14 minute read
From The Fields
Matt Erickson Fertile, Minn. Oct. 7
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Leah Johnson is pleased with harvest so far, but she knows she’s not out of the woods. “I try not to pay attention to long-range forecasts,” she admitted.
Leah Johnson Evansville, Minn. Oct. 11
2022
“Things can turn on a dime this time of year.” Erickson combined “a little bit of corn” to check on the moisture. “It Johnson spoke with The Land on Oct. 11 as she prepared for the was pretty wet when we started,” he said, “but it’s getting better every final push. “We were able to wrap up soybeans on Saturday (Oct. 8),” day. A little moisture would be nice, but the dry weather is good for she said. “Yields were above what we thought. We’re not breaking any getting the crop out.”
Erickson’s cattle are still grazing, but he wants to get them in by the time deer hunting season starts. After that, Erickson will turn them back out to graze corn stalks until about mid-November. “We’d rather have them grazing as long as we records. I’d say we’re right about the five-year average.” Moisture ran around 14 percent. The Johnson farm is still in the process of repairing bins and is holding off on starting the corn until they have somewhere to put it. “Lots of corn is getting started around here,” Johnson said. “It’s running 16 to 22 percent moiscan,” he said. ture, so it’s going right into the bin.” When you farm farther north, unpredictable fall weather is always a challenge; but one thing is certain: “Days are getting shorter,” Erickson said. “We don’t get as much done and find ourselves going a little later (in the day).” v Corn yields are in the 170-200+ bushels per acre range. “Continuous corn-on-corn is seeing lower yields and lighter soils are worse,” Johnson said. “We’re making a few combine repairs and then we’re going to try to find some dry corn we can take right to the elevator. Everything is standing perfectly right now so we don’t want to wait too long.” v
FROM THE FIELDS Compiled by PAUL MALCHOW, The Land MANAGING EDITOR Bob Roelofs Garden City, Minn. Oct. 7
Roelofs said he began combining corn today. “It dried down fairly well,” he admitted. “Moisture is around 20 percent.”
If the good weather holds, and the forecast indicates it will, Roelofs is very optimistic about the completion of the 2022 harvest. “We have a chance of being done by Halloween,” he stated. “We don’t say that very often.” v
Scott Winslow’s farm is a hub of activity as he interrupted his busy schedule to talk with The Land on Oct. 6. “We’re done with beans,” he said. “Yield is about average. Sudden death syndrome knocked a little off the yield.”
Scott Winslow Fountain, Minn. Oct. 6
“We started corn yesterday. A shot of rain — about a tenth of an inch — kept us out of the field.” Winslow said the corn is running about 25 percent moisture. “We had a bad case of tar spot. I’d like to get it out of the rain before cobs start falling off.” He’s estimating yields will be three or four bushels behind last year.
On top of field work, Winslow is working on his grain dryer and washing hog barns in preparation for new arrivals. “The last of the pigs went Tuesday (Oct. 4),” he said. “The new batch arrives next Tuesday.”
“Things are going well so far — knock on wood,” Winslow said before heading back to work. “There are lots of beans in the field yet. I’d say beans are two weeks late this year. We had a pretty good frost on the 28th. The edge of the corn got nipped, but there’s enough heat inside the first couple of rows it didn’t affect much.” v
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THIESSE, from pg. 8A
mium levels. Crop losses in many areas in 2022 were highly variable from farm-to-farm within the same county and township, which would favor the optional units for collecting crop insurance indemnity payments this year.
RP crop insurance calculations
The 2022 crop insurance calculations for RP insurance policies with harvest price protection will likely function differently for corn and soybeans. Corn — Since the harvest price for corn will likely be above the base price, the harvest price will be used for both the final revenue guarantee and the final crop value calculations. As a result, any potential crop insurance indemnity payments will require a yield loss comparable to the policy coverage level. For example, an 85-percent RP policy will require a harvest yield greater than 15 percent below the APH yield. An 80-percent RP policy will require a 20 percent or greater yield loss, etc. For RP policies, any corn indemnity payments will be based on the higher corn harvest price, as compared to the base price for YP or RPE polices. At current corn harvest price projections, there could be a significant difference in potential indemnity payments with RP insurance policies in 2022, compared to YP or RPE policies. Soybeans — Since the 2022 harvest price for soybeans is likely to be lower than the base price, the revenue guarantee will be determined by the spring base price and the harvest value of the crop will be determined by the harvest price. If the soybean harvest price continues at current levels, the “threshold yield” to initiate crop insurance payments will be at a higher percentage than the RP insurance coverage level and higher than standard YP or RPE insurance policies. Please read attached email Using a final harvest price of $13.50 per bushel CODE AND REP NAMES ALREADY ON AD THE LAND 3.417 x2” and the 2022 soybean base price of $14.33 per bushel, the “threshold yield” to receive a soybean insurance payment is at 90 percent of APH yield with an 85-percent RP policy, 84 percent with an 80-percent RP policy, and 79 percent with a 75-percent RP policy. For example, with a 60 bushel per acre APH The Land yield and a $13.50 per bushel harvest price, soybean insurance payments would begin if the final soybean yield falls to about 54 bushels per acre with an 85-percent RP policy, below 51 bushels per
There’s still time to get your building site ready and get on our build schedule! acre with an 80-percent RP policy, and below 48 bushels per acre with a 75-percent RP policy.
Potential corn indemnity payments
The level of crop insurance coverage and having RP insurance policies, with harvest price protection, can be a big factor in determining the amount of insurance indemnity payment received for crop yield reductions. Most corn and soybean producers in the upper Midwest are carrying RP insurance coverage in 2022. Some producers utilized YP (yield only) or RPE (harvest price exclusion) policies to reduce crop insurance premiums. There will likely be a big difference in the potential final results of the various insurance policies for corn in 2022.
Following is an example of how the various crop insurance policies would function with a corn APH yield of 200 bushels per acre, a harvest yield of 155 bushels per acre, a 2022 base price of $5.90 per bushel, and a corn harvest price of $6.85 per bushel:
RP policies (with harvest price option) — 85-percent RP: $1,164.50 guarantee, $1,061.75 harvest value, $102.75 gross indemnity payment; 80-percent RP: $1,096.00 guarantee, $1,061.75 harvest value, $34.25 gross indemnity payment; 75-percent RP: $1,027.50 guarantee, $1,061.75 harvest value, zero indemnity payment.
RPE policies (harvest price exclusion) — 85-percent RP: $1,003.00 guarantee, $1,061.75 harvest value, zero indemnity payment; 80-percent RP: $944.00 guarantee, $1,061.75 harvest value, zero indemnity payment; 75-percent RP: $885.50 guarantee, $1,061.75 harvest value, zero indemnity payment.
YP policies (yield only) — 85-percent RP: 170 bu./ acre guarantee, 155 bu./acre harvest yield, $88.50 gross payment (15 bushels times $5.90/bushel); 80-percent RP: 160 bu./acre guarantee, 155 bu./acre harvest yield, $29.50 gross payment (5 bushels times $5.90/bushel); 75-percent RP: 150 bu./acre guarantee, 155 bu./acre harvest yield. zero indemnity payment.
Summary
There will be considerable variation in potential crop insurance indemnity payments across the Midwest in 2022 — even within the same county or township. There will also be significant differences in potential crop insurance indemnity payments at the same final harvest yield, depending on the farm unit APH yield, the type of insurance coverage and the level of coverage. Some producers also carried enhanced private insurance coverage levels, had separate wind or hail insurance endorsements, or carried additional area insurance coverage — any of which could affect final potential insurance indemnity payments on the 2022 corn and soybean crop.
Producers who had crop yield losses in 2022, with the potential for crop insurance indemnity payments, should contact their insurance agent and properly document yield losses.
It is also important for producers who did not have crop losses in 2022 to understand the dynamics of the various insurance options when making crop insurance decisions in future years. A reputable crop insurance agent is the best source of information to make estimates for potential 2022 crop insurance indemnity payments or to find out about documentation requirements for crop insurance losses, as well as to evaluate future crop insurance
See THIESSE, pg. 15A
Grain Outlook Traders fearing transportation woes
The following marketing analysis is for the week ending Oct. 7.
CORN — The week got off to a mundane start in post-grain stocks trading with equity markets shooting higher, the U.S. dollar softer, and favorable harvest weather. The U.S. dollar experienced its largest one-day decline on Oct. 4 after Australia increased its interest rate by a less-thanexpected half percent. However, when the Bank of New Zealand raised its rate by a half percent the next day, hopes for others to follow Australia’s leads were dashed. The U.S. dollar soared in response.
At mid-week, OPEC+ agreed to cut crude oil production by 2 mil- PHYLLIS NYSTROM lion barrels per day beginning in CHS Hedging inC. November. This was rumored St. Paul just a few days before OPEC’s meeting. Many countries (Russia) are not currently producing their quota, so the actual reduction may be in the 1 million barrels per day area.
In general, corn was consolidating ahead of the Oct. 12 World Agriculture Supply and Demand Estimates report and as it waits for further yield reports.
Weekly corn export sales were dismal and below the lowest trade estimate at 8.9 million bushels. Total 2022-23 export commitments of 521 million bushels are 50 percent behind last year. The fiveyear average of total commitments by this date is 34 percent and this year they are just 23 percent of the U.S. Department of Agriculture outlook. China has purchased 3.4 million metric tons of U.S. corn for this year compared to last year’s 11.9 mmt by this date. This suggests the USDA export outlook may be
Cash Grain Markets
corn/change* soybeans/change*
Stewartville $6.35 -.45 $12.96 -.36 Edgerton $6.88 -.10 $13.56 -.17 Jackson $6.67 +.35 $13.37 -.22 Hope $6.63 +.29 $13.16 -.27 Cannon Falls $6.83 +.16 $12.87 -.51 Sleepy Eye $6.58 -.09 $13.31 -.37 St. Cloud $6.53 +.25 $13.26 -.32 Madison $6.63 +.20 $13.42 -.32 Redwood Falls $6.65 -.13 $13.47 -.23 Fergus Falls $6.45 +.17 $13.30 -.23 Morris $6.58 +.26 $13.46 -.22 Tracy
$6.78 +.35 $13.53 -.07 Average: $6.63 $13.31 Year Ago Average: $5.07 $11.90
Grain prices are effective cash close on Oct. 11. *Cash grain price change represents a two-week period.
too high.
The weekly ethanol report showed production rose 34,000 bpd to 889,000 bpd which was slightly higher than expected, but down 9.1 percent from a year ago. This is the lowest production in nine years on a same-week comparison. Ethanol stocks fell by 1.01 million barrels to 21.7 million barrels. This was a larger decline than anticipated and a 39-week low. This was the biggest one-week decline in 25 weeks. Stocks are still 9 percent above a year ago. Gasoline demand was up 640,000 bpd to 9.465 million bpd. This was a 41-week high, but unchanged from last year.
The August National Agricultural Statistics Service Grain Crush report showed 432.3 million bushels of corn were used for ethanol. This brought the crop year total corn for ethanol usage to 5.328 billion bushels compared to the USDA’s 5.33 billion bushel outlook.
Russian President Putin officially annexed the four regions of Donetsk, Luhansk, Kherson, and Zaporizhzhia in Ukraine. This accounts for 18 percent of Ukraine’s total area. He has vowed to never give it back. Reportedly, 200,000 Russians have fled Russia to escape the recent conscription order. The European Union added sanctions on Russia in response to the annexations.
Brazil’s first corn crop was 37 percent planted as of Oct. 5 and slightly ahead of the 34 percent average. Conditions have been favorable. Conab is forecasting Brazil’s corn crop at 126.9 mmt compared to the USDA’s 126.0 mmt outlook in September. Due to dry conditions, Argentina’s corn planting was 12 percent complete as of Oct. 5 and the lowest in five years.
As of Oct. 7, there were 111 southbound (1754 barges) and 74 northbound (1138 barges) tows to transit through Lake Providence, La. which has been a bottleneck. Dredging is continuing. There are no significant rain events in the forecast to help alleviate the problem. And we still don’t know whether railroad workers will ratify the proposed contract. We may not know until after the elections. The uncertainty of logistics heading into the heart of harvest may back up grain in the country more than many would like. One anonymous export trader said they couldn’t commit to additional sales through the Gulf due to the uncertainty of grain movement. It was estimated the cost of moving grain from Illinois to the Gulf costs twice what it costs to move grain from the Gulf to China. Higher transportation costs have pressured board and cash carries.
The average trade estimates for the October WASDE report: corn yield is expected to decline from 172.5 bushels per acre to 171.8 bu./acre. Production is forecasted to fall from 13.944 billion bushels to 13.885 billion bushels. Ending stocks at 1.124 billion bushels would be a 95 million bushel decrease from the September 1.219 million bushel forecast.
Outlook: Where are we going from here? December corn has stagnated between $6.54 and $7.00 per bushel. The upside in post-harvest trading may be favored with a softening U.S. dollar, more crude oil production cuts, dry weather in Argentina, and questionable events in Ukraine. One caveat, will we lose export demand permanently due to river logistics? With most of the corn harvest ahead of us, we may see some near-term weakness; but I’m not expecting a washout without an unforeseen event. History favors a higher October market when gains are seen
See NYSTROM, pg. 19
Information in the above columns is the writer’s opinion. It is no way guaranteed and should not be interpreted as buy/sell advice. Futures trading always involves a certain degree of risk.
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