Have a Question?
Recently Asked Questions
Q: Why does the USDA’s Prospective Plantings report matter so much? (Submitted 3/28/16)
A: Each spring the USDA puts out survey-based data on what farmers intend to plant for major crops. This report is the first real piece of data for new crop production potential, so the market is always keen to know what to expect as planting season approaches.
Q: What is causing wheat prices to fall so much? (Submitted 2/10/16)
A: Global wheat supplies are very large, and exporters (such as the United States, Russia, Canada, and the EU) are competing for limited business. This is driving down prices into the spring.
Q: What is going on with El Nino? (Submitted 12/13/15)
A: El Nino is caused by warmer than normal sea surface temperatures in the Pacific Ocean off the coast of South America. It results in a mild winter in the US as well as some dryness in Asia Pacific. Palm oil production will be impacted in the coming months but in the United States, the winter should be relatively mild.
Q: With The USDA forecast soybean acreage to be little changed during its Feb outlook conference. I thought the expectation was for an increase in acreage? (Submitted 2/28/15)
A: The Outlook Conference is not survey-based and tends to be longer-term in its focus. We still believe soybean acres will increase by 1 -2 million acres. The Planting Intentions Report will be the first survey-based data and is due out at the end of March.
Q: Corn yields was a record in 2014 at 171 bushels per acre. What can we expect in 2015? (Submitted 1/15/15)
A: Yields are based primarily on the weather during the growing season, and for corn in particular, during July and early August. But looking at history, it would be reasonable to expect yields to be greater than 160 bushels per acre. If realized, this would keep ending stocks of corn at a comfortable level for the 2015/16 crop year.
Q: What impact will all the new natural gas fired generation have on the natural gas market this summer? (Submitted 12/5/14)
A: Assuming normal weather, natural gas demand this summer could increase by 3-4 Bcf/d based on the retirement of coal fired generation and added natural gas fired plants. A hot summer could see demand jump to as much as 6-7 Bcf/d.
Q: With Spot CME Cheese prices hitting all time highs, where do we go from here? (Submitted 2/3/14)A: The recent run up in prices have been driven mostly by exceptional demand from Asia, rather than a supply constraint from major producing regions. Cheese stocks remain at seasonal levels and we would expect producers to increase production substantially to chase these high prices. Look for spot cheese to fall after the spring flush at a faster rate than normal if Asian imports remain at current levels.
Q: The corn crop was a disaster in 2012… what are the chances we will see a crop problem like that again in 2014? (Submitted 1/13/14)
A: Long-term trends suggest that there will be a bad crop every five years, so about a 20% chance of a poor corn crop. But 2012 was an extremely bad year, unlike any that we have seen since 1988. There is a always a chance for a bad crop like that, but the chances are very slim.
Q: Last year’s drought hurt the corn and soybean crop…how were the crops this year? (Submitted 11/19/13)A: The weather was much more favorable this year, even with the bout of heat and dryness in July/August. The corn crop yields returned to trend levels and stocks more than doubled vs. a year ago. The soybean crop was also much improved, but strong demand for crush and exports have kept ending stocks at a tight level despite bigger production.
Q: What does the recent Government shutdown mean for monthly USDA reports? (Submitted 10/2/13)
A: The USDA and other federal governmental agencies remain closed until a 2014 budget clears Congress. In the interim all standard reporting and data collection from the USDA is on hold and the market will have to rely of private 3rd party reports for crop conditions and harvest progress. In addition, new renewable fuel standard levels for 2014 which are provided by the EPA are on hold keeping the soybean market in limbo.
Q: How will the recent decline in feed costs impact dairy prices? (Submitted 9/20/13)
A: Dairy farmers over the past 18 months have been paying very high feed inputs (Soybeans, Corn, Alfalfa) while milk selling prices remain low, hurting their profitability. The recent break in feed inputs will help to rebuild those margins and promote stronger milk production this spring.
Q: The weather has been much better this summer…will we have more corn than last year? (Submitted 7/20/13)
A: The weather has been much more favorable this year for the U.S. corn crop, with plenty of moisture and not as much heat as 2012. There is still time before harvest where the corn has to fill out the kernels, but it is looking to be a much better year for the corn crop.
Q: Why are wheat prices not falling as much as corn? (Submitted 8/1/13)
A: While corn supplies are expected to grow in the coming crop year, domestic wheat stocks are expected to tighten. Also, global demand is picking up for wheat.
Q: What is happening with the ethanol mandate? (Submitted 8/8/13)
A: Each year the EPA mandates a certain amount of corn-based ethanol that must be blended with gasoline. That number has risen each year since the Renewable Fuels Standard (RFS) mandates were put in place in 2007. An issue has occurred with cars’ engines only being able to burn gasoline with up to 10% ethanol. This limit, coupled with decreased gasoline demand due to economic forces and improved fuel economy of cars, is called the “blend wall”. Many have called for the EPA to reduce or eliminate the mandate levels, as it will soon become impossible to blend the required amount of ethanol. The Obama administration is expected to weigh in very soon, but the issue remains unresolved at this time.
Q:How will the “Fiscal Cliff” debates in the US Congress impact the agricultural markets? (Submitted 12/15/12)
A: Please see our study relating to the fiscal cliff and managing volatility in the markets.
Q: Natural gas stocks continue to exceed historical norms, what will happen next fall when projected stocks exceed storage capacity? (Submitted 2/21/12)
A: Markets are anticipatory. That means prices will fall to clear the stocks or begin to shut in production. With prices below $2.50, we believe production will be curtailed to manage the very large stock situation.
Q: What do you expect the August USDA production report to say? (Submitted 8/6/13)
A: We believe it is impossible to forecast the USDA reports accurately. Position yourself as nearly as you can so that a bullish or bearish report does not make or break your year. Do not speculate on the outcome
Q: Won’t the removal of subsidies kill the bio-fuels industry? (Submitted 12/10/11)
A: Margins are currently positive even without the subsidy. Look for demand to slow but we believe current USDA forecasts for the 2011/12 year are likely to be achieved.
Q: I am looking for alternative energy suppliers for my plant in Ohio. Any suggestions? (Submitted 11/7/11)
A: We do not recommend suppliers over the website. We are more than happy to do that if you give us a call.
Q: Why is the Planting Intentions Report in late March such a big deal?
A: This report sets the stage for the supply side for corn and soybeans (and wheat to some degree) for the upcoming crop year. Production is a function of yield and area, and the USDA’s Planting Intentions Report gives the market its first glimpse at the area part of the equation. (Submitted 2/16/13)
Q: Will last year’s drought have an impact on corn yields in 2013? (Submitted 2/25/13)
A: Historically, there is no connection between corn yields and weather the previous summer. Assuming we get normal weather in the Corn Belt, we would expect yields to be on trend.
Q: Why is the government buying sugar? (Submitted 3/13/13)
A: The government has a long history of supporting U.S. sugar growers. In the past few years, production has been small and controlled imports have combined to support prices. The 2012/13 beet and cane sugar crops in the U.S. were large, which drove down prices to a level that the government and sugar lobby thought was too low. In order to support the sugar market, the USDA is expected to take some sugar out of the supply chain.
Q: If dairy prices are rising due to tight supply, why don’t they just make more? (Submitted 2/1/13)
A: Dairy comes from cows, and raising new cows to meet strong demand takes time. Reductions in the size of the dairy herd (aka “culling”) in the last 12 months has limited potential production. Birthing new dairy cows and raising them to production age to respond to higher prices and demand usually takes about a year and a half.
Q: Why has corn export demand been so weak? (Submitted 1/19/13)
A: Limited supply in the U.S. pushed domestic prices to record highs in the fall. Foreign buyers looked to other markets (mainly South America) for a more competitive price.
Q: When do farmers plant their corn and soybean crops? (Submitted 2/4/13)
A: Geography plays a part, as farmers further South tend to plant earlier given the warmer climate. But in general, corn planting starts the first or second week of April, and soybeans tend to get rolling the first week of May.
Q: Why should I use my margin account? (Submitted 3/14/13)
A: In some situations, using your margin account for futures or an options strategy may provide greater flexibility than what you are able to do through a vendor. However, there are often cash flow implications when using a margin account. The solution is not the same for every company, so give us a call to discuss your situation and needs further .
Q: What is the connection between commodity prices and the value of the U.S. Dollar? (Submitted 11/4/12)
A: As the value of the Dollar rises, commodities become more expensive to foreign buyers, reducing demand and therefore prices. The opposite is true, where falling Dollar values support commodity prices.