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Honored Advisor

PLC ---- Will it be enough to keep corn planted in the Dakota's

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Couple of thoughts 

 

I keep hearing about farms moving away from corn in W Ks.  Because of diminishing water, but mostly because of its negative cash flow for corn.  

I also herd this week that the PLC portion of the new farm bill is designed to keep the corn planters rolling in N Dakota region.  Which makes it appear that usda, or someone designing this legislation, expects that area to have a big negative basis year after year.

 

Will that work??  Or has production just been turned loose to go where economics take it?

 

 

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A news flash for Illinoisteve and MT ------ " Net farm income is forecast to be $73.6 billion in 2015, down nearly 32 percent from 2014’s forecast of $108 billion."  We need to be thinking "Peak" corn in economic terms.  

That is why I have given MT a pass on his Peak corn comments ------- economically he is may be right.  And that is the only numbers that really count.

 

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Honored Advisor

Re: PLC ---- Will it be enough to keep corn planted in the Dakota's

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I just went to one farm bill meeting and they talked about ARC first and how I`d probably get $90/acre next October...all I heard after that was Blah Blah Blah  and I signed up for ARC the other day  Smiley Happy

 

What little I know about PLC is you are betting on really low prices in the coming years, plus you are probably in a low yield county with high yielding farms to make PLC pay.  If a guy plugs in yields, cost of production is about breakeven at best with today`s prices.

 

https://www.pioneer.com/home/site/us/agronomy/tools/production-cost-calculator/  

 

With the high priced inputs, the fringe is even going to have a tougher go at it.  Can a guy irrigate at today`s corn price?   I suppose those that already have the rigs, wells and water about have to use them regardless, but dryland could shift to milo.

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Honored Advisor

Re: PLC ---- Will it be enough to keep corn planted in the Dakota's

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Irrigation,

 

If you are lucky enough to live in one of the half dozen locations left  with high volume wells and/or shallow water.  And rain chips in half the work. AND, you have a higher basis,  probably can still make it work. But it is incrimental and 75%(approx) of irrigation does not fit that example.   

So it will be a sliding scale and we should be half way down the slide already.  

 

A lot of irrigation SW will look at milo over corn.  Lowers risk in weak water as well as cash flowing better.

 

BA,  I think that is a good decision.   Will have em done in a couple of weeks.  Did Bases and Yields this last couple of weeks and with two weeks left to get signatures in I was suprised when they told me how few had been in so far.

 

"With the high priced inputs, the fringe is even going to have a tougher go at it." ----- Yes without usda backing I don't see corn acres in the fringe holding up.  That is half the crop area that will make adjustments to their cash flow.  Either this guy will do it.......or the next guy.

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Honored Advisor

Re: PLC ---- Will it be enough to keep corn planted in the Dakota's

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Oh boy.......we are gonna talk about "peak corn" again?    I had better make some more popcorn...........no pun intended. Smiley Wink

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Veteran Advisor

Re: PLC ---- Will it be enough to keep corn planted in the Dakota's

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I'm told that river water is going to run
$45 AC/foot..
Plus pumping fuel

Farm program. I've thrown my hands up.
Bad yeilds last few years on dryland.
Better off maybe keeping county average.

The future.
How are we to forecast...and now want
To change boats in mid stream, by redoing crop insurance.

???????



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Honored Advisor

Re: PLC ---- Will it be enough to keep corn planted in the Dakota's

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Elwynn Taylor is calling for a 170 corn yield..175 if El Nino is in place.  That would make sense, especially if the fringe cuts.  David Kruse is saying Brazil is having a good year, they`ve brought more land into production and the Brazilian Real is 25% lower than the buck, in other words they haven`t had as big of sting on low prices. 

 

Here`s David`s comments 

 

https://www.commstock.com/radiobroadcasts.asp 

 

 

btw. Kruse says the below cost of production typically lasts 18 months.   Hang in there one more year guys, the slowest Cheetah starves and the slowest Gazelle gets eaten.

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Veteran Advisor

Re: PLC ---- Will it be enough to keep corn planted in the Dakota's

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I'm a chicken anymore (some say billygoat)
What happens to me?
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Veteran Contributor

Re: corn consumption to exceed production

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I want to share with you Darrel Good's thoughts on corn production, consumption, and price..straightforward... 

 

 

Expectations are for consumption of U.S. corn during the 2015-16 marketing year to exceed production, leading to a decline in stocks by the end of the marketing year. According to Good, the magnitude of the decline has important price implications. He explained that corn consumption occurs in four major categories—ethanol, other domestic processing, exports, and feed and residual.

Ethanol use of corn will be influenced by the EPA's final rulemaking in regard to implementing the Renewable Fuel Standard mandates as well as the level of crude oil and gasoline prices. The EPA rulemaking is expected to establish renewable fuel (ethanol) requirements at higher levels than in the preliminary rulemaking. Such an increase, along with low gasoline prices that might increase domestic motor fuel consumption, and with a net ethanol export trade balance would be supportive of ethanol production. Ethanol use of corn could increase modestly from the projected level of 5.175 billion bushel this year to 5.225 billion bushels next year. Other domestic processing uses of corn are fairly consistent from year to year, with a small trend increase, and would be expected to be near 1.41 billion bushels.

 

"The magnitude of U.S corn exports varies considerably from year to year and is difficult to forecast," Good said. "Demand for U.S. corn will be influenced by the magnitude of grain production in the rest of the world, by the rate of world economic growth, and by currency exchange rates. Exports during the current year are projected at 1.75 billion bushels and exports in the previous 10 years (excluding the drought year of 2012) ranged from 1.541 billion to 2.437 billion bushels. Early expectations for 2015-16 center on about 1.85 billion bushels," he said.

Good said that feed use of corn next year should be supported by increasing livestock production and positive livestock feeding margins. Residual (or unexplained) use of corn, however, might be reduced from this year's level if the 2015 crop is smaller than the 2014 crop. If those factors offset use, next year might be near the projection of 5.275 billion bushels for the current year.

 

"Early expectations are for 2015-16 marketing-year corn consumption to be near 13.76 billion bushels," Good said. "CBO and USDA projections are at 13.61 and 13.745 billion bushels, respectively. Ending stocks would total only 1.54 billion bushels and would point to a marketing-year average price in the low $4 range. The price expectation is 50 cents to 70 cents higher than most other projections and slightly higher than the price currently reflected by new crop futures."

http://www.farmers-exchange.net/detailPage.aspx?articleID=14535

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Honored Advisor

Re: PLC ---- Will it be enough to keep corn planted in the Dakota's

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With the handle "Elcheapo" I think you`ll be just fine.  Unfortunately the last 5 years, my handle has been "Elspendo".   Smiley Happy

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Senior Contributor

Re: PLC ---- Will it be enough to keep corn planted in the Dakota's

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 I don't see how PLC make any difference in the incentive to plant corn. From my understanding ARC-IC is the only program choice chich is based off of actual planted crops. With PLC or ARC-CO payment is based off of base acres whether they are planted or not, no matter what is planted on them.  Patrick

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