OSU Extension Field Specialist Bruce Clevenger teaching computerized farm recordkeeping workshop at the Ramser 4H Center.
If you have questions regarding computerized farm recordkeeping, contact the OSU Extension office – 740-397-0401.
Budgeting
Weekly Commodity Market Update
Brownfield’s Weekly Commodity update featuring former OSU Extension Ag Economist Ben Brown.
This Week’s Topics:
- Market recap
- Crop market continues general fall
- Added trade support?
- USDA Ag Outlook Forum bearish
- Reports to watch
This week Will and Ben track falling crop prices and where they might be headed.
Market recap (Changes on week as of Monday’s close):
- March 2024 corn down $0.12 at $4.20
- December 2024 corn down $.08 $4.62
- March 2024 soybeans down $.08 at $11.85
- November 2024 soybeans down $.09 at $11.59
- March soybean oil down 1.45 cents at 45.99 cents/lb.
- March soybean meal up $3.50 at $350.00/short ton
- March 2024 wheat down $.27 at $5.66
- July 2024 wheat down $.29 at $5.66
- March WTI Crude Oil up $.86 at $77.97/barrel
Weekly Highlights
- Two separate measures of inflation came in hotter than anticipated. The Consumer Price Index came in at 3.1% year over year vs expectations of 2.9%. Similarly, the Producer Price Index came in at 0.9% month over month vs expectations of 0.1% increase and -0.1% in January.
- Weekly CTFC data showed that open interest in Chicago Futures and Options was down 2.3% for Chicago Wheats, up 2.1% for corn and up 1.4% for soybeans.
- Managed money traders continue to sell Chicago corn and soybean contracts. The net short for corn increased 16,597 contracts which took them over the philosophical threshold of 300,000 contracts. The record was set in April 2019 at just over 322,000 contracts. Managed money was also a seller of Chicago soybeans by 4,200 contracts to 134,500 contracts. The record for soybeans was May 2019 at just under 190,000 contracts.
- Crude oil stocks excluding the strategic petroleum reserve increased 505 million gallons for the week leaving them 7% below last year. Gasoline stocks declined 153 million gallons but 2% higher than this same week last year. Distillate stocks were down 80 million gallons and are 5% higher than last year. West Texas Intermediate Oil prices are creeping back up to $80 per barrel after reaching the low $70 range in early February.
- Ethanol production increased again this week to 318 million gallons. Corn used for ethanol production exceed the same period last year by 97 million bushels. Ethanol stocks increased 43 million gallons.
- The National Oilseed Processors Association reported soybean crush numbers that disappointed the market. Soybean crush for January came in at 185.8 million bushels- four million less than the trade had anticipated, although still a January monthly record. Even though soybean crush was lower, soybean oil stocks also grew and were above all expectations implying January soybean oil use was rather bearish.
- At USDA’s annual Agricultural Outlook Forum, the agency released their first balance sheets for 2024/25 marketing year. The numbers were bearish to new crop supplies but not as bearish as many in the industry were anticipating.
- US grain and oilseed export sales were mixed last week. For corn- export sales of 51.4 million bushels were a 9-week high while soybean sales of 13.0 million bushels and wheat sales of 12.8 million bushels were both on the low end of expectations. There were net cancelations of grain sorghum sales amounting to 100,000 bushels for the current year and cancelations of all 2.4 million bushels of 2024/25 sales. There are no grain sorghum commitments for next year at this point after reaching 7.5 million bushels a few weeks ago.
Central Ohio Agronomy School
Night 4
“Economic View from the Farm Gate”
Barry Ward, OSU Extension
Leader, Production Business Management
Director of OSU Income Tax School
Weekly Commodity Market Update
Brownfield’s Weekly Commodity update featuring former OSU Extension Ag Economist Ben Brown.
This Week’s Topics:
- Market recap
- Penciling out profit
- South American production
- South American second crop planting
- Managing production cost
- Corn acreage to fall
- Reports to watch
This week Will and Ben look at falling crop prices across the board and what it’ll take to stabilize.
Market recap (Changes on week as of Monday’s close):
- March 2024 corn down $0.05 at $4.40
- December 2024 corn down $.01 $4.74
- March 2024 soybeans down $.29 at $11.94
- November 2024 soybeans down $.17 at $11.80
- March soybean oil down 2.61 cents at 45.55 cents/lb
– March soybean meal down $1.50 at $354.30/short ton - March 2024 wheat down $.06 at $5.93
- July 2024 wheat down $.03 at $6.09
- March WTI Crude Oil up $2.13 at $76.78/barrel
Weekly Highlights
- US Gross Domestic Product grew 3.3% in the fourth quarter of 2023- down from the 4.9% in the third quarter but well above the 2% growth expected. Taking out the sharp recovery after the pandemic in 2020. The 3rd and 4th quarters are the strongest two quarters back-to-back since 2014.
- Core Inflation at 0.2 month over month was right inline with expectations and core inflation year over year of 2.6% was as expected.
- The housing market continues to run hot- with New home sales at 664,000 up from last month and expectations and pending home sales up to a huge number of 8.3% in December- the largest number since June 2020.
- It was another fairly risky week for US commodities. Open interest positions increased across the board for Chicago wheat (2.7%), Corn (5.7%), soybeans (6.5%), soybean oil (3.7%), soybean meal (3.4%), cotton (10.7%), and rough rice (0.4%).
- Producers and Merchants increased their net positions of corn adding to the small net long while also adding net positions of soybeans shrinking their small net short. Producers and Merchants sold off net wheat contracts adding to the net short in Chicago wheat.
- Managed money traders sold off another 4,743 contracts of Chicago corn while selling 15,045 contracts of soybeans to increase the net short there as well. Managed accounts added 26,518 contracts of cotton futures to take the small net short into a net long.
- US crude oil stocks excluding the strategic petroleum reserve were down another 388 million gallons while gasoline stocks increased 206 million gallons on a 5% week over week reduction in gasoline demand.
- As expected, US ethanol production pulled back to 240 million gallons- down from 310 million gallons the week prior due to the cold snap in the US. Even with the drastic drop in ethanol production-ethanol stocks increased due to the drop in gasoline demand and blending.
- Exports sales were lower this week nearly across the board and bearish for soybeans. Only SRW wheat posted week over week gains.
- Weekly grain and oilseed export inspections for the week were neutral for corn and soybeans, while bearish for wheats and grain sorghum. Corn, HRW and HRS wheats were the only commodities up week over week.
Central Ohio Agronomy School
Night 2 – “Farm Economic Outlook”
Ben Brown, Senior Research Associate
Food and Agricultural Policy Research Institute
University of Missouri
Weekly Commodity Market Update
Brownfield’s Weekly Commodity update featuring former OSU Extension Ag Economist Ben Brown.
This Week’s Topics:
- Market recap
- Consumer sentiment at two-year high
- Oilseed outlook
- Managed money profit taking
- Managing when to sell
- Record December soybean crush
- Reports to watch
This week Will and Ben discuss marketing crops around profit taking
Market recap (Changes on week as of Monday’s close):
- March 2024 corn down $0.02 at $4.45
- December 2024 corn down $.06 $4.75
- March 2024 soybeans down $.04 at $12.23
- November 2024 soybeans down $.04 at $11.97
- March soybean oil down 2.19 cents at 48.16 cents/lb
- March soybean meal down $7.50 at $355.80/short ton
- March 2024 wheat flat at $5.96
- July 2024 wheat down $.07 at $6.12
- March WTI Crude Oil up $2.02 at $74.67/barrel
Weekly Highlights
- The December National Oilseed Processors Report showed their members crushed a record 195.3 million bushels of soybeans in December- up from 189 in November and 177.5 million last December. Cumulative soybean crush is running 40 million bushels of last years pace with USDA expected an 88-million-bushel year over year increase.
- The US economy continues to show resistance. The Home Builder Confidence Index reported a reading of 44 increased from 39 in December and analysist expectations of 39. This signal that while contracting its not contracting as fast. Lower mortgage rates boosted confidence.
- Consumer sentiment jumped to the highest level since July 2021 reflecting optimism regarding slowing inflation and rising incomes.
- The US labor market remains tight as jobless claims fall under 200,000 and lowest level in 16 months. Employers may be adding fewer workers but they are holding on to the ones they have and paying higher wages.
- It was a fairly risk on week for US commodities. Open interest positions increased for Chicago wheat (5.7%), Corn (8.1%), soybeans (4.9%), soybean oil (5.6%), soybean meal (6.2%), and cotton (2.7%) while rough rice fell (2.1%).
- Producers and merchants increased their futures and options positions of Chicago corn more than 25,000 contracts with managed money increasing their net short position 29,819 contracts. The managed money net short for corn is quickly reaching a resistance level close to the largest net short in 15 years.
- Managed money for soybeans also increased the net short 45.5 thousand contracts.
- US crude oil stocks excluding the strategic petroleum reserve were down 105 million gallons while gasoline stocks increased 125 million gallons on a slight week over week reduction in gasoline demand.
- US ethanol production pulled back to 310 million gallons but well above the 296 million gallons last year. Ethanol stocks have built to a 10 year high. The cold weather will likely slow US ethanol production over the next several weeks. Higher natural gas prices and lower ethanol prices are cutting into ethanol plant margins.
- Export sales were bullish for corn and wheat last week while neutral for beans and grain sorghum. Sales were higher week over week across the board.
- Weekly grain and oilseed export inspections were rather neutral. Corn, soybeans, and grain sorghum were all down week over week, while total wheats were slightly higher.
- Friday’s USDA Cattle on Feed as of January 1 report showed all cattle on feed at 102.1% of last year.
Fertilizer Prices Climb; and Injunction for Largest Proposed Fertilizer Mine in Brazil Overturned
Source: Farmdoc, University of Illinois
DTN Farm Business Editor Katie Micik Dehlinger reported yesterday that, “The retail prices of all eight major fertilizers climbed higher in the second week of October, with anhydrous, MAP and UAN32 posting the largest gains.
“DTN polls retail fertilizer sellers each week to compile price estimates and considers a price change of 5% or more to be significant.
“Anhydrous prices climbed 16% on average to $804 per ton. MAP and UAN32 each climbed by 7% to $794/ton and $418/ton, respectively.”
Dehlinger explained that, “The prices of the remaining five fertilizers were all higher than last month, but less significantly. DAP cost an average of $711/ton; potash, $506/ton; urea, $575; 10-34-0, $613/ton; and UAN28, $356/ton.”
Weakening Crop Prices and High Production Costs Weigh on Farmer Sentiment
Source: James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture
Click here to listen
Agricultural producers’ sentiment declined for the second month in a row during September as the Purdue University-CME Group Ag Economy Barometer fell 9 points to a reading of 106. Producers expressed concern about both their current situation as well as future prospects for their farms. The Current Conditions and Futures Expectations Indices both declined 10 points in September leaving the Current Conditions Index at a reading of 98 while the Future Expectations Index stood at 109. Weakening prices for major crops and ongoing concerns about high production costs and interest rates weighed on producers’ minds this month. September’s declines left all three indices below year-ago levels. This month’s Ag Economy Barometer survey was conducted from September 11-15, 2023.
The Rising Costs of Corn Production in Illinois
Source: Farmdoc daily, University of Illinois, (edited)
While this article is written for Illinois, many if not all of these thoughts are pertinent in Ohio as well.
Significant increases in production costs in recent years combined with expectations for lower commodity prices have resulted in much lower return expectations for 2023 and 2024 compared with the previous three years (see farmdoc daily, August 29, 2023). In today’s article, we revisit trends in direct costs for corn production in Illinois over time (see farmdoc daily, April 4, 2023 and July 12, 2016, for previous articles). Since 2000, direct costs – which include production inputs – have risen at an average annualized rate of 7% per year. Individual components of direct costs, such as fertilizers, pesticides, and seeds, have all experienced similar average growth rates.
Total direct costs are projected to reach record levels for 2023 and are expected to experience only modest declines for 2024. Fertilizer costs are projected at record levels for 2023, but a fairly large decline is expected for 2024. Seed costs are projected at record levels for 2023 and remain constant in 2024. Pesticide costs are projected to be at record levels for 2023 and to further increase for 2024. In addition to viewing these costs on a $ per acre basis, we also provide perspective on a share of revenue basis.
Total Direct Costs
Direct costs include the cost of production inputs such as fertilizers, seeds, and pesticides (herbicides, pesticides, fungicides). Costs associated with drying, storage, and crop insurance are also included in the direct cost category. Total direct costs for corn production in central Illinois have increased over time from $134 per acre in 2000 to $558 in 2022 (see Figure 1), which implies an average annualized growth rate of 7% between 2000 and 2022. Direct costs for the 2023 crop year are projected at a record level of $579 per acre, with a decline to $527 per acre currently expected for the 2024 crop year based on recently released crop budgets (see farmdoc daily, August 29, 2023 and 2024 Illinois Crop Budgets) and Ohio Crop Enterprise budgets.
Best practices for buying farm inputs
Source: Jonathan LaPorte, Michigan State University Extension
Are farm input prices better now or should you wait to make a purchase?
Answering that question presents quite a challenge. Historically, farms that prioritize purchasing inputs early, on average lower total input costs. But this past year revealed better input prices were realized in the spring. As input prices continue to fall, largely driven by lower prices in commodity markets, last year’s strategy may still be a viable option. To decide which approach is right for your farm requires thinking strategically about your buying options.
Understanding market conditions
Understanding market conditions is essential when buying farm inputs. Markets are influenced by a number of different factors, such as supply chains and commodity prices. Recent improvements in supply chains and product availability certainly favor purchases now. Especially when purchases are compared to recent production years.
Declines in commodity market prices have also driven demand for lower input costs. But as market prices decline, concerns of eroding farm profits may increase further demand for lowering costs. If demand is strong enough, it may make waiting to buy a better option.
Long-term commodity projections lean towards lower prices unless production estimates significantly change. A significant change is often brought on by global or domestic events. These events can include global trade, wars, or poor weather, such as drought. Many parts of the country experienced drought in the early summer months. But it remains unclear how drought conditions will impact commodity prices.
When uncertainty exists in the markets, other options to assist decision-making should be explored. One such option is to compare differences between current and historical prices. For fertilizer purchases, a crop to fertilizer price ratio helps consider short-term profits compared to product use. The fertilizer nutrient price ($/lb.) is divided by the crop price. Crop prices are then adjusted to a per pound value. For example, corn prices are divided by 56, while soybeans are divided by 60. A higher price ratio indicates a more expensive fertilizer (see Figure 1 below).
