Monthly Archives: September 2013


Ag Economist: 2013 a Transition Year for Grain Farmers

SEPTEMBER 23, 2013
By: University News Release

Shifting grain prices in the aftermath of the 2012 drought could mean a shift in input prices for 2014.
By Jennifer Stewart, Purdue University
Changes in the economics of grain production after drought that led to record-high farm incomes in 2012 could mean a shift in the demand for and prices of agricultural inputs for the 2014 crop, a Purdue Extension agricultural economist says.
The 2012 drought-ravaged crop left short supplies and high demand, with farmers receiving high prices for the grain they were able to produce and high insurance indemnities on covered crops that were destroyed. High grain-farm incomes capped a series of years with abnormally high grain prices. But with some drought relief in major corn- and soybean-production states leading to expected higher yields and lower commodity prices, grain farmers can expect to see changes in what they pay for inputs, such as seed, fertilizers, fuels and chemicals, for the 2014 crop.
An apparent shift in market demand for corn and soybeans also could play a major role in what it will cost growers to produce the next crop, Alan Miller said.
“The markets are currently saying they want more soybeans and less corn in 2014, which changes the demand for inputs,” he said. “For example, growers don’t need as much nitrogen fertilizer if they are growing less corn. That ultimately will affect the prices of inputs.”
The big story in 2014 crop production costs, Miller said, is fertilizer prices. Potash and phosphate prices have been declining since the fall of 2012 and are down 15-17 percent since last spring. Nitrogen prices peaked last spring and have dropped about 22 percent this fall. Farmers’ ability to apply fertilizer this fall will help determine what prices will look like for next spring.
“If weather or a late harvest were to keep farmers from applying fertilizers this fall, it could drive fertilizer prices down for the spring,” he said. “Normally, fertilizer prices hit bottom in the early fall, but we will have to wait and see is if the market is weak enough to sustain the drop into the spring.”
Nitrogen prices also are falling because the U.S. is now a low-cost producer. North American fertilizer producers are expecting historically strong sales this fall.
During the height of the ethanol boom, farmers were growing more corn and using more nitrogen. Plus, natural gas prices were high. Since then, natural gas prices have fallen, which has led to renewed interest in investing in domestic production capacity for nitrogen fertilizers. This leads to greater supplies of U.S.-produced nitrogen in the future if the cost of producing it here stays well below its market price as it is now.
“Corn growers really will start to see the full effect of more domestically produced nitrogen in 2015,” Miller said. “We have been importing more than 50 percent of our nitrogen fertilizer, meaning supply disruptions could easily impact prices. As we produce more of our own, we will import less. The bigger supply will benefit corn producers.”
Recent prices for nitrogen […]

By |2013-09-23T07:47:28-05:00September 23rd, 2013|Commodities|0 Comments

U.S. Crop-Insurance Claims Jump Amid Planting Delays, USDA Says

SEPTEMBER 18, 2013
By: Bloomberg

U.S. farmers who were prevented from planting by rain this year filed crop-insurance claims on six times more land than last season, the government said.
Farmers filed claims on 8.213 million acres of grains, oilseeds, cotton and sugar as of Sept. 1, according to revised estimates released today by the U.S. Department of Agriculture’s Farm Service Agency. That compares with 7.71 million acres at the beginning of August and last year’s total of 1.239 million acres. The FSA is set to update its data monthly through January, with its next report on Oct. 16.
Parts of the Midwest, including top corn and soybean growers Iowa and Illinois, saw double the normal amount of rain in April and May, when farmers usually sow crops, National Weather Service data show. Farmers planted a total of 246.3 million acres enrolled in government programs, including failed acreage, down from 250.76 million a year earlier, the FSA said.
“Some parts of the Corn Belt have been hit by weather problems throughout the season,” said Kieran Walsh, a broker of agricultural derivatives at Aurel BCG in Paris. “Delayed plantings and the higher number make sense.”
Crop prices rallied today on the Chicago Board of Trade as corn for delivery in December rose as much as 2.6 percent to $4.685 a bushel and soybeans for delivery in November added as much as 1.2 percent to $13.65 a bushel. Corn is still down 45 percent since reaching a record $8.49 a bushel last year as drought slashed U.S. yields, while soybeans slumped 24 percent from last year’s all-time high of $17.89 a bushel.
Corn Harvest
Crop-insurance claims covered 3.57 million acres of corn as of Sept. 1, up from 3.41 million in August and from last year’s total of 262,467 acres, the FSA said. The USDA said Sept. 12 farmers might harvest a record 13.843 billion bushels of the grain, more than previously estimated, as yields recover from last year’s drought.
Soybean claims were filed on 1.69 million acres, compared with 1.62 million in August and 159,579 acres last year, according to the report. The U.S. harvest may total 3.149 billion bushels, less than expected in August while still 4.4 percent more than last year.
Farmers filed crop-insurance claims on 1.98 million acres of wheat, up from 1.74 million in August, while rice claims at 418,021 acres rose from 408,737 acres a month earlier, the FSA said. Claims for upland cotton increased to 205,410 acres from 197,116 acres, according to the report.

By |2013-09-18T15:43:55-05:00September 18th, 2013|Articles|0 Comments

Ethanol Drops to Three-Year Low After Corn Output Estimate

SEPTEMBER 13, 2013
By: Bloomberg

Larger corn crop is expected to lower costs for distillers, could lead to re-opening ethanol plants.
Mario Parker
Ethanol plummeted to a three-year low, expanding its discount to gasoline, after a government report showed corn production will be higher than previously estimated, lowering costs for distillers.
The spread widened by 8.55 cents to 91.47 cents a gallon after the Agriculture Department said corn output will be 13.84 billion bushels this year, more than the 13.6 billion estimated in a survey of 34 analysts and trading firms by Bloomberg.
“The cheaper corn should turn on some of these plants,” said Jim Damask, a manager at StarFuels Inc. in Jupiter, Florida. “There’s a little more pressure on it after the report.”
Denatured ethanol for October delivery slid 3.5 cents, or 1.9 percent, to $1.848 a gallon on the Chicago Board of Trade, the lowest level since Aug. 24, 2010. Futures have dropped 16 percent this year.
Gasoline for October delivery rose 5.05 cents, or 1.9 percent, to $2.7627 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.
Corn for December delivery fell 6.25 cents, or 1.3 percent, to $4.6625 a bushel in Chicago. September corn slumped 0.75 cent to $4.79. One bushel makes at least 2.75 gallons of ethanol.
Record Planting
Farmers responded to last summer’s drought that destroyed crops by planting a record amount of acres of the grain. Higher corn costs had forced ethanol plants to shut or reduce output.
Ethanol production in the week ended Sept. 6 rose 3.5 percent to 848,000 barrels a day, data from the U.S. Energy Information Administration show. That’s down 12 percent from the record 963,000 barrels a day in December 2011.
Stockpiles last week climbed 0.3 percent to 16.3 million barrels, the most since Aug. 16. Ethanol blender inputs, a measure of demand, tumbled 3.1 percent to 834,000 barrels a day, an eight-week low. Imports dropped 59 percent to 15,000 barrels a day last week.
A 2007 energy law requires the U.S. to use escalating amounts of ethanol in gasoline. The government monitors adherence to the program by using tracking certificates attached to each gallon of biofuel called Renewable Identification Numbers, or RIN’s. The certificates can also be traded among companies.
Corn-based ethanol RIN’s slipped 1 cent to 63 cents, data compiled by Bloomberg show. Advanced RIN’s, which cover biodiesel and Brazilian sugarcane-based ethanol, were unchanged at 71 cents.

By |2013-09-13T15:31:11-05:00September 13th, 2013|Commodities|0 Comments