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Articles from 2018 In August


Corn flowing into grate. DarcyMaulsby/ThinkstockPhotos
TESTING CORN: Corn processors are aware of mycotoxin concerns from the 2016 corn crop. Ethanol plants have stepped up their mycotoxin testing and are letting their corn suppliers know the maximum level they will accept.

Tightening corn stocks help market hold lows

The end of August marks the final day of summer, at least for weather forecasters. But for the markets the last two years it’s also been a pivotal moment. Corn made early harvest lows on the last trading days of August in 2016 and 2017, setting the stage for rallies into the following winter and spring.

Two years in a row doesn’t make for a statistically significant trend. But it was enough of a pattern to attract attention at a time of year when the market doesn’t have many fresh facts to trade.

Nearby corn futures took out lows made earlier in the summer on the final day of trading for the marketing year in both 2016 and 2017. In August 2016, new crop ending stocks were forecast to reach 2.4 billion bushels in the coming year, the most since the end of the 1980s farm crisis. In 2017, the situation didn’t look much better, with new crop endings stocks put at nearly 2.3 billion bushels.

Nearby futures took out lows made earlier in the summer in both years. Eventually the stocks situation turned out to be note quite as dire as predicted, helping the market hold those August lows on the next wave of selling at harvest.

The August low in 2016 was $3.01, and $3.285 in 2017. In 2016 nearby futures rallied 93.5 cents off that low. The move the following year topped out with an increase of 84 cents.

But this year, September futures was able to stay above its July low. Stocks look ready to tighten by 300 million bushels or more, a forecast the continuation chart reflects. September futures easily held above the July low of $3.2975, trading down to $3.4075 before closing at $3.51. 

The optimism of this pattern was reflected by the attitudes of farmers about what to grow in 2019. Farm Futures first survey of planting intentions for next year showed corn acreage increasing nearly 2%, to 90.8 million. Farmers said they want to cut by soybean seedings by 2.3% to 87.5 million after planting more soybeans than corn in 2018 for the first time since 1983. 

USDA forecasts soybean stocks will swell to 785 million bushels over the next year, a record surplus. Chinese tariffs further cloud the outlook for demand. Nonetheless, nearby futures in August were able to stay above July lows on the nearby chart, something they haven’t done since the 2012 drought year, when the market put in its all-time high. 

That perhaps is a ray of hope the worst of the bean market is history. That thesis could be put to the test soon, when USDA updates its production forecast Sept. 12. With traders bracing for an even bigger crop than USDA forecast Aug. 10, the market could be poised decide if enough bearishness is enough.

 

Corn has followed wheat lately, and for good reason. Production of both crops around the world is falling due to weather problems in major exporting countries. That should help export demand. Still, corn exports have never topped 2.5 billion bushels and they likely won’t in the year ahead, either. 

But lower world inventories of wheat helped boost U.S. prices because the market is a world stage. The same influence could help corn too. 

In the meantime, growers face very weak basis in some areas, especially those influenced by the river system. The highest early September barge freight rates on the Mid- and Upper Mississippi River since Hurricane Katrina in 2005 caused shippers to lower corn basis to cover costs. Still, deliveries against September corn futures on first notice day were modest, 137 contracts, even though basis on the Illinois River was 18 to 53 cents under the board.

Weak basis and December to July 2019 futures carry trading at new highs are the market’s way of urging farmers to store. Most farmers will listen, helping the market recover once the crop is tucked away in storage.

 

Soybeans haven’t provided much good news for growers in 2018. But a funny thing happened on the way to the poor house: Many producers may eke out a profit on this year’s crops, even if China stands firm on its 25% tariff against imports from the U.S.

Most producers forward priced some of their production on the spring rally. Those who do have nearly half of their expected crop locked in, according to our latest Farm Futures survey. Add in Market Facilitation Program payments of $1.65 a bushel on 50% of their production, and these growers look likely to make a little money. 

The key is to crunch the numbers hard now. Better than average yields should lower the cost of production. Basis collapsed in many places, but November to July 2019 carry in the futures market hit 49 cents into September delivery. Storage hedges on soybeans don’t normally work well but selling a post-harvest bounce could be a way to help insure that potential profits don’t slip away.

 

Wheat exports are off to a slow start, despite estimates of global production that keep ratcheting lower. Whether end users begin to get serious about securing supplies may depend on what governments in Russia and Ukraine due to limit exports from their disappointing crops. 

Russian ag ministry officials met in August with representatives from the country’s livestock sector who are worried about high costs and limited supplies of feed. Officials next meet with exporters, amid rumors of a cap on sales. These same rumors surfaced from Ukraine, and every time they do, the market jumps. 

U.S. stocks don’t look like they tighten significantly in the year ahead, because other countries are eager to sell off their surplus. But a rising tide of prices overseas could help lift U.S. futures to a test of August highs, a chance to hedge inventory and make more sales of 2019 crop wheat. 

Bryce Knorr first joined Farm Futures Magazine in 1987. In addition to analyzing and writing about the commodity markets, he is a former futures introducing broker and is a registered Commodity Trading Advisor. He conducts Farm Futures exclusive surveys on acreage, production and management issues and is one of the analysts regularly contracted by business wire services before major USDA crop reports. Besides the Morning Call on www.FarmFutures.com he writes weekly reviews for corn, soybeans, and wheat that include selling price targets, charts and seasonal trends. His other weekly reviews on basis, energy, fertilizer and financial markets and feature price forecasts for key crop inputs. A journalist with 38 years of experience, he received the Master Writers Award from the American Agricultural Editors Association.

7AgStoriesNEW051517-1540x800 NolanBerg11/flySnow/SteveOehlenschlager/ThinkstockPhotos

7 ag stories you might have missed this week - Aug. 31, 2018

Need a quick catch up on agricultural news? Here are seven agricultural stories you might have missed this week. 

University of Wisconsin Extension dairy economist Bob Cropp says August Class III milk prices should be around $15 per cwt. Declining cow numbers and slower growth in milk production are contributing to the price increase.  – Wisconsin Agriculturalist

Farmers can begin signing up for trade aid beginning Sept. 4. The $4.7 billion in direct payment aid is to assist farmers who have been negatively impacted by retaliatory tariffs. In other trade-related news, President Trump announced he may levy more tariffs on China as soon as next week. And, negotiators from the United States and Canada are working to reach a NAFTA deal.  – Farm Futures

A new study by the Environmental Working Group shows many popular oat-based cereals and snack foods contain what the group labels as problematic levels of glyphosate residue. The benchmark is based on what the EWG determined to be “unacceptable,” and that its standard is more than 100 times more strict than the current EPA guideline. – Kansas Farmer

Environmental groups are asking a federal appeals court to overturn the Environmental Protection Agency’s approval of XtendiMax. The herbicide’s main ingredient is dicamba. – Farm Futures 

What factors will impact land prices in your area this fall and winter? In areas where there’s a big crop, expect to see continued land market stability. If crop yields are disappointing, there is potential for softness in the local land market. Also, pay attention to farm bill negotiations. Recent land sales in Iowa have ranged from $2,950 per acre to $10,550 per acre. – Wallaces Farmer 

There is enormous potential for innovation to transform African agriculture. Africa has the among the lowest agricultural yields in the world and the highest prevalence of the world’s undernourished people. - Forbes 

A website, dairyproposals2018.com, has been developed for people to submit their proposals to fix the current dairy pricing system. – American Agriculturalist 

And your bonus.

Four historic barns are on the route for this year’s Knox County, Ohio, Barn Tour on Sept. 8. Featured are the Kirk barn, the Overholt barn, the Thompson barn and Warwick barn. – Ohio Farmer

5 Stories not to miss: Nitrogen management, Chlorpyrifos and conservation

In this week's edition of 5 stories not to miss, we get an update on Chlorpyrifos from the EPA. Plus, wondering how to include conservation practices into your lease? We have some tips. And we take a look at a site-specific nitrogen application study. Check out this week's gallery. 

Midwest agronomists talk August crop progress

This fourth report of 2018 from Winfield United agronomists in eight Midwest states show corn and some soybeans maturing ahead of normal.

Corn harvest in many areas may be two to three weeks ahead of schedule. All agronomists recommend scouting now to determine corn harvest order by field as nutrient deficiencies, diseases and insects may have compromised stalk quality leading to early lodging. Who has time for down-corn harvest?

Here’s a brief highlight by state. Click through the gallery to get all the details for your state.

 

Illinois: Foliar fungicides helped on corn and soybeans (like in many states), as non-treated fields show more gray leaf spot and frogeye leaf spot.

Indiana: Corn and soybean diseases are increasing, causing potential to impact yield.

Iowa: Rapid growth (as in many states) may have challenged corn stalk integrity; recommend harvesting at least 1/3 of most vulnerable corn acres before cutting soybeans.

Michigan: Two-thirds of the state is experiencing varying levels of drought.

Minnesota: Corn fields without in-season nitrogen applications are showing deficiencies (like in numerous states).

Ohio: Outbreaks of gray leaf spot, northern corn leaf blight and stalk rots in corn on the rise. Soybeans showing Sudden Death Syndrome (SDS), frogeye leaf spot and cercospora diseases.

South Dakota: A lot of crop variability across the state—wet areas showing nutrient deficiency, dry areas are harvesting corn for silage.

Wisconsin: Crops showing accelerated maturity (like numerous states). Disease pressure and nutrient deficiency are higher than normal.

Max Armstrong's Daily Updates

MIDDAY Midwest Digest (August 31, 2018)

In today's Midday Midwest Digest, we learn how the West Nile Virus is taking lives in the Midwest. The main symptoms are flu-like and include a fever with body aches. The mosquito carried virus will be a problem until the first hard frost this fall. Plus, many are talking about the thousands of earthquakes being felt in Harper County, South Dakota. The area has been having the earthquakes since 2012 when fracking began there. And a set of parents in Ann Arbor, Michigan are fighting for their children's playhouse. The couple didn't secure permits from the city and so far they have racked up $1,200 in fines and could face up to $5,000 more plus jail time. Check out today's Midday Midwest Digest. 

money in soybean field Simazoran/Getty Images

Additional tariffs?

Soybean bears are again paying close attention as Washington talks about moving forward with an additional $200 billion in tariffs, perhaps as early as next week. The escalation of a trade war with the worlds #1 buyer of soybeans does very little to encourage or help incite a rally. There is also some negativity associated with comments from Chinese delegates who suggest their total soybean imports for 2018-2019 might be closer to 86 MMTs vs. the current USDA estimate of 95 MMTs .

Keep in mind, there was also another case of African Swine Fever discovered in eastern China, which is spooking the trade to some degree. Many sources are thinking the actually number of cases are being under reported. With China being home to almost half of the worlds pig population, just seeing them sneeze can cause many inside the trade to worry about wide spread contagion.

From my perspective, the much bigger concern is how long the trade war between the U.S. and China will last? I continue to hear comments circulating inside the trade that China has enough supply to make it through November, but December and January appear much more uncertain. In other words, they may ultimately have to purchase 12 to 15 MMTs of U.S. soybeans to bridge the gap until new-crop South American production can become available.

Here at home, the trade is trying to digest even more bearish news, as the well respected FC Stone pushed their soybean yield forecast from 51.6 to 53.8 bushels per acre vs. the USDA's current estimate of 51.6 bushels per acre. If this type of yield number is actually harvested, there's worry that it could push U.S. ending stocks north of a massive +950 million bushels. I still see more downside ahead...

The opinions of the author are not necessarily those of Corn+Soybean Digest or Farm Progress.

CHECK OUT ALL THE DAILY INFORMATION IN THE VAN TRUMP REPORT

Precise Conservation
8.31 technology

We are misappropriating our limited resources

The arguments to increase the number of publicly funded conservation employees has admittedly run its course. Therefore, the need to update technology in soil and water conservation is blatantly obvious. We know we all need to accomplish more with less. Let’s end the pretext for our lack of progress, and get on with improving technology. Before you respond and tell me why this is impossible, let me provide a response to the Top 5 arguments I hear for not improving technology.

#1: Soil and water conservation budgets are limited.  Resources are limited, and the funds to invest in technology are not available.

All businesses/organizations/agencies have limited resources.  Even tech companies, like Apple, will tell you they have limited resources.  How companies use limited resources however, is the critical factor. Improving soil and water conservation technology is more about the lack of collaborative resources than about the lack of financial resources. If 20 states would collaborate to invest the cost of just one employee per state, ($100,000/year including benefits) they would have an available operating budget of $2 million/year.  That $2 million/year could make a significant dent in a budget directed toward building a conservation technology platform.  Yes, for the cost of one employee each, 20 states could finance a partnership that could build-out a state-of-the-art technology platform to deliver soil and water conservation. 

#2: Soil and water conservationists are already using the best available technology.

The science of soil and water conservation far exceeds any technology available to conservationists.  For example, the USDA Agricultural Research Service (ARS) in Oxford, MS has developed the science required to model sediment delivery, from an entire field, to a water body.  Today, most technical conservationists can only calculate the level of erosion that is occurring in one point in a field.  Better technology, that incorporates current science, would allow conservationist to show how different practices affect the amount of sediment leaving each part of the field and the total amount delivered to a stream. That piece of information would fundamentally change how we interact with farmers.

#3: New technology will only make the implementation of soil and water conservation more complicated.

No one wants technology that makes life more complicated.   The real value of technology is taking complicated science and making life better, but also easier. The technology to make our smart phones work, is just one example.  The processes running in the background of a smart phone are really, really complicated; well beyond what I can comprehend.  But tech companies have used complicated computer science and built an easy-to-use device.  When was the last time you read the owner’s manual before you used your smart phone? Technology to plan and design soil and water practices can be just as user-friendly.

#4: Conservationists could never trust software that is developed by a third party

When providing publicly funded recommendations to farmers, both conservationists and taxpayers need assurances these recommendations will reasonably meets USDA’s Natural Resources Conservation Service (NRCS) standards and specifications. This does not mean the software must be developed by government. However it does mean the inputs, methodology, and outcomes must be transparent, so a reviewer can evaluate the science and processes behind the technology and have confidence in the results. 

#5: Technology will put conservationists out of work.

Conservationists have more work than they can possibly do.  Even if their efficiency quadrupled, conservationists would still have too much to do.  Before bringing on more conservationists to help with the work, we need to identify how best to equip them to improve efficiency. I believe more employees can’t make a dent in the work, without smart technology.  But then there’s the question of cost.

For convenience, let’s say a state hired 2 new conservationists. One state agency person told me they budget $100,000/year/employee (benefits included). In most Midwestern states, there are approximately 80 counties. Two full-time employees, serving the entire state could only contribute the equivalent time of 6 days/county/year (see math below.) Those 6 additional days of employee time in each county seem rather insignificant when there is an average of 800 farmers/county.  We cannot afford the staff necessary to accomplish our soil and water conservation goals if we keep doing what we have always done.

But what if we spent that $200,000/year on upgrading technology?  If 10 states would collaborate, it would provide a technology budget of $2,000,000/year.  If spent wisely, this could provide a lot of smart technology. 

Do the math: 

2 employees/state x $100,000/employee = $200,000/state
2 employees X 240 staff days/year ÷ 80 counties = 6 days/county/year of additional staffing


If I have missed any arguments, please take the time to send them my way.  I am yet to hear an argument, for staffing over technology, that is worth considering.  If we are going to be serious about meeting our soil and water quality goals, we need to get serious about technology.  Let’s quit stalling and get on with building, buying, and/or licensing technology that is going to make us all more efficient. 

sorghum close

Swisher County Corn and Sorghum Tour set for Sept. 11 in Tulia

The Texas A&M AgriLife Extension Service and Swisher County Ag Committee will host a corn and sorghum tour Sept. 11 at Attebury Grain, 1205 N.W.  5th St. in Tulia.

Registration will begin at 10:45 a.m. The fee is $10. Two Texas Department of Agriculture continuing education units – one general and one integrated pest management will be offered.

After registration, the tour will move to the Kennedy Montague Farm, located 4.5 miles east of Tulia on Texas Highway 86, where participants will view irrigated corn and dryland sorghum fields, said John Villalba, AgriLife Extension agriculture and natural resources agent for Swisher County.

Dr. Calvin Trostle, AgriLife Extension agronomist from Lubbock, will present information on corn and sorghum management. Also, Dr. Ed Bynum, AgriLife Extension entomologist in Amarillo, will discuss insect identification and concerns, as well as recommended control of pests.

Lunch is included and will be provided at Attebury Grain after the field visit.

Those planning to attend should RSVP by Sept. 7. For more information, contact the AgriLife Extension office for Swisher County at 806-995-3726.

Max Armstrong's Daily Updates

MORNING Midwest Digest August 31, 2018

In this Morning Midwest Digest, we find out how parts of western and northern Michigan are still without power and the impact of 16 tornadoes is having on Wisconsin. Plus, southern Kansas reported four earthquakes this week, Find out what some are saying could be causing them. And the opioid crisis is impacting the University of Michigan's pocketbook. A $4.3 million dollar fine is levied against the college after a bookkeeping problem showed errors in how some employees were able to acquire drugs. Check out the Morning Midwest Digest. 

RandyCooperUnionCityBRobbDFP Brad Robb
Randy Cooper, from left, Ross Bradley, district sales manager, Tennessee, Bayer Crop Science, Randy’s basketball-playing grandson, Carter, and Cooper’s son TJ, pose for a quick picture during the recent DeKalb, Asgrow, Deltapine Field Day in Union City, Tenn.

Randy Cooper: Even after 42 crops, good farming decisions paramount

Randy Cooper attended the Monsanto field day in Union City, Tenn., to hear about next year’s soybean and corn varieties, their trait technologies, and if those in the know think dicamba will be labeled in 2019. After 42 years of farming, he knows good decisions still make or break any crop year.

He hangs his hat every night in a house located in an unincorporated community outside of Sharon, Tenn., called Sidonia. He has seen the good and the bad of farming. “I’ve known a number of good people who went broke farming, and it really wasn’t their fault,” says Cooper. “It was just bad luck — and unfortunately, that has a great deal to do with success or failure.”

A former owner of an Allis Chalmers dealership, he once had milk cows, but now farms corn, soybeans, and a little wheat just to appease some landowners. He has a good and long-standing relationship with a vital partner — his local banker.

Looking back, he’s never had a crop year that prevented him loading up the planter the next season. “I feel sorry for young farmers who are trying to get started in today’s farming business environment,” says Cooper. “You almost need to have ‘old money’ to get established because one bad year could do you in.”

The Important Things

Cooper saves a dollar where he can and quickly recognized the value of RTK and variable rate technologies. His son has a scouting business and they use drones to help make in-season decisions related to nutrients and pests.

“The days of being profitable by just busting your back are gone,” says Cooper. “Sure, you have some long days, but farming smart and taking advantage of proven technologies applicable to your operation just makes sense.”

Variable rating lime has always saved him money. His ability to fix his own equipment has always been advantageous to each year’s bottom line. He grids everything. He is all dryland. He knows the importance of following the market and pulling the trigger when the numbers are right.

“You can’t get greedy, but you have to be willing to make an educated decision,” says Cooper. “I would probably be a better farmer if I were a better long-range planner.”

He always tries to avoid going over the same bad tracks twice and strives to learn something every day.

“I come from a multi-generational farming family,” says Cooper. “I’m 60 years old and I’ll die on this farm — learning.”