Corn and Soybean Production Outlook in 2017-18

Given the price reaction, the market remains uncertain about the USDA’s September forecast of 2017 corn and soybean production. Todd Gleason has more with the commodity markets specialist from the University of Illinois.

USDA NASS Soybean Objective Yield Pod Weight

Tuesday’s USDA Crop Production report included a very heavy soybean pod weight. Todd Gleason talks with USDA NASS Chief of the Crops Branch about the weight, how it is calculated, and how it might change over time.

DICAMBA | U of Arkansas Takes a Stand

Statement from Dr. Mark Cochran, Vice President-Agriculture for the University of Arkansas System Division of Agriculture, on Monsanto’s petition to the Arkansas State Plant Board

First, and most importantly, we stand by the integrity of our scientists and their science, including Dr. Jason Norsworthy, our internationally recognized researcher and his work, and all our weed scientists, as well as other public weed scientists on record in other states.

We are confident in the science that we’ve used to advise the regulatory process in Arkansas.
Even Monsanto recognizes his reputation. Just 48 hours before the petition was filed, the company invited Dr. Norsworthy to present a summary of national drift and volatility research at an academic summit on dicamba that the company is hosting in St. Louis this month. He has declined this invitation.

We will examine every point in this petition and its appearing and disappearing group of supporting exhibits, and over time will respond factually to its major points.

There are several points in the petition we need to address immediately: First, Norsworthy’s findings are anything but an outlier. It is consistent with research work in other states, including that of Kevin Bradley in Missouri, Tom Mueller and Larry Steckel in Tennessee, and elsewhere.

Second, none of our researchers has ever endorsed any product, but sometimes companies use our public comments and statements without our permission.

Based on Monsanto’s allegations, we intend, under the terms of our agreements with Monsanto, to publish all data relevant to our dicamba work over the last few years.

This petition isn’t just about a single herbicide, but it’s an attack on a whole profession – scientists whose careful work is meant to be of benefit to all.

We have made our explanations available to the public, including at field days and through videos of the presentations that were and are still public on the Cooperative Extension Service site, www.uaex.edu. Our public land grant research results are scientifically vetted and valid, and we are pledged to being transparent in our results.

Link to Dicamba in Arkansas - Research and FAQs

Storing Corn and Soybeans in 2017

The current price structure of corn and soybean futures markets indicate positive carry in both markets and raises the question of whether producers should make decisions about grain sales. The decision by producers to store corn or soybeans should be determined by the returns to storage.

There will be a lot of corn around this fall. USDA projects about sixteen-and-half billion bushels when you add what’s leftover from last year to this year’s harvest. It is projecting about four-point-eight billion bushels of soybeans. That’s a lot of both crops, but University of Illinois agricultural economist Todd Hubbs isn’t worried about running out of space to store it. In fact, the market is urging farmers to go ahead and store both crops at the moment by pricing futures contracts for later in the year a bit higher than the nearby months. The difference is called the carry says Hubbs. Having said that, he says the carry probably doesn’t pay out for commercial storage like you would see for on-farm storage, but there is a nice carry in the market for both crops.

The carry probably doesn’t pay out for commercial storage like you would see for on-farm storage, but there is a nice carry in the market for both crops. - Todd Hubbs, University of Illinois

Harvest bids says Hubbs for corn and soybeans possess a weak basis. This means the difference between the futures price in Chicago and the local cash prices across the nation are generally wider than normal. In central Illinois, for example, that bid is about 7 cents wider than usual. It seems there could be some room for improvement.

When we look at the fundamentals of the corn and soybean markets they’ve been poor says Hubbs, “We are looking at higher yields than expected and large crops in South America. Still, on the corn side, it looks like demand through the 2017/18 marketing year should be really good. Ethanol grind will be really strong, exports should be there especially at these price points, and I believe feed usage should be up across the board. I think there is some strength in corn demand.”

Demand for soybeans may be a slightly different story. However, the domestic crush has been strengthening and exports to China remain super strong. The ag economist explains, “when we think about storing into next year and hedging the storage, basis is a real issue. This is particularly true in Illinois. This year we should see a typical basis pattern for corn because of the supply and demand factors. There may be a lot of basis risk in soybeans. There is really no discernible pattern for spring basis in soybeans. Some years we have a positive basis. This year we had a really weak basis for soybeans. So, I think there is a lot of basis risk when you think about storing and hedging soybeans and you should take that into consideration.”

The uncertainty surrounding corn and soybean yield projections for 2017 says Todd Hubbs may encourage a patient approach to pricing crops. By storing corn and soybeans unpriced, one holds an expectation of prices increasing by more than the cost of owning and storing them. Over the short term, significantly higher prices require a large reduction in the production forecasts by the USDA on September 12 or October 12. Over a longer horizon, higher prices may occur if demand is stronger than currently forecast. Southern hemisphere crop problems could also materialize to provide a price increase.