Waiting for Rain and USDA Estimates
Although they farm more than 600 miles apart, Nebraska farmer Ashley Andersen and Indiana farmer Scott Wallis both say their crops need rain.
“It needs a drink,” Wallis said. “It’s probably doing OK, but the sins of the spring are starting to show.” His corn was largely planted in two windows — one around Mother’s Day and the other in early June — and compaction has made the later-planted corn more sensitive to moisture.
“I can’t even remember the last time it actually rained a substantial amount, so it’s getting a bit serious,” Andersen said. While the bulk of their corn acreage is dryland, the family rented a piece of ground this year that has a pivot, and they turned it on for the first time over the weekend. “Jarret (Ashley’s husband) and Tim (Jarret’s dad) are enjoying figuring out how to irrigate.”
Wallis and Andersen are participating in DTN’s View From the Cab, a weekly series that details current field conditions and family life on the farm. This is week 15 of reporting during a season that has served up more than a little uncertainty.
DTN Senior Ag Meteorologist Bryce Anderson said the forecast for both eastern Nebraska and southwestern Indiana includes intermittent rainfall.
“Both locations look to be in line for some light showers with total precipitation of 0.30 to 0.75 inch, maybe a bit heavier,” he said. “Late summer is indeed dry. Washington County, Nebraska, was moved into ‘abnormally dry’ in the U.S. Drought Monitor release Thursday, July 31. And over the past 30 days, both locales have had only 25% to 50% of their normal precipitation.”
While their eyes are on the skies, they’re also on the markets, awaiting USDA’s Aug. 12 round of crop reports. Usually, yields are the big attention getter in this report. But this year, USDA will be releasing the results of a re-survey of acreage across a wide swath of the Corn Belt.
While there’s a chance USDA’s corn acreage estimate could be less than expected and send price higher, DTN Lead Analyst Todd Hultman said that’s a risky bet.
“If USDA pegs corn plantings above 90 million acres and/or has a crop estimate near 14.0 billion bushels, there is a good chance we will see heavy noncommercial selling in response, and that would be bad news for producers that have not sold anything yet in 2019,” he said. “Unfortunately, it is difficult to predict how the Aug. 12 estimates will go, and there is a lot riding on the outcome for this year’s corn prices.”
While they await the report’s findings, both Andersen and Wallis say their local corn basis is better than average for this time of year.
Here’s what’s happening in their parts of the farming world.
SCOTT WALLIS: PRINCETON, INDIANA
Wallace’s farm sits just 25 miles from the Ohio River, and that’s where he sells most of his crop. But there are a couple of ethanol plants nearby, and he’ll sell to them when the price is right.
This spring’s floods created an interesting price dynamic for old-crop corn.
“When the Mississippi River shut down at St. Louis, the river bid got really hot,” Wallis said, adding that the ADM facility in Evansville, Indiana, took in more corn than ever during the month of June.
That, in turn, has forced the ethanol plants to raise their bids, and some are as high as 50 cents to 60 cents over the September futures contract.
“The ethanol joints are bidding like there’s no tomorrow,” he said. “I think that’s extremely interesting because everybody is crying tight margins.”
For an in-depth look at ethanol profitability, please read “Ethanol Margins Take Toll” by DTN Staff Reporter Todd Neely here: https://www.dtnpf.com/…
When it comes to marketing, Wallis starts with his “feel-good number.” It’s the price he needs to get to make all of his payments, maintain his lifestyle and keep the farm in business another year.
“If I have an opportunity to take a five-year-average yield times the price they’re offering me, and get above my feel-good number, then I think we need to get 10% to 20% of that on the books before we plant,” he said.
He’s usually comfortable selling up to half of his expected production by the time planting is wrapped up, but usually sells no more than 75% before harvest.
“I’ve had a lot more luck in my time selling ahead at a good price than I have holding corn and waiting for a good price. It doesn’t always work that way, but that’s been my experience,” he said.
It’s been a little different this year. He sold about 25% of his usual corn production this spring using a number of cash contracts, including an accumulator. But with 150 acres drowned out and expected yield loss due to late planting, he now says he’s sold about a third of what he expects to produce.
He has also sold about half of his expected soybean production and said he’s used an options strategy to protect a $9.60 price on his soybeans.
“We use a lot of tools,” he said, adding that different ones work best in different situations.
Last Friday, Wallis went to his local Farm Services Agency office to sign up for his Market Facilitation Program payments. He farms in four counties in two states, but all his county rates were within a tight range of $65 to $67 per acre.
The overall process was fairly simple, he said, especially if you didn’t have any acreage changes from year to year. His farm picked up some ground this year, and they did find a few mistakes. But, in all, the visit only took about an hour.
ASHLEY ANDERSEN: BLAIR, NEBRASKA
Ashley Andersen’s husband, Jarrett, has also stopped by their local FSA office to sign up for trade aid. The sign-up process was fairly simple, but as it is with all official paperwork, it’s important to double and triple check. Their county rate is $68 per acre, with half expected to be paid later this month and two more 25% payments later in the year.
The one-two punch of trade and weather has made for unusual markets. Their local corn basis is significantly better than normal, sitting around 11 cents over. At one point, it was as high as 20 cents over. Almost every kernel of their corn goes to their local Cargill facility, which processes corn into ethanol and other products.
“Sometimes we take it for granted that we have a plant in our hometown, so you can get multiple loads in a day,” she said. “And other guys, two rounds and that’s all they get. It’s pretty close and pretty convenient.”
They truck their soybeans to a Bunge facility in Council Bluffs, Iowa, where the bean basis is 15% to 20% wider than it usually is this time of year, largely due to the trade war with China.
Andersen said her husband has priced some of the current crop, but not as much as normal. With how wet it was this spring, they just weren’t sure what they’d be able to grow.
“Even now, it’s a little scary because you don’t know what you’re going to raise,” she said. While they’re becoming more comfortable, they’re waiting for the August USDA report to do its thing before making any more decisions.
While there’s usually a bit of a lull this time of year, things don’t really slow down, she said.
They’ve been spraying for thistle caterpillars on their late-planted soybeans, figuring out the irrigation pivot and focusing on their trucking business.
“They just do something different,” she said.
Katie Dehlinger can be reached at [email protected]
Follow her on Twitter @KatieD_DTN
Source: Katie Dehlinger, DTN