URBANA, Ill. – The current price structure of corn and soybean futures markets indicate positive carry in both markets. This raises the question of whether producers should make decisions about grain sales. The decision by producers to store corn or soybeans should be determined by the returns to storage.
According to University of Illinois agricultural economist Todd Hubbs, the current projection for 2017-18 marketing-year corn supply is 16.573 billion bushels, 367 million bushels smaller than last year's supply. The soybean supply is projected at 4.777 billion bushels, 249 million bushels larger than last year’s supply. Total supplies (production, beginning stocks, and imports) of wheat, feed grains, and soybeans are currently estimated or forecast by the USDA to be 21.780 billion bushels, 16 percent smaller than supplies of a year ago. The USDA estimates on-farm and off-farm grain storage capacity as of Dec.1 each year. Total storage capacity on Dec. 1, 2016, was estimated at 24.317 billion bushels.
“Although storage capacity is not consistent over different areas or by type of crop, storage capacity appears capable of handling 2017 crops,” Hubbs says.
Harvest bids for corn and soybeans possess a weak basis, although conditions vary over different regions, Hubbs adds. At interior elevators in south central Illinois, current harvest time corn bids reflect an average basis of about -32 cents per bushel. This basis is around 7 cents weaker than the basis at this time last year and about 3 cents weaker than two years ago. The carry from December 2016 to July 2017 in the corn futures market is about 26 cents per bushel, around 3.71 cents per month. For soybeans, current harvest time bids in south central Illinois reflect an average basis of approximately -3.25 cents per bushel. The basis is about 10 cents weaker than at this time last year and about 2 cents weaker than that of two years ago. The carry in the soybean futures market from November 2016 to July 2017 is approximately 34 cents per bushel, about 43 cents per month.
“A producer’s storage decision is based on their storage capacity and the expected returns from storage,” Hubbs says. “Returns to storage can be captured by selling the crop for later delivery at a price that exceeds the spot cash price by more than the cost of owning and storing the crop. This can be accomplished through a forward cash contract or by selling deferred futures contracts. Using a forward cash contract eliminates all uncertainty about the return to storage. By selling futures to price a stored crop, uncertainty about future basis levels can impact the actual returns to storage. Returns to storage can also be captured by storing the crop unpriced in anticipation of higher cash prices. Forward pricing eliminates downside price risk but also eliminates a return from higher price levels. Storing a crop unpriced allows the producer to capture higher prices, but provides no protection from lower prices.”
For corn, average harvest bids on Sept.1 in south central Illinois are near $3.24 per bushel, slightly below the $3.30 mid-point of the range of the U.S. average farm price projected by USDA, Hubbs reports. “The relatively low price, weak basis, and carry futures market encourages storage of the 2017 crop. In south central Illinois, the average basis for corn typically strengthens to around -10 cents by spring, as it did in 2015 and 2016. In 2017, the average basis remained weak throughout the spring with the strongest basis occurring in late April at -14 cents relative to the July 2017 futures price. Given the current production and demand scenarios, an expectation of the typical basis pattern for corn over this marketing year is reasonable.”
As of Sept.1, Hubbs says average harvest time bids for soybeans in south central Illinois are near $9.17 per bushel, below the mid-point projection of $9.30 for the U.S. average farm price projected by USDA for the 2017-18 marketing year. “The average basis in south central Illinois usually strengthens in the spring but there has been no discernable pattern in recent years,” he says. In 2017, soybean basis remained weak with the strongest basis occurring in early June at -28 cents relative to the July 2017 futures price.
Hubbs says basis risk could be substantial this marketing year depending on South American crop production and U.S. export market competitiveness.
“The uncertainty surrounding corn and soybean yield projections for 2017 may encourage a patient approach to pricing crops,” Hubbs says. “By storing corn and soybeans unpriced, one holds an expectation of prices increasing by more than the cost of owning and storing these crops. Over the short term, significantly higher prices require a large reduction in the production forecasts by the USDA on Sept. 12 or Oct. 12. Over a longer horizon, higher prices may occur if demand is stronger than currently forecast. Southern hemisphere crop problems could also materialize to provide a price increase.”
Could switchgrass help China’s air quality?
URBANA, Ill. – Researchers from the United States and China have proposed an idea that could improve China’s air quality, but they’re not atmospheric scientists. They’re agronomists.
“China’s poor air quality is caused by a combination of coal burning and particulates from soil erosion. The Loess Plateau is the major source of erosion in China, and air quality there is just terrible. If erosion in the Loess Plateau can be improved, air quality will improve,” says D.K. Lee, an agronomist in the Department of Crop Sciences at the University of Illinois.
Although the region has been farmed for millennia, much of China’s Loess Plateau could be described as a barren moonscape: dry, dusty, and prone to erosion. In fact, the distinctive loess soils in the area have been called the most erodible in the world. In a massive soil conservation effort, the Chinese government is creating incentives for farmers to plant sustainable and erosion-reducing cropping systems, including orchards, forests, and perennial grasses. Researchers from U of I are recommending switchgrass.
“When we’re looking at revegetation, ideally we’re planting something that can bring in revenue for farmers. Switchgrass produces a lot of biomass that can be harvested and burned as a cleaner source of energy,” Lee says. “Not only can switchgrass reduce air pollution by holding the soil, if it is burned instead of coal, it can reduce air pollution in a second way.”
Switchgrass is stress tolerant and small-scale testing in the area has shown that it can produce plenty of biomass even with limited irrigation and fertilizers. But, Lee says, cultivar selection and management practices will depend on where switchgrass is planted within the Loess Plateau. “Most areas should be okay, but elevation, latitude, and moisture level should be taken into account when selecting the appropriate switchgrass cultivar for the area.”
Although switchgrass has been introduced in China, it hasn’t caught on as a biomass crop yet. That’s where the research team— including experts in switchgrass cultivar selection, agronomy, and management—comes in, and their new article provides this information in practical terms for future evaluation by Chinese scientists and government agencies.
“Stopping erosion in the Loess Plateau is not going to be easy. It was the birthplace of agriculture in Asia, and it has been farmed for several thousand years. The land has been intensively farmed. But when I visited, I saw people out there planting trees by hand. It’s changing. And maybe switchgrass can be part of that change,” Lee says.
The article, “Switchgrass as a bioenergy crop in the Loess Plateau, China: Potential lignocellulosic feedstock production and environmental conservation,” is published in the Journal of Integrative Agriculture. Lee’s co-authors include Danielle Cooney, Hyemi Kim, Moon-Sub Lee, Jia Guo, and Lauren Quinn from U of I, and Chen Shao-lin and Xu Bing-cheng from China’s Northwest A & F University in Yangling. The work was supported by the USDA National Institute of Food and Agriculture’s Hatch Project.
Adding commercial soy in developing countries brings unique challenges
URBANA, Ill. – Growing commercial soybean in developing countries comes with a set of unique challenges. Pests and weeds are more difficult to control than on farms in the United States, and using chemical inputs is often unfamiliar to farmers. University of Illinois agricultural economist Peter Goldsmith says when they decide to grow commercial crops like soybean, it will likely raise their profits and ability to pay a higher wage to workers, but may require a major shift in thinking in relation to crop production and management.
“Convincing farmers in developing countries to grow soybean as a commercial crop involves a change in how they farm,” says Goldsmith. “It will be different than what they’re used to. It may require new equipment and training. Farmers who have been growing native staples like cow peas for generations have tacit knowledge about the seed, how to store it or where to buy it locally next year, the best row spacing, and other production details.
“With soybean, a new introduction, the best seed sources are certified. Reliable seed suppliers store seed well, can better assure high germination rates, and reflect varietal improvement, local adaptation, disease resistance, and high yield. But unlike cowpea, high quality soybean seed suppliers are commercial, not necessarily a farmer’s usual local source in the next village or from their own saved stores. Production practices to maximize soybean yield and profitability in the tropics requires fertilization and pest management, which involves commercial purchases and application of chemical fertilizers and pesticides.”
Goldsmith recognizes there are some people who would prefer that fewer or no chemicals be used. But there is also the reality that growing productive commercial crops to raise the income level for farmers in developing countries requires chemical inputs to be economically sustainable. He asks, can we do it in balanced, smart way?
Goldsmith analyzed three data sets to demonstrate how using chemical inputs in soybean production affects the economic outcome.
- In west central Brazil, a low labor cost (only 9 percent of the total cost) and high input cost results in high yields. The outcome means $4.04 for each dollar of labor and has huge implications for elevating rural wages. But, this also came with a tradeoff—chemical inputs are 47 percent of the total production costs.
- In northern Ghana, labor represents 75 percent of the total cost of production. The yield is one-fifth of the yield in Brazil. With almost no chemical inputs, this example is very environmentally green, but with zero operating profits, it’s unsustainable. These farmers lost money and accordingly generated low returns to labor (wages).
- The USAID Soybean Innovation Lab research farm in Nyankpala, Ghana, represents a middle path. Results from the SMART (Soybean Management and Appropriate Research and Technology) Farm show employing some basic agronomic and production practices and locally available technologies dramatically improves yields and profitability. Labor costs are still high at 55 percent, but with chemical and fertilizer inputs, yield is better and the profit allows for 79 cents per dollar of invested labor.
“To me, the traditional low-input scenario in northern Ghana is unacceptable,” Goldsmith says. “Asking farmers to grow soy without inputs is like giving them a tractor with three wheels or a pump with no handle. The outcome is going to be bad. Farmers will get frustrated, produce one crop and then stop. It’s a waste of donor dollars.”
Goldsmith says his findings from the three scenarios aren’t pessimistic about soybean catching on in developing countries. Rather, it is a caution to be realistic and appropriately investing in these programs.
“Just today I got a call from a company in Ethiopia that wants to produce edible soy,” Goldsmith says. “I get a lot of calls like that one. Industry demand for soybean as either a food, food oil, or animal feed is great and they want farmers to grow the crop. Prices reflect the strong regional demand. For example, we analyze soybean prices in Ghana. The prices in Northern and Central Ghana, inland, are on average comparable to soybean prices in Chicago (about 4 percent less). "
Goldsmith identifies some of the changes that need to be addressed when shifting from growing native staples such as cowpea to successful and sustainable soybean production in developing countries:
- Weed and pest pressure are high, so chemical inputs will be required and bundled with environmental stewardship training.
- Soil quality is poor, so correction and fertilization are important.
- Traditional practices of seed saving or local procurement may result in unreliable soybean seed supply, so farmers will need to access certified seed supply chains.
He adds, “If changes like these can be implemented, commercial crops like soybean offer remarkable new opportunities for poverty reduction, nutrition improvement, rural economic development, but there is a tradeoff. They will require changes to the norms of traditional agricultural production.”
Goldsmith’s paper, “The Faustian bargain of tropical grain production,” is published in Tropical Conservation Science. He is a professor and economist in the Department of Agricultural and Consumer Economics in the College of Agricultural, Consumer and Environmental Sciences at U of I and principal investigator of USAID’s Soybean Innovation Lab. Funding for this work was provided by USAID.
Study examines dietary fats’ impact on healthy, obese adults
URBANA, Ill. — Metabolically healthy obese adults consuming a diet high in unsaturated fat and low in saturated fat may be able to decrease their total cholesterol by 10 points, a new study suggests.
However, there was little research evidence to support current dietary recommendations that replacing saturated fat with unsaturated fat aids in weight loss, the researchers also reported in their meta-analysis of recent dietary studies.
Nutrition scientists at the University of Illinois analyzed the findings of eight randomized controlled trials to investigate the impact of diets that provided similar amounts of calories, but high amounts of either saturated or unsaturated fats, on the blood lipid levels and body composition of overweight and obese adults.
Each of the studies included a control group of participants who ate a diet high in saturated fats, constituting from 14 to 24 percent of their total energy intake. Found in animal products such as red meat, butter and dairy products, saturated fats have been linked to weight gain and increased risk of cardiovascular disease.
Compared with their counterparts, subjects who ate greater amounts of monounsaturated fats and polyunsaturated fats reduced their total cholesterol by more than 10 milligrams per deciliter.
However, reductions in these individuals’ low-density lipoprotein (LDL, commonly called the “bad cholesterol”) and triglyceride concentrations were marginal, said lead author Bridget A. Hannon, a graduate research assistant at the university.
Regardless of the amount of saturated or unsaturated fat they consumed, only those subjects who followed calorie-restricted diets lost weight, the U. of I. scientists found.
Commonly called the “good fats,” polyunsaturated and monounsaturated fats are found in foods such as olive, sunflower and canola oils; nuts and seeds; and avocados. Consumption of these unsaturated fats has been linked with lower risk of cardiovascular disease and other health benefits.
Obesity has been linked with more than 20 different diseases, and lowering one’s total cholesterol by as little as 10 points can be clinically beneficial, preventing the onset or progression of many of these conditions, said nutritional sciences professor Dr. Margarita Teran-Garcia.
A pediatrician, Teran-Garcia is a professor of human development and family studies, and a faculty member in the Carle Illinois College of Medicine. She and kinesiology and community health professor Ruopeng An were co-authors of the study.
Published recently in the Annals of Nutrition and Metabolism, the study is believed to the first to examine the effects of replacing saturated fats with unsaturated fats in the diets of more than 660 metabolically healthy individuals who were overweight or obese. The meta-analytic method enabled the researchers to assess the results of multiple studies at once to determine the overall impact of this dietary replacement.
People who are metabolically healthy but overweight have not yet developed any of the weight-related comorbid diseases or conditions such as type 2 diabetes or heart disease, Teran-Garcia said.
“We know that metabolic health, in the context of obesity, is a transient state that may not persist over time, and these individuals are at increased risk of developing different comorbidities,” said co-author Sharon V. Thompson, a registered dietitian and pre-doctoral fellow at the university.
“More than 60 percent of adults in the U.S. are obese or overweight, placing them at greater risk of weight-related diseases, including high cholesterol and stroke, and we need evidence-based strategies to recommend that will prevent disease development,” Thompson said.
While the U of I scientists reported a lack of strong research evidence to indicate that unsaturated fats alone reduced blood lipids, they suggested that consuming healthy fats may be beneficial for preventing other obesity-related comorbidities, especially if combined with a calorie-restricted diet and increased physical activity.
“This can be accomplished in small, simple steps, such as substituting olive oil and canola oil while cooking, and increasing one’s consumption of fish, nuts, fruits and vegetables,” Teran-Garcia said. “These strategies could not only reduce an individual’s risk of obesity-related diseases but also help them get to a healthy weight.”
Further research is needed to identify the specific properties of fatty acids and food sources that are beneficial and provide the ideal ratio of saturated to unsaturated fat that promotes health, Hannon said.
“The U.S. population is not getting any healthier, and scientists need to provide the public with easy-to-follow, evidence-based dietary recommendations to prevent the progression of obesity-related disease,” Teran-Garcia said.
The paper “Clinical outcomes of dietary replacement of saturated fatty acids with unsaturated fat sources in adults with overweight and obesity: A systematic review and meta-analysis of randomized control trials” is available online or from the News Bureau.
Got stress? Experts provide tips for back-to-school
URBANA, Ill. – Have you noticed any new behaviors in your children since you sent them back to school? Sleep disturbances, acting out, or mood swings? These behaviors and others may be signs of stress, according to experts at the University of Illinois.
“Often you’re not going to hear a kid say, ‘I’m stressed out’, so as parents we need to look for signs they are communicating to us through their behaviors,” says Chelsey Byers Gerstenecker, family life educator at U of I Extension.
Once they are aware of their kids’ stress, parents can help them manage it by introducing effective coping skills early in life. According to Gerstenecker, stress management starts with getting kids into healthy routines with plenty of exercise and sleep. And she says parents should encourage kids to talk to them early and often about things that are worrying them.
“We’re teaching our kids it’s better to come tell us about it and not sit on it, so together we can brainstorm how to overcome whatever’s troubling them. It’s just being a family and helping them learn coping strategies that will serve them well throughout life.”
Back-to-school isn’t just hard on kids. Most teachers experience stress on a daily basis, whether it’s from managing troublesome behavior in the classroom or from meeting expectations of administrators.
Erica Thieman, assistant professor in the Agricultural Education Program at U of I, is a teacher educator whose research focuses on stress management. She says the high attrition rate in the first five years of teaching can be attributed in large part to stress. But teacher stress doesn’t just contribute to attrition; it can affect the stress levels of students.
“You can quickly watch a stressed-out teacher turn an entire classroom into a bunch of stress balls just by walking around the room,” Thieman says, due to something called communicative stress. Thieman explains that when the human heart beats, it emits an electromagnetic signal that can be felt by others within a 3 to 4 foot radius. “When we’re stressed, our heart emits a very erratic signal versus when we’re calm, it’s very regular. That erratic signal can be picked up by other people.”
The good news is that there are plenty of strategies for teachers to manage stress. One that Thieman endorses is both free and easy: breathing. “It’s really powerful to take three deep breaths. Cortisol lowers instantly; there’s an instant response in the body to those three deep breaths.” She also strongly recommends a good night’s sleep.
“Ensuring proper sleep – 8 hours for adults – is one of the best stress-management techniques I can offer, especially during the back-to-school time when people are adjusting to new routines and typically more difficult work is required of their brains,” Thieman says.
Not going back to school? Fortunately, Gerstenecker and Thieman say these stress-management tips apply to everyone.
To hear more from these experts on the topic of stress management, listen to the #askACES podcast at https://soundcloud.com/aces-illinois/managing-stress.