Michigan Farm News

Market Outlook: Dr. Jim Hilker

Columnists, Markets & Weather

2018-09-06 Dr. Jim Hilker

The November USDA/NASS Crop Production Report showed U.S. 2018 corn production to be 14.6 billion bushels, down 1% from the October estimate. It would still be the second largest crop on record, just below the 2016 record of 2016 of 15.1 billion bushels. 

Yields are expected to average a record 178.9 bu/ac, down 1.8 from the October forecast, but 2.3 bushels higher than 2017, which had the second highest yield on record. The area harvested for grain is forecast at 81.8 million acres, down from the 92.7 million acres harvested in 2017. The U.S. has had its six largest corn crops the past six years.


The November 11 NASS Weekly Crop Progress Report showed 84% of the corn had been harvested - 3% higher than last year but 3% below the 2013-17 average. Quality of the remaining corn has dropped off since the data was collected for the November report. Expect the January Final 2018 Crop Production Report to be lower, but we still have a lot of corn.

Michigan’s corn production forecast was 315.4 million bushels of corn, up 5.4 million from the October forecast, and is based on 2.4 million planted acres, with 1.9 million harvested for grain acres, and a projected yield of 166 bu/ac. The 166 bushel average yield would be a record, beating out the 162 recorded in 2015, but I expect the final figure will be lower due to deteriorating crop conditions. As of November 11, Michigan had harvested 67% of the corn acres, about the same as last year and the five year average. 

The updated November USDA World Agricultural Supply and Demand Estimates were also released November 11. U.S. total 2018-19 supply was lowered 152 million bushels due to the lower production estimate discussed above. Feed and residual use was lowered 50 million bushels based on the lower production and higher projected price. Projected exports were lowered 25 million bushels as projected 2018-19 world corn production was increased 30 million bushels.

Overall, projected ending stocks were lowered 77 million bushels from October to November to 1,736 million bushels, 11.5% of use. Which puts 2018-19 ending stocks 404 million bushels below the 2017-18 marketing year, with its ending stocks to use of 14/5%. The USDA is projecting a 2018-19 average corn price with a midpoint of $3.60/bu, up $0.10 from last month, up $0.24 from 2017-18. All the numbers can be seen in Table 1 below.

The prices we are seeing – both current and forward bids – match up pretty well with the fundamentals. The harvest basis, relative to out months, is strongly suggesting on-farm storage will pay, but paying for commercial storage is a close call. 

Columnists, Markets & Weather

2018-10-30 Christopher Wolf | Michigan State University

Michigan State University has collected information on land values since 1991 using a mail survey of appraisers, lenders and others involved in Michigan agriculture. The goal of the MSU study is to provide information on the value of land based on agricultural and non-agricultural uses. The survey questionnaire was mailed in May with responses coming in through July 2018. A total of 157 responses were received.

Respondents were asked to provide current agricultural-use value of the farmland, expected change in value during the next year, and cash rental rate for their geographic area. Estimates on agricultural-use values for farmland were reported separately for tiled (non-irrigated) field crops, non-tiled field crops, fruit, sugar beets, and irrigated land. Price data on non-agricultural use land values were collected for residential, commercial, and recreational development.

Land-Value-Table-1_MFN_10.24.18

Average agricultural farmland values are reported in Table 1. For the entire state, tiled cropland averaged $4,900 per acre with much variation depending on location, geography, soil type and other factors. Land that was not tiled was worth about $1,000 less per acre on average. Land for sugar beets was worth $6,885 per acre. Land with bearing fruit trees was worth about $8,000 per acre while land suitable for fruit production was worth about $6,000 per acre.

The state was also divided north-south basically splitting the Lower Peninsula at Clare. In the Southern Lower Peninsula, the average value of tiled field cropland was $5,121 per acre while non-tiled field cropland averaged $4,092 per acre. In the Upper and Northern Lower Peninsula tiled and non-tiled field crop land averaged $2,443 and $2,219 per acre, respectively.

With respect to land rental rates, tiled field cropland averages $165 per acre in cash rent. Irrigated and sugar beet land rented for $220 and $215 per acre, respectively. Land rent in the Upper and Northern Lower Peninsula was considerably lower on average at $70 per acre for tiled land and $60 per acre for non-tiled crop land.

Land-Value-Figure-1_MFN_10.24.18

Figure 1 displays the trend in average per acre price of land for Southern Michigan from 1998 through 2018. In general, the land prices have consistently increased in price when inflation is not considered. The average values trended upward at an increased rate from 2012 to 2015 but had adjusted downward in 2016 and 2017 before an increase in 2018.
Land-Value-Figure-2_10.24.18

Figure 2 displays the average land price and rental rate for tiled field cropland in the southern lower peninsula of Michigan from 1991 through 2014. From 1992 through 2018, Michigan farmland value increased at an average rate of 6.5 percent. Agricultural land price and rents move together over that time period with a correlation between the two series of 97 percent.

The survey also solicited opinions about factors driving land values. Respondents were provided the opportunity to indicate their perception of the importance of agricultural-related factors that influenced farmland values and cash rents. For the state and all districts in Michigan, expansion by farmers, grain prices and milk price were the highest-ranked agricultural factors influencing land prices. The most important non-agricultural factors influencing land values were interest rates, home sites, and small farms. This pattern was consistent across districts although hunting and water access were also important particularly in the Upper and Northern Lower Peninsula.

The full report is available online at: https://www.canr.msu.edu/telfarm/land-value-reports/2018%20MI%20Land%20Values%20Leasing%20Rates_final.pdf

Columnists, Markets & Weather

2018-09-30 Trey Malone | MSU Extension

The first cup of coffee I can remember drinking was with my grandad at the Farmers Co-op in Laverne, Oklahoma. Every Wednesday for the past few decades, he’s brought the donuts and gossiped with the other farmers and ranchers. 

I’m pretty sure that’s where he gets most of his agricultural production information. When I moved to Michigan last year, I knew the climate, the soils, and the production would be unlike what I’d known, but I also knew that one characteristic would remain consistent. Regardless of where they call home, those who labor in the agricultural value chain care about the people with whom they do business. Just like the value and trust my grandad places in his co-op friends in Oklahoma, I knew I could assume that growers in Michigan also rely on other farmers and friends to make their growing choices.

By overlooking the social relationships embedded throughout the agricultural value chain, businesses and researchers alike risk missing magical moments from the farm to the fork. We have all experienced it at the fork level: think about how much tastier an apple is if you pluck it in an orchard with your family as opposed to when you buy one from the local grocery store.

The result of these social relationships can be even more profound at the farm level. Research by my colleagues Lindon Robison and Bob Myers suggests that the social relationship between the buyer and seller significantly influences the sale price of agricultural land. Farmland sellers are often willing to discount prices to friendly neighbors and family members.

Friendly neighbors and family members aren’t the only ones who experience a grower’s good graces. To explore how these social relationships influence agricultural producers, I recently collaborated with Ph.D. candidate Braeden Van Deynze on an experiment with soybean growers in the region.

In the survey, we asked growers how they would manage a new invasive insect pest in their fields. We were most interested in who they would hire to spray their field: a co-op, another farmer, or an input dealer? Or perhaps would they choose to spray themselves?

We then asked a series of questions about how they trusted the options provided in their area. The results of our experiment unveiled an interesting pattern. Across all aspects of trust that we measured (expertise, reliability, connection to your operation, focus is on you as opposed to on themselves), neighbor farmers were viewed with the lowest regard and were least likely to be chosen to aid in spraying.

Growers were far more likely to choose cooperatives to spray instead of other farmers, even though cooperatives typically sprayed later than the growers anticipated.

That is not to say that the social relation- ships between growers and other growers do not also weigh heavily on a farmer’s decision-making. Consider the tillage intensity of soybean farmers. At first glance, a producer’s tillage decisions should not be determined by the tillage decisions of his friends. To test this, I collaborated with James DeDecker, newly appointed director for the MSU Upper Peninsula Research and Extension Center (UPREC) on an analysis of the relationships between groups of Michigan soybean growers.

In the study, we asked growers to identify how well they knew other growers within the agricultural community. With those linkages, we could connect farmers to one another in a social “map” of sorts. We found that even the no-till growers were tightly linked with the conventional tillage growers in their com- munities. In fact, those social relationships were so important that they significantly influenced a grower’s tillage intensity.

What does this look like on the farm? Over the past year, I have had the privilege of attending meetings across the state and have witnessed firsthand the enthusiasm of leadership teams of grower groups. While the influence of those leadership teams varies from commodity to commodity, these leaders are all passionately dedicated to assisting in the development of their fellow growers. A few weeks ago, I attended the annual meeting of the Midwest Chestnut Producers Council. One might think that farmers in this nascent industry might be less willing to collaborate, but my impression of the group is that they view one another as compatriots rather than competitors.

As an agricultural economist who spends the majority of his time on the MSU campus in the Morrill Hall of Agriculture, I find solace in the interconnectedness of the people in agriculture. Unfortunately, sometimes that solace is cold comfort when I think about agricultural policymaking in the United States.

At the beginning of 2018, Dr. Brandon McFadden and I sent out two surveys: one to a representative panel of voters and one to a group of agricultural workers. The results were disheartening. Relative to agricultural workers, the voting public clamored for more government involvement in nutrition, food safety, and food prices, while agricultural workers wanted less government involvement in how and where food was produced. The gap between the opinions of the voting public and agricultural producers suggests that we as an industry need to do better at developing relationships with those who are not involved.

These survey results also suggested that there is hope for public perceptions of the agricultural value chain. For example, consider the survey responses related to the question of environmental sustainability. While the phrase “environmental sustainability” is likely to conjure dissimilar utopias for a farmer and the average voter, it is also likely to be a concept with which both are familiar. We asked both groups if they thought environmental sustainability would benefit more from a combination of incentives and regulations. Where the agricultural workers were more likely to believe neither incentives nor regulations would promote environmental sustainability, more than 20 percent of the voters acknowledged that they did not know.

This uncertainty of opinion creates a clear opportunity for “agvocates” to inform their fellow Americans about the trials and tribulations constantly confronted within agriculture.

One of the best mechanisms for engaging with consumers and voters alike is to provide learning opportunities for these folks. For instance, in collaboration with generous sponsors such as Farm Bureau, MSU Extension hosted its annual Break- fast on the Farm event on Sept. 15. At this event, thousands of people had the opportunity to explore the MSU Beef Center, where they actually experienced facilities from the ultrasound to the squeeze-chute. MSU experts were on hand throughout the self-guided tour to answer questions.

As I wandered through the crowd, I eavesdropped on one animal scientist engaged in a discussion with a grandmother and granddaughter. The grandmother was under the impression that the cows standing behind the animal scientist lived their entire lives in a feedlot (they don’t), and that feed- lots are a horrifying place for beef cows (they aren’t). By the end of the conversation, she was nodding in agreement with the animal scientist as he explained that ranchers have a genuine interest in the welfare of their livestock. Indeed, just as social relation- ships sustain the working relationships in agriculture, so too might social relationships sustain good consumers and voters.

Dr. Malone will be presenting these findings and others at the National Conference for Food and Agribusiness in West Lafayette, IN, on Nov. 6-7, 2018. You can follow him on Twitter at @TreyMalone3.

Malone is an Assistant Professor and Extension Economist for the Department of Agricultural, Food, and Resource Economics at Michigan State University.  

Columns

Market Outlook: Large corn inventories don’t bode well for price outlook

Dr. Jim Hiker | November 30, 2018

 Jim Hilker png(1)The November USDA/NASS Crop Production Report showed U.S. 2018 corn production to be 14.6 billion bushels, down 1% from the October estimate. It would still be the second largest crop on record, just below the 2016 record of 2016 of 15.1 billion bushels. 

Weather Outlook: Warmer and drier days ahead…

Jeff Andresen | November 30, 2018

Jeff Andresen pngThe development of an upper air trough across central and eastern North America during the last week of October led to northwesterly flow across the Great Lakes region and to an extended period of early winter weather through much of the first half of November.

Field Focus- November 15, 2018

Welcome to the 2018 Field Focus feature. This year, six of our seven reporters are members of ProFile, a leadership development program of Michigan Farm Bureau. In each print edition of Michigan Farm News through the growing season, these young farmers will tell you about conditions on their farms and their regions. 

 

Weather Outlook: Above normal precipitation to continue

Jeff Andresen | November 15, 2018

Jeff Andresen pngSeasonably cool and drier weather developed across the Great Lakes region during late October, allowing a resumption and/or acceleration of fall harvest and fieldwork activities across Michigan. With a persistent troughing pattern in place during much of the latter half of October, temperatures fell to below normal values, slowing grain dry down and soil evaporation rates.


Drier days ahead for harvest?

Jeff Andresen | October 30, 2018

Jeff Andresen pngThe jet stream flow across North America changed dramatically during mid-October, with the transition of the highly amplified western troughing/eastern ridging pattern of the past few weeks to a western ridging/ eastern troughing pattern.