But What About Revenue Expectations?

WhataboutFarm Revenue

by David A. Widmar

Last week the USDA released the much anticipated corn and soybean yield estimates. Many were caught by surprise as the USDA estimated yields higher than the overall trade expectations. Corn and soybean futures tumbled in response. While attention has focused on the higher than anticipated yields and lower-trending price, little has been done to considered how the changes have impacted potential revenue.

This week’s post takes a look at the latest USDA yield estimates and how changes in yield and price estimates have impacted corn and soybean revenue expectations across the country.

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Got Enough Base?

Got Enough Base

by Brent Gloy and David A. Widmar

As the possibility of 2014 farm program payments slowly works its way toward reality, we thought it would be useful to look at one of the major drivers of how large these payments will be, farm program base acres. The ARC-County and PLC programs both pay farmers on 85% of their base acres, while ARC-Individual pays on 65% of base acres. According to USDA payments will be made at the end of the marketing year for the commodity in question, but not before October 1, 2015.

One key feature of the new farm bill is that payments under ARC-County and PLC do not depend upon what was actually planted for the growing season.   While current prices (ARC-CO and PLC) and yields (ARC-CO) are the most important triggers for farm bill payments, base acres rather than planted acres determine the total payment that a farmer receives. Most of the discussion around payments has been at the level of payment per base acre. The concept of a “base acre” sounds fairly intuitive, but we wanted to know how well base acres lined up with planted acres and whether producers might be disappointed when, or if, a farm bill payment is made. Continue reading

Will El Nino be a Bin-Buster?

ElNino Yields

by David A. Widmar and Brent A. Gloy

One of the top stories in agriculture for 2015 will likely be the impact the current El Nino has on production. Earlier this spring an official El Nino was declared and is expected to last until 2016. It appears the event predicted for last summer has finally arrived.

There is great interest, and concern, over exactly how El Nino conditions could impact the summer growing season for corn and soybeans in the U.S.  Much work has been done looking at the temperature and precipitation patterns of El Nino events, but these are often very general. This led us to look into how historic El Nino conditions have overlapped with corn and soybean yields.

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