Archive

Archive for the ‘Crop Outlook’ Category

Record Crops, But Somewhat Smaller Than Expected

August 12th, 2014

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA report.

Hart_Chad-thumbRecord Crops, But Somewhat Smaller Than Expected (8/12/14)

The USDA’s WASDE and Crop Production reports were released today. These reports were heavily anticipated by the markets as they represent the first set of estimates based on objective data from the field. The pre-trade expectations were for both crops to reach record production levels. And on that count, the reports agreed. But the production levels projected by USDA are slightly smaller than expected. For corn, the adjustments actually start with the 2013 crop. As we finish up the 2013 marketing year, corn demand has continued to build. In these latest numbers, USDA increased ethanol demand by 45 million bushels and export demand by 20 million bushels. Those changes cut ending stocks to 1.18 billion bushels, which was outside the range of pre-trade expectations. For the 2014 corn crop, there were a number of shifts on both the supply and demand front. The national yield was estimated at 167.4 bushels per acre. That’s up 2.1 bushels from USDA’s original estimate and up 8.6 bushels from last year. Given that yield, production is pegged at just over 14 billion bushels, topping last year’s record. However, the trade was looking for production in 14.2 billion bushel range, so the corn crop is a little lighter than anticipated. Feed, ethanol, and export demand were all increased, raising total demand to 13.435 billion bushels. Carryout stands at 1.8 billion bushels. The midpoint of the 2014/15 season-average price range was lowered to $3.90 per bushels, down 10 cents from last month.

For soybeans, the shifts for the 2013 crop basically offset each other, leaving ending stocks at 140 million bushels and a season-average price of $13 per bushel. For the 2014 crop, the yield was increased by 0.2 bushels per acre to a national average of 45.4 bushels per acre. That puts production at 3.816 billion bushels. Demand for the 2014 crop was left unchanged, so the production increase was absorbed into ending stocks. Carryout was raised to 430 million bushels for the 2014/15 crop and the midpoint of the 2014/15 season-average price range was lowered 15 cents to $10.35 per bushel.

Ag Decision Maker (AgDM) 

An agricultural economics and business website.

Crop Outlook

A Very Quiet Report

June 11th, 2014

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA report.

A Very Quiet Report (6/11/14)

97hartsmUSDA released its June update for crop supplies and demand and the updates were few and far between. For corn, there were no changes to the supply and demand estimates for the 2014 crop. Yield is projected at 165.3 bushels per acre.  Production is projected at a record 13.935 billion bushels, 10 million bushels above last year’s record crop. Total use is set at 13.385 billion bushels, down 250 million bushels from last year. 2014/15 ending stocks are set at 1.726 billion bushels, up 580 million bushels from the previous year. And the midpoint of the season-average price range remains at $4.20 per bushel.

For soybeans, there was one adjustment, but it was for the 2013 crop. 2013 domestic crush was increased 5 million bushels. Otherwise, as with corn, the projections remain the same. Yield is projected at 45.2 bushels per acre. Production is projected at a record 3.635 billion bushels. Total use is set at 3.45 billion bushels. 2014/15 ending stocks are set 325 million bushels, up 200 million from the previous year. And the midpoint of the season-average price range is $10.75 per bushel.

Ag Decision Maker (AgDM) 

An agricultural economics and business website.

Crop Outlook, Crops

The 1st Official Look at 2014

May 9th, 2014

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA report.

97hartsmThe 1st Official Look at 2014 (5/9/14)

With the May World Ag. Supply and Demand Estimates report, USDA provides its 1st official set of projections for the 2014 crops. We can compare these numbers to USDA’s unofficial numbers from the Ag Outlook Forum they hold in February each year. On the supply side, the number to watch is the yield. And is typically the case with the 1st estimates, USDA maintains trendline yields for both corn and soybeans. Those are 165.3 bushels per acre for corn and 45.2 bushels per acre for soybeans. Given the acreage estimates from the March Prospective Plantings report, then 2014 shapes up to be a record year for corn and soybeans. On the demand side, all of the sectors (feed, ethanol, crush, and exports) are in play. And the current projections are generally higher than those from February. Ethanol and export demand for corn was raised for both old and new crop corn. The weak spot on the corn side is feed demand, as fewer animals translate to slightly smaller demand. Export demand for soybeans continues to soar to record levels, while domestic crush demand also grows (but more slowly than anticipated in February). In the February outlook, season-average price estimates were set at $3.90 per bushel for corn and $9.65 per bushel for soybeans. With the higher demand numbers with the May report, these estimates move to $4.20 for corn and $10.75 for soybeans. So with Iowa production costs in the $4.50 range for corn and $11 range for soybeans, the USDA projections still indicate negative returns for both crops, but the gap has shrunk significantly.

Ag Decision Maker (AgDM) 

An agricultural economics and business website.

Crop Outlook, Crops

Stocks and Small Grains

September 30th, 2013

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA report.

97hartsmStocks and Small Grains (9/30/13)

USDA found more bushels of corn and soybeans in bins at the end of the marketing year than traders expected. Corn stocks were estimated at 842 million bushels, down 17% from last year, but that was still 10% higher than the highest trade estimate. Disappearance of corn over the June to August period was 1.94 billion bushels. 4th quarter disappearance was 2.16 billion bushels in 2012. So corn demand continued to be sluggish this summer as users waited for the new crop to come in.

Soybean stocks were estimated at 141 million bushels, down 17% from last year. USDA revised the 2012 soybean crop estimates by increasing harvested acres by 60,000 acres, yields by 0.2 bushels per acre (for a national average of 39.8 bushels per acres), and production by 19 million bushels. These adjustments basically explain the increase in soybean stocks from last month’s estimate. Soybean disappearance in the 4th quarter fell off the table, as it was down 41% from last year’s levels.

Ag Decision Maker (AgDM) 

An agricultural economics and business website.

Crop Outlook

Questions about Late Harvest, Low Prices Addressed by Iowa State

September 19th, 2013

A news release from Iowa State University Extension and Outreach by Charles Hurburgh, Agricultural and Biosystems Engineeringtatry@iastate.edu and Willy Klein, ISU Extension and Outreachwklein@iastate.edu

Members of the extension crops team from Iowa State University responded to producer questions related to the late spring, dry summer and slow crop development by holding meetings in north central Iowa last week.

Extension field agronomists Mark Johnson and Paul Kassel discussed crop maturity, crop drying, potential effects of an early frost, and pre-harvest preparations at meetings held in Clarion, Wesley and Sheffield. Charles Hurburgh, extension grain quality and handling specialist, spoke of 2013 crop quality, including moisture and test weight variability, potential diseases, and the best practices for handling and storing the crop.Iowa State specialists Chad Hart, extension economist, and Kelvin Leibold, extension farm management specialist, reviewed the 2013-2014 crop market outlook at the meetings.For the benefit of those not attending the meetings, ISU Extension and Outreach has made video recordings of the presentations available on the Iowa Grain Quality Initiative website at http://www.extension.iastate.edu/grain/.

Get more crop news from ISU Extension and Outreach
The extension crops team makes the most current information related to crop, harvest, storage and handling issues available through the Iowa Grain Quality website and Integrated Crop Management (ICM) News, an online newsletter. ICM News articles are published at www.extension.iastate.edu/cropnews/; newsletter subscribers receive notification when new articles are published.Hart and Leibold are frequent Ag Decision Maker authors. Ag Decision Maker (AgDM) updates and news are available atwww.extension.iastate.edu/agdm. The AgDM newsletter and updates are published every month; subscribers receive notification of the publication of new materials.As the drought situation continues in Iowa, new material is added to the Dealing with Drought – 2013 webpage. The webpage offers information for dealing with crops, livestock, stress, home and yard and financial concerns during drought situations at www.extension.iastate.edu/topic/recovering-disasters.

Ag Decision Maker (AgDM) 

An agricultural economics and business website.

Crop Outlook, Crops, Meetings and Events , , ,

Harvesting Wet Corn to Provide Challenges

September 17th, 2013

Contributed by Steve Johnson, Extension Farm Management Field Specialist, sdjohns@iastate.edu.

Johnson_Steve_smWhile half of Iowa’s corn crop was planted by mid-May, much was pushed back several weeks. Some fields were replanted more than once and as a result pollinated into August.

The bottom line for many growers is that corn maturity has been delayed. The problem with harvest may be a wetter than normal crop created by a combination of late planting and then impacted by hot, dry conditions during grain fill.

Iowa farmers are now expected to harvest about 13.5 million acres of corn, that’s 200,000 acres less than last year’s drought ravaged crop. The latest USDA estimate is that Iowa would average 162 bushel per acre, below the 30-year state trend yield by 17 bushels. The variability of corn yields and moisture levels is going to be large across the state. Much depends on the corn planting date and the water holding capacity of the soils.

Some corn plants that died prematurely may already be harvested, but much of Iowa’s crop will be slow to dry down in the field. It will need to be harvested and dried down to near 14 or 15 percent moisture to avoid a discount or extend storage time for bushels to be marketed later. Delivery of wet corn sold will carry moisture discount at roughly 2 percent times the points of moisture above 15 percent times the cash contract price.

For corn harvested at 25 percent moisture and averaging 170 bushels per acre dry, that’s about $90 per acre with corn valued at $4.50 per bushel. This amount roughly equals the cost of commercial drying charges using a 1.4 percent shrink factor and 4.75 cents per point of moisture. Drying and storage of corn may be a problem as harvest gets underway.

Heavy drying needs
The key thing for a grower is to think ahead about corn moisture levels, drying and storage costs — be prepared. There’s an abundant supply of propane out there. The challenge this fall — if harvested grain needs a lot of drying — will be having the propane in the right place at the right time.

Perhaps the most important factor in dealing with corn at higher moisture levels at harvest is getting the combine set up right. Some things to remember are:

  • A properly adjusted combine can handle corn between 20 and 30 percent moisture, but expect grain damage to increase unless careful attention is paid to combine settings.
  • Be sure to select a ground speed adequate to keep separator and cleaning shoe at full speed. Adjust your hydrostatic transmission to maintain the engine near rated speed under varying crop conditions.
  • Operate the corn head as high as possible to reduce getting wet plant material in the combine, which can significantly reduce the machine’s ability to thresh and separate the grain.
  • Before changing concave clearance, make sure it is level side-to-side in a conventional combine or front-to-back in a rotary combine so that the adjustment is uniform.

While corn harvest may begin later than normal this fall, farmers will want to be prepared early.

Ag Decision Maker (AgDM) 

An agricultural economics and business website.

Crop Outlook, Crops ,

Some Crops Grow Without Rain (9/12/13)

September 12th, 2013

Chad Hart, ISU Extension Grain Marketing Economist, provides a summary of the latest USDA report.

97hartsmThe latest USDA updates showed a growing corn crop and a shrinking soybean crop. The projections for corn put the nationwide average yield at 155.3 bushels per acre, up 0.9 bushels from last month and over 30 bushels better than last year. That puts corn production at 13.84 billion bushels, a record by over 700 million bushels. Soybean projections are a nationwide yield of 41.2 bushels per acre and production in the 3.15 billion bushel range. That soybean yield is down 1.4 bushels from last month, but still 1.6 bushels better than last year.

On the demand side, the changes were concentrated. For corn, all of the shifts were on the old crop with feed, ethanol, and export demand being raised. New crop corn demand was left unchanged. For soybeans, the major demand shifts were for the new crop as domestic crush and export demand were both lowered as we enter the marketing year. In the end, corn’s supply gains outweighed the demand shifts, so 2013/14 projected ending stocks are up slightly compared to last month’s projections, to 1.855 billion bushels. With that slight increase, USDA lowered the midpoint of its season-average price range to $4.80 per bushel. For soybeans, the supply moves also outweighed the demand shifts, but the moves were in the opposite direction from corn. So 2013/14 ending stocks tightened back to 150 million bushels and the midpoint of the season-average price range jumped $1.15 to $12.50 per bushel.

Ag Decision Maker (AgDM) 

An agricultural economics and business website.

Crop Outlook , ,

Early Harvest Basis Opportunities

September 6th, 2013

Contributed by Steve Johnson, Extension Farm Management Field Specialist,sdjohns@iastate.edu.

Johnson_Steve_smWith the heat and dry conditions from late August, Iowa corn fields are maturing quickly. Farmers might want to take advantage of an unusual marketing opportunity this in September.

By harvesting some of their corn early and delivering directly in to local corn users, such as processors, livestock feeders and ethanol plants; farmers could potentially earn a premium of 50 cents per bushel of more over cash prices offered in October. That premium price is likely to disappear quickly in early October, when the 2013 fall harvest begins to pick up more momentum.

It’s really going to be a win-win situation for grain users and farmers. Corn users are looking for corn now after last year’s short crop and farmers could use this to earn premium prices and help their fall cash flow situation.

There could also be a few marketing opportunities on early-harvested soybeans. Like corn, processors and river terminals are looking to secure a local supply of soybeans after last year’s drought-reduced harvest.

Iowa farmers are fortunate because there is a strong demand for corn and soybeans in the state. That can create marketing opportunities that are not  available in all states.

A good strategy for Iowa farmers this month is to keep a very close eye on the moisture content and quality of corn in their fields during September as well as bids from local buyers. If the moisture content of the corn drops down toward 15 percent, or if there are signs of stalk rot or other problems that could trim yields, it may make sense to harvest some of the driest fields early and try to take advantage of a cash bid premium, he said. Even if the grain is still above the target moisture level of 15 percent, the premium for early delivery may more than make up for the dockage.

In years when the crop is less than ideal, there is a tendency for Iowa farmers to store corn and wait for higher bids later in the marketing year. However, those higher bids may not materialize in the upcoming marketing year because other parts of the Corn Belt have experienced better growing weather and may have more corn to market. I think it will be good to take an aggressive marketing approach this year and to look for early opportunities.

Ag Decision Maker (AgDM) 

An agricultural economics and business website.

Crop Outlook , ,

High Grain Prices means “The Russians are Coming”

July 17th, 2013

Contributed by Kelvin Leibold, Extension Farm Management Field Specialist, kleibold@iastate.edu. Leibold_K03-L

With several years of extremely high grain prices the world of agriculture is changing.

1). We are seeing profits increasing to all-time highs. This is creating a strong incentive to expand land use which could result in a substantial decline in crop prices worldwide.

2). Cost of production has increased but not as much as revenues have increased resulting in motivation for producers to boost output.

3). Boosts in production may outpace increase in demand in the short run. Boosts in production of wheat, for example, will drag down the price of all crops.

I recently returned from Voronezh, Russia which is located in the “black earth zone” where the soils are as black as Iowa and they have enough organic matter you can scrape it loose with your foot. These are ideal soils for raising sugar beets or potatoes. They can also raise corn and soybeans. In the short run they are seeing a lot of demand for feed from the domestic livestock industry. Dairy is growing extremely fast with assistance from the government in the form of interest rate subsidies.

Land values for top land range from $250 to $750 per acre, depending on the quality of the “land title” and no property taxes. If they get adequate rain corn yields can reach 175 bushels per acre. One feels quite at home talking about seed corn companies, machinery suppliers and GPS technology. Labor is a lot different as are certain overhead costs.

Walking the fields of EKONIVA, http://ekoniva-apk.ru/en, gives one a good sense of their vastness at almost 460,000 acres. They have almost 3,000 employees. Not bad for a company that started off with $200,000 in capital less than twenty years ago. This is just one example. Black Earth Farms, http://blackearthfarming.com/about.html, is another operation with over 750,000 acres, mostly owned, which has been operating since 2005. High prices have encouraged the expansion of these and the development of many more farms. Producers from the UK, Germany, Sweden and other western European countries all faced with limited land availability and high taxes have looked to the east for opportunities.

It remains to be seen how competitive these farms will be in the long run. Competition is a function of production costs, land rents, and infrastructure (ex. Transportation costs). Russia also joined the World Trade Organization in 2012 and this will impact their domestic livestock in the coming years as we should export more meats and dairy products into their country.

On a closing note and a little closer to home: in 2012 which was more profitable on the average – an acre of corn in Iowa or in North Dakota? It’s not only the Russians to think about!

Ag Decision Maker (AgDM)

An agricultural economics and business website.

Crop Outlook, Crops, Whole Farm ,

Small Adjustments This Month (7/11/13)

July 11th, 2013

Chad Hart , ISU Extension Grain Marketing Economist, provides a summary of the latest USDA report.

97hartsm

This morning’s supply and demand report mostly held to expectations.  Old crop stocks remain very tight, while new crop stocks are projected to increase.  Acreage was set by the June “Acreage” report and yields were held steady.  That put an additional 30 million bushels of soybeans in the 2013/14 projections, while corn production slipped by 55 million bushels.  On the demand side, there were no adjustments to soybean demand.  Corn feed was raised 50 million bushels for old crop, but lowered 50 million for new crop.  New crop exports were also lowered 50 million.  In the end, projected 2013/14 prices remain the same, $4.80 for corn and $10.75 for soybeans.

Ag Decision Maker (AgDM)

An agricultural economics and business website.

Crop Outlook, Crops ,