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 December, 2015

As any farmer knows, it’s been a tough year in the grain markets. How many times do you want to see that corn prices are below the cost of production? But with 2015 nearly in the books, perhaps we can all learn from the past so we can build a better, more effective marketing plan for 2016, based on the 5 grain market lessons learned in ’15.

  1. The market doesn’t always seem to care about the same weather that growers do. Heavy rains and flooding leftfields in Indiana andIllinois in bad enough shape to qualify for federal disasterassistance. But worries about the damage never seemed to stick. After hitting a high in $4.50 territory in July, corn prices slid back below $4.
  2. Ethanol still matters. While the EPA’s long awaited announcement of renewable fuel levels wasn’t quite as high as some ethanol supporters wanted, the November news finally brought some certainty to the market, both for corn growers and energy producers. Exports of ethanol are also growing, with the U.S. exporting an estimated $57 million worth of ethanol to China in October 2015 alone—which the USDA says is more in one month than “in the previous 10 years combined.”
  3. Big rallies can happen, but you’ve got to be ready if you want to capture those gains. In late June, lower-than-expected planting numbers caused corn and soybean prices to explode upward in record trading volume. Just a month later, prices had eroded again.
  4. Holding grain is a double-edged sword that growers must learn how to handle effectively—or risk getting sliced in a falling market. With two years of big crops now in the bin, farmers need a strategy for that stored grain—not just a hope and a prayer for $5.50 corn and $11 beans. That might includetaking advantage of basis, buying calls, or looking for other incremental gains. There’s simply too much grain in the world to close the bin doors andignore the risk of $3 corn.
  5. The U.S. dollar, be it weak or strong, has an undeniable effect on farmers and agricultural exports. As the dollar strengthened in 2015, it hurt American exports like wheat, corn, and cotton, making them less competitive on the global market.

As posted on Ag Web’s blog

‘Tis the season to speculate. Will 2016 grain prices be naughty or nice?

With the highest world corn and soybean stocks in more than a decade, many farmers remain skeptical a rebound in prices for 2016 is likely. A strong dollar also creates problems for farmers hoping to move grain this winter. That’s because it lowers foreign countries’ buying power and makes foreign grain more competitively priced, according to Purdue ag economist Chris Hurt.

“China’s currency has lost 4% of its buying power in the U.S. over the past year,” he notes in the December 2015 Purdue Agricultural Economics Report. “More dramatically, Japan’s buying power has dropped 12% and the Korean currency has dropped 15% in the past year.”

Because of this, odds favor a “sidewise price pattern” this winter until the excess supply situation is solved.

“However, the price pattern and marketing strategies vary for corn and soybeans,” Hurt adds.

Hurt expects corn prices to increase throughout the winter and spring at least enough to cover farmers’ on-farm storage expenses. He speculates corn could raise as high as $4.40 next summer.

“When one decides to price, they should probably price for next summer delivery,” he recommends. “The principal is to price for the delivery period that provides the most return above storage costs. This is called earning the carry in the market and is generally one of the best marketing strategies in periods of excess supplies.”

On the other hand, Hurt says he does not see soybean price bids to gain much into next spring and summer. The high could end up around $9.40 this winter in processing plants and could fall back in spring and summer, he estimates.

Continue to watch the weather in South America for a potential wildcard, Hurt recommends.

“The biggest impact would generally be on soybean prices, with corn moving in the same direction, but with a smaller magnitude of price change,” he says.

Hurt already sees strong signs of farmers aligning their marketing strategies to lower commodity prices.

“Producer strategies … include watching closely for any price rally to sell more bushels,” he says. “The current tight storing pattern suggests many producers are doing this. Secondly, striving to drive down costs per bushel downward is always an important strategy.”

Adjustments take time, Hurt notes, and foresees farmers needing to prepare for tight margins through at least 2018.

“Hopefully some progress will be made each year in narrowing the current negative margins,” he says. “By late this decade, producers will have adjusted their costs to be in better alignment with revenues.”

May your travels be safe, your loved ones close and your memories merry!

As we close out the year, we find ourselves thinking of those who have helped make our business successful. Thank you for your loyalty, business and friendship throughout the year. We look forward to servicing all your agricultural needs in 2016!

Merry Christmas and Happy New Year from Mercer Landmark.

December 24, 2015

By: Brian Mitchem

Wishing all readers and Mercer Landmark patrons a wonderful Christmas and a prosperous New Year.

This area has had a large amount of acreage devoted to popcorn for several years and this year many farmers are considering a move to non-GMO hybrid corn as well. Consideration of the differences in weed and insect management are among several factors of discussion a farmer may have with their Mercer Agronomy professional.

Since you do not have a glyphosate post emerge option it is wise to invest in aggressive pre applied herbicide programs with at least 3 effective sites of action from different herbicide families. Several reasonably priced options exist to achieve excellent weed control in non GMO corn.

Insect control in non-GMO corn is much harder to predict due to the fact that most yield impacting insects do not over winter in the area and are brought here by wind currents in the spring.

Early season insects include Black Cutworm and first generation European Corn Borer. Seed treatments can suppress but not control Cutworm. Cutworms can be easily controlled with an application of a product like Asana®XL, Grizzley® or Warrior®. First gen ECB requires a preventative application at blackhead stage of the eggs with the same products listed above. If they have entered the plants whorl or leaf then an additional product such as Lannate® must be added to penetrate the plant and control the larvae.

At tassel we can experience several yield robbing insects as well. The second generation of ECB as well as Western Bean Cutworm and Corn Earworm can impact corn in our area. ECB causes damage by stalk tunnels, ear shank feeding thus causing ear drop of mature ears and kernel feeding. Both WBC and Earworm can cause major damage to developing kernels and also allow fungal disease to develop in the ear and kernel wounds.

At this stage a longer residual product such as Prevathon® should be used to maximize yield protection as well as use a newer site of action product for insect control.

Most believe that all three of the late season pests are increasing in volume and severity across the corn belt. Mild winters to our southwest will increase the number of ECB moths potentially migrating north in the spring. WBC populations to our west have experienced a population shift to later egg laying on insect protected corn thus increasing survival. Finally, what we call Earworm in the north is the cotton Bollworm in the south and we have used the pyretherin (Asana®XL, Grizzley®, Warrior®) class of insecticide for over 40 years and it is limited in effectiveness and we have also seen tolerance build to the in plant Bt protection in cotton.

The popcorn pictured below is from Van Wert County this year and shows late season kernel feeding.

By~ Amy Hayes

“Where can I cut costs?” Seems to be a common question in most discussions with growers this year. Through Mercer Landmark’s multi-year local data on hybrids, varieties, and foliar products paired with WinField’s vast Answer Plot data consisting of 5+ years insights over 334 locations with an LSD of 1.63bu across all locations we are able to assist growers in sorting through where they can and cannot afford to make cuts for the 2016 season. Your local Mercer Landmark Agronomist is able to determine valuable data driven insights in regards to not only hybrid and variety testing, but also each specific product’s response to nitrogen, fungicide, continuous corn, and population.

So where do we even start? The two constants in the cost cutting equation are soil type and previous crop. From here analyze which fields you would classify as “Best Acres, Tough Acres, and Average Acres.” Our best acres need to be pushed, as these are going to give us maximum return on investment (push populations, additional nitrogen, etc). On tough acres we could look at making some cuts as well as different management styles. Lastly, average acres are the ideal candidates to make a plan for profit, yet as the season progresses, utilize tools such as R7 In-Season Imagery, Tissue Sampling, and Data to make appropriate in-season management decisions to maximize profit for the year.

Next, we tackle hybrid and variety placement. Referencing the R7 Tool by WinField, we can properly place the correct hybrid in each field, which will optimize maximum return on investment on a per field basis. The chart below demonstrates how different varieties handle differing soil types in our area.

Following proper hybrid and variety placement, we move onto VRT seeding prescriptions to push populations in more productive areas of the field, and reducing populations in poorer environments. Next we can begin to focus in on our best and average fields. Through scouting, R7 in-season imagery, tissue sampling, VRT nitrogen recommendations, and fungicide applications we can ensure that we are not only getting the highest yield possible on each acre, but also ensuring a great return on investment.

Talk with your local Mercer Landmark Agronomist today about how to optimize production on your farm using the valuable insights gained through Mercer Landmark local on-farm trials, as well as national and regional insights gained from the WinField Answer Plot system.

Two of the most frequent questions I have been asked lately is “What should I do with the grain that I have stored?” and “Is there hope for a rally?” These are both understandable questions given that the market has been very range bound as of late, making it hard to make any marketing decisions. I read this post the other day by Greg Johnson from The Andersons. I believe it helps to shed some light on what may happen between now and the end of the year.

Monday, November 30, 2015
by Greg Johnson, Executive Account Representative

The grain markets have been in a slump in the last half of 2015. With huge projected carry-outs of both corn (1.7 billion bushels, the same as last year) and soybeans (465 million bushels, more than twice as much as last year), prices have trended lower since July, and are currently sitting close to contract lows.

Is there any hope for a rally? In the short run, there is the hope that the EPA may announce that the ethanol mandate for 2016 and 2017 will be either unchanged or higher than the 2015 levels. Uncertainty over when the new Argentine government will reduce export tariffs, the outcome of OPEC meetings this week, and the announcement of the Federal Reserve Board as to their intentions on raising interest rates all will have an impact on prices. Additionally, the weather in northern Brazil has been a little on the dry side, although with only 85% of the beans planted, dry weather is not a major issue yet.

However, the funds are short both corn and soybeans, and there is a chance that if some of the above factors are positive, the funds may buy back some of their short positions before the end of the year. While each year is different, it is interesting to look back over the past 10 years to see what corn and bean prices have done between Thanksgiving and Christmas. As you can see from the tables below, both corn and bean prices have tended to rally between now and the end of the year. A couple of things to note:

  1. The average rally has only been 16 cents in corn and 29 cents in beans, so the odds might suggest a small rally, not a large one.
  1. Current prices are the lowest prices at Thanksgiving since 2008 (7 years ago), so the market has quickly adjusted from tight supplies a few years ago to ample supplies currently.
  1. Farmers are holding onto a larger percentage of their crops than they historically have in the past. This would also suggest that rallies will be limited unless and until we see weather problems develop (either in South America in January/February or in the United States in July/August).

Bottom line: While the markets may be due for a rally between now and the end of the year, the odds would suggest a small one, not a big one.