Yearly Archives: 2013

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.

JULY 23, 2013
By: Ed Clark, Top Producer Business and Issues Editor

The debate about the future of biofuels mandates is running hot and heavy in Congress with the outcome too close to call. What would be the impact on corn prices if the ethanol mandate were wiped out entirely?
Not great, so far as current ethanol use is concerned, says Bruce Babcock, Iowa State University ag economist.

(Click to read: What Farmers Need From Biofuels Policy in 2014)

“The mandate increases corn prices by about 25¢ per bushel,” Babcock says. He spoke July 17 at the Federal Reserve Bank of Kansas City’s Agricultural Symposium. “The impact of policy mandates on 2013/14 producer profitability is modest,” he says. This year’s Renewable Fuels Standard (RFS) mandate is 13.8 billion gallons of ethanol, increasing to 14.4 billion gallons next year, and 15 billion gallons by 2015. A 15 billion gallon mandate has only a modest increase on corn prices as well, in Babcock’s view.
His outlook assumes favorable weather now through 2014/15, thus big crops and much lower corn prices than this year, potentially reaching sub-$4 levels for 2014/15.
“Without a 2014 drop in acreage, stocks could grow to 2.5 billion bushels,” he says. That would represent a tripling in stocks from the current 2012/13 marketing year. Obviously, with or without a mandate, continued ethanol demand is important.
What gives and why does he believe the mandate would only have a minor impact on corn prices and ethanol demand?
“If you didn’t have the mandate, ethanol would still be 9% to 10% of the nation’s fuel supply,” Babcock says. While oil companies did not welcome the mandate in the RFS, they found themselves making money by using ethanol as a cost-effective octane booster, taking lower octane petroleum and increasing it to required octane levels for ultimate sale, he says.
Ironically, at the same time oil companies are fighting the ethanol industry over higher blends in the future, ethanol is making them money today. “Since it’s profitable for oil companies to use ethanol, I assume that even without a mandate, they would continue to be rational when it comes to buying it,” Babcock says.
Still, there are two variables that could, without a mandate, cause lower ethanol use. “If gasoline prices—caused by a major decline in crude oil prices—drop precipitously, then mandates have a larger impact,” Babcock says.
If weather conditions are unfavorable and moves corn prices higher, mandates will boost corn prices by more than under unfavorable weather, he adds.
Eliminating the mandates would have another impact, Babcock says. The value of RINs, or ethanol production credits, that oil companies purchase to meet the mandate, currently are valued at $1.35 per gallon. Without the mandate, the RIN price would fall to zero, Babcock says. Even with a mandate, he sees RIN prices declining.
Babcock says that without question, the mandates contained in the RFS have been important in creating 3 billion bushels in additional annual corn demand, or net 2.25 billion bushels, factoring in distillers dried grains.
Corn ethanol production has increased by 8.5 billion gallons […]

AUGUST 21, 2013
By: Jen Russell, AgWeb.com Managing Editor

The top two corn-producing states go head-to-head on the Pro Farmer Midwest Crop Tour.
It’s Day Three of the 2013 Pro Farmer Midwest Crop Tour, and as scouts make their way through Iowa and Illinois, the word that keeps coming up is “variability.”
“The problems we’re seeing over here all go back to the planting process and the conditions that this crop was planted into,” says Pro Farmer editor Chip Flory, reporting from the Western leg of the Tour.
He said corn fields in Iowa were all over the map in terms of maturity.
“We were in one field that literally had four different levels of development on the corn that we were in–everything from very late milk to early dough on one ear, down to ears that we really couldn’t even count because they were just shooting silks,” Flory says. “The range of development in some of these fields is really astounding and more dramatic than I expected to see.”
Flory says that the weather this year hasn’t done Iowa any favors, either.
“It’s so strange to be going through fields that have planting issues because it was so wet during the planting season, and you’ve got cracks that are eight inches into the ground now,” he says.
Similar Story in Illinois
On the Eastern leg of the Tour, Pro Farmer senior market analyst Brian Grete says corn samples on his route so far have been anywhere from 100 bu. per acre to over 200 bu. per acre.
“It’s been all over the board in terms of variability, not only from field to field but within each field,” Grete says. “A lot of the stuff that I’ve noticed here has been corn on corn acres are underperforming the corn that was planted on soybean acres from last year.”
He says he’s still seeing some dry conditions.
“Soil conditions are probably a little bit better than what I saw yesterday, but I came through a really dry area in eastern and northeastern Illinois. So, while it’s better, it’s not great by any means,” he says.
So will Illinois’ corn crop do better than Iowa’s this year?
“There’s potential there,” Grete says, “but it’s not uniform across the state, at least on the route that I’ve been on. We’ll see what the numbers spit out when all of the routes are tabulated tonight.”