URBANA, Ill. – Soybean prices have been on a roller coaster for the past three months. November 2015 soybean futures traded to a high of $10.45 on July 14, declined to a low of $8.53 on Sept. 11, and rebounded to a high of $9.16 on Oct.14. That contract is currently trading just under $9.
According to University of Illinois agricultural economist Darrel Good, the price swings reflect changing expectations about the size of the U.S. crop, uncertain U.S. export prospects, and potential impacts of the current strong El Niño weather event on world oilseed and vegetable oil production in 2016.
“Depending on how all of these factors unfold, soybean prices could move substantially in either direction over the next six months,” Good said. “Some analysts expect a larger U.S. crop forecast, large crops outside of the U.S., and weak demand for U.S. soybeans to push prices below $8. Others point to the elevated production risk associated with the El Niño event, the current strong demand for U.S. soybeans, and the potential for prices to move back above $10.”
Good explained that the case for lower soybean prices starts with the expectation that the U.S. average soybean yield for the crop currently being harvested will exceed the 47.2 bushels forecast in the USDA October Crop Production report, resulting in a larger crop forecast.
“That expectation is based on continuing reports of high soybean yields in many areas as harvest progresses,” Good said. “In addition, there is a history of the final soybean yield estimate in January exceeding the October forecast in years when the September forecast exceeded the August forecast and the October forecast exceeded the September forecast, as was the case this year. That pattern occurred in 11 of the past 40 years, with the January estimate above the October forecast in nine of those 11 years. In addition, those expecting lower prices point to the potential for another record soybean harvest in South America due to expanded soybean area in Brazil, and to the risk of weaker soybean demand from China. That combination would point to U.S. soybean exports during the current marketing year being less than the current USDA projection of 1.675 billion bushels. A larger crop estimate and smaller exports then would point to larger year-ending stocks and lower prices.
The case for higher soybean prices, Good said, starts with the expectation that harvested acres of U.S. soybeans will be less than the USDA’s October forecast, limiting any future increase in the estimated size of the crop.
“As pointed out in the farmdoc daily article of Oct.16, 2015, expectations of fewer soybean acres is based on planted acreage reported to the USDA’s Farm Service Agency to date,” Good said. “That total is not expected to increase very much in the final report and is relatively small compared to the estimate in the October Crop Production report. Based on this analysis, some expect the final production report in January to contain a slightly smaller estimate of harvested acreage.”
Good said that the second argument for higher soybean prices is that export demand for U.S. soybeans has actually been quite strong in recent weeks and points to stronger overall export demand. New export sales during the four weeks that ended Oct. 8, totaled 236 million bushels, compared to 211 million bushels in the same period last year. An additional 49 million bushels of sales were reported in the USDA’s daily reporting of large sales since Oct. 8.
“The pace of export shipments has also accelerated so that cumulative shipments since Sept. 1, now exceeds those of a year ago,” Good said. “However, shipments were extremely large in late October and November last year. While current export activity is encouraging, the potential for U.S. soybean exports this year will hinge at least in part on the size of the 2016 South American harvest. Those friendly to soybean prices have expectations of a shortfall in production there based on the El Niño weather event.
“In addition, some expect that the world palm oil crop could be adversely impacted by weather associated with the El Niño event, enhancing the export demand for soybean oil,” Good said. “There is also the tendency for USDA to underestimate U.S. soybean exports early in the year as reason to expect larger exports.”
The USDA’s forecast of marketing-year exports in the October World Agricultural Supply and Demand Estimates (WASDE) report was less than actual exports in 17 of the past 25 years, Good said. The difference was 50 bushels or more in 14 of those years and exceeded 150 million bushels in five years.
According to Good, the third argument for higher prices is that the end of the El Niño event in 2016 could result in late summer weather that is adverse for U.S. soybean yields.
“Finally, some also argue that potential changes in biofuels policy yet this year could enhance the demand for soybean oil as feedstock for biodiesel,” Good said. “The uncertain soybean supply- and consumption-prospects suggest that soybean prices may continue to trade in the wide range of the past three months. Fairly dramatic changes, however, would be required to alter prospects for abundant U.S. and world inventories and push prices above the high experienced in July. Prices at that level will likely only be generated by production issues and are not expected in the near term. Modest short-term rallies based on other factors, however, are more likely.”
Office of International Programs announces the 2015-16 Academy for Global Engagement
Eight faculty from the University of Illinois College of Agricultural, Consumer and Environmental Sciences (ACES) have been selected to form the newest cohort of the ACES Academy for Global Engagement (Global Academy).
The 2015-16 Global Academy, which marks the ten-year anniversary of the program, will focus on “public research institutions and the global food system” and include an immersion trip to Mexico, the Academy’s inaugural destination 10 years ago, to deepen ties with ACES strategic partners.
The Global Academy training program encourages greater internationalization of the College by providing a platform and assistance to ACES faculty who wish to further their global research, teaching, and service engagements.
The scholars selected for the 2015-16 ACES Academy for Global Engagement are:
Dr. Rabin Bhattarai, Department of Agricultural and Biological Engineering
Dr. Gail Ferguson, Department of Human Development and Family Studies
Dr. Juan Loor, Department of Animal Sciences
Dr. Hope Michelson, Department of Agricultural and Consumer Economics
Dr. Michael Miller, Department of Food Science and Human Nutrition
Dr. Jennifer McCaffrey, Extension and Outreach
Dr. Maria B. Villamil, Department of Crop Sciences
Dr. Michael Ward, Department of Natural Resources and Environmental Sciences
Participating in the Global Academy requires an academic year commitment to the program, which focuses on global activities at the college, campus, and national levels, and culminates with an international immersion experience.
For more information about the ACES Global Academy, visit: http://intlprograms.aces.illinois.edu/staff-resources/global-academy
In a negative emotional climate, romantic partners may miss attempts to warm things up!
URBANA, Ill. –A new University of Illinois study reports that when conflict occurs in romantic relationships, the negative emotional climate that results hinders a person’s ability to recognize their partner’s attempts to reach out to them.
“When we evaluate relationship maintenance in couples, the important measure is not what’s actually happening in the relationship but how those persons perceive their partner’s efforts. That perception creates the climate in which attempts at reconciliation will either be accepted or rebuffed,” said Brian Ogolsky, a U of I professor of human development and family studies.
After an argument, in a newly chilly emotional climate, communication styles can be very important, he noted.
For the study, 98 same-sex couples kept a 14-day diary in which they recorded conflict and answered questions about how they had responded to it. For example, did they withdraw? Did they lash out? Did they blame the other person? Did they threaten to leave?
Or did they take a more positive approach? Did they persist in their attempts to communicate? Did they prioritize solving the problem? Answers to these questions predicted whether they were able to recognize that their partner was attempting to mend the relationship.
“When conflict occurred, it influenced the way persons rated their partner’s general efforts to work on their relationship. If partners withdrew or become contemptuous or critical, the bad feelings lingered, and that negative emotion dampened people’s ability to process or perceive their partner’s attempts to repair what was wrong between them,” Ogolsky said.
Some couples use conflict resolution strategies that cause those bad feelings to dissipate, he said.
“Hostile feelings don’t gain a foothold among constructive communicators—people who talk things out and work through the problem in a constructive manner. That’s a game changer for the way a couple’s relationship will develop,” he noted.
Good problem solvers are able to engage with each other in the moment of conflict or shortly thereafter, he said.
“Taking a moment to regroup and gather your thoughts is never a bad thing, but be careful that the moment you take doesn’t turn into a longer period of avoidance, which allows the problem to fester,” Ogolsky said.
The study showed that people with constructive communication styles tend to form relationships with partners who are also good communicators.
“Communication is just one aspect of relationship maintenance, but it’s an important one,” he said. “If you use effective strategies to manage conflicts on a daily basis when those conflicts are small, you’re likely to create a warmer emotional climate and have better outcomes.
“It’s important because when you feel negative toward your partner, you’re not paying attention to the efforts he or she is making. That’s a problem for you because you feel like your partner’s not investing in the relationship, but it’s also a problem for your partner because they may actually be doing positive things that you’re not noticing,” he said.
“Conflict, Negative Emotion, and Reports of Partners’ Relationship Maintenance in Same-Sex Couples” appears in the Journal of Family Psychology and is available pre-publication online. Brian G. Ogolsky of the University of Illinois at Urbana-Champaign and Christine R. Gray of Texas State University co-authored the article. A USDA grant funded the study.
Illini Soil Judging Team Comes Home Decorated
By Abigail Peterson, President of the 2015 team:
The 2015 Regional Illini Soil Judging Team came home decorated. We got first place in the two group pits (pits that the team judged all together), second place overall (a combination of the individually judged pits and the group judged pits), and I had the honor of receiving third place individually and bringing the Burt Ray (awarded to the number one soil judger in Illinois) home to the University of Illinois. I have been truly blessed by this opportunity that my professor, my mentors, and my team has given me and I would recommend the soil judging experience to anyone.
So what is soil judging?
Soil has a taxonomy, kind of like animals and plants, but it is harder to define because there is no genetic material to trace it back to ancestry. There are 12 basic soil orders according to the USDA taxonomy classification. To determine the taxonomy, among other important information, soil scientists must see the profile by taking a soil core or digging a pit in the ground. For the interest of the soil judgers, a pit in the ground gets the job done. Using the information gathered from the pit and the surrounding landscape, soil scientists can determine the classification of the soil and other important information such as drainage class, effective soil depth, and parent material. This data allows scientists to determine if that soil is acceptable for basements, septic tanks, and roads.
All of this data is very important in the practical sense for the profesionals, but for the amateurs, such as soil judging teams, they try to determine this information as close to the professional soil scientists as possible. The closer you get, the more points you receive.
The regional soil judging competition this past week involved seven schools from Illinois, Wisconsin, and Indiana. Purdue was the host this year and the seven schools gathered in Columbus, Indiana to judge 16 practice pits and six competition pits. The practice pits are so that the competitors can see the local soils of the region before the competition. Experience is a very important factor in soil judging because the more you see, the more you know. Anybody can learn taxonomy in the classroom, but until you see a fragipan or a soft bedrock in person, you probably will have a hard time determining what it is initially.
Over the course of four days, I saw numerous C horizons, a fragipan, two inceptisols, too many hapludalfs to count, and four other soil orders in the form of delicious monolith cakes. I was able to network with other professionals in my field and even was asked about graduate school at Purdue. I have gained so much from soil judging and clearly it has paid off. In my three competitions, I have made great friends, gained valuable field experience, found a valuable letter of recommendation for graduate school and scholarships, and have received guidance and opportunities from renowned professionals in the field.
Learn more about the group on their website: https://illinisoiljudging.wordpress.com/author/illinisoiljudging/.
Is the corn crop overestimated?
URBANA, Ill. – The USDA’s Oct. 9 Crop Production report forecast the 2015 U.S. corn crop at 13.555 billion bushels, 30 million bushels smaller than the September forecast and 660 million bushels smaller than the 2014 crop. The U.S. average corn yield is forecast at 168 bushels, 0.5 bushel above the September forecast, and harvested acreage is forecast at 80.664 million, 437,000 below the September forecast.
According to University of Illinois agricultural economist Darrel Good, commentary following the release of the report suggests that some observers believe that the corn crop is not as large as the current USDA forecast.
“One of the factors cited as evidence that the crop may be smaller than is forecast is the strong basis levels in many markets,” Good said. “The average cash price at central Illinois country elevators on Oct. 9, for example, was -16 cents under December futures. A year earlier, the average basis at those locations was -42 cents. The argument is that a crop as large as forecast, particularly in the face of a rapid pace of harvest and a large soybean crop, would not support such a strong basis due to the resulting strong demand for storage space.” But that argument is not completely supported by the current estimates of crop supplies.
“Total supplies of corn and soybeans in areas experiencing the strongest basis are, in fact, estimated to be much smaller than supplies of a year ago, which would tend to support basis levels relative to those of last year,” Good said.
Forecast production of those two crops plus the inventory of the old crop on Sept. 1 is estimated to be down 196 million bushels (7 percent) in Illinois, 219 million bushels (17 percent) in Indiana, 188 million bushels (26 percent) in Missouri, and 67 million bushels (8 percent) in Ohio. In contrast, supplies are up 189 million bushels (6 percent) in Iowa and 344 million bushels (17 percent) in Minnesota.
“Nationally, the total supply of corn and soybeans (production plus Sept. 1 stocks) is estimated to be 100 million bushels smaller than the supply of a year ago,” Good said. “Although harvest progress during the first week of October was more rapid than that of last year, it was equal to the average pace in the previous five years and cumulative harvest was five percentage points behind the average level.
“Basis levels are generally determined by the supply of storage space and an array of factors that determine the demand for storage capacity,” Good said. “Harvest-time basis levels at the point-of-producer delivery may be receiving some additional support this year from the recent expansion in grain storage capacity.”
The USDA’s December Grain Stocks report estimates that permanent storage capacity (on and off farm) increased by nearly 550 million bushels from Dec. 1, 2012, to Dec. 1, 2014. Additional capacity has been added in the past year, Good said.
“Basis levels at the farm level may also be receiving support from the lack of widespread transportation delays and the increasing use of delayed pricing contracts,” Good added. “Both of these factors allow for a more rapid movement of corn through the marketing channel. The lack of widespread transportation issues may reflect, in part, the dominance of the domestic corn market relative to exports, resulting in a larger portion of the crop moving by truck rather than by rail where delays are more common.”
Good said that basis levels are also influenced by the pace of corn consumption. “A more rapid pace of consumption, all else equal, tends to strengthen basis in order to make storage less attractive. Domestic ethanol production in September and early October 2015 was nearly 5 percent larger than that of a year earlier, supporting the domestic demand for corn. Domestic feed demand for corn has also likely been supported by the 4 percent increase in the hog inventory this fall and the slightly larger number of cattle on feed, dairy cattle, and broiler placements. On the other hand, the pace of export shipments is well below that of last year. The relative pace of consumption in the various segments of the corn market may explain part of the regional differences in basis patterns this year.
“Because corn basis levels and patterns are determined by a complex set of supply-and-demand factors, it seems to be a stretch to conclude that generally strong harvest-time basis levels this year point to a smaller corn crop than currently forecast,” Good said. “History is also not on the side of a smaller yield forecast than the 168-bushel forecast of last week. In the 40 years from 1975 through 2014, the USDA yield forecast increased from September to October, as it did this year, in 24 years. The January yield estimate was below the October forecast in only four of those 24 years. The decline was 0.2 bushel in 1991, 0.1 bushel in 2008, 1.6 bushels in 2013, and 3.2 bushels in 2014. In 2013, a yield forecast was not released in October due to the partial government shutdown so the yield change was from November to January. The November to January decline in the yield forecast of 1.6 bushels that year followed a very large September to November increase of 5.1 bushels. The 3.2 bushel decline in 2014 followed a September to October increase of 2.5 bushels.
“While higher corn prices as the marketing year progresses are possible, price increases are not likely to be generated by a smaller U.S. production forecast,” Good concluded. “Instead prices will be influenced by the pace of consumption and the development of the South American crop.