 8.8% greater than the corresponding quarters from last year. Taking all of this into account, WIU’s Jason Franken says hog prices should be profitable throughout much of 2020, even though they have been below the cost of production in recent weeks, as they often are seasonally at this time of year.