Aug 27, 2014
Home| Tools| Events| Blogs| Discussions| Sign UpLogin


August 2011 Archive for Farmland Forecast

RSS By: Marc Schober, AgWeb.com

Marc Schober is the editor of Farmland Forecast an educational blog devoted to investments in agriculture and farmland.

Rural Economy Outlook Deteriorates in August

Aug 23, 2011

The rural economy declined in August for the first time in 2011 as economic confidence and home sales deteriorated to below growth-neutral levels. The bright spot continues to be agriculture. Farmland values continued to appreciate, and the majority of bankers expect value to appreciate over the next 12 months.

 

The overall Rural Mainstreet Index (RMI) declined to 49.3 from 55.7 in July, according to the survey of bank CEOs in a 10-state region. August’s reading was the third consecutive monthly decline and well below April’s high of 59.4.

 

Farmland Forecast   Rurual mainstreet index August 2011 marc schober greyson colvin

 

"The Rural Mainstreet economy is clearly slowing down. According to our August survey, more than one-third, or 35%, of bank executives expect the U.S. economy to dip into recessionary territory before the end of 2011," said Creighton University economist Ernie Goss, co-author of the report.

 

Agriculture

 

Farmland prices remain above growth-neutral for the 19th straight month as the farmland index increased to 61.9 from July’s 59.4. Consistent with farmland price growth, the farm equipment sales index expanded to 56.9 from July’s 53.7. "A weak economy and significant economic volatility have encouraged nonfarm investors to buy nonfinancial assets including farmland. This continues to be an important component of farmland price growth," Goss said.

 

Farmland Forecast   Farmland price index Rurual mainstreet index August 2011 marc schober greyson colvin

 

Bankers are bullish on their outlook for farmland values, with roughly 20% expecting an increase of 5% or more over the next 12 months. "On average, an annual price increase of 2.6% is projected for farmland prices for the next year. This is significantly below current actual growth rates of between 10% and 20% depending on the area," Goss commented.  

 

Banking

 

Loan volumes declined in August to 62.1 from a reading of 66.4 in July and certificates of deposit decreased to 40.2 in August from 43.7, although checking deposits increased to 55.4 from 52.8 in July.

 

The rural economy continued to see a slight loss in jobs, with the August index at 49.3, unchanged from July. "Healthy farm income has produced very little to no new hiring by Rural Mainstreet businesses," Goss commented.

 

Bankers' confidence in the rural economy over the next six months plummeted in August to 44.0 from July’s 55.0. "Recent weak national economic reports and S&P’s [Standard & Poor’s] downgrade of U.S. debt pushed the region’s confidence index below growth-neutral for the month," Goss noted.

 

According to one respondent, "The downgrade of U.S. debt by S&P has created a great deal of uncertainty both locally and throughout the country. I think this will continue to erode consumer confidence and, subsequently, put the country back in a recession."

 

Survey

 

The Rural Mainstreet Survey is a snapshot of the rural economy covering 10 states, focusing on roughly 200 rural communities with an average population of 1,300. The survey respondents include community bank presidents and CEOs located in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.

 

Visit http://farmlandforecast.colvin-co.com for daily articles on farmland and agriculture.

Chicago Fed: Farmland Values Post Largest Gain Since the 1970’s

Aug 18, 2011

During the second quarter, farmland values in the 7th Federal Reserve District rose 17% over the last twelve months according to the Federal Reserve Bank of Chicago’s second quarter survey of Farmland Values and Agricultural Credit Conditions Report. Across the District, the value of “good” farmland increased 4% in the second quarter compared to the first quarter of 2011. Among the District states, only Wisconsin had a smaller year-over-year increase in farmland values in the second quarter of 2011 than in the first quarter of 2011. Year-over-year, land values in Indiana and Iowa climbed 21% and 20%, respectively, while values in Wisconsin climbed a modest 8%.

Farmland Forecast   Chi fed Percent Change in dollar value of good farmland 2011 marc schober greyson colvin

Of the 226 agricultural bankers surveyed within the 7th District, some expressed concerns about the risks facing farmland markets, especially with regards to declining commodity prices. However, these views were expressed by the minority, as less than 2% of responders expected farmland values to decline in the third quarter of 2011. 36% of respondents are forecasting higher farmland values in the third quarter, while 62% expect no change. Bankers commented on the unseasonably high number of summer auctions this year and noted that demand for farmland continues to remain strong from both farmers and investors.

District Production
 
Based on data from the U.S. Department of Agriculture (USDA), 2010 crop revenue for producers in the District increased 34% above 2009 levels, despite below-trend corn yields. In 2010, the value of corn for grain produced within the District was $31.8 billion, and the value of soybeans was $16.6 billion.
 
Current USDA estimates for the 2011 corn for grain crop are 3.8% larger than the 2010 crop. However, estimates for the five District states’ in 2011 are forecasting a 7.0% larger crop compared to 2010. Production of soybeans in the U.S. for 2011 is estimated to decline 8.2%, while District production is forecasted to be 8.1% lower than 2010.
 
In addition, livestock prices in 2011 have outpaced 2010 levels. This year prices in July, for hogs, cattle, and milk were 23%, 20%, and 39% higher compared to 2010 prices, respectively. These higher prices have lead to record levels of revenue for livestock producers, but higher feed costs have compressed net margins. The combination of higher revenues for crop and livestock producers coupled with growing investor demand has provided the momentum for significant increases in farmland values across the 7th District in 2011.
 
Farm Loan Performance
 
Higher on-farm revenues also supported agricultural credit conditions during the second quarter within the 7th District. Agricultural loans with “major” or “severe” repayment problems decreased to 2% of District loan volume. In the District’s major corn and soybean producing states, between 1% and 2% of farm loan volume was problematic, but in Michigan and Wisconsin upwards of 4% of loan volume was classified as troubled.
 
Repayment rates for non-real estate farm loans also improved during the second quarter of 2011 compared to 2010. During the second quarter of 2011, of those surveyed, 36% reported higher rates of loan repayment, while only 3% reported lower rates, compared to the previous year.
 
Renewals and extensions of non-real estate agricultural loans in the second quarter of 2011 were lower than in the same quarter of 2010, as 4% of respondents saw increases, while 27% saw decreases. This is explained by the elevated income levels most producers saw in 2010, which allowed them to either deleverage their balances sheets or stockpile cash reserves thus not requiring financing going into 2011.
 
Loan Demand
 
Non-real estate agricultural loan demand fell to its lowest level since 1987, during the second quarter of 2010. The 7th District reported only 16% of respondents were observing higher loan demand, 37% reporting lower demand, and 47% reporting no change in demand.
 
At 70.3%, the Districts average loan-to-deposit ratio remains near the previous quarter’s post-1997 low. The ratio desired by bankers is 78.7%, only 24% of banks are at or above this level. Fund availability continues to bolster strength, with 49% of the banks having more funds available, while only 4% reported having less.
 
Banks tightened their collateral requirements for loans in the second quarter of 2011 relative to the second quarter of the prior year. Of those surveyed, 16% of banks are requiring more collateral, while only 1% is requiring less collateral.
 
Record low interest rates have also contributed to the increase in District farmland values. During the second quarter of 2011, interest rates for farm loans reached their lowest point in the survey’s history. As of July 1, 2011, the 7th District’s average interest rate on new operating loans was 5.75%, over 300 basis points below the most recent peak, in 2006. Agricultural mortgage rates averaged 5.62%, about 220 basis points lower than five years earlier.
 
3rd Quarter Outlook
 
Of those that responded, bankers expect non-real estate agricultural loan volumes to decrease during the third quarter, compared to the same period in 2010. However, compared to 2010, volumes for farm machinery and grain storage construction loans are forecasted to rise during the next quarter. Finally, compared to 2010, 21% of respondents are also forecasting farm real estate loan volumes to increase in the third quarter, while only 13% anticipate lower volumes.
 
The Federal Reserve Bank of Chicago’s second quarter survey of Farmland Values and Agricultural Credit Conditions Report is a summary of the 7th District’s value of farmland, farm loan portfolio performance, and on-farm income. The 7th District consists of the entire state of Iowa, and portions of Illinois, Indiana, Wisconsin, and Michigan.
 
Read more about agricture and farmland at http://farmlandforecast.colvin-co.com.

Kansas City Fed: Farmland Values Increase 20%

Aug 16, 2011

Rising farmland values and strong farm loan portfolio performance were the highlights in the Federal Reserve Bank of Kansas City’s second quarter survey of Agricultural Credit Conditions. The survey details several indicators of farm financial condition in the 10th District, including farmland values, interest rates on farm loans, and credit supply and demand.

Rising Farmland Values

During the second quarter, District farmland values rose further, although the pace of gain slowed. Compared to first quarter gains, the value of nonirrigated and irrigated cropland in the District climbed 2.3% and 3.9%, respectively, to remain 20% above year-ago levels. District ranchland values grew 1% from the first to second quarter and year-over-year values are up 11% compared to 2010 levels.

Disparate weather patterns across the District caused farmland value gains to vary across the region. Plentiful rain and good growing conditions in Nebraska fueled the largest jump in second quarter cropland values, with a 30% increase over 2010. In contrast, drought conditions in the Southern Plains hurt wheat crop yields, prompted cattle herd liquidations and restrained farmland value gains to just 10% year-over-year. However, land lease revenues from energy exploration have helped support farmland values in some of the drought-stricken areas, particularly in Oklahoma and the Mountain States.

Respondents believe prices will remain elevated near current levels because of strong demand for farmland and tight supplies. Within the District, farmers and non-farmer investors continued to compete for quality acreage, with data indicating that sales of marginal ground have also picked up. The number of farms on the market remained low but is expected to increase after the fall harvest.

Farm Loan Portfolios

Farm credit conditions edged down during the second quarter after peaking in the first quarter. Farm loan repayment also eased but was expected to improve despite weaker farm income expectations. Credit conditions varied across the District, with fewer requests for loan renewals and extensions in Nebraska offsetting an increase in loan restructuring reported by Oklahoma bankers.

The majority of bankers are still reporting healthy farm loan portfolios. Of those respondents, on average, 90% of their loans had no significant repayment problems, 7% had minor repayment issues that could be managed easily, 2% will require major restructuring and fewer than 1% will likely result in a loss or forced sale of assets.

More than half of the 246 responding banks reported zero nonperforming loans more than 90 days past due. Of those reporting delinquencies, the breakdown by operation was split evenly between livestock operators, crop producers and loans for specialty crops, real estate and other purposes.

Due to strongly performing farm loan portfolios, bankers are reporting another round of easing in collateral requirements for borrowers. For the fourth consecutive month, fewer bankers are referring borrowers to non-bank credit agencies. Finally, interest rates continue their downward trend after reaching a 10-year high of 9.2% during the third quarter of 2006. During the second quarter, interest rates averaged 6.5% for operating loans and 6.2% on real estate loans.


Falling Farm Incomes

The 10th District’s farm income index fell in the second quarter as extreme weather conditions and rising input costs strained profit margins. In the Southern Plains, income expectations deteriorated as droughtlike conditions cut wheat production. Livestock producers were not immune to contracting margins; poor grazing conditions prompted herd liquidations and increased cattle feeding costs.

These conditions prompted Oklahoma bankers to report the steepest drop in farm incomes since the third quarter of 2008. Several respondents noted increased reliance on crop insurance to support farm income levels.

Farm incomes across the Central Plains declined to a lesser degree. Profits were trimmed as crop producers paid more for production inputs, such as seed and fertilizer, while livestock producers paid higher feed costs. However, both groups of producers saw relief from above-average levels of precipitation, reducing irrigation costs. However, areas along the Missouri and Platte Rivers experienced losses from heavy snowmelt and rain that led to severe flooding.

Bankers reported that operating loan demand remained sluggish during the second quarter but are forecasting higher demand for the second half due to the higher operating costs discussed above. Bankers are also estimating further deterioration in farm-based capital spending after many producers upgraded equipment at the end of last year.

Visit http://farmlandforecast.colvin-co.com for daily articles on farmland and agriculture.

USDA: Crop Conditions Remain Flat

Aug 15, 2011

According to today’s USDA weekly progress report, the percentage of 2011 corn crop rated good or excellent remained flat at 60% over this past week. The percentage of crop rated poor or very poor decreased by one percentage point to 15%, while the percentage of crop rated fair increased one percentage point to 25%. Condition ratings still remain behind the 2010 crop, as 69% of the corn crop was in good or excellent condition, 20% was in fair condition, and 11% was in poor or very poor condition.

Of the 18 primary producing states, 3 additional states began reporting that corn in their state has reached the dent stage, bringing the total to 14 states representing 17% of the total corn crop. Denting progress in the 2011 corn crop remains behind its 2010 pace and 5 year historical average of 30% and 21%, respectively. North Carolina and Texas has progressed the furthest at 80% and 70%, respectively, while Colorado, Michigan, North Dakota, and Wisconsin have yet to report progress.

For the week ending August 14th the percentage of crop that has reached the dough stage increased 20 percentage points to 52%. This is still behind progress for the same period one year ago and 5 year historical average of, 71% and 58%, respectively. The USDA also reported estimates for silking at 98% compared to estimates of 99% and 97% for the 2010 crop and 5 year historical average respectively. As of August 14th, Illinois, Missouri, North Carolina, and Tennessee are the only four states who have reported 100% silking progress.

For the 18 primary soybean producing states, crop conditions were flat on all levels of the reporting scale. The percentage of the crop rated good or excellent, fair, and poor or very poor, was 61%, 26%, and 13%, respectively. Compared to last year 66% was rated good or excellent, 23% was rated fair, and 11% was rated poor or very poor.

The USDA estimates that 70% of the soybean crop had set pods as of August 14th, an increase of 19 percentage points over last week. Pod setting estimates for the same period in 2010 and a 5 year average are 82% and 78%, respectively. The USDA also reported that 94% of the soybean crop has bloomed, compared to 96% last year, and a 5 year historical average of 94%. For the week ending August 14th, only Mississippi’s soybean crop has finished blooming, compared to Mississippi and North Dakota, for the same period last year.

Progress in the winter wheat harvest increased six percentage points over the past week. The USDA reports harvested winter wheat estimates for the week ending August 14th, at 91% of the total crop, compared to a 5 year average and 2010 estimate of 94% and 90% respectively. Only seven of the 18 primary producing states have a percentage of their respective winter wheat crop left to harvest.

The USDA estimates that 66% of the spring wheat crop is rated good or excellent, this is unchanged from their previous week’s estimate. For the same period last year 82% of the crop was rated good or excellent. The spring wheat harvest increased by 7 percentage points over the past week to 13%, compared to estimates for the same period last year and a 5 year average of, 31% and 39%, respectively. Harvest has now begun in all 6 primary producing states, which represent 99% of the United States spring wheat production.

Commodity prices made nice gains from last Monday’s close on fundamental concerns raised by last week’s Crop Progress and Production Reports. The USDA lowered production numbers for both corn and soybeans, while estimated 2011/12 carryout numbers were less than consensus levels. Over the last week, corn prices increased 4.7% percent or $0.32 to close at $7.07 per bushel, soybeans also increased $0.32 to close at $13.41 per bushel, and wheat jumped $0.55 to $7.11. Corn and soybeans still remain higher year-over-year up, 75% and 22% respectively, while wheat prices are less than 1% lower than they were last year.

Next week we look forward to the same estimates provided in this report.

Read more about agriculture and farmland at http://farmlandforecast.colvin-co.com.

USDA Lowers Production Estimates Due to Difficult Weather

Aug 12, 2011

The USDA updated the U.S. and World balance sheet estimates for major agricultural commodities in the World Agricultural Supply and Demand Estimates (WASDE) report today. WASDE reports in the summer are a barometer of overall world demand, forecasted production, and inventory adjustments. In August, U.S. ending stocks for 2011/12 were revised lower for corn and soybeans, but increased for wheat.

Corn

The majority of news for the U.S. corn market can be seen as bullish, as the 2011/12 U.S. projections for harvested acres, yield, and ending stocks were all decreased from their July estimates.

After the surprising June 30th Acreage report, the USDA resurveyed producers in Minnesota, Montana, North Dakota, and South Dakota and confirmed previous estimates for planted acres but decreased estimates harvested acres. The USDA reduced harvested acres to 84.4 million acres, a reduction of 0.5 million acres. Reductions were based on flooding damage caused in the Mississippi and Missouri River basins.

The national average yield was revised to 153.0 bushels per acre, down 5.7 bushels from July’s projection as unusually high temperatures and below average precipitation during July across much of the Corn Belt sharply reduced yield prospects. Harvested acreage and yield reductions resulted in the USDA lowering production estimates for 2011/12 to 12,914 million bushels, a reduction of 556 million bushels, or 4%.

The USDA raised 2011/12 beginning stocks 60 million bushels to 940 million bushels reflecting lower estimated demand for the remaining of the 2010/11 year. The USDA lowered domestic consumption during 2011/12 by 240 million bushels. Projections for ethanol usage and food consumption were lowered by 50 and 190 million bushels, respectively. Exports were also reduced by 150 million bushels or 7.9%.

Compared to the July, ending stocks for 2011/12 corn crop are now projected to be 156 million bushels lower at 714 million bushel, a 24% decline from last year’s estimated ending stocks (940 million bushels). Consensus estimates for ending stocks were 735 million bushels.

The forecasted stocks-to-use ratio is projected at 5.4%, compared with last month’s projection of 6.4% and a five-year average of 11.6%. Season-average farm price estimates were increased on each end of the range by $0.70 per bushel, to $6.20-$7.20 per bushel.

Estimates for world corn ending stocks were lowered to 114.53 million metric tons, or 1.13 million metric tons lower than the July estimate. This is a result of beginning stocks being increased by 2.05 million metric tons, production and imports being decreased by 12.92 million metric tons, and usage being lowered by 17.86 million metric tons. Supply constraints can be mainly charged to the United States. However, slight revisions were made in the following countries; South Africa, Mexico, Argentina, and Southeast Asia, Egypt, the EU-27, Brazil, Canada, and the Ukraine. Usage adjusts can also be attributed to changes in the U.S. market, while minor revisions were made in the EU-27, South Korea, Canada, and Egypt.

Soybeans

Following corn, the soybean market also received bullish news from the USDA. Planted and harvested acres, yield estimates, and ending stocks were reduced in today’s WASDE report. Unlike corn, estimates for planted acres of soybeans were reduced from findings in the USDA’s previously mentioned resurvey of selected states.

USDA alterations for 2010/11 included a reduction in soybean crush and exports and an increase in ending stocks. Crush was reduced by 5 million bushels to 1,645 million reflecting reduced soybean meal exports. Soybean exports were reduced 25 million bushels to 1,495 million reflecting lower-than-expected shipments in recent weeks. Ending stocks for 2010/11 are now projected at 230 million bushels, up 30 million from last month.

Soybean production for 2011/12 is estimated at 3.056 billion bushels, a reduction of 169 million bushels or 5.2% from July estimates. Planted and harvested acres were reduced by 0.2 and 0.5 million acres, to 75.0 and 73.8 million acres, respectively. This is mainly reflecting reductions in South Dakota. Yield estimates were also reduced to 41.4 bushels per acre, or 2.0 bushels less than July’s estimate and 2.1 bushels less than the previous year.

The USDA lowered export estimates by 95 million bushels to 1,400 million bushels, due to increases in projected supplies in South America this fall. Soybean crush was also reduced 20 million bushels to 1,635 million bushels because of lower domestic soybean meal usage. U.S. soybean ending stocks for 2011/12 are now projected at 155 million bushels, 20 million bushels lower than the July report, and 19 million bushels below consensus estimates of 174 million.

The U.S. season-average soybean price for 2011/12 is projected at $12.50 to $14.50 per bushel, up $0.50 on both ends of the range.

Global soybean beginning stocks were increased, while production reductions outpaced usage decline compared to the July report, while estimates for ending stocks were decreased by 1.02 million metric tons. Offsetting lower U.S. and Chinese production estimates were increases in production estimates from Brazil and the EU-27. Along with lower than expected usage in the U.S., reductions were also applied to the EU-27. The USDA also reduced export estimates for the U.S. and China while increasing estimates for Argentina and Brazil.

Wheat

The USDA decreased production estimates for 2011/12 by 29 million bushels to 2,077 million bushels. This is reflective of the USDA lowering estimates for planted and harvested acres by 1.2 and 1.3 million acres, to 55.2 and 45.9 million acres, respectively. Unlike corn and soybeans, yield estimates were increased for wheat to 45.2 bushels per acre from 44.6 bushels in their July report.

There was no change to 2011/12 beginning stocks, but revisions were made in 2011/12 feed usage and exports. Feed usage was increased by 20 million bushels to 240 million bushels, while exports were reduced by 50 million bushels to 1,100 million bushels. Compared to the July report, projected ending stocks are estimated to be 1 million bushels higher at 671 million bushels, and above consensus estimates of 668 million bushels.

The 2011/12 season-average farm price for all wheat is projected at $7.00 to $8.20 per bushel, up from last month’s range of $6.60 to $8.00 per bushel supported by higher projected prices for corn.

Estimated global wheat supply for the 2011/12 year was increased by 14.47 million metric tons to 993.21 million metric tons. Increases in supply are attributed to increased production in; the EU-27, China, India, the FSU-12, Russia, Kazakhstan, and the Ukraine. Compared to July, global wheat usage was raised by 10.99 million metric tons to 934.19 million metric tons. These adjustments resulted in increasing ending stocks by 6.68 million metric tons to 188.87 million metric tons.

Overview

Even though the USDA lowered its 2011/12 ending stock levels for corn and soybeans, we are closely monitoring demand levels for both commodities. Recent escalations in commodity prices have caused some demand softening and end-users will look towards alternatives if margins cannot be sustained. If end-users begin to transition to alternatives or go out of business due to higher commodity costs, the entire demand picture may shift drastically and force stocks to increase resulting in lower prices.

We also need to be cognizant of the ever changing political picture in the United States and Europe. Fiscal uncertainty and a strengthening dollar may have a negative impact on foreign commodity buyers causing prices to also decline. Furthermore, with 35-40% of the domestic corn crop used for ethanol, attention has to be paid to the blenders’ credit and ethanol mandates. If this legislation is reversed and oil prices decline, prices for ethanol and gas may converge, reducing the demand for corn as an energy source.

However, given our countries current political/economic makeup and end-users profit margins, we are still bullish grain prices and farmland values. Pay attention to weather patterns across the major soybean production areas for the next 3-4 weeks, as any period of long, hot, dry weather may cause supply constraints.

Visit http://farmlandforecast.colvin-co.com for daily articles on farmland and agriculture.

Summer Heat and Corn Yields

Aug 04, 2011

Questions about diminishing crop conditions have been raised in July, as the Corn Belt has been plagued with unseasonably high temperatures for most of the past two weeks. This prolonged period of hot, dry weather caused the USDA to lower crop condition estimates for both corn and soybeans in each of the past two weeks. According to a recent publication by UBS Investment Research, “The 2011 corn crop is off to a start that we believe would be consistent with below normal growing conditions.” Since 1992, below trendline crop conditions at this point in the growing season have resulted in a national average of less than 154.7 bushels/acre, said UBS.

There are a number of factors to determine how the levels of stress and potential yield damage caused by hot weather. To estimate potential losses, one needs to analyze the following factors collectively: soil moisture, plant maturity, duration of prolonged heat and temperatures, plant population, and genetic makeup of the plants.

Soil Moisture and Plant Maturity


Soil moisture can be both a yield enhancer and inhibitor, varying on timing within the plant's lifecycle and quantity of moisture within the soil. Excess moisture can cause delays in planting, which may affect yields if the plant does not experience a full growing season. Another issue with wet soils is the possibility of nitrogen leaching. Of the three major nutrients, nitrogen moves through the soil profile the fastest and producers run the risk of losing applied nitrogen with excess rainfall.

Producers can take tissue samples from plants during the growing season to monitor not only nitrogen, but all major and micronutrients. This management technique allows producers to apply nutrients more efficiently and allows them to tailor specific nutrient plans for each field.

During germination, excess moisture can have a lasting affect on a plant's development. Abnormally high amounts of water will cause plants to set a shallow root system in order to stay alive versus drowning. During warm, dry months a shallow root system may inhibit the plants ability to search deep into the soil for moisture and nutrients. Finally, damp growing conditions leave plants susceptible to diseases, which can lead to standability issues and make harvest difficult.

Without adequate moisture, plants become defensive and focus on survival. This means they do not collect the nutrients needed to fully mature, thus adding additional stress. Stress during pivotal growing stages such as pollination, silking, and grain fill may result in shorter ears, increased tip back, and possible abortion of kernels. All of which will contribute to yield reductions. Producers with irrigation equipment can assist plants through these crucial time periods by watering them daily, while others are at the mercy of the weather and their soil structure.

Unlike soybeans, once a corn plant reaches maturity, its kernels no longer continue to absorb moisture. Soybeans will continue to absorb moisture until they are harvested. This can cause harvest delays because soybeans are more susceptible to damage during drying versus corn. The only way soil moisture affects the corn harvest is if machines are unable to operate without getting stuck.

Temperature Stress

Corn plants produce energy (sugars) through the process of photosynthesis, which combines sunlight, water, and carbon dioxide. The plant then utilizes dark respiration, which uses the sugars produced during photosynthesis for growth and maintenance. However, unlike photosynthesis, respiration is a continuous process that does not require sunlight.

When night time temperatures remain above 70 to 80 degrees Fahrenheit, respiration rates are higher and dry matter accumulation is lower. Ohio State University has reported that for each 13 degree increase in temperature, respiration rates may double. During these periods the plant uses more sugars produced during photosynthesis for maintenance instead of growth. Essentially, the plant is working so hard to stay alive that it has less energy available for developing kernels, thereby lowering potential grain yield.

High night time temperatures result in faster growing degree unit (GDD) accumulation that can lead to earlier corn maturation. Where cool night time temperatures result in slower GDD accumulation that can lengthen the grain filling period and promote greater dry matter accumulation and grain yields. Research performed by the University of Illinois indicates that corn grown with night time temperatures in the mid-60s out yielded corn grown with temperatures in the mid-80s.

Plant Population

To maximize yields, farmers select planting populations based on soil characteristics, annual rainfall (natural or irrigated), and genetic makeup of their seeds. Corn populations can range from the low tens of thousands to over forty thousand plants per acre.

Producers will plant higher populations in soils composed of silt loams versus lesser quality soils containing more clay or sand. Depth of topsoil is also taken into consideration when determining plant population. Based on geography, topsoil levels can range from nonexistent to greater than six feet. Soils with more topsoil can hold and store water more efficiently, compared to those with a sand or gravel base. Compared to soils with minimal topsoil, those with multiple feet of topsoil will hold water further down in the profile, which allows growing plant roots to find additional sources of water during long dry periods.

Understanding annual rainfall is also important when planting higher populations. All crops need sufficient moisture throughout the growing season. To produce top end yields, moisture availability during tasseling, silking, and pollination is imperative. Water usage during these growth stages can increase to 0.35-0.50 inches per day.

Hybrid Genetic Selection

Selecting corn hybrids that are built to withstand the stresses of heat and drought-like conditions is important for growers to understand. Producers in arid climates or below average soil quality will naturally plant lower populations, but selecting hybrids known for the ability to handle these environments is just as important to maximizing profits.

As mentioned above, periods of high night time temperatures add stress to maturing corn plants. During ear fill, which occurs directly after pollination and fertilization, corn plants may respond to stress by remobilizing or moving stored sugars from the stalk and leaf tissue to developing ears. This is commonly referred to stalk cannibalization, which weakens the stalk and makes it more susceptible to diseases. Research from Purdue University shows, that even if stalk rot does not develop, loss of stalk integrity and structure from the remobilization can increase the risk of stalk breakage.

Stalk strength ratings vary between hybrids and are based on; stalk diameter, stalk rind thickness, stalk strength components, and disease tolerance. Weak stalks are more susceptible to stalk rots, which can lead to upwards of a 20% loss of yield potential. In addition to cannibalization, stalk weaknesses can be attributed to:

      • A reduction in photosynthesis due to foliar diseases
      • Damage to plant structure from hail or insect and nematode feeding
      • Difficult growing environment from nutrient deficiency or imbalance, compaction, excessive plant
        population, or moisture extremes

Producers can limit yield losses by selecting hybrids that fit their growing conditions best and by scouting fields to access stalk and plant health. Iowa State University recommends scouting before black layer or 40 to 50 days following pollination. Scouting fields weekly by walking in a zigzag pattern through the field and pinching at least 100 random plants. Pinch tests can be done by pinching the lower stalk internodes between your thumb and forefinger. If more than 15% of the stalks fail the pinch test (stalks easily collapse under minimal pressure), the field should be harvest as soon as possible to avoid harvesting delays that accompany downed corn.

Management

Producers are in no means in complete control of their yields. However, developing and following proper management techniques on a farm by farm basis will allow producers to maximize their returns. The management techniques listed below will assist producers in developing their strategic plans and reaching their goals:

      • Select hybrids with good stalk ratings and strong tolerance to foliar diseases
      • Plant appropriate populations for each hybrid
      • Maintain balanced levels of fertility, especially nitrogen and potassium
      • Help to avoid or minimize stress to corn, especially during pollination and grain fill
            o Control insects to help avoid root and stalk injury
            o Manage weeds with different modes of action, including adding other herbicides to control
               glyphosate (Round-Up) resistant weeds
            o Rotate crops to reduce pathogen survival
            o Provide adequate drainage to help avoid conditions conducive to rot or other diseases
            o Provide timely applications of irrigation (where applicable) to help avoid moisture stress
      • Harvest in a timely manner to help minimize the risk of harvest losses

Read daily articles on farmland and agriculture at http://farmlandforecast.colvin-co.com.

Chinese Imports Increase, As Do Crop Prices In July

Aug 04, 2011

Extreme weather patterns across much of the U.S. have lead to increasing grain prices throughout July. Farmers have been busy scouting for aphids in their soybean fields and timing the spraying of herbicides and fungicides in their crops in July, but a very severe heat wave left many crops in the Midwest damaged in mid-July.

Temperatures in the Midwest were very high with dangerously high humidity levels. Champaign, Illinois had a seven-day span of temperatures in excess of 90°, while nine of ten days were over 90° in Waterloo, Iowa. Mitchell, South Dakota experienced a four-day span of temperatures over 99° with a high of 103° on July 19.

Grain Prices

Corn prices increased by 5.79% this month and closed at $6.65 per bushel during a month of a general upswing in prices. September corn was trading as high as $7.23 by July 19th due to the latest WASDE Report which revealed an increase in demand which will continue to trump increased production estimates. Chinese import estimates for 2011/12 were increased by four times to 2.0 million tonnes, compared to June, which sent corn prices immediately higher.

The corn crop condition is also continuing to deteriorate with each passing weekly USDA Crop Progress Report as extreme heat and humidity spanned across the entire Midwest in late mid-July. 14% of the U.S. corn crop was classified as in poor or very poor condition as of the last week in July compared to 2010's 9% during the same week.

Soybean prices increased by 3.69% in July to $13.54 per bushel due to harsh growing conditions throughout the month. Prices have also paralleled rising corn prices during July. The July WASDE estimated lower export expectations from Argentina and Brazil which should help competition for U.S. soybeans in the global market.

Wheat prices increased this month to $6.72 per bushel, a 15.14% increase due to the poor conditions of the wheat crop in top producing states, Texas and Oklahoma. The southern plains experienced prolonged drought conditions throughout the growing season leading to the poor yields. The month's WASDE drastically lowered Canadian wheat production to 21.5 million tonnes. World production of high quality wheat was estimated to decrease 15% year-over-year.

WASDE

The USDA updated the U.S. and World balance sheet estimates for major agricultural commodities in the World Agricultural Supply and Demand Estimates (WASDE) report in mid-July. WASDE reports in the summer are a barometer of overall world demand, forecasted production, and inventory adjustments. In July, U.S. ending stocks for 2011/12 were revised higher for corn, but decreased for soybeans and wheat.

Mixed news for the U.S. corn market continues after the surprise USDA June 30th Acreage and Grain Stocks report, as the 2011/12 U.S. projections for beginning stocks, production, usage, and ending stocks were all increased from their June estimates.

The USDA raised beginning stocks 150 million bushels reflecting changes made to the 2010/11 usage projections. After the surprising June 30th Acreage report, an additional 1.7 million harvested acres were added in the July estimates. Yield estimates remained flat from June, causing the 2011/12 production estimate to be increased by 270 million bushels to 13,470 million bushels.

We will pay attention to crop conditions during pollination and grain fill, end-user demand, and weather patterns as the summer progresses. As grain prices could regain a tailwind and continue their historical climb higher.

Farmland

Farmland prices remained above growth neutral for the 18th straight month, but the farmland index continued to slip to 59.4 from June’s 62.0, according to the Creighton University Rural Mainstreet Survey. "Even though this is the 18th straight month the index was above growth neutral, we are tracking consistent slippage in farmland price growth as the index has declined for three straight months. Consistent with the decline in farmland price growth, the farm equipment sales index sank for the fourth consecutive month to 53.7 from 63.1 in June," said Professor Ernie Goss.

Roughly 68% of bankers supported the removal of blenders’ tax credit for ethanol as a part of the U.S. debt reduction and 35% supported phasing out agriculture support payments over five years. Dan Coup, of First National noted though, "If the government wants to continue with a cheap food policy, payment support needs to remain. Subsidy on crop insurance premiums is a must."

Outlook

The macro outlook of agriculture has been continuing to build strength throughout this summer and the headlines of China importing four times the amount of corn than previously estimated for the 2011/12 season should support elevated grain prices moving forward. A recent report from Macquarie estimates the Chinese to import 3.5mt compared to the latest USDA estimate of 2.0 million tonnes in 2011/12. Since the mid-1990s, when China transitioned to being a net importer of soybeans, soybean imports have grown at a torrid pace. We have been foreseeing the same adjustments in corn, which has started to take shape this month. We estimate that the global demand for U.S. grain will continue to increase and thus continue to support increasing farmland values.

Visit http://farmlandforecast.colvin-co.com for daily articles on agriculture and farmland.

Log In or Sign Up to comment

COMMENTS

Receive the latest news, information and commentary customized for you. Sign up to receive Beef Today's Cattle Drive today!. Interested in the latest prices for cattle in your area? See highlights of the latest for-sale cattle in the Cattle-Exchange eNewsletter.

Hot Links & Cool Tools

    •  
    •  
    •  
    •  
    •  
    •  
    •  

facebook twitter youtube View More>>
 
 
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions