By Frank J. Buchman
It’ll likely be a warm, wet winter with drier spring months allowing farmers to plant their crops. Positive growing conditions point to higher production hindering price rises, with hedging opportunities allowing profitable marketing.
Soybean growers heard that outlook synopsis for their industry from featured speakers at the Kansas Soybean Expo last week in Topeka.
Sponsored by the Kansas Soybean Association (KSA) and the Kansas Soybean Commission (KSC), the daylong program also featured soybean “partner” updates, soybean research highlights, review of the state attorney general’s agriculture efforts, the association’s annual business meeting and honoring Kansas’ top soybean growers.
Welcomes from Raylen Phelon, KSA president of Melvern, and Dennis Gruenbacher, KSC chairman of Andale, included clarification that the organizations function separately, yet complementary for benefit of soybean growers.
According to Phelon, “The Kansas Soybean Association is the voice and advocate for soybean farmers on local, state, national and international issues of importance.”
Gruenbacher explained, “The Kansas Soybean Commission is a board of nine volunteer farmers, elected by their peers, who are responsible for managing Kansas’ share of the funds collected under the national soybean-checkoff program, ensuring a strong and productive future for soybean farmers.”
Thus, Phelon insisted: “Our two distinct organizations work together for Kansas soybean farmers.”
“We aim to expand existing soybean markets; develop new uses; facilitate agronomic research; and communicate goals and successes to soybean farmers, industry partners and consumers,” Gruenbacher emphasized.
Basically climate is determined by the sun, clouds, volcanoes, oceans and urban heat islands, explained Evelyn Browning Garriss and her son James Garriss, second and third generation historical climatologists, who edit and publish The Browning Newsletter, for 38 years a source for long-term climate forecasts.
In a dual presentation, alternating the microphone back and forth, with intermingling remarks, the Garriss team mixed pragmatism, humor and scientific findings while observing natural factors of the weather, using ocean currents, volcanic activity and natural cycles to determine patterns in the future.
“As historical climatologists, we look at what factors are shaping the weather and consider historical records, coral, tree rings, sediment layers and glacial cores to learn how they shaped the weather in centuries past,” James explained.
“Climate change is not linear, it ebbs and flows,” James stated. “Climate change is happening, but the process is very complex.”
El Nino is a warm ocean current of variable intensity that develops after late December, sometimes causing catastrophic weather conditions. La Nina is a cooling of the ocean surface occurring periodically every four to 12 years, also affecting weather patterns.
“There is a 90 percent chance the current El Nino will be strong and last through February, and an 85 percent chance it will last until May,” James said. “Often, after a strong El Nino, a cooling La Nina follows close behind.”
The Icelandic volcano of Bardarbunga had a large eruption which normally brings warmer temperatures to the Midwest and Northeast, easing winter heating demands and prices, according to Evelyn.
“The combination of the strong El Nino along with the eruption of an Icelandic volcano,” Evelyn said, “creates a warm dry winter in the northern tier of states through the Midwest and a double dip winter for much of the Northeast.
“Springtime El Ninos create dry planting seasons for the eastern Corn Belt,” she explained.
El Nino was said to be bad for Asian and European production, while also lowering Russian winter crops. “But, South American summer crops will have better than average yield,” James forecasted.
“This will mean that the overall price of global commodities will likely lower as overall productivity is good,” the team concluded.
There’s no question Andrew Shissler has been there and done that marketing commodities, and offers his vast personal experiences assisting Midwest farmers hedge and market crops through his S&W Trading LLC at Wheaton, Illinois.
Reports about China, their commodity use and production have most apparent impact on this country’s grain prices. Traveling to China, his wife’s homeland, annually, Shissler gave his opinion about future of China’s agriculture, affecting prices received by Kansas farmers.
“Agriculture in China is going to be revolutionized in the next decade, as small farms are rented to larger farms,” Shissler predicted. “Prevalent government quotas and stock piles are going to be mostly eliminated, which will strongly affect corn and milo imports.”
More acres will be seeded to soybeans in southern China, Shissler forecasted, while Chinese beef, dairy, pork and chicken production expand.
Contrary to seeming local opinion, Shissler showed a U.S. map verifying land values are dropping. His United States Department of Agriculture numbers show Kansas cropland values August 5, 2015, at $2,210 an acre, down 2.2 percent from 2014.
Missouri, at $3,810 an acre, was unchanged, while Nebraska dropped 2.1 percent to $5,070 an acre, and Iowa was off 6.3 percent, at $8,200. Illinois was down less than a percent, at $7,650, while cropland in Oklahoma, Texas, and most northeastern United States increased in value.
Looking to corn production next year, Shissler forecasted a smaller U.S. and world crop, with reduced plantings and lower yields, yet still higher stocks.
However, Shissler sees larger U.S. and world soybean crops from higher yields, with considerably higher U.S. stocks.
“Corn and soybean prices should bottom at multi-year lows, but the prices will go up,” Shissler said.
Upon questioning, he’s optimistic corn “could trade at $4,” and soybeans “may hit $10, briefly,” quickly adding “without adverse weather, prices are going to be very flat.”
Corn averaged $3.70 a bushel last year, with Shissler’s prediction of a range from $3.35, to $3.95 this year
While soybeans averaged $10.10 per bushel last year, Shissler sees the 2016 market ranging from $8.15, to $9.65.
He insisted: “Weather will be the market driver this winter and into summer.”
Despite some lower cropland values, Shissler said, “Corn acres are favored above ’beans, with cash rents still very high.”
However, restrictions on loans will make it difficult to grow large crops worldwide. “Likewise, currency changes and interest rates will affect market price restructuring over the next year,” Shissler said.
Looking at cash grain trade, Shissler said, “Many basis contracts have been written for cash flow reasons and space issues.”
He recommended using “collars and accumulators” as protective marketing strategies. Seeing “fewer market moves,” Shissler suggested farmers sell more at one time when market advances.
Questioned about his feelings for the livestock industry, Shissler forecasts all meat production to be up about 3 billion pounds this year.
The commodity expert predicts steers to average $136.75 per hundredweight, compared to $148.07 in 2015. Hogs, $48.25, down from $50.44; broilers, 85.8 cents a pound, down from 89.9 cents; and turkey, $1.14, down from $1.163. Eggs are seen to drop from $1.844 a dozen to $1.658.