Blogging by the Bushel
With numerous challenges over the past several years for producers, we at Mercer Landmark understand the need for a comprehensive risk management solution. We seek to provide our customers with unparalleled service to ensure maximum results.

Archive for July, 2015

By: Jeff Keller

The stress on our corn crop just doesn’t end. With all the storms we had blowing up from the south they brought a little pest along. The corn borer has shown up in pockets of Indiana and western Ohio.

The damage these things do is chewing into the stalk, cutting off the flow of nutrients from the leaves as they carry out photosynthesis. Also as the leaves come out they may break off since the strong part of the leaf is chewed through. The life cycle is usually 25 – 30 days and these insects will mature into a moth and spread to the next field where more eggs get laid and hatch into a worm. That can eat up a lot of forage on these crops.

The amount of damage that EC borers can do varies from field to field. Where we see them now is in the non-GMO corn acres that has no protection against them. The best thing we can do is scout for these pests and determine if spraying is going to justify the damage from them. They can cut off yield anywhere from 5- 15%. This could get worse however, because the chewing that takes place on these plants allow disease to get into the plant and create additional stress on the corn. Therefore, a fungicide will be essential to protect the plant the rest of the season.

It is going to be critical to scout all of your fields this season because there is a lot of variability between fields. Your Mercer Landmark agronomist can help you with this to make a recommendation on your crop.

Below are a few EC borers I found in some non-GMO acres in northwest Darke county.

This article echos the blog that was posted a few days ago about the 10 year corn production. Illinois truly is going to be the swing state this year.

Grain Market Commentary
Monday, July 20, 2015
by Amy Sage, Executive Account Representative, Champaign, IL

This year, Iowa planted about 15% of the US corn acres this year and as of Sunday, July 12 the state is still rated 82% good-to-excellent and on pace for an above average crop. Indiana accounts for 6.5% of this year’s corn acreage and unfortunately conditions have been declining as weeks go on and as of July 12, were down to 46% good-to-excellent. Stuck in the middle of the “I” states is good ole Illinois which many are calling the “wild card” for the 2015 corn crop.

Illinois is responsible for growing 13% of the US corn acres, second only to Iowa. Conditions across the state are so variable that analysts are all over the board with yield estimates, mostly ranging from 165 to 175. To put this in perspective, for every 7 bushels per acre that Illinois is adjusted, the national yield will increase/decrease by about 1 bushel. Each 1 bushel per acre change in national yield adjusts the supply side by 81 million bushels.

Even if weather is perfect going forward, the hope for additional yield potential is virtually non-existent. There have been significant areas that have taken substantial yield hits because of the extremely wet season. There are, however, significant areas that look great and while most won’t touch last year’s numbers, they certainly have the potential for an above average corn crop. We’ve had concerns around nitrogen loss, stands, and photosynthesis, but most of our Champaign draw feels fortunate (with the exception of some pocket areas). This variability is why there is such a discrepancy in estimates amongst traders. We spent some time here talking to different folks across the state and would use 168-169 for Illinois yield based on today’s conditions. Keep an eye on how these conditions change week by week as small adjustments will be crucial to the overall corn supply.

Some interesting work from our research folks yesterday. This pie chart breaks down the states by share of the US corn crop, and by crop condition. The poorest corn is in OH, IN, and MO – and accounts for 14% of the nation’s corn…On the other side of the equation, 28% of the nation’s corn is in very good shape. This helps to confirm to us that we are not looking at a 2012 drought inspired widespread devastation. We are looking at a regional issue that tightens ending stocks to difficult conditions, not unmanageable. Strong basis / spread implications? Illinois is shaping up to be a key swing state, as further deterioration would rapidly move the needle nationally.

The soybean chart is similar, with the same 3 states with adversity accounting for 21% of the country’s soys. On the positive side, we would have 28% of production in the best states: ND, IA, and MN. Again, IL is the key swing state.

By: Kyle Imwalle

With the heavy rains we’ve been having this year a lot of our nutrients have left our fields. With the rising cost of conventional crop inputs and commodity prices falling some hard choices will need to be made on where to cut back. Chicken litter may help keep prices down.

A study by Agricultural Research Service (ARS) agronomist Haile Tewolde figured the litter’s value for Nitrogen as $15.70 per pound, Phosphorus at $14.60 per pound, and Potassium at $7.10 per pound. The prices ARS used for N-P-K were, on a per pound basis $0.30, $0.27, and $0.16, respectively. ARS also figured the litter’s value as a soil conditioner as an extra $17 per ton of litter. They calculated this by balancing the price tag of the nutrients in litter with its resulting higher yields, a reflection of its soil conditioning benefits. Chicken layer manure also has 86 pounds of Calcium per ton which equals roughly $26.00 in commercial fertilizers. At the time of this post chicken litters value is anywhere from $29.00 to $64.00 depending on where the litter is coming from and how far it has to be transported.  On top of the price difference chicken litter has organic matter. Organic matter helps break down corn and bean stalks during the winter, hold more water during a drought and create a safe haven for beneficial microbes.  Chicken litter can be spread from March through November on either bare ground, wheat stubble, cover crops, or corn stalks.

The tables below show the average values of macro nutrients in the different types of poultry manure.

If you have any questions please contact your local Mercer Landmark Agronomy Sales Representative.

Almost every year (with the exception of 2014), there are areas in the Midwest that experience less than optimal growing conditions. We certainly have areas this year that are experiencing too much rain, and the market has taken notice. How much damage has been done? And how much might this impact the market? To keep this wet weather in perspective, let’s look at the top 6 corn and bean states, and look at how their crops are progressing.

Key points:

  1. A general rule of thumb is that final ratings 80% or above result in record or near-record yields, ratings in the 70% to 80% range result in above average yields, ratings in the 60% to 70% range result in average yields, and ratings below 60% result in below average yields.
  2. Today’s ratings can change over the next two months.
  3. Even with areas of too much rain, the top 6 states (with maybe the exception of Indiana) still have the potential for above average yields.
  4. While the ratings indicate that we may not break last year’s U.S. record yield of 171.0 bpa, we still are on pace to have the 2nd or 3rd best corn yield ever. (Our second best corn yield was 165.2 bpa in 2009, and our 3rd best corn yield was 160.3 bpa in 2004).

Bottom line:
Current ratings would indicate that even with “some” wet areas, the overall corn crop has the potential to be the 2nd or 3rd best crop. That, combined with a large carryover of 2014 corn, should keep the market feeling comfortable about having adequate to surplus stocks of corn in 2015.

Soybeans
The bean situation is a little bit different. Again, to keep things in perspective, let’s look at the top 6 soybean states:

Key points:

  1. Most people don’t realize it, but North Dakota and Missouri are big bean states, normally producing more soybeans than Indiana and Nebraska.
  2. Ratings for beans in 3 of the top 6 soybean states are lower than they are for corn. This reflects the concern that soybeans are not handling the wet weather as well as the corn (“beans don’t like wet feet”).
  3. Over half of the beans have not been planted in Missouri. While some of these acres are double-crop acres, a good percentage of these acres are first-run beans.
  4. In addition to the late planting pace, many acres of beans that have been planted will need to be re-planted.
  5. The wet weather is preventing many soybean acres from being sprayed. The increased weed pressure could reduce yields.
  6. Additionally, the early wet weather increases the odds of Phytopthora, Pythium, Sudden Death Syndrome, and other soybean diseases typically associated with wet conditions.

Bottom line:
A tighter carryout for 2014 soybeans (compared with 2014 corn) combined with the potential for yield reduction in the soybeans and less planted acres than originally anticipated sets up the potential for more upside in soybean prices than in corn prices.

Recently our focus, for good reason, has been on the weather and yield issues. We have watched the grain markets run quickly to find a price supportive of new yield estimates that alter the supply and demand complex. The yield story is not finished, and a WASDE report is being released this Friday, so there is still plenty to deal with in the grain markets alone. Nevertheless, I would like to shift our focus to the macros for a moment.

Global Economies

Greece voted yesterday to reject the referendum from the ECB. This debt issue has been unfolding for some time and there is plenty of coverage on news stations and websites, so skipping the idiosyncrasies, it basically means Greece is a step closer to exiting the Euro. If they were to exit the Euro, a domino effect could happen with other European countries, costing Germany and France the most financial pain.

Another country whose economy should be watched carefully is China, currently the Shanghai exchange. We know that China’s GDP is still in a growth state, but is slower than expected, around 7%. That fact coupled with the absolute drop in their stock market is causing economies that rely on their growth to become insecure. The extent of the plummet in the Shanghai exchange is substantial, dropping roughly 30% after a 7 month climb. Their government is working aggressively to stabilize the market but it may be too much to handle.

The effects that can ripple through our economy, and the grain markets based off decisions in these matters are considerable. There is much policy both in China and the EU that will be decided in the near term, and we urge you to stay in-tune and up-to-date.

Macro Gauges

Lately crude oil has settled around a $60 price level which was believed by most to be a fair value with the supply and demand structure currently at play. The dollar had started to lose steam and struggles to climb back above the 100-day MA. However, as we see more macro events unfold both crude and the dollar start to gyrate more. Just after news of the no-vote, equity markets reacted down harshly, the dollar rallied, crude crumbled, and the euro gapped lower but is climbing back above the 100-day MA.

The dollar and crude are a very important indicators for the grain markets. We have spoken countlessly about crude being a leader of commodities as a whole, and the dollar being inversely related to grains. At this time grains are insulated slightly with weather stories and other supply shifts. Unfortunately as we see the dollar come back, it will only hinder the exporting power of the US.

Everybody (presumably) knows that July 4th is America’s Independence Day. But John Adams, who had a lot to do with the American colonies’ break from Great Britain, had other ideas. He thought July 2nd was the date that would be celebrated “as the great anniversary festival.” Why?

Here’s a post I published three years ago, with a few changes.

On July 3, 1776, John Adams, a leader of the American Revolution who later became the second president of the United States, wrote a letter to his wife Abigail with this prediction:

The Second Day of July 1776, will be the most memorable Epocha, in the History of America. I am apt to believe that it will be celebrated, by succeeding Generations, as the great anniversary Festival. It ought to be commemorated, as the Day of Deliverance by solemn Acts of Devotion to God Almighty. It ought to be solemnized with Pomp and Parade, with Shews, Games, Sports, Guns, Bells, Bonfires and Illuminations from one End of this Continent to the other from this Time forward forever more.

July 2nd? Why did he not write her another letter, on July 4th or 5th, and say his prediction was premature?

Because it was on July 2, 1776, that the Second Continental Congress meeting in Philadelphia voted to approve a motion for independence put forth by Richard Henry Lee of Virginia. Twelve of the 13 colonies approved it, while New York abstained, as its representatives did not have permission to vote for it at that time. What became known as the Lee Resolution officially separated the thirteen American colonies from Great Britain. Later that day the Pennsylvania Evening Post published this:

“This day the Continental Congress declared the United Colonies Free and Independent States.”

So why do we celebrate July 4th as Independence Day? It’s because the actual Declaration of Independence was adopted by the Continental Congress on that day in 1776. Thomas Jefferson, the principal author, had been working on it during the summer, going through different drafts, seeking advice from Adams and Benjamin Franklin and having others at the Congress work on it as well.

The city of Philadelphia, where the Declaration was signed, waited until July 8 to celebrate, with a parade and the firing of guns. The Continental Army under the leadership of George Washington didn’t learn about it until July 9.

As for the British government in London, well, it didn’t know that the United States had declared independence until Aug. 30.

Scholars don’t think the document was signed by any of the delegates of the Continental Congress on July 4th. The huge canvas painting by John Trumbull hanging in the grand Rotunda of the U.S. Capitol depicting the signing of the Declaration is, it turns out, a work of imagination. In his biography of John Adams, historian David McCullough wrote: “No such scene, with all the delegates present, ever occurred at Philadelphia.”

It is now believed that most of the delegates signed it on Aug. 2. That’s when the assistant to the secretary of Congress, Timothy Matlack, produced a clean copy.

John Hancock, who was the president of the Continental Congress, signed first, right in the middle of the area for signatures. The last delegate to sign, according to the National Archives, is believed to be Thomas McKean of Delaware, some time in 1777.

In a twist of history, Adams died on July 4, 1826, the same day as Thomas Jefferson, the 50th anniversary of the adoption of the Declaration of Independence.