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Green ripening soybean field, agricultural landscape

Whopping yields: Too good to be true?

It isn’t over until it’s over, but USDA data and projections point to record yields in many states.

National corn yields are projected to hit 181.3 bu/acre., up 2.9 bu. from the August estimate. The result is a projected 14.8 billion bushel crop for 2018, which is below 2016’s record but ahead of 2017 yield. Ten states (designated by the # sign on the map below and including Iowa, Nebraska and South Dakota) are pegged to have record yields.

Rain has made grain: Both ears per acre and implied ear weight are exceptional. Production outstripped the highest industry expectation by 200 million bushels.

corn yield september 1 2018

Producers with reasonable costs whose yields are on or above the average should be able to “bushel through” this year’s tight margins, especially with the help of the Market Facilitation Program. Soybean yields also have been bumped higher to a record 52.8 bu./acre, 1.2 bu. above August and 3.7 bu. or 7.5 percent higher than last year. The result would be record soybean production of 4.69 billion bu., up from the August projection of 4.39 billion. Like corn, 10 states (including Iowa and Nebraska) will see record yields, USDA projects.

soybean yield September 1 2018

Progress and Condition

The yield estimates reflect crop condition at this point in the crop year. USDA rated the corn crop one point better in the good/excellent categories, at 68 percent, and stable in the bottom two. Nebraska is top in our service area at 82 percent in the top categories, followed by Iowa (73 percent), South Dakota (64 percent) and Kansas at just 46 percent.

In the 18 reporting states, corn is reported:

Dent: 86 percent Average 75 percent
Mature: 35 percent Average 21 percent
Harvested: 5 percent Average 3 percent

All but one of the states we serve is on or ahead of average for harvest. Nebraska, at 43 percent harvested, lags its average by six points

corn progress sept 12 2018

Soybeans remain ahead of average as well, with 31 percent dropping leaves compared with 19 percent average.

Condition improved two points from last week on the top end of the scale, to 68 percent, and one point on the bottom end, at 10 percent poor/very poor.

soybeans progress September 12 2018

Given the stage of the crop and its moisture requirements, most of Iowa and nearby states have excess moisture, though there is still time for things to dry down before harvest.

Corn moisture index September 8 2018

The Florence Factor

While North Carolina is not a corn or soybean powerhouse, it is a feed-deficit state, so any crop losses related to Hurricane Florence there can ripple back up the transport chain. Soybeans are planted in all 100 counties in the state, from the mountains to the sea – totaling 1.6 million acres in an average year. USDA forecasts 1.59 million to be harvested this year. However, most are grown in the eastern third of the state.

Hurricane Florence factor

Corn’s pattern is very similar, but accounts for about half as many acres, with 870,000 projected for harvest as grain this year. So far, 43 percent has been harvested.

As Hurricane Florence spins her way to landfall, it is expected to penetrate the state, with winds of 150 mph and deluges of 15-30 inches of rain. Crop damage is a given; even stored grain may in peril.

Last year, the state’s corn crop amounted to 119.3 million bushels and soybeans, 67.6 million – both less than 1 percent of national production, but potentially important to the protein producers in the state, assuming they don’t also experience extreme losses.

Hurricane Florence NOAA

hands holding soybeans

Busheling through 2018: The Difference Yield and Federal MFP Payments Make on Farm Income

The two main legs of crop income every year are Yield X Bushels. Crop insurance provides a third leg and government payments a fourth.

In its September 12 Crop Production report, USDA forecast record corn and soybean yields for 10 states and the nation.

While federal ARC payments are expected to be minimal this year, as intended by the 2014 Farm Bill, the government is offering direct payments under a one-time Market Facilitation Program (MFP) to producers whose commodities are negatively impacted by trade disputes. In our territory, the MFP will benefit soybean, grain, hog and dairy farmers.

USDA last week announced MFP commodity rates and the rules and process for applying for payment. Unknown until producers have completed harvest or know their final production numbers is how much impact MFP payments will have on individual 2018 farm incomes. But simple scenarios involving two hypothetical farmers shed some light on the benefit of MFP payments.

For our scenarios, we applied MFP to soybeans. Our assumptions are straightforward and do not take into account the complexities and realities of day-to-day production. We use a production cost of $9.50/bu., or $475 an acre and an APH of 50 bu., with our producer having sole ownership of his crop.

soybean marketing opportunities

For sales prices, we used monthly average November 2018 futures prices and subtracted Iowa monthly average basis. The resulting $7.75 and $9.50 are for illustrative purposes and may not fit your specific situation.

In the first scenario, everything goes right for our producer. He knows his all-in production cost and took advantage of the $9.50 pricing opportunity earlier this year, relying on his crop insurance to forward market 80 percent of his APH to lock in $380 an acre. Because he benefited from the year’s good growing conditions, he actually harvests 60 bu./acre. This leaves him 20 bu. to sell at a lower price of $7.75 for $155 per acre.

Our farmer already has made a profit of $60, thanks to his forward marketing and solid yield. Now he applies for his MFP payment. As required by USDA, he reports his total yield of 60 bu./acre. But under this first installment of MFP, the government applies its reimbursement rate of $1.65 for beans to half his yield – or $49.50. Our producer’s per-acre profitability is now $109.50. His profitability will increase if the government decides later this year that a second payment is warranted.

In scenario No. 2, our producer did not forward market and has an average yield of 50 bu./acre. He needs the cash and sells his crop at $7.75, or $387.50 per acre – a loss of $87.50. Even after applying his MFP payment (25 bu. x $1.65 = $41.25), he has lost $46.25 per acre.

This scenario becomes much more positive if farmer No. 2 grows another 10 bu./acre, a reasonable assumption for many growers this year. With more beans to sell and to apply to his MFP payment, he now has a per-acre profit of $39.50.

What do these scenarios tell us? Producers with a reasonable cost of production and solid yields could bushel through 2018, with some additional help from MFP.

Steady as she goes

Crops are marching their way to the finish line with promise of a touchdown. As of September 2, status in the reporting states was:

Corn dough stage: 96 percent, average 91 percent

Corn dented: 75 percent, average 60 percent

Corn mature: 22 percent, average 11 percent

Soybeans dropping leaves: 16 percent, average 9 percent

Sorghum headed: 96 percent, average 95 percent

Sorghum coloring: 69 percent, average 62 percent

Sorghum mature: 30 percent, average 33 percent

Sorghum harvested: 22 percent, average 23 percent

Spring wheat harvested:  87 percent, average 75 percent

 

Condition is little changed from a week ago and overall continues better than last year.

Corn is rated 87 percent good/excellent and 12 percent poor/very poor, 1 point lower on the high end than a week ago and 6 points better than a year ago.

Soybeans are unchanged from last week, with 66 percent in the top categories and 11 percent in the bottom two. This compared with the same number in the bottom categories and 5 percent more in the top categories than last year.

Sorghum, at 52 percent good/excellent in the 11 states, is 1 point below last week, but 11 points behind last year. Its bottom two categories, at 17 percent, compares with just 8 percent last year. Texas and Missouri represent the highest numbers in the bottom categories.

The table includes a few surrounding states:

Corn Soybeans Sorghum

Good/excellent

Poor/very poor

Good/excellent

Poor/very poor

Good/excellent

Poor/very poor

Iowa

74

8

72

8

NA

NA

Kansas

44

28

49

15

66

8

Nebraska

81

6

81

6

84

1

South Dakota

65

14

57

20

65

5

 

Recent rains helped pasture condition improve a couple points at each end in the 48 states. Drought-stressed Kansas now has 27 percent in the bottom two categories and 38 percent in the top two. This compares with 25 percent in the bottom and 34 in the top two months ago (July 2). The first report in May showed 29 percent in the bottom categories and 25 in the top two.

pasture and crop condition for Kansas

 

Corn field and stormy sky

Condition Inches Downward; Reports Not All Rosy

At the start of the week of the annual Pro Farmer Crop Tour, USDA trimmed corn condition a few points. Sixty-eight percent of the crop is in good/excellent shape, down from 70 percent the prior week. The bottom end of the ratings crept up two points to 12 percent. Soybean condition also worsened slightly with the top end down one point to 65 percent and the bottom end at 11 percent.

Corn denting is well above its 26 percent average at 44 percent. In the states we serve, Iowa is at 42 percent (average 21); Kansas, 58 (36); Nebraska, 38 (25) and South Dakota, 38 (12).

Soybean pod setting also is ahead of average at 91 percent in the 18 states against an average of 83 percent. Iowa farmers reported 93 percent (85 percent average); Kansas, 82 (67); Nebraska, 92 (88) and South Dakota, 91 (85).

Crop Tour

Pro Farmer midwest crop tourThe annual Pro Farmer Crop Tour kicked off and the day one results were startling: A 100-bu./acre range of estimates. More than 100 scouts took to the roads in Nebraska, South Dakota and Ohio. The western group suffered downpours – rather unusual for the tour.

Jeff Wilson, leading the tour for the first time this year, was among those taking field measurements in southeastern South Dakota. Estimates ranged from 153 to 248 bu./acre, averaging 185 bu. – a little higher than the 170 bu. estimate from USDA last week.

Tour members traveling in northeast Nebraska reported 192 bu./acre dryland east of Norfolk, 196 bu./acre east of Columbus, and 200-plus in Antelope County. In other parts of Nebraska, there were reports of hail, flooding and delayed development, disease pressure and irregular fertilization and fill. Follow the tour on Twitter: #PFtour18.

Grain sorghum

Little change was reported in the sorghum crop, with one more percentage point falling from fair to poor, putting the poor/very poor score at 18 and good/excellent steady at 49 percent in the 11 states. Forty-six percent of the crop is coloring with 23 percent mature, compared with 43 percent and 27 percent respectively.

Wheats

Harvest of winter wheat is 97 percent complete, one point behind average while 60 percent of spring wheat has been harvested, versus 44 percent on average.

Spring condition held steady at the lower end of the range but lost one point at the upper end.

Crops Are Rushing to Maturity – and USDA Sees Strong Yields

corn for grain yield chartThe Crop Progress report for August 12 supports the USDA supply/demand report’s record corn yield and second highest soybean yield.

With 73 percent of the corn in dough stage and 26 percent dented – well above average – USDA rated 70 percent of the crop good/excellent and 10 percent poor/very poor. Nebraska’s crop continues to shine, with 83 percent in the top categories, followed by Iowa at 75 percent and  South Dakota at 69 percent. The Kansas crop continues to suffer, with only 47 percent in the top categories and 22 percent in the bottom two. Producers in very dry, eastern Kansas are chopping corn rather than waiting to harvest for grain.

corn yield - August 1 2018As seen in the map, Nebraska is expected to harvest a record 196 bu./acre; South Dakota, a record 170 bu./acre and Iowa’s yield, unchanged from last year at 202 bu./acre. Kansas farmers may see a 129-bu. yield, down three bushels from last year.

Soybeans

Ninety-six percent of the soybeans are blooming and 84 percent are setting pods. All states in our region are ahead of average.

Much the same pattern is seen in condition ratings for soybeans. In the 18 reporting states, 66 percent are good/excellent and 10 percent are poor/very poor. Kansas has a worse than average rating, with 22 percent in the bottom categories and 40 percent in the top two. South Dakota has 9 percent in the bottom two and 66 percent in the top, followed by Iowa and Nebraska with 7 percent poor/very poor and 72 percent and 80 percent good/excellent, respectively.

soybean yield - August 1 2018Nebraska’s yield, estimated at 61 bu./acre, would be up 3.5 bushels from last year and a record (see map). Iowa’s yield is projected at 59 bu./acre up 2.5; and South Dakota, at 49 bu./acre, would be up 6 bushels. Kansas is expected to harvest 36 bu./acre, down one from last year. Kansas’ best yield in the past 10 years was 48 bu./acre in 2016 – 33 percent above this year’s estimate.

Grain Sorghum

Sorghum condition continues to run well below the prior four years, with good/excellent at under 50 percent. Seventy- eight of the crop is headed (average 73 percent), 37 percent is coloring (average 36 percent) and 21 percent is mature (behind the 24 percent average).

Wheat

Winter wheat harvest is just six points from completion, with mainly Idaho, Montana and Washington still to go. USDA projects yield down 4.6 percent and production off 6.3 percent. Both Kansas and Nebraska yields are unchanged from last year at 38 bu./acre and 48 bu./acre respectively.

Spring wheat harvest is 35 percent complete (average 27 percent); South Dakota is far ahead of the six-state average and its 52 percent average. Condition for the six states is 75 percent good/excellent and 5 percent poor/very poor. However, South Dakota’s crop is 51 percent in the top categories and 13 percent in the bottom.

crop progress - KS pasture August 2018Pasture and Range

Pasture and range conditions are unchanged from last year. Kansas conditions are almost evenly divided, 31 percent in good/excellent, 34 percent fair and 35 percent poor/very poor. Hay simply is not available in parts of eastern Kansas and some cow/calf producers are selling herds.

Risk Management

In today’s ag economy, risk management is as important as cost control. Frontier Farm Credit seeks to help producers protect their working capital and legacy through holistic risk management – and crop insurance can play a key role in a producer’s risk management plan.