Corn south february 2016 by One Grower Publishing

2016 Market Outlook

CornSouth ONE GROWER PUBLISHING, LLC

Southern Production & Marketing Strategies

A Supplement to Cotton Farming and The Peanut Grower Magazines

February 2016

CS0216 Layout_CF 11/13 template 1/14/16 9:47 AM Page 2

CornSouth One More Obstacle You’re fighting the calendar and the clock, for that matter. The crop is ready and waiting to be harvested; weather this nice won’t hold out for long. And where are you? In the shop trying to get a combine fixed and back in the field. You’ve got the tool you need to do the Amanda Huber job, maybe the welder or an Editor impact wrench, but, wait, it won’t work either! It’s frustration on top of frustration. That tool you depend on worked good the last time you used it, but not now, and time is ticking away. I thought of this scenario as I read about PPO-resistant Palmer amaranth being found in Mississippi this past year. These Group 14 herbicides became a critical tool in the weed management tool box when glyphosate resistance became widespread in the last five to 10 years. Now, it looks like this tool increasingly won’t do the job either, and unfortunately, it is probably because this tool was used too much. Jason Bond, Mississippi State University Extension weed specialist, writes on the Crop Situation Blog, “Because of the widespread problem with glyphosate-resistant Palmer amaranth and because there are few other options, PPO herbicides have often been used in the same field in successive years. Therefore, similar to the evolution of glyphosate resistance in Palmer amaranth, it was only a matter of time before repeated use of the same herbicide mode of action selected for Palmer amaranth plants resistant to PPO herbicides.” Bond says that complaints about the efficacy of PPO herbicides have increased in Mississippi in recent years; however, no resistance was documented prior to 2015. Samples were being studied through the fall and winter, and official confirmation is still pending based on test results. But as Bond reports, it looks like that will be the case and provides yet another obstacle to producing a high-yielding, quality crop that doesn’t cost more than it brings in.

2016 Outlook

Market Offers Guarded Optimism

lemson Cooperative Extension economist Nathan Smith is optimistic corn can rebound some in 2016, but global supply-and-demand pressures will continue to depress cotton, peanut and soybean prices. Strong demand for ethanol and livestock feed are likely to support corn futures, Smith says, though prices could dip if production spikes next year, he said. Corn prices have ranged between $3.35 and $3.95 per bushel. But, he adds, “Costs are going to have to adjust pretty soon for margins to improve.” “I’m probably more bullish on corn than any crop right now, but it’s going to depend on what farmers plant throughout the U.S.,” says Smith, who moved from the University of Georgia to Clemson last fall. “I’d say look for pricing opportunities when futures get above $4 in the near term.” For South Carolina producers, increasing the corn yield just one percent would pocket farmers nearly $1.3 million, based on recent production data. Producers in that state planted 278,000 acres of corn in 2014 at a production value of $127.8 million, according to U.S. Department of Agriculture data.

Not A Significant Increase

Mark Welch, Texas Agri-Life Extension economist, says the following in his market report. “The most recent numbers from the Agricultural Marketing Resource Center at Iowa State University on ethanol proﬁtability show plants operating at just below cost

of production in October. Total costs have been about $1.84 per gallon the last three months and revenue has averaged $1.82 per gallon. For the previous 12 months, cumulative profitability has been $1.00 per gallon. Besides falling ethanol prices, another factor impacting revenue is a sharp drop in the price of distillers dried grains with solubles (ddgs), down from $181 per ton in April to $111 per ton in October. “Ethanol production numbers from the Energy Information Administration last Wednesday show production running at 41.8 million gallons per day for the week of Jan. 1. That is 5 percent above a year ago and 9 percent above average. At the current rate of ethanol production, 5.304 billion bushels of corn would be needed compared to USDA’s forecast in the December WASDE of 5.2 billion bushels. “My marketing plan for 2016 again calls for breaking up sales over four pre-harvest time periods and the fi nal 20 percent at harvest, along seasonal tendencies in the corn market. My early budget projections show a breakeven price of corn of $4.13 and $4.08 for grain sorghum. Prices on the 2016 December corn contract closed back today where they left off on Dec. 31. There appears little on the horizon to suggest a significant increase in corn acres for 2016 so I expect much of the production discussion to focus on yield. A state of flux in a major weather phenomenon during the corn-growing season may provide marketing opportunities in the spring.

POINTERS If you have comments, send them to CornSouth, 6515 Goodman Rd., Box 360, Olive Branch, MS, 38654. You may also call (901) 767-4020 or contact Lia Guthrie at lguthrie@onegrower.com or Amanda Huber at ahuber@onegrower.com. TWITTER: @CORN_SOUTH

Market Overview ■ Potential rebound in corn over other crops ■ Ethanol production is above average for the year ■ Look for slight increase in acreage; watch for weather phenomenon CORN SOUTH FEBRUARY 2016

CS3

Gain A Better Market Position

Grain Bins Offer Flexibility

itchell Farm Partnership is one of many Arkansas producers who have adopted grain bins as part of an overall marketing strategy, which both helps protect harvested crops and gives growers some leverage in a market in which the primary producers are

typically “price takers” rather than “price setters.” Mitchell purchased the five massive bins, each of which can store 40,000 bushels of grain, in 2009. Prior to that, corn would field-dry as harvest time approached, leaving the crops exposed to the weather until a

desired moisture level was achieved. By storing grains, growers can gain marketing advantage by not selling immediately after harvest, says Jeff Welch, staff chair for the Lonoke County Cooperative Extension Office. “Typically, the price throughout the year is at it’s very lowest at harvest,” he says. “And the reason for that is that there’s a glut of grain in the United States, and people can only use so much. “They’ll use their grain bins to store their grain until the price recovers to a point where they can make a profit — and that’s what grain bins are for,” he says. “It allows flexibility in marketing, and that’s everything.” Scott Mitchell, farm manager of Mitchell Farm Partnership, says that using the bins added a new element of responsibility between harvest and delivery. “Once you’ve got a harvest in there, that bin is basically full of money,” he says. “After a rain, you’ve got to get in there and check that everything’s all right. Until it’s delivered, it’s an added risk you’re taking on — a bigger responsibility for the owner.”

Safety Essentials

Rainbow. Full Spectrum Plant Nutrition. Corn needs 13 different nutrients to achieve ideal size and yield. Most soils in the coastal plain are sulfur, manganese and boron deficient, so your crops need a good, available secondary and micronutrient source. Each homogeneous granule of Rainbow Plant Food contains the perfect balance of primary, secondary and micronutrients. And whether you broadcast or apply it in-row, every plant across your field will have the vital nutrients available when they need it most. Find out more at RainbowPlantFoodProducts.com.

CS4

RAINBOW P L A N T

Article by Ryan McGeeney and provided by the University of Arkansas System Division of Agriculture.

F O O D

CORNSOUTH.COM

CORN SOUTH FEBRUARY 2016

46318-03 Rainbow_Spectrum_4_5x7_5_Corn_CS_a2.indd 1

The bins also require an additional eye toward safety. “Grain bin safety is absolutely crucial,” Welch says. “What can happen is that the producer will fill his bin, his grain will be dry, but at some point, he’ll take some grain out of the bottom of the bin. If there’s a crust on top, what happens is, it looks like the bin is full, but it may only be half full. And if he gets in that bin at that point, he can crash through that crust, and it can swallow him alive.” Grain should be “coned” at the top of the bin, rather than flat across. Grain should also be dried as much as possible before it goes in the bin; workers should wear safety harnesses and never enter a bin alone. “More and more farmers are trying to achieve economies of scale through farming larger and larger acreages,” Welch says. “Once that happens, grain bins come into play, because they have to have the ability to market their product effectively.” For more information on grain storage, contact your local Extension agent or visit www.uaex.edu.

12/15/15 2:52 PM