Local Grains

Last Updated Aug 16, 2019 7:57 AM*
Corn Old Crop New Crop
Pro Coop, Terril - 1 -.09 -.31
Lakota Ethanol - GPRE, Superior .04 -.22
CFE, Ocheyedan - Old 1 .16 -.25
Stateline Co-op, Halfa .05 -.23
Poet Bio Refining, Emmetsburg -.05 -.25
Max Yield, Mallard -.09 -.33
Max Yield, Fostoria -.09 -.35
Max Yield, Kerber +.10 -.22
Ag Partners, Fonda -.05 -.30
Ag Partners, Hartley +.13 -.30

Soybeans Old Crop New Crop
Pro Coop, Terril - 1 -.87 -.87
Meadowland Co-op, Lamberton,MN -.93 -.85
CHS, Fairmont -.67 -.63
CFE, Ocheyedan - Old 1 -.96 -.93
First Co-op, Laurens -.89 -.90
Max Yield, Fostoria -.93 -.90
Max Yield, Mallard -.93 -.90
Ag Partners, Emmetsburg -.89 -.90
Ag Partners, Hartley -.93 -.90
WFS Co-op, Dolliver -.87 -.89

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*This information was current as of this date. We believe it to be accurate but assume no responsibility.

Commodity Headlines

Trump Hints at More Trade Aid as Farmers Absorb ‘Body Blow’

August 6, 2019 11:11 AM

Source:  bloomberg.com

President Donald Trump said he’s prepared to deliver more aid to farmers hurt by the trade war with China, but concerns are growing that the U.S. agriculture industry could suffer a long-term loss of market share as other countries rush in to fill Chinese orders.

The nation’s leading farm group on Monday called China’s decision to halt imports of U.S. agricultural products “a body blow” to the nation’s farmers, a crucial constituency for Trump.

The president responded with assurances of continued assistance to farmers in a tweet Tuesday morning, suggesting he would add to the $28 billion in trade aid he has approved for farmers over the past two years.

“As they have learned in the last two years, our great American Farmers know that China will not be able to hurt them in that their President has stood with them and done what no other president would do,” Trump said in a tweet. “And I’ll do it again next year if necessary!”

Trump so far has maintained support among the rural voters who overwhelmingly backed his 2016 election with federal assistance partially making up for farmers’ losses from tariff dispute. But farmers and their lobbyists in Washington increasingly respond with demands for “trade not aid” as shifts in global trading patterns harden.

Brazil and Argentina are capturing larger shares of soybean sales to China, the largest export market for the oilseed.

Farmers in Brazil are also investing to convert more land to soybean production to satisfy Chinese demand, raising the country’s long-term capacity to grow crops. Fertilizer Giant Yara International ASA forecasts Brazil’s soybean planted area will rise 2.5% this year as farmers shift pasture land and sugar-cane areas to the crop.

Archer-Daniels-Midland Co. Chief Executive Officer Juan Luciano said on an Aug. 1 conference call with analysts that the damage to U.S. agriculture grows the longer the tariff dispute continues, though he doesn’t think it has yet done irreparable harm.

“People find alternatives and eventually they become a little bit more comfortable with those alternatives,” Luciano said. “So this is not good for the U.S. farmers.”

Cannot Last Forever’

Zippy Duvall, president of the the American Farm Bureau Federation, the nation’s largest and most influential general farm organization, said Monday U.S. farmers are “grateful” for the money the Trump administration has given them so far but “we know that aid cannot last forever.”

He said China’s import cut-off was “a body blow to thousands of farmers and ranchers who are already struggling to get by.”

Roger Johnson, president of the National Farmers Union, the nation’s second-largest general farm group, said Trump’s “strategy of constant escalation and antagonism” has “just made things worse.” America’s family farmers and ranchers “can’t withstand this kind of pressure much longer.”

Duvall said the tariff war is worsening the plight of a farm sector already reeling from low commodity prices and bad weather. U.S farm exports to China had already fallen $1.3 billion during the first half of the year, he said.

“Now, we stand to lose all of what was a $9.1 billion market in 2018, which was down sharply from the $19.5 billion farmers exported to China in 2017,” Duvall said.

Trade Aid

Last year, the administration announced $12 billion in aid to farmers hurt by the spat. Trump followed that up with another $16 billion in trade assistance this year.

Prior to Trump’s tweet, U.S. Agriculture Secretary Sonny Perdue had warned farmers not to count on more trade aid. Agriculture Department spokeswomen didn’t immediately respond to requests for comment on Trump’s tweet.

Trump won overwhelming backing from rural voters in 2016 and their continued enthusiastic support is crucial to his re-election bid. In June, 54% of rural voters approved of Trump’s job performance compared with a national approval rating of 42%, according to a Gallup survey of 701 self-identified rural voters.

Farmers optimism rebounded in July, after the latest tranche of trade aid was announced and before the escalation in the trade war. The Purdue University/CME Group’s agricultural sentiment index increased to 153 points in July from 126 in June, according to a survey of 400 agricultural producers.

Why MFP 2019 Will Be A Disappointment For Some

July 16, 2019 11:06 AM

Source:  PRO AG

The flow of meaningful information from USDA leadership about MFP 2019 payments has remained painfully slow. Yes, there was the big announcement, but there has been exactly zero information that producers can plug into their farm financial projections to help them plan for the rest of 2019. In the absence of tangible information, we’ve been asked numerous time what 2019 MFP payment rates might be. While there is no way of knowing the exact county-level payment rates, this week’s post considers the big-picture impacts of how a 2019 MFP program might roll-out.

2018 MFP Payments
Before jumping to 2019, it’s worth reviewing the 2018 MFP program. Figure 1 shows how MFP crop payments were distributed across the U.S. These are estimates and only consider crop payments for corn, cotton, sorghum, soybeans, and wheat. Furthermore, the data are total payments made within a county.

As one would expect and intuitively already knew, the MFP crop payments were made where soybean production – a function of acres and yield- were strongest. As figure 1 shows, the Delta regions, Central Illinois, and Southeast North Dakota were the epicenters of the 2018 MFP program.

One observation – that we’ll see as a common theme in this post- is how quickly the payments dropped-off. Southwest NE, Eastern and Western Kansas, and Western Missouri, for example, are large agricultural regions that ‘missed’ most of the 2018 payments. Again, the 2018 payments were based on 2018 production (bushels raised).

The Heavy Hand of Soybeans
In the 2018 program, the payment rates were quite high for soybeans. Figure 2 is interesting as it shows where soybeans make up a large share of a county’s MFP crop eligible acres. Specifically, the chart shows the share of 2018 MFP crops that soybeans accounted for.[1] Again, the Delta region and along the edges of the traditional Corn Belt, had more than 50% of their 2018 acres planted to soybeans.

Note how some states- Oklahoma, Kansas, Nebraska- have regions where soybean’s share of total MFP acres drops off quickly. Take Kansas for instance. In 2018 soybeans were planted on more than 50% of many Eastern Kansas counties total MFP eligible crop acres, but this quickly dropped to fewer than 25% of the acres in the Western counties. This will set the stage for a wide variation of payments across the Midwest.

2019 MFP Payment- Big Picture
On the surface, the USDA’s announcement of $16 billion in 2019 trade aid funding sounds very large. In fact, it was sort of difficult for us to wrap our minds around how far that money might go. First off, however, it’s important to note that only $14.5 billion was earmarked for MFP, or direct payments to producers. How large is $14.5 billion?

Well, in 2018 there were about 294 million acres of corn, cotton, sorghum, soybeans, and wheat planted in the U.S. $14.5 billion across 294 million acres is about $49 per acre. That said, 2019 MFP payments will include more crops than those outlined above and will also make payment to dairy and hog producers too.

The point here is to size-up how big total MFP payments are. Yes, $14.5 billion is a lot of money. That said, there are a lot of slices to come out of the pie. The reality of the situation is that a $50 per acre payment across the five crops above would spend all that money, and more.

Estimating 2019 Payments
Before showing our estimated county-level crop payments, we must mention a few caveats. First, we haven’t gotten all the details from USDA so we have had to make several assumptions to derive figure 3. Because of that, what the USDA publishes as a final estimate will be different from our estimates. Additionally, our assumptions may prove to be inaccurate. So in other words, these are our estimates based on the limited information that we have today.

To derive figure 3, we used a five-year average for corn, cotton, sorghum, soybean, and wheat acres and yields to establish a production base. From there, payment rates for the crops- corn, cotton, sorghum, soybeans, and wheat – were assumed. For corn, soybeans, and wheat – the rates used were from this Bloomberg article. The mentioned payment rates were $2.00/bu for soybeans, $0.63/bu for wheat, and $0.04 for corn.

While the USDA has refuted the article, many elements of the article have held up and this metric hasn’t been specifically denied. For cotton and sorghum, which weren’t mentioned in the Bloomberg article, 2018 rates were used ($0.06/lb on cotton and $0.86/bu on sorghum). If these payment rates change -i.e., corn receives a higher rate and soybeans lower, then the county estimates will change. Additionally, it is possible that USDA won’t even release a per commodity payment rate, but instead, just report county level payment rates. Our assumption is that something like the rates above will drive the determination of the county level payment rates, this may not prove to be accurate.

Second, the purpose of Figure 3 is to illustrate the potential for wide payment variations, not to provide specific county-level estimates. Again, we don’t actually know what the USDA payment rates are going to be, so these estimates are just that. If the USDA would announce their metrics, we could take most of the guesswork out of the estimates, but so far that is not the case.

Wide Variation
Based on our calculations and assumptions, the counties with the potential for the largest MFP crop payments in 2019 are in the Delta region. Keep in mind soybeans are a large share of production (2018), along with the other high per-acre payment crop of cotton.

Outside of the Delta, the largest payment rates across the Midwest will be in the heart of the Corn Belt. In these areas, soybeans are driving most of the payment math while corn is pulling the weighted average lower.

Even within the I-States, county payment rates are likely to slip lower in the northern-tiered counties.

Outside of the Corn Belt, payment rates drop quickly. Consider how much variation states like Nebraska and Kansas have as you move west. This is a case where national- or even state-level- averages will be hard to interpret. 

Wrapping it Up
While we wait for the USDA to announce the county-level MFP payment rates – which could come at any time- producers are left to guess what potential 2019 payments might be. We’ve heard many float the idea of a $50 per acre payments.

For a national average, MFP crop payments will come in well below this level. The math just doesn’t support such large payments given the size of 2019 MFP payment funds (the size of the pie) and the number of commodities that will have claims for payments (the number of slices). However, some counties will likely have much higher rates than $50/acre, and some much lower.

Based on 2018 payment rates and what we know about 2019, soybeans will again drive a large share of 2019 payments. Counties and regions that have traditionally had a large share of their acres planted to soybeans will likely see larger payments. Conversely, counties and regions where soybeans are a minor crop will see significantly smaller payments. States like Kansas and Nebraska will likely see wide variations in payment rates as you move across the state.

Putting this all together, the biggest story about MFP 2019 might be the wide variation of county payments rates. While large payments, say greater than $50 per acre, will likely be possible in some counties and regions, but most producers will see significantly smaller payment rates.

Once the USDA releases these county-level rates, producers can begin to update their budgets. Of course, the next uncertainty will be around the second and third payments. Specifically, how and when will the USDA determine and announce if these payments will be made.

Source: David Widmar, Agricultural Economic Insights

Fairytale Weather Needed for 2019 Crops

July 12, 2019 8:26 AM

Source:  proag.com

After a wet, cool spring caused the slowest planting pace in 40 years, Iowa farmers need “Goldilocks” weather for the remainder of the growing season to produce decent corn and soybean crops this year.

“With such a late start, everything has to be just right the rest of the way for our 2019 crops to be good,” says Dennis Todey, director of the USDA Midwest Climate Hub, based at Iowa State University in Ames. “We need temperatures to be near to above normal, but not too hot. And it can’t be below normal.”

Much of Iowa’s corn and soybeans in 2019 were planted two and three weeks later than normal, and cooler-than-normal temperatures in May and June delayed emergence and development even further. “It wasn’t a storybook start,” he notes.

Weather for rest of growing season

Not too warm, not too cool, not too wet, not too dry. “That’s the kind of weather needed the rest of this growing season,” Todey says. “Some crops, especially in northern Iowa, are at risk of not reaching full maturity even with average growing degree day accumulation.”

For example, a 100-day corn hybrid planted May 25 in Floyd County isn’t expected to reach black layer (mature stage) until early November, more than two weeks after the average date of the first fall frost for that area. Farmers can keep track of growing degree days for their fields with the Mesonet weather calculator.

The National Weather Service forecast for the first-half July is for above-normal temperatures, which will help crop development. But that weather pattern isn’t expected to stay. “It looks like we are going to move back into a cooler, wetter pattern,” Todey says. “That’s pleasant for people and for livestock, but not for corn.”

Wet grain in fall

Cooler weather means fewer growing degree days for corn and soybean crops to mature. “The late planting date leads to concerns in the fall because of the need to extend the growing season to allow crops to mature. Additional drying of grain will likely be necessary,” according to a USDA report by Todey.

Farmers should plan for a longer, wetter fall. “Get propane for grain drying lined up now,” he advises. “It’s too soon to predict when the first freeze could hit. My biggest concern is not that corn won’t make it to maturity. I think most corn will make it to maturity. Unfortunately, we will have some wet corn and probably muddy field conditions.”

He adds, “A perfect Goldilocks scenario — average temperatures midsummer and additional warmth from August on and a delayed first freeze — would benefit crops in Iowa this year.”

New record for wettest 12 months

Iowa recorded its wettest 12-month period on record with 50.73 inches of precipitation since June 2018. That’s about 16 inches above the 30-year average. Conditions turned somewhat drier in June 2019, which put Iowa in better shape for crop progress than other neighboring states.

Iowa crops are faring better than those in Illinois, Indiana and Ohio, where precipitation has been upward of 140% of normal this year. In Michigan and Ohio, less than 70% of the corn was emerged as of June 23.

Iowa and Nebraska are generally behind in crop progress due to late planting, but not as far behind as Illinois, Indiana and Ohio. Eastern Corn Belt areas have had an incredibly wet spring and are way behind normal. Soybean emergence there at end of June was only in the 40% range. The eastern Corn Belt will have a very late crop this fall, and a lot of their acres didn’t get planted.

“Prevented planting acres are going to impact U.S. production this year as we move through the rest of the growing season,” Today says.