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02-22-2013 12:15 PM
The laugh for the day, the good ole USDA is always funny with some of there reports. I will eat my hat if Iowa gets a trendline yield in 2013. I could be wrong of course, but the article is below for your enjoyment. Let's see, they say an average corn price of $4.80.
210 bu corn yield* $4.80= $1,008 rough gross revenue. Subtract $550/acre in inputs+ Custom Farming costs= $458/acre in rough profit. On $12,000/acre land= a rough 4% ROI crop number. Now it gets hairy for the guys that are paying $500/acre in cash rent.
$458 profit before $500/acre in land costs= -$42/acre in the red. Guess all the guys with high land costs better sign up for the ACRE Farm Program Payments, the ACRE Target Price has to be better than $4.80/bu. Time to check the USDA website for the ACRE Program and review it. I still remember the LDP Target prices and faxing in our paperwork to get our goverment payments when the prices were below $2 for corn. Yes, the farm program ACRE just may pay-off in 2013.
USDA predicts record crops in 2013
Normal spring weather could bring yields back to recent averages
ARLINGTON, VA. — U.S. farmers are expected to harvest record corn and soybean crops in 2013 as growers recover from the worst drought to ravage the industry in decades, a top agricultural economist said Thursday.
Normal spring weather would bring yields back to their recent averages, Joe Glauber, the U.S. Department of Agriculture’s chief economist, told an audience of lobbyists, agribusiness executives and other officials near Washington.
He said improved yields would generate a harvest of 14.53 billion bushels of corn and 3.41 billion bushels for soybeans. A year ago, farmers overcame bone-dry conditions affecting much of the country to harvest 10.78 billion bushels of corn and just over 3 billion bushels of soybeans.
The recovery should send prices for most oilseeds and grains sharply lower, providing a much-needed reprieve for livestock, dairy and poultry producers struggling with high feed costs. Consumers who have paid more for food at their local grocery store should also see relief eventually, Glauber said.
Prices are forecast to average $4.80 per bushel for corn, down a third from the average of the prior year, and $10.50 per bushel for soybeans, a drop of 27 percent. Wheat is forecast to decline 11 percent, to $7 per bushel.
“The critical factor that people will be following is weather,” Glauber said at the department’s annual outlook forum. “While the outlook for 2013 remains bright, there are many uncertainties.”
Glauber acknowledged his forecast is strikingly similar to one he made at this time a year ago. Expectations of a record corn crop and a rebuilding in livestock herds were quickly replaced by record-high corn, soybean and wheat prices and a liquidation of animals because of tight margins.
Despite an optimistic outlook from the USDA, weather forecasters have warned that farmers and ranchers in the Midwest and West should brace for another round of hot and dry weather this year. More than half of the United States remains mired in a drought. Conditions have improved in the eastern Corn Belt states of Ohio, Indiana and Illinois where most areas are no longer being hit by drought. The western Corn Belt, primarily Iowa, remains severely or extremely dry.
“American agriculture is quite resilient,” U.S. Secretary of Agriculture Tom Vilsack said.
A record corn crop in 2013 should improve ethanol production margins and lead to more output. USDA estimated 4.675 billion bushels of corn going toward producing ethanol, an increase of 175 million bushels from 2012, but down from 2010 and 2011 when more than 5 billion bushels went to produce the fuel. U.S. ethanol producers were forced to scale back output, and about a half dozen plants shuttered altogether.
Glauber said growth in ethanol will likely be stunted during the next few years by less gasoline consumption, already high penetration rates of the corn-based fuel in motorfuel and fewer opportunities for exports.
02-22-2013 04:31 PM
Gannett news writers ahve struck again.
Here is the actual speach Glauber gave. It is interestng and worth a read. No where in the report did he use the word "predict".
What Glauber said is that if history repeats itself, 2013 should be a year with large yields. He stated several times that there were many uncertainties. Here are some key excerpts:
"Assuming normal weather conditions for spring planting and summer crop development, USDA
is projecting a return to trend yields resulting in record crops for corn and soybeans in 2013.
There has been much discussion about the effects of last year’s drought on corn and soybean
yields in 2013. A number of factors suggest that corn and soybean yields will likely to return to
trend. First, we have already seen some improvement in the eastern Corn Belt. While much of
Indiana and Illinois was in drought throughout much of the summer, fall and winter rainfall has
improved conditions there. Second, studies suggest that there is little correlation between
seasonal precipitation in one year and the next. A dry summer in 2012 has little implication for
summer precipitation in 2013. Third, research shows that corn and soybean yields are largely
determined by summer weather conditions, with July weather being the most important. There is
little evidence to suggest that low preseason moisture levels have significant impacts on corn and
soybean yields (figure 13)."
Note in particular his second point. Much of this is the same information we've been getting from university publications this winter.
Farmers are particularly worried that the subsoil has been depleted. As he says, in the eastern corn belt it has somewhat recovered. Even here in east central Iowa, there are reports of tile running.
No one is going to argue that we need the right rain at the right time. Even with tile running, I bet none of us feel we have the subsoil moisture we'd like.
If you think that weather history is not going to repeat itself this year, you can stand to make a lot of money by buying the market now. If you thnk that weather history will repeat itself, you should fade the market right now.
It doesn't do us any good to take the bad reporting of a newspaper writer who put words in the speakers mouth and base our marketing on it. The speech is worht a read on it's own, whether you agree with it or not.
02-22-2013 08:55 PM
Someone once told me, that having a 50 year drought, doesn't mean that you will go 49 years, without another drought that severe. What it means, it that there is a 50-1 chance of a drought like that, every year.
My thoughts, are, we have a 1/3 chance of a near 'normal' year, a 1/3 chance of a 'wetter than average year', and a 1/3 chance of a 'dry' year in more or less round numbers.
So, I'm going with the odds. The odds are roughly 2 out of 3, that we will not have a 'wet' year.
I don't know about where you are, but if our moisture is 'average' or less, our corn production in Nebraska, will be nothing to brag about. Less acres due to more hay, below average dryland yields, will drag total production down.
However, in States like Iowa, maybe being a little drier than average, will bring their yields up.
Too tough to call.
About the only certainty I can see, is that if I sell now, prices will go up, and if I wait, prices will go down.
02-23-2013 12:49 AM - edited 02-23-2013 12:51 AM
I think i have it all figured out. The USDA has been creating a corn illusion for 2 years now.
They have penciled in 13b usage to make up 1-2b it's trying to hide for this/last mktg yrs.---w/ 88.5 m ac harvest.....................SO, this has absolutely Nothing to do with reality, it simply gives the stooges wiggle room.
WCMO posted link to a table:
the table is assuming 13b usage and says if yield is below 146 - balance sheet would show below min pipeline end stocks
all they'd have to do here is trim 300m from usage to have a more comfortable end stocks #. they are saying usage this year is only 11.2b. It could easily be 12.5b....say if it's 12, and we only get a 135 avg yield, they will again have to say usage can only be 11.2 - 547 end stocks.
Bottom line, sounds no different than the WHITE house- hope & change. see the trouble they're creating if we have a dicey yr...which is in reality what is predicted by drought and above normal temps through AUG....the mkt will work itself out.
we are in @ least a 120 yr drought, by the way - per yield/production data trends... the $$ doesn't lie, and it (per net commercial pos) is saying Corn has some "moving" to accomplish........hope this makes any sense.
02-23-2013 04:48 AM
I have thought since the 70's that the gummint directly tries to manipulate corn prices. It more or less affects everything else. Cheap corn means cheap food so people can spend there money on more important things like cars, campers, and boats. Keep the economy humming right along. Then G. Bush signs mandatory ethanol usage and corn skyrockets, upsetting 50 years of gummint keeping corn prices at or below COP.
02-24-2013 05:32 PM
With USDA's track record I think I will stick to flying! Right or wrong the USDA has been constantly incorrect for quite a while now. Interesting that they always seem to be wrong on the end users side rather than that of the farmer's side.
02-26-2013 07:52 AM
Given whats going on in Wash.today this should'nt surprize anyone.Here it is March and we already have record yields.Should just put trendline at 200 then we can go up from there.This is almost funny,one of these years they may hit it....on second thought..Sure hate to run a business on this information....