News

Issued by Darrel Good, University of Illinois

The USDA’s November forecasts of the size of the 2012 U.S. corn and soybean crops were larger than expected, particularly for soybeans. As a result, the general downtrend in soybean prices since mid-September has accelerated, with January futures now at the lowest level since June 29.

Corn prices have moved into the lower half of the trading range that has been in place since mid-September and December futures are at the lowest level since September 28. So far, prices seem to be following the classic pattern associated with small crops -peaking early in the marketing year and then declining as the year progresses.

The futures market reflects expectations that prices will continue to decline, especially into the 2013-14 marketing year. The expected rebound in South American soybean production, Argentine corn production, and U.S. corn and soybean production in 2013 all contribute to the expectation of lower prices. If those crops are as large as generally expected, prices will be even lower than currently reflected in the futures market.

The USDA is forecasting record South American production of both crops. If planted acreage of corn in the U.S. in 2013 is at the same level as in 2012 and the U.S. average yield is near a trend value of 162.5 bushels, the crop would total 14.6 billion bushels, about 1.5 billion larger than the record crop and record consumption of the 2009-10 marketing year.

Similarly if soybean acreage is maintained at the 2012 level and the average yield is near the trend value of 43.8 bushels, the 2013 crop would reach 3.34 billion bushels, near the record levels of 2009 and 2010. A combination of record, or near record South American and U.S. crops in 2013 would likely push prices down to or below the long term averages of about $4.75 for corn and $11.00 for soybeans.

While the expectation for lower corn and soybean prices in 2013 is reasonable based on historical patterns and prospects for large crops, the timing and speed of the return to more “normal” prices will be influenced by a large number of factors. The final estimate of the size of the 2012 crops to be released on January 11, 2013 is one of those factors.

For soybeans, the pattern of 2012 yield forecasts to date, lower in September and higher in October and again in November, was experienced six other times in the previous 30 years. The yield estimate released in January following harvest in those six years was above the November forecast three times and below the forecast three times. The deviation ranged from 0.1 to 0.8 bushels. History does not provide much guidance for forming expectations this year.

For corn, the pattern of yield forecasts this year, lower in September and October and higher in November was experienced only two other times. The January yield estimate equaled the November forecast in one of those years and exceeded the November forecast by 0.7 bushels in the other. Again, history provides […]

NOVEMBER 2, 2012
By: Rhonda Brooks, Farm Journal Seeds & Production Editor

An adequate amount of seed corn is available to plant in 2013, but the popular hybrids will be in tight supply.
In the future, you may look back on 2013 as the year you were happy to get your second or even third choice of corn hybrids. That’s because industry leaders say many of the most popular hybrids will be available in only limited supplies as a result of the historic 2012 drought.
Corn hybrids hit hardest by drought this past summer were the 105-day and later maturity ones, notes Kent Schulze, an associate with Minnesota-based Cornland Consulting. Schulze estimates that 90% of the total U.S. seed corn crop was grown this year in drought-impacted areas.
“Even the best-irrigated fields in those droughty areas will come up 10% to 20% off normal yields, and I expect dryland (seed corn) acres will be worse,” Schulze says.
Heat was also a big driver in seed corn production this year, according to Dave Snedden, North America row crops manufacturing lead for Monsanto. He says prolonged high temperatures for multiple days and nights during the pollination period were just as hard on seed corn crops as the lack of moisture. To mitigate such risks, Snedden says Monsanto spreads its seed corn crop acres across the U.S. from east to west and north to south.
“Our seed crops are grown on a mix of soil types and under a variety of agronomic conditions,” adds Dan Case, DuPont Pioneer supply planning manager.
More than enough.
Seed companies routinely produce more seed than is needed in any given year. Such standard plans were in place this year.
“We planned for twice the number of acres we actually sold corn for in 2011,” says Scott Beck, vice president of Beck’s Hybrids. He adds the company has an adequate supply of its leading hybrids going into 2013.
Other companies report they also have adequate amounts of seed for farmers to plant next spring, thanks to a combination of carryover seed from previous years, summer production and winter production, explains Craig Newman, chief executive officer for AgReliant Genetics, Westfield, Ind.
Schulze says enough seed corn is available to plant 95 million corn acres in 2013 if companies clean out their warehouses and existing pipeline. “But once you get into the corner of the warehouse, people are going to get their third or fourth choice of hybrids,” he contends.
That’s not necessarily all bad, he adds, explaining that older seed products in warehouses may have higher germination and overall quality than some of the hybrids from this year.
“Farmers still need to be thinking about selecting hybrids best suited for their ground—hybrids that are solid, stable performers—and planting them in a timely manner,” says Chris Garvey, general manager of Mycogen Seeds at Dow AgroSciences.
Winter wonderland.
Seed production now underway in Argentina and Chile will play an important role in boosting the availability of hybrids for U.S. farmers next spring.
Newman estimates winter production will provide between 15% and 20% of the seed corn farmers plant […]

By Robert Burns, Texas AgriLife Extension
October 31, 2012

El Niño has fizzled, and you can forget the forecasts of a wetter, cooler Texas winter, said the state climatologist.
Though many agricultural producers may be disappointed in not having a wet winter to replenish soil-moisture levels, there’s some good news mixed with the bad, said Dr. John Nielsen-Gammon, state climatologist and regents professor at Texas A&M University.

Despite a now wavering El Niño, the National Oceanic Atmospheric Administration was still predicting warmer-than-average temperatures in much of the south. But it’s less of a sure thing than it was a month or so ago when a strong El Niño was expected , said the Texas state climatologist. (NOAA contributed image)

“The closest thing to a sure bet is that this won’t be another La Niña winter,” Nielsen-Gammon said. “But next year the odds are La Niña will ramp up again, and with them the chances that next winter will be a dry one.”
As recently as late August, forecasters, including those at the National Oceanic Atmospheric Administration’s Climate Prediction Center, were expecting a stronger-than-average El Niño to develop in the tropical Pacific, he said.
The earlier prediction of a strong El Niño was good news for drought recovery for most of the state, Nielsen-Gammon said. Though an El Niño’s effects are usually stronger in the southern parts of the state and along the Gulf Coast, it generally leads to wetter, cooler weather for the entire state.
Typically, the development of an El Niño begins with warmer ocean temperatures, at least about 1 degree Fahrenheit, above normal, which is what climatologists were seeing during the summer, he said. The situation, once it begins, usually results in a “feedback situation” that further raises ocean temperatures and magnifies the effect.
“As the warm temperatures spread across the Pacific, the winds weaken, allowing the warm water to remain at the surface longer before losing any of its heat,” Nielsen-Gammon said.
“However, the feedback failed to develop, and now we are expecting a neutral situation,” he said.
“Neutral situation,” means there are now equal chances of either a wet or dry winter, Nielsen-Gammon said.
“In the meantime, the tropical Pacific is likely to stay neutral, he said. This means a good chance that rainfall this spring and summer will also tend to be close to normal, to the extent that Texas weather is ever normal,” he said.

OCTOBER 26, 2012

The global supply of both corn and soybeans will tighten next year as world feed demand remains strong, according to USDA’s latest World Supply and Demand Estimates released in mid-October.
World production of corn is expected to reach 839 million metric tons, down slightly from September’s estimated 841 million metric tons. USDA now estimates that global feed demand will be 504.49 million metric tons, also down slightly from the department’s September projection of 505.84 million metric tons.
With feed demand expected to remain buoyant, the stocks-to-use ratio for the global corn supply has dropped to 13.7%. During the 2007-08 crop year, when corn prices were driven higher by a world wheat shortage, the global stocks-to-use figure was between 17 and 18%. According to Matt Roberts, agricultural economist with Ohio State University, this month’s global stocks-to-use ratio is the lowest since at least 1985.
“Why have we seen the slide in corn prices over the last six weeks? Harvest pressure. The basis has weakened as corn has come off, and for the time being we don’t have that sense of panic,” says Roberts. “When people start to look at the various scenarios of what could happen, we could see corn prices move higher.”
In its recent report, USDA estimates 2012-13 corn production in Brazil at 70 million metric tons, down slightly from the current 2011-12 crop of 72.73 million metric tons.
“If South America comes out with a big crop, that could take pressure off U.S. exports and reduce the draw on the U.S. corn supply,” says Roberts. But that’s a big if in Roberts’ mind because Brazil is just now planting its 2012 crop.
“We have not seen the demand destruction we would need to see to justify recent price declines,” he adds. “In six to eight weeks, the panic will return.”
Global Bean Supply Also Tight
USDA expects world production of soybeans to increase due to large crops in South America and expects world carryout to grow. The department projects a world bean crop in 2012-13 of 264.28 million metric tons, up 3.4% from its September estimate of 258.13 million metric tons, but still substantially smaller than the 2011-12 crop of 238.11 million metric tons.
The 2012-13 world carryout is projected to grow to 57.56 million metric tons, up from the previous year’s 54.79 million metric tons.
The global stocks-to-use ratio is now 22%, according to Roberts’ calculations. By comparison the 2008-09 ratio was 19.2%. “The soybean market is tight,” says Roberts. “USDA statistics, I believe, underestimate how tight it is.”
If, for instance, the world stocks-to-use ratio is calculated using the 2012 South American crop, the one harvested this past spring, and the North American crop being harvested now, the stocks-to-use ratio would drop to 12 or 13%. “If we just look at the calendar year, we are as tight as we have ever been in soybeans,” says Roberts.
World demand for soybeans, particularly from China remains strong. “There’s more upside in soy from now through March or April because the market is so physically tight,” says Roberts.
On […]

October 25, 2012
By: AgWeb.com Editors
By John Block, Olsson Frank Weeda Terman Matz PC

We are about 10 days away from the election. Most of the focus has been on the Presidential race. However, let’s not forget that there are 3 branches of government. We have the Executive – that’s the President; we have the legislative – the Congress; and the judicial – our judges.

Whoever gets elected as President likely will have a chance to appoint a Supreme Court Justice, assuming one of the current justices should retire over the next 4 years.

The President has a lot of power. He can help to shape the court consistent with his philosophy. He can veto legislation coming out of the Congress if he doesn’t like it. Through his leadership, he can help point the country in his preferred direction. Finally, he is “Commander in Chief” and can use our military to protect the country. He cannot declare war. That’s up to Congress. With all the focus on the President, we tend to ignore the importance of the Congress.

The Congress passes legislation to address issues of the day. The Congress appropriates money to build roads, provide food stamps, school lunches, support our military, money for everything.

Since the Congress is responsible for approving all the spending, you might think they would prepare and approve a budget. The Republican House of Representatives did. The Democrat-led Senate has not passed a budget in 3 years. How irresponsible is that?

With that as background, here is what I predict in this election:

1.With 435 House seats up, the Democrats would have to take 25 seats away from Republicans to regain control. That won’t happen. They might flip 8 or 10. The House remains Republican.
2.Republicans will add some seats in the Senate but will not be able to get a majority.
3.A month ago, it appeared to me that President Obama would hold on to win the Presidency. I’ve changed my mind. I won’t bet the farm on it, but I give the nod to Mitt Romney.

Farm programs under a Romney Presidency won’t look much different than under Obama. Romney, however, will support more relief from the death tax for farmers and small businesses. Romney will put the brakes on the EPA rush to regulate everything. A Romney Presidency will have more courage to deal with our serious debt problem.