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  • Analyst David Hightower recently explained why he thinks demand will provide more support to the corn and soybean markets six months from now than people think.

  • Uncertainty surrounding rail car deliveries to grain elevators in the upper Midwest could turn the fall harvest into a "disaster," according to one South Dakota elevator manager.

  • Sometimes when I get on a roll with a project (or two), and I lose focus on my regular tasks, like keeping the blog fresh. Here are just a few interesting snippets from my overflowing notebook.

  • Tuesday's U.S. spring wheat trade saw basis levels for high protein milling wheat gain as much as $1.75/bushel, a sign that protein is potentially poised to be a growing issue.


  • The corn and soybean markets appear to be expecting the USDA’s already very large U.S. production forecasts to be increased in the October 10 Crop Production report. Larger crop expectations stem from expectations for higher yield forecasts, with some disagreement about the prospects for changes in acreage estimates. The implication of large crops for the magnitude of year-ending stocks obviously depends on the consumption response. As indicated in earlier newsletters (August 11 and August 25), the markets will continue to monitor the pace of consumption relative to USDA projections in order to form expectations of the magnitude of year-ending stocks.Some of the consumption response can be monitored directly from periodic reports of exports and export sales, ethanol production, the domestic soybean crush, and crop inventories. Other responses can be monitored only indirectly from estimates of livestock inventory and livestock production intentions. For corn, the USDA has projected 2014-15 marketing year exports at 1.75 billion bushels, 175 million less than exported last year. The expected decline in exports reflects an expected decline in world trade, not a loss of market share. The USDA’s weekly Export Sales report indicated that as of September 11, 513.3 million bushels of U.S. corn had been sold for export during the current marketing year. That total is only 7 million bushels less than sales of a year earlier, even though sales to China are down by 122 million bushels. Sales are larger to Japan and several western hemisphere countries, particularly, Columbia.  Export inspections during the first 3.5 weeks of the marketing year were about twice as large as in the same period last year. The variation in the seasonal pattern of both export sales and shipments from year to year, however, means that early season activity is not always a good indicator of marketing-year export demand. Still, the current pace of export activity is encouraging.The USDA has projected marketing-year ethanol use of corn at 5.125 billion bushels, equal to use of the past year. With prospects for limited increase in domestic consumption of ethanol, the year-over-year change in ethanol production and corn consumption will primarily reflect changes in trade activity. Current prospects favor a continuation of large net exports of ethanol for the U.S. this year. Ethanol production in the first half of September was about 10% larger than production of a year earlier, but stocks also increased to an 18-month high. At this early stage, expectations for corn consumption for ethanol do not differ from the USDA projection.The USDA has projected marketing year feed and residual use of corn at 5.325 billion bushels, 150 million bushels larger than the current forecast of last year’s consumption. The estimate of last year’s consumption will be finalized with the release of the September 1 stocks estimate on September 30. Indicators of feed and residual use of corn are limited, and forming expectations about use is made difficult by the varying magnitude of residual use from year to year. Use is revealed quarterly based on the USDA’s quarterly Grain Stocks report. Still, livestock numbers are monitored, along with the price relationships of various feed ingredients, to gauge prospects for underlying feed demand for corn. The most recent USDA reports reveal a modest year-over-year expansion of 1% to 2% in the number of broiler chicks placed on feed, an increase of about 0.5% in the number of dairy cows, and about 1% fewer cattle on feed. The USDA’s quarterly Hogs and Pigs report to be released on September 26 will be closely watched for any signs of expansion in the pork sector. For soybeans, the USDA projects the 2014-15 marketing year crush at 1.77 billion bushels, 40 million more than crushed the previous year. The National Oilseed Processor Association (NOPA) crush report for September, to be released on October 15, will provide the first look at the pace of crush this year. Marketing year exports are projected at 1.7 billion bushels, 55 million bushels larger than exports of last year. The USDA’s weekly Export Sales report indicated that as of September 11, 935.7 million bushels of U.S. soybeans had been sold for export during the current marketing year, 95 million more than sales of a year earlier. Most of that increase was to unknown destinations, with sales to China down about 40 million bushels. Since September 11, however, the USDA has reported export sales of about 81 million bushels under its requirement to report large daily sales. Similar large sales were made during the same period last year. Exports during the first 3.5 weeks of the marketing year were quite small, as is normally the case, but were larger than shipments in the same period last year. As with corn, conclusions about marketing year export prospects are difficult to draw from early season activity, but the current pace of sales is encouraging. As a whole, current indicators of corn and soybean consumption do not point to 2014-15 marketing year consumption that would deviate much from the current USDA projections. Those projections will be updated on October 10, with the September 30 Grain Stocks report to provide some insight into the recent pace of feed and residual use of corn.    Issued by Darrel GoodAgricultural EconomistUniversity of Illinois

  • As harvest approaches, a main concern for farmers may be storage and crop drying. If you’re worrying about moisture levels, there are a few different options you can take this fall. “One possible solution is harvesting the crop as high-moisture grain and marketing it to livestock producers,” says Bob Fanning, Extension plant pathology field specialist at South Dakota State University. “For example, high-moisture corn is an excellent feed for ruminant animals that is used quite frequently in South Dakota feedlots.”Advantages to this approach include:No drying costsEarlier harvest  Use of an immature cropLower field losses Earlier availability of crop residue grazing Disadvantages of high-moisture harvest include: Less marketing flexibility (only through livestock) Need for specialized storage facilities and equipment Potentially higher spoilage and storage losses “Alternatives to high-moisture corn can include high-moisture ear corn (earlage) and snaplage (includes the grain, cob, and shuck or husk),” says Fanning. “Producers could choose to harvest a portion of their grain as high-moisture while waiting for the remaining crop to dry sufficiently to store safely. The dilemma with selling high-moisture grain is how to arrive at a value for the crop.”You can apply an adjustment to the cash price at the local grain elevator – this should be based on the industry-standard moisture content. With earlage or snaplage, additional adjustments would need to be made. “Grain buyers may use a variety of methods to calculate shrink,” says Fanning. “One method to adjust for excess moisture is to mathematically remove the water and calculate what you are buying and selling on a dry matter basis.”Below is an example of corn marketed as a high-moisture crop by Fanning. The industry standard moisture content is 15.5%, and the weight per bushel is 56 pounds. To calculate the dry matter in one bushel of 15.5% moisture corn, we would use the following formula: (1 - 0.155) X 56 = 47.32 pounds of dry corn/Bu."The same principle can also be used to calculate the bushels of 15.5% moisture corn in a load of high-moisture corn,” says Fanning. To keep the math simple, we will assume a load of 25% moisture corn weighs 1,000 pounds. By using the formula: (1 – 0.25) X 1,000 = 750, we have mathematically removed the water, and determined that 75% of the load of corn is dry corn, which weighs 750 pounds. By dividing 750/47.32 (pounds of dry corn/Bu) = 15.8, we know that the 1,000 pounds of 25% moisture corn contains the equivalent of 15.8 bushels of 15.5% moisture corn.“If the buyer and seller agree on this method of adjusting for the excess moisture, they can determine the value of the 1,000 pounds of high-moisture corn by multiplying the cash price per bushel of corn on that day by the equivalent bushels of 15.5% moisture corn in the load,” says Fanning. Keep in mind the buyer and seller may agree to make additional adjustments due to handling losses, storage requirements, and who is incurring the trucking costs, says Fanning.

  • As reports of Palmer amaranth continue to sweep across the country, nearly everyone has heard about this formidable weed. Now's the time for you to pay closer attention and look for infestations. “The only refuge where this weed has not been reported is Minnesota and North Dakota,” says Rich Zollinger, North Dakota State University Extension weed specialist. "It appears that once established, eradication is impossible – at least no state or area has been able to return the land to ‘weed-free’ status."“Correct Palmer amaranth identification and prevention in North Dakota has been a key Extension message this year,” adds Zollinger. Once the combine starts rolling, it’s important to be on the lookout for this weed. From the truck drivers to combine operators, make sure everyone knows how to identify this weed. If you do spot an infestation, properly clean your equipment before moving to the next field to avoid weed seed dissemination. “I encourage everyone to keep keen observation,” says Zollinger. “A good refresher on how plants would look at this time of the year is in page 137 of the North Dakota Weed Control Guide.”      Bob Hartzler, Iowa State University Extension weed specialist, recommends looking for infestations on roadsides, around grain bins and storage areas, and near field edges. He recommends the following when you find Palmer amaranth:Properly eradicate small infestations. This weed can produce 1 million seeds per plant, and pulled plants can reroot and produce seed if not properly disposed. Don’t underestimate the number of plants present. Palmer amaranth emerges from mid-May through August.Don’t confuse the identification of water hemp with Palmer amaranth.“The majority of waterhemp and Palmer amaranth plants have the same general shape and growth habit,” says Hartzler. “This reinforces the need to closely examine the floral characteristics of the two pigweeds – the large bracts of female Palmer amaranth make it simple to differentiate Palmer from waterhemp.”Have an attitude of prevention.“High seed production and the efficiency of field equipment at disseminating seeds will facilitate the movement of Palmer amaranth across Iowa,” says Hartzler. “However, individual farmers can prevent it from becoming established in their field with a combination of vigilance and diverse weed management.”

  • Remember MTBE?That’s the octane booster that oil refiners used to put into gasoline in this country. After the potential cancer-causing MTBE started showing up in groundwater near Lake Tahoe in California, it was eventually banned in this country. It was a big break for ethanol, which has replaced MTBE.Refiners still export MTBE, however, but because it’s roughly $1 a gallon more costly than ethanol, U.S. ethanol exports are starting to replace MTBE around the world.That’s one reason why University of Illinois economist Scott Irwin sounds almost bullish on ethanol production these days.On Friday, we checked with Irwin to see how much the market has changed since he and economist Darrel Good looked at exports in June.Exports this year are likely to hit about 800 million gallons, Irwin projects. That’s short of the record of 1.1 billion gallons, but well above the 620 million gallons shipped in 2013.“There’s a pretty consistent market for U.S. ethanol exports, to the degree I think it’s only a mater of time before the world will use all of our available capacity,” Irwin told “I’m getting a lot of calls from investors and venture capitalists asking about the ethanol space.”Exports themselves don’t account for a big chunk of the U.S. corn crop, but Irwin believes they help improve corn prices “at the margin.”Right now, the market “is being overwhelmed by huge yields,” he said. Those big yields aren’t going to be repeated every year. Meanwhile, exports are expected to grow in places like India, the Philippines, and even Brazil and the Middle East. That’s because ethanol is the global bargain for boosting octane.Here’s the Irwin-Good article on exports.