Farm Programs

Weather, exports continue to drive soybean market

NYSTROM, from pg. 18 Scheduling conflicts were cited as the reason for the percent, and Minnesota unchanged. Ninety percent commitments at 480.4 million bushels compared to postponement; but in later comments, President of the U.S. soybeans were blooming vs. 94 percent just 184.3 million on the books last year. New crop Trump said he wasn’t ready to talk to China. Virtual average with 84 percent setting pods vs. 79 percent sales are the highest for this date since 2013. talks are expected to take place before the end of the average. Like corn, the tour soybean yield has been

Weekly ethanol production was up 8,000 barrels month to discuss Phase 1 trade progress. running below the U.S. final yield. per day to 926,000 bpd. Ethanol stocks were 520,000 The July National Oilseed Processor’s Association Weekly export sales for old crop showed net cancelbarrels higher at 20.3 million barrels. Margins crush also lent support at a record for the month at lations of 500,000 bushels. This is not surprising as improved a penny to 9 cents per gallon. Gasoline 172.8 million bushels. Daily soybean sales announcewe approach the end of the marketing year and sales demand remains 10 percent behind last year. ments resumed which moved soybean prices sideget rolled forward or cancelled. Old crop commitChina continues to sell state reserve corn in weekly auctions. They intend to auction corn every week through September. So far this year they have sold 51.9 million metric tons from reserves. Steady demand from China may be expected into the fourth quarter. Outlook: Traders continue to decipher what Iowa’s crop losses will likely be considering favorable conditions in other parts of the corn belt will make up some of the shortfall. No matter how you slice and dice it, we do have a big crop headed toward us. Are the harvest lows already in? It’s a toss-up, but can you risk it if you have catch sales to make before you hit the field? ways. There have been only three business days this month when we didn’t have a soybean export sale announcement. The one day this week when we were sans an export announcement, soybean prices pushed lower to test their 200-day moving average support. Heading into the weekend, China purchased 15.75 million bushels of new crop soybeans and another 14.5 million bushels were sold to an unknown destination. For the week, daily releases totaled 22.75 million bushels to China and 19.3 million bushels to unknown. This didn’t faze traders and the market remained in the lower half of the week’s trading range, but above the 200-day moving average support level at $9.01 per bushel. There is a downside ments stand at 1.745 billion bushels compared to the USDA outlook for 1.65 billion bushels. New crop sales were as expected at 94.5 million bushels after a string of daily announcements. We have nearly four times new crop sales on the books vs. last year. New crop sales are the highest for this date since 2015. U.S. soybeans are the cheapest origin through January/February, but then South American supplies should whisk away our demand. Outlook: There is a gap in November soybeans from $9.01.25 down to $8.99.5 per bushel. For the week, November soybeans were 6 cents higher at $9.04.75 and November 2021 soybeans were 8.5 cents better at $9.15 per bushel. For the week, September corn was 2.5 cents higher at $3.27, December corn showed a 2.5 cent gain to close at $3.40.5, with December 2021 corn up 2 cents at $3.74 per bushel. gap in November soybean futures from $8.99.5 to $9.01.25 per bushel. The Midwest Crop Tour found mostly-as-expected pod counts across the tour which were higher than Weather and on-going export announcements will determine where we go from here, but recent buying hasn’t done much to engage buyers. If the rain develops as advertised, prices should come under pres

SOYBEANS — November soybeans gapped higher last year’s tour numbers. Pods in a 3x3 square, by sure. Aug. 17 on dry conditions centered in west central Iowa. On the next day, we broke an eight-day streak of daily export sales announcements, but still posted double-digit gains. state and vs. last year’s tour figure: Minnesota 1,086 vs. 965.3; Iowa 1,146.3 vs. 1,106.9; and Illinois at 1,247.4 vs. 997.7 last year. If we get the advertised rain, we’ll have a huge crop Nystrom’s Notes: Contract changes for the week as of the close on Aug. 21: Chicago September wheat rallied 27.25 cents to close at $5.27.25, Kansas City jumped 20.5 cents to $4.45.75, and Minneapolis

The anticipated trade discussion between the United ready for market soon. Soybean conditions for the wheat was 17.5 cents better at $5.15 per bushel. v States and China scheduled for Aug. 15 were postweek ended Aug. 16 fell 2 percent to 72 percent good/ poned, but the trade took it as “no news is good news.” excellent. Iowa’s rating fell 8 percent, Illinois down 2 Seed costs will come down as more seed is grown

FIELD DAY, from pg. 13

There are about 24,000 to 27,000 hemp seeds in a pound. Seeding rates are 25 to 45 pounds per acre said Kubista, so figure seed costs of $125 to $135 per acre at this stage. His ambitions are seed at $3 to $3.50 per pound as U.S. seed production ramps up.

His take on hemp’s future? “The demand is on the fiber side,” Kubista said. “I have a couple growers in northern Minnesota already into production contracts with clothing firms North Face and Patagonia. My goal is to provide seed to the Seehusens and help with connections to end users of their processed hemp products.”

Kubista said he has shirts, sweatshirts, even shorts made from hemp fabrics. His wife recently purchased shoes made of 100 percent hemp. “My hemp shirts are comfortable and durability is a plus.”

“I have supplied at least 14 universities with hemp seed for their expanding research trials. University trials, I think, will be an important information source. Yes, I’ll have some shareable data with you shortly,” summed up Kubista.

Another observer at Prairie Producers first field day was Erik Petersen, President of F&M Bank. “Some banks and farmers are a bit nervous and understandably so,” stated Petersen. “At our bank we take a long-term view. We’re keenly aware of marketing cycles. Today you are hearing about Minnesota being in the top five in farm bankruptcy numbers. This huge crop coming on will temper this crunch somewhat — plus timely marketing helps too.” “People know the Seehusens. They’re long-time fixtures in our community — starting with their dad who launched his own agriErik Petersen business venture very likely before his sons were born. Paul was a teacher here at Olivia when I was in high school. They’re a great family. I respect the ambition, the optimism and their hard work.

“Anytime you put creative minds at work in creating new markets for our farm production it just opens new avenues — not just for our area farmers, but for communities in general. So how will I relate to farmers intending to grow this new crop next year? Lots of numbers being generated already this first year with the Seehusens and their first-year growers. Plus we know our State Department of Agriculture and Harold Stanislawski with Ag Utilization Research Institute are gathering incredible amounts of information also. I’ve got lots of confidence in Tim, Paul and the outstanding farmers in Renville County. Sure, a few mistakes now and then, but for the most part these folks think diligently with positive ambitions.”

Petersen is optimistic some black ink will be working for most of his farmers this year. “It’s been a turbulent year for livestock producers with processing plants shutting down. But most are pretty well positioned to do just fine.”

And he’s positive on this new industry called hemp farming now ramping up in Renville County. v

Farm program payments likely for some, pending yield data

Corn and soybean prices declined significantly earlier this year due to the coronavirus outbreak and greatly reduced ethanol and biodiesel production. The lower corn and soybean prices have had a negative financial impact for farm operators FARM PROGRAMS who had remaining 2019 grain inventory to market By Kent Thiesse this past summer; as well for farmers as they begin to set MARKETING prices for their 2020 crop production. However, the continued lower grain prices will likely result in higher levels of 2019 farm program payments for many producers.

All farm program payments are based on the national market year average price for a given crop commodity. The 2019 market year average price for corn and soybeans is the 12-month average price from Sept. 1, 2019 to Aug. 31, 2020, with the market year average price finalized on Sept. 30, 2020. The 2019 market year average price for wheat and other small grains is the average price from June 1, 2019 to May 31, 2020, with the price being finalized on June 30, 2020. Any 2019 farm program payments earned will be paid after Oct. 1, 2020.

The market year average price is based on the monthly average farm-level market price received by producers across the United States. It is then “weighted” at the end of the marketing year, based on the volume of bushels sold in each month. Market year average price estimates are updated on a monthly basis in the USDA World Agricultural Supply and Demand Estimates report, which is usually released around the middle of each month.

As of Aug. 1, 2020, USDA was estimating the 2019 market year average prices at $3.60 per bushel for corn, $8.55 per bushel for soybeans, and $4.60 per bushel for wheat. With only one month remaining, the final corn and soybean price is not likely to vary by more than 5 cents per bushel by the end of the marketing year from current estimates. At the current market year average price estimates, there would be PLC payments for corn and wheat, as well

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as increased likelihood of 2019 ARC-CO payments 2019 PLC and ARC-CO payment estimates for corn and soybeans in or corn and soybeans in Minnesota many counties which had below-average crop yields PLC Payment Estimates for Corn at PLC Payment Estimates for Wheat at in 2019. various FSA farm unit yields various FSA farm unit yields

For the 2019 and 2020 ($3.60/bushel market year average) ($4.60/bushel market year average) crop years, 76 percent of 165 bu./acre = $14 per base acre 50 bu./acre = $38 per base acre the corn base acres in the 150 bu./acre = $12.75 per base acre 40 bu./acre = $30.50 per base acre United States are 135 bu./acre = $11.50 per base acre 30 bu./acre = $23 per base acre enrolled in the price-only, price loss coverage (PLC) Counties likely to receive Other Estimated ARC-CO Payments farm program choice; and 2019 ARC-CO payments for corn per Base Acre only 19 percent in the Maximum Payment Level per Base Acre Lincoln = $43 Martin = $33 county yield-based Ag Cottonwood = $65 Hennepin = $58 Mille Lacs = $22 Steele = $13 Risk Coverage (ARC-CO) Jackson = $63 Murray = $64 Traverse = $43 Wabasha = $29 program choice. By comNobles = $63 Pipestone = $63 Watonwan = $30 Yellow Medicine = $10 parison, 94 percent of the corn base acres were Rock = $66 enrolled in the ARC-CO Counties likely to receive 2019 ARC-CO payments for soybeans program from 2014-2018. In 2014, producers needed to make a one-time farm program choice for $40 or more per Base Acre Blue Earth Brown Cottonwood Dodge Jackson Murray $20 to $29 per Base Acre Becker Big Stone Chippewa Freeborn Isanti Lyon five years (2014-2018), Nobles Pipestone Rock Martin Nicollet Redwood while the current proSteele Watonwan Yellow Medicine Renville gram choice is only for two years (2019 and 2020). The biggest change causing the shift in the PLC and ARC-CO farm program choice for corn was the decline in the $30 to $39 per Base Acre Faribault Hennepin Lincoln Mower Stevens Swift Traverse Waseca $19 or less per Base Acre Chisago Clay Douglas East Polk Fillmore Goodhue Grant Kittson Lac Qui Parle Mille Lacs Norman Pine Sibley Stearns Wabasha Winona benchmark price from $5.29 per bushel in both Notes: Some counties did not have 2019 NASS yield estimates, so there were no ARC-CO calculations. 2014 and 2015 to $3.70 ARC-CO payment estimates were based off of NASS yields and may change with RMA yields. ARC-CO per bushel for 2019 and payment estimates were based on current 2019 market year average price estimates (as of Aug. 1). 2020. The benchmark Table prepared by Kent Thiesse, Farm Management Analyst price of $3.70 per bushel is the same as the reference price for corn that is used to calculate PLC the soybean base acres are enrolled in ARC-CO and payments. only 14 percent in PLC.

PLC payments are initiated when the market year The 2019 benchmark price for wheat is $5.66 per average corn price drops below $3.70 per bushel. bushel for 2019, but will decline to $5.50 per bushel 2019 ARC-CO payments require more than a 14 for 2020, which is the same as the reference price percent decline below the market year average price for wheat. The low projected 2019 market year averto generate a payment, if the final county average age price for wheat was more favorable for enrollRMA yield is equal to the benchmark yield. The ment in the PLC program. For wheat, 93 percent of ARC-CO program was attractive for corn in some the base acres are enrolled in the PLC program and counties in southwest Minnesota due to very low only 6 percent in ARC-CO. 2019 average corn yields. For ARC-CO calculations, the benchmark revenue

The 2019 benchmark price for soybeans is $9.63 for a given crop is the county benchmark yield times per bushel, which is well below the benchmark price the benchmark price, which is multiplied by 86 perof $12.27 per bushel in both 2014 and 2015. cent to calculate the “county revenue guarantee.” However, it is still well above the soybean PLC refThe county benchmark yield for 2019 is the average erence price of $8.40 per bushel. As a result, the county yield for the five years from 2013-2017, drophigher benchmark price — together with reduced ping the high and low yield, and the averaging the 2019 soybean yields in many areas — was favorable other three yields. for farm program enrollment in the ARC-CO proSee THIESSE, pg. 21 gram for soybeans. For 2019 and 2020, 80 percent of