2016 Growing Season - Monday, 22 February 2016

 The USDA is always busy formulating predictions usually several weeks if not months in advance.  The early estimates given by the agency indicated their belief that producers are likely going to increase acres of corn planted to 90.5 million and decrease acres planted to soybeans to 82 million in 2016.  The first true picture for the 2016 crop year will come in the USDA’s Prospective Plantings report on March 31st, 2016.  Agricultural economist from the University of Illinois, Darrel Good says, “the report will shed some light on how last year’s large prevented acreage (6.7 million acres), the decline in winter wheat seedings (2.8 million acres), the decline in Conservation Reserve Program acreage (1.4 million acres), and low commodity prices will impact planting intention for spring planted crops.  That is the report that will shed light on the prospective size of the 2016 acreage pie.”  Farmers all seem to have a love of planting corn.  According to the USDA though this may need to change due to producer’s diminished working capital from 2 years of prices at or below the cost of production. While corn may show a higher return on paper the higher input costs may deter producers when compared to the cost of growing soybeans which is about 50% lower.   

The USDA has also projected a corn yield for 2016 of 13.9 billion bushels.  At this level of production, corn demand will be met and ending stocks likely will remain steady.  As a result corn prices are expected to average around $3.60 per bushel.  Soybean production is expected to fall by 200 million bushels from 2015 if the decrease in soybean acres holds true.  Less acres would drop the surplus of soybeans but only by about 40 million bushels, not enough to keep prices from falling to a USDA estimated price of $8.65 per bushel.

Darrel Good, Agricultural economist offers producers more promise for a turn- around in prices than the gloom and doom described in the USDA’s estimates.  “The nature of the 2016 growing season is not predictable but there are two developments that may point to an elevated risk for the U.S. average corn yield to fall below trend value.  First and most widely cited, is the weakening of the current El Niño event.  Historically, El Niño events that existed in January and ended by July, as is expected this year, have been associated with higher-than-average incidence of corn yields below trend value.  Second as reported by private agricultural weather forecasting service T-storm weather, is the historical record for extremely wet conditions in the Midwest during November and December to be followed by a higher-than-average incidence of corn yields below trend value.  Total November and December precipitation the Midwest in 2015 was record high.”  He contends that depending on acres planted, an 8 to 10 bushel drop in yield off trend line could change the balance sheet from having a surplus to one requiring rationing.

 

 

A recent report calculated that the state of Iowa leads other states in grain storage capacity.  At the end of 2015, on-farm storage in the state sat at 2 billion bushels.  Grain storage space at the states 900 off-farm storage facilities totaled 1.5 billion bushels.  These combined resources of 3.5 billion bushels make Iowa the leader in grain storage capacity compared to all other states.

Another storm will be heading out of the Rockies for the Midwest this week.  The jet stream will begin to bring cold air into the Rockies, Monday into Tuesday it is then expected to meet up with an energized polar jet stream Wednesday and Thursday to bring snow across the eastern corn belt, Great Lakes region, Ohio Valley and Appalachians.  We are not expected to receive any precipitation in our area directly from this system.

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