Fundamentally Speaking
Joel Karlin DTN Contributing Analyst

Friday 02/05/16

Crude Oil-Corn Price Ratio
Crude oil-corn price ratio along with the long-term average and plus and minus one standard deviation lines.[Read Full Blog Post]
Posted at 6:44AM CST 02/05/16 by Joel Karlin | Post a Comment
Comments (1)
We wonder how many "Ag Banks" are holds of "Oil Paper"? And whether that position will hinder their ability to stay with poor performing Ag Loans in the coming years? Oil at $100 per barrel, cost of production at $40, little and/or declining local demand of quality loans, increasing deposit from money looking for "save" home and a "Fed" push investment rates down, may have made participation in "Fracking" loans an attractive option for many banks. That is until oil price moves to $30 and under; $10 or more under the cost of production. The problem with low oil prices is not only in the oil patch, it is in the financial sector as well. It will not be the shock of the "Housing Crisis" but it will be significant. We suspect there will be nonperforming oil loan showing up in locations in and way from the "Fracking" areas. Time will tell the longer term affect on Agriculture. Freeport, IL
Posted by Freeport IL at 5:01PM CST 02/08/16
 

Monday 02/01/16

U.S. Soybean Export Sales as of 3rd Week in January
U.S. soybean exports and shipments as of the third week in January for the past 25 years and those sales and shipment figures as a percent of the January WASDE.[Read Full Blog Post]
Posted at 10:52AM CST 02/01/16 by Joel Karlin | 0 Comments | Post a Comment
 

Tuesday 01/19/16

2015 Soybean Yields for Top States & U.S.
Actual 2015 and forecasted 2016 trend soybean yields for the top 18 producing states and the U.S. along with the 2015 yield as a percent of trend and as a percent of the 2014 yield.[Read Full Blog Post]
Posted at 10:59AM CST 01/19/16 by Joel Karlin | 0 Comments | Post a Comment
 

Friday 01/15/16

2015 Corn Yields for Top States & U.S.
Actual 2015 and forecasted 2016 trend yields for the top 18 producing states and the U.S. along with the 2015 yield as a percent of trend and as a percent of the 2014 yield.[Read Full Blog Post]
Posted at 7:18AM CST 01/15/16 by Joel Karlin | Post a Comment
Comments (2)
And Marcia said that Iowa producers on average still lost $86.00 an acre with 192 bu yields. Gives everyone something to look forward to for 2016 doesn't it?
Posted by Raymond Simpkins at 6:51PM CST 01/16/16
It would stand to reason that growers in areas unable to produce corn yields that are sustainable both for the land and the industry might find better use for their farms. Were it not for government intrusion and infusion this might indeed be the case. Heck , we might even develop new crops and cropping systems if we could wean our industry away from the government's involvement. This situation is the pink elephant that sits in every agriculture discussion I attend or read.
Posted by Unknown at 8:50AM CST 02/04/16
 

Tuesday 01/12/16

Sep-Nov Corn Feed Use as % of Dec WASDE
Corn feed use in Sep-Nov period as percent of feed estimate in Dec WASDE, change in total feed demand from Dec to Jan WASDE and change in production from Nov to Jan production report.[Read Full Blog Post]
Posted at 8:46AM CST 01/12/16 by Joel Karlin | 0 Comments | Post a Comment
 

Wednesday 12/16/15

Falling Soybean Meal/Corn Ratio
Long-term soybean meal/corn ratio on a per ton basis.[Read Full Blog Post]
Posted at 10:09AM CST 12/16/15 by Joel Karlin | Post a Comment
Comments (1)
There looks to be a 20%% to 35% chance of seeing double digit prices for soybeans in our 2016-17 marketing year. This is for the fall of the crop we will plant this spring. This outlook is factoring a 2% drop in Brazil's production from USDA's current estimate. This is for the crop they are currently growing. The range in projected chance is dependent on Argentina's crush and export activities and 85 million or less soybeans are planted in the US this spring. "Funny" SBM/corn ratios may indicate Argentina's intentions. Happy Year! Freeport, IL
Posted by Freeport IL at 8:17PM CST 12/27/15
 

Thursday 12/10/15

July-December Soybean Meal in Carry
July-December soybean meal spread as of the first of the year since 1987 in $ per ton vs. the final year soybean stocks-to-use ratio.[Read Full Blog Post]
Posted at 10:10AM CST 12/10/15 by Joel Karlin | 0 Comments | Post a Comment
 

Wednesday 12/09/15

Potential USDA Ag Outlook 2016 Yields
First USDA yield estimates for U.S. corn, soybeans and wheat given at the Ag Outlook forums from 1999 to 2015.[Read Full Blog Post]
Posted at 10:29AM CST 12/09/15 by Joel Karlin | 0 Comments | Post a Comment
 

Tuesday 12/01/15

Corn Yelds in Top Exporting Countries
2015 corn yields for top exporting countries in bushels per acre.[Read Full Blog Post]
Posted at 10:11AM CST 12/01/15 by Joel Karlin | Post a Comment
Comments (2)
A periodic review of "risk" to a Northern Illinois farm was completed over the weekend. The normal two year horizon also included a multiyear - 1980 like, event. The running of this analysis required the understanding of what happened in the 1980's. Many causes have been noted: high debt (The end of the 1970's was a profitable time and expansion was desired to "make room" for the next generation. They generally wanted to return to the farm. Also remember families tended to be larger back then.), high interest rates, Carterâ?™s Gain Embargo, unsympathetic Government (The goal/vision at that time was to balance the budget.) declining value of land and equipment and low commodity prices. (Iowa Public TV has an hour and half documentary on the subject. It is quite good but hard to watch for the remembering. http://www.iptv.org/mtom/story.cfm/story/11604/frc_20140324_farm_crisis/video ) Many have suggested a 1980's like event could not happen today. They contend our debt is lower, interest rates are lower and asset values, especially land, are stable. We question that assertion. An operation with a 4 to 1 asset to debt ratio would become insolvent in two years with annual asset declines of 15%. If rates were at 21& (the peak of the prime interest rate) and delinquent loans were rolled to the next year, insolvency might occur in the third year. The same deal with a 5.0% rate, insolvency occurs in the fourth year. So declining asset values could be more damaging than high interest rate. Although we can cash flow declining asset values, the environment that causes lower asset values also decreases cash flow making a very challenging situation. Multiple years of low commodity price could cause this environment. The cause of low corn prices - corn was the focus of our risk review, is more supply than demand. This generally means too many bushels and/or to many acres. When corn price start heading lower, the planted acres tend to drop. So for multiyear low corn prices to occur, yields need to have multiyear high yields. It has been postulated (Sorry we do not remember who said that. It may have been Elwin Taylor.), we are heading into a period of more volatile corn yield swing because of the changing weather patterns. If one compares the 16 year period from 1996 through 2011 with the sixteen year period from 1980 through 1995, there seems to be more stable yields from 1996 through 2011. We grouped US harvested yields in a 2% range up and down from trend line (98% to 102% of trend). In the 1996 to 2011 time frame, this range occurred eight times (50% of the time). The earlier time period only occurred two times (13%). Trend yields above 102% occurred 6 times (38%) in the later period and 8 times (50%) in the earlier period. The average was 105 versus 109% of trend for the 80's through early 90's. Only twice (13%) in the 1998-2011 period were yield under 98% of trend with the average decline of 6% (94% of trend). Six times (38%), the early time frame saw yield under 98% of trend. The average decline was 15% (85% of trend). So not only were high yields and low yields more likely to occur they occurred at more extreme levels in the earlier time frame. The early 1980's saw these high yields occur in back to back to back years causing large ending corn stocks. The poor years reduce stocks. The 1988 drought, although painful to go through, could be credited with the drawdown of extra supply that was part of the 1980 farm crisis. The early 1990'ss saw high yield but they were followed by a year of low yields keeping ending corn stocks in check. The 1980 farm crisis started with ending stocks 30% of use for corn. It peaked at over 60%. Our inquiry indicates, if we can keep planted corn acres under 90 million acres, there is no chance of 30% stocks to use next year, 10% chance in two years and around a 15% chance in 3 to 5 years. When we limited yields to the more volatile fluctuations of the period of 1980 through 1995 there seemed to be an increased chance of 30% ending stock ratio in the early years and a lower chance as time goes by. It seems the longer we go in a volatile year pattern, the higher the likelihood of catching a drought. The drought reduces stocks and thus lowers chances. If there is a weather pattern that is repeatable and if we are in that pattern now, there could be a 15% chance (about once in seven years) of 30% ending stocks to use ratio in the next two years. After that the chances seem to peak at 10%. Volatile yields reduce the chance for a 1980's type calamity in the longer run. Marketing in that environment can be quite challenging - maybe more on that later. Freeport, IL
Posted by Freeport IL at 12:39PM CST 12/07/15
Sorry typing errors - 4 to 1 asset to debt is insolvent in two year with an annual asset decline of 30%. Freeport, IL
Posted by Freeport IL at 1:10PM CST 12/07/15
 

Monday 11/16/15

2014 & 2015 Soybean Yields, % of Trend
Actual soybean yields in bpa for the top 18 soybean growing states and the U.S.[Read Full Blog Post]
Posted at 1:04PM CST 11/16/15 by Joel Karlin | 0 Comments | Post a Comment
 

Friday 11/13/15

2014 & 2015 Corn Yields, % of Trend
Actual corn yields in bpa for the top 18 corn growing states and the U.S.[Read Full Blog Post]
Posted at 8:41AM CST 11/13/15 by Joel Karlin | Post a Comment
Comments (1)
It appears we calculate our percentage of trend line differently than you. Your way might be more correct. Our data had an interesting find. Only one state had a record high percentage of trend line yield in 2015. That state was Michigan. The USâ?™s 25 year high was in 2004. The 18 states combined average had a high in 1994 and six states had a record high in 1992. (The non 18 states had a good year in 2004 to push National levels to a record in 2004.) So it seems there is room, from a historic view, for a higher national yield than we saw in 2015. The multi-state and National yield had their lows in 2012. Freeport, IL
Posted by Freeport IL at 12:47PM CST 11/13/15
 

Thursday 11/12/15

History of January Yield Revisions
USDA corn & soybean yield revisions in years when the yield has increased in crop October & November crop production reports.[Read Full Blog Post]
Posted at 10:06AM CST 11/12/15 by Joel Karlin | 0 Comments | Post a Comment
 

Monday 11/09/15

Small Corn Yield Revisions
USDA U.S. corn yield revisions from August to October[Read Full Blog Post]
Posted at 10:55AM CST 11/09/15 by Joel Karlin | 0 Comments | Post a Comment
 
Small Corn Yield Revisions
USDA U.S. corn yield revisions from the August to October[Read Full Blog Post]
Posted at 10:55AM CST 11/09/15 by Joel Karlin | 0 Comments | Post a Comment
 

Thursday 10/29/15

Grain, Oilseed Futures Volatility Trending Lower
Rolling 50 day standard deviations of corn, soybean and wheat futures from March 2008 to Sep 2015 along with trend.[Read Full Blog Post]
Posted at 10:02AM CDT 10/29/15 by Joel Karlin | Post a Comment
Comments (6)
In volatile time we are either saying;; "Prices are surely going higher. I will price later" or "I wished I had sold when prices were higher but they will surely turn around." In times when the market seems to be quite, we seem to be looking for ways to squeeze profit from under every stone. We tend to prefer the volatile times. At least then we have the hope of profits with a lot less effort. But the quite time do force our operations to become much "cleaner". A big dose of volatility could be coming this spring. It could be more than the "normal" seasonal occurrence noted by Mr. Karlin. The financial markets are projecting further tightening of credit in developing countries as the US interest rates start to move higher. The developing countries will see further declines to their currencies helping their local price and export chance. But the cost of imported inputs will climb. The increase in input cost and tight credit may limit the amount of inputs used. This would seemingly increase the risk of lower production levels which might limit exports helping US producers. Brazil is expected to have 70% of their corn acres following soybeans. One can only imagine how the market would follow weather changes if 70% of our soybeans were double cropped after wheat. (Double cropped beans can be either a winning Lottery ticket or a blessing for having a crop insurance premium that is due.) This trend of tight credit and a strong dollar seems to be setting up for the next year or two and maybe beyond. This spring might give an indication of how things could be in the years to come. But look out when this trend changes. The US producer could get clobbered. Freeport, IL
Posted by Freeport IL at 2:23PM CDT 10/29/15
There has not been anything in the news about corn piles. Is there any in Indiana and Ohio or even Illinois? That fact would be a huge market maker. I don't see the interest rates going up much,they have said that for years now. I wish they would though.
Posted by Raymond Simpkins at 6:37AM CDT 10/30/15
Freeport ,you can't insure double cropped beans. Legally anyway!
Posted by Raymond Simpkins at 11:39AM CDT 10/30/15
Why is it not legal to insure double cropped beans? Freeport, IL
Posted by Freeport IL at 6:41PM CST 11/03/15
You can only insure one primary crop per year. Even a cover crop is harvested that is considered the primary crop. What I've been told.
Posted by Raymond Simpkins at 8:03PM CST 11/03/15
That is right, you can only insure one primary crop. You can also insure a secondary crop. FAC (Following Another Crop) Soybeans have crop insurance rates in many counties - mainly Southern States. Although we can buy it in Southern Illinois. In Northern Illinois, double crop soybeans have generally not been grown since the early pea crop has moved out of the area. If one partakes in what Risk Management Agency (RMA) calls "Generally Accepted Practice" and has an Actual Production History (APH) for that practice, one can request insurance in the form of a written agreement. So if soybeans are generally double cropped in ones area or one harvests a cover crop and plants a second crop on that field, crop insurance is potentially still available. One will want to check with a "good" crop insurance agent. But this is way off the point we were trying to make. Best of Luck to You. Freeport, IL
Posted by Freeport IL at 8:15AM CST 11/04/15
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Recent Blog Posts
  • Crude Oil-Corn Price Ratio
  • U.S. Soybean Export Sales as of 3rd Week in January
  • 2015 Soybean Yields for Top States & U.S.
  • 2015 Corn Yields for Top States & U.S.
  • Sep-Nov Corn Feed Use as % of Dec WASDE
  • Falling Soybean Meal/Corn Ratio
  • July-December Soybean Meal in Carry
  • Potential USDA Ag Outlook 2016 Yields
  • Corn Yelds in Top Exporting Countries
  • 2014 & 2015 Soybean Yields, % of Trend
  • 2014 & 2015 Corn Yields, % of Trend
  • History of January Yield Revisions
  • Small Corn Yield Revisions
  • Small Corn Yield Revisions
  • Grain, Oilseed Futures Volatility Trending Lower
  • First Winter Wheat Rating vs May Yields
  • Was USDA Right to Cut Soybean Exports?
  • Change in Corn & Bean Stocks
  • U.S. Corn Export Projections
  • Global Grain & Oilseed Yields