Podcast Summary
Midwest Agricultural Industry: Despite increasing farmland values, concerns over lower commodity prices and uncertainty surrounding the farm bill are affecting the health of the Midwest agricultural industry. The upcoming World Agricultural Supply and Demand Estimate report is highly anticipated for insights on soybean demand, while tar spot in Central Illinois is a concern for corn crops.
Learning from today's Back Roads of Illinois discussion is that there are concerns about the current state of the agricultural industry in the Midwest, with lower commodity prices and uncertainty surrounding the passing of the farm bill in Washington D.C. The farmland value is increasing due to market performance, but there are concerns about the overall health of the industry. The upcoming World Agricultural Supply and Demand Estimate report from the Department of Agriculture is highly anticipated for insights on soybean demand. Ashton Bailey from Evergreen FS in the Greater Peoria area joined the show to discuss tar spot in Central Illinois, and he reported seeing more instances of tar spot on corn crops in the region. Farmers and experts are working to prepare for next year and address these challenges in the agricultural sector.
Tar Spot Disease: Farmers in cooler, humid environments should be vigilant against tar spot disease, applying fungicides, rotating crops, and selecting tolerant hybrids to prevent its spread.
Tar spot, a fungal disease, has become a more serious issue in recent years due to unpredictable weather conditions, particularly cooler and humid environments. Tar spot thrives in prolonged cooler and humid weather conditions, and although it has not been heavily prevalent in central Illinois, farmers should be vigilant as cooler weather approaches. Weather conditions, such as storms or winds, can increase spore counts and spread tar spot. To prevent tar spot, farmers can apply fungicides deeply into the canopy, rotate crops, and select more tolerant hybrids. If tar spot is heavily prevalent and taking hold, fungicides should be applied during the R1, R2, and even R3 stages.
Tar Spot Management: Effective tar spot management involves using the right fungicides and timely applications based on spore counts and weather conditions. Proactive approaches using technology for risk assessment can lead to higher ROI.
Effective tar spot management in corn and beans involves a proactive approach using the right fungicides and timely applications based on spore counts and weather conditions. According to Purdue's recommendations, Revitek, Feltima, Miravus Neo, and Delaro Complete are effective tar spot treatments. However, there are many other fungicides that can also help prevent and treat tar spot infections. At Evergreen FS, they have taken disease management a step further by implementing a program that uses sensors and data analysis to provide growers with insights on tar spot risk. This allows farmers to apply fungicides when conditions are ideal for tar spot development, resulting in higher ROI. For beans, recommendations on fungicides and application timing depend on the specific situation. It's essential to stay informed about the latest research and best practices to effectively manage tar spot and other diseases in corn and soybean fields.
Soybean Disease Resistance: Soybeans have more disease-resistant varieties due to their genetic diversity. Disease prevalence in soybeans has been low this year, but farmers should continue to scout their fields for potential disease outbreaks, particularly in areas of stress.
Soybeans, compared to corn, have more disease-resistant varieties due to their genetic diversity. This year, despite wet conditions, disease prevalence in soybeans has been surprisingly low. However, disease is highly microclimate-dependent, and sensors in the fields help identify hotspots where farmers may need to apply fungicides. Corn, being a hybrid, is more susceptible to disease due to its uniform genetics. Farmers should continue to scout their fields, particularly areas with more stress, such as ridges or sandy soils, to catch any potential disease outbreaks early.
Midwest Crop Conditions: Despite concerns over Tarspot and late season diseases, Midwest crop conditions are currently better than expected, leading to significant price drops for corn and soybeans
Despite some concerns about potential disease issues, particularly Tarspot, later in the season, the Midwest crop conditions are currently looking better than expected. The crop progress report showed an increase in good to excellent conditions for both soybeans and corn, defying the usual trend for late July and early August. This has led to significant price drops for both commodities, with December corn and November beans reaching three-and-a-half to four-year low closes. However, the overall good conditions and lack of major weather threats during August have the potential for a strong crop in Iowa and the Midwest. Farmers are encouraged to stay diligent and reach out to their local crop advisors for any questions or concerns.
Flooded Corn and Soybean Crops: Despite flooding impacting 5% of US corn and soybean crops, overall yields are projected to be strong with potential record production, but flooded areas may affect local markets and demand for ethanol and cattle feed.
While approximately 5% of the US corn and soybean crops were affected by flooding in the Northwest and damaged in South Dakota, Minnesota, and Northern Iowa, resulting in 70,000 acres of flooded corn and 46,000 acres of flooded beans, the overall crop yields for the country are looking strong, with the potential for record production this year. The flooded areas will have lower yields and may affect local markets due to high demand for ethanol and cattle feed in those regions. The USDA report does not include the drowned-out areas, so the actual impact on the market is yet to be seen. Soybean futures for the next couple of months until November are expected to remain strong due to good yield potential and high demand, particularly from China.
U.S. Soybean Purchases: U.S. soybean purchases are at 19-year lows due to decreased demand and increased bookings from Brazil and Argentina, causing a three-and-a-half-year low in soybean prices
Soybean purchases from the United States are at 19-year lows, with commitments for the new coming year being scarce. This trend is due to a decrease in demand from the US and an increase in bookings from Brazil and Argentina. The price of soybeans has also reached a three-and-a-half-year low, with the closing price in November being $10.08. The reason for this decrease in buying is uncertain, but the weather during August and export numbers from Brazil to China are factors to consider. In the cattle market, there is a strong urge to hedge due to economic concerns, with put options being bought for any type of cattle that will be sold in the next six months. Despite the stock market seeing significant gains, the cattle futures have seen a sharp sell-off.
Perception vs Fundamentals in Cattle Futures: The recent decline in cattle futures is not due to fundamental factors but rather perception and money flow. Market conditions may lead to further price declines, and using put options could help mitigate potential losses.
The recent sell-off in the cattle futures market is not driven by fundamental supply and demand factors but rather by perception and money flow. The markets have seen a significant decline in the last five to seven trading sessions, with cattle futures being down 7-10% from their highs. This sell-off comes despite a bullish outlook for the supply of cattle in the next 12 to 18 months. The speaker emphasizes that the market's perception is currently reality, and the huge money flow out of the cattle market is a cause for concern. The speaker advises against dismissing the possibility of further declines in the market, as the cattle futures have a history of experiencing large sell-offs. To mitigate the risk of significant losses, the speaker suggests considering the use of put options. Open interest in the market has also decreased by over 40,000 contracts, further indicating the potential for continued downward price movement. Overall, the speaker is urging caution and action in response to the current market conditions.
Commodity markets price decrease: Corn, soybean, wheat, cattle, feeder cattle, leanhogs, and crude oil markets experienced price decreases with corn futures down 8-4 cents, soybean futures down 7-4 cents, wheat futures down 4-6 cents, cattle futures down 7-9 cents, feeder cattle down 8-9 cents, leanhogs down 8-9 cents, and crude oil down 8-9 cents. The Dow Jones index also finished down by 8 points.
Key takeaway from today's discussion on Back Roads of Illinois is that various commodity markets, including corn, soybean, wheat, cattle, feeder cattle, leanhogs, and crude oil, experienced price decreases. Specifically, corn futures dropped by 8 to 4 cents, soybean futures declined by 7 to 4 cents, wheat futures went down by 4 to 6 cents, cattle futures fell by 7 to 9 cents, feeder cattle decreased by 8 to 9 cents, leanhogs dropped by 8 to 9 cents, and crude oil was down by 8 to 9 cents. Additionally, the Dow Jones index finished down by 8 points. Jeff French from American Egg and Ashton Bailey from River Green FS provided insights into these market trends. Despite running out of time on the show, listeners can catch the full discussion wherever they get their podcasts. Cesar Delgado, your host, wishes you a great day.