CROP AND WEATHER REPORT
For the Monthly Report Ending April 15, 2014

Welcome to another year of Fairland's Crop & Weather Report. We are using a new format this year, which we hope you will enjoy and find more relevant. The report will be a monthly newsletter with more in-depth information. We understand that schedules are busy in today's world and it is more and more challenging to keep up with everything. We also know that technology continues to change at a rapid pace. For years, the Bi-Weekly Crop & Weather Reports was one of our main methods of communication with our clients during the growing season. In today's world with e-mail, internet, smart phones, i-pads/computer tables, and many more technological tools, we are able to stay more connected with our clients than ever.

Our goal is to keep you informed through this report on a monthly basis, as well as be in contact with you directly as necessary on field operations. We will still continue to provide you general ag information through our Production, Income, and Expense (PIE) #1 Report, the annual Ag Report, the June 15th and September 1st Crop & Weather Report, and the Harvest Reports with final yield information. At the same time, we continue to be in contact with clients with conditions that affect the crop production/returns on their land. As you know, we pride ourselves on keeping our clients informed about their farmland and the things that affect it with respect to crop production, tax information, grain marketing, government programs, wind energy, and land valuation, just to name a few. It is definitely exciting times to be involved in agriculture, and it all begins with the land...

GENERAL WEATHER FOR THIS AREA: So far, 2014 has been a repeat of 2013 in many ways. The winter of 2013/2014 will be remembered as being cold (about the 8-9th coldest on record in Minnesota), and long, as the first snowfall was in early November and the last significant one (hopefully) was on April 4th. Whereas we did not have a tremendous amount of snow this winter, it stayed around and our highest measurable snowfall total was on April 3rd-4th, at 8-9 inches. Frost levels are some of the deepest we have observed in quite some time, with frost being recorded at 5-6+ feet deep. The concerns have been for homeowners having waterlines freeze in Southwestern MN (SWMN), but the benefits should be to enhance soil structure (frost can help alleviate previous soil compaction and help make some tile work more effectively) and deter pest development (many pests cannot survive extreme extended cold conditions). Most of the frost has come out of the ground and tile lines are running. However, it is likely that we will be planting corn over patchy frost this year. This is more of a novelty than a concern, but still notable as we need the soil to warm up for root and early plant development.

During the past month, daytime high temperatures have ranged from 22 to 75 degrees and nighttime lows from 9 to 52 degrees, according to the Southwest Research and Outreach Center (SWROC) in Lamberton, MN. Many forecasts show below average temperatures for the next 30+ days. Currently soil temperatures in the 2-4 inch depth are about 40 to 45 degrees. It will take some warmer weather to keep soil temperatures above 50 degrees, which is necessary for germination, and thus corn planting.

The moisture situation is below average. Last fall, there was about 4 inches of available moisture in the 5-foot soil profile (SWROC), which is below the long-term average of about 5.4 inches. Whereas we have picked up some moisture over the winter in the form of snow, we have not received much moisture that has soaked into the soil profile except for the 9-inches of snow previously noted. The Martin County region did receive some moisture via a nice thunderstorm on April 6th, but otherwise, most of the region has not received much more than a few tenths of scattered rainfall in the past month.


Figure 1 - Available Soil Water (inches) at the SWROC-Lamberton for past 6 years and historical average.

According to the National Weather Service, most of SWMN is rated in a "moderate drought". It has also predicted some drought relief in our area in the coming months. Nationally, the western Corn Belt is dry, but the eastern Corn Belt has adequate soil moisture. On a global scale, many weather models are indicating that an El Nino is forming. If it does, that is generally conducive for favorable growing conditions and yield potential.



Figure 2 - U.S. Drought Monitor from the National Weather Service, April 15, 2014.

SOYBEANS: The USDA monthly Supply & Demand Report on April 9th estimated a carryout in the U.S. of 135 million bushels. This is just 4% of the 2013 U.S. production. South American soybean production estimates continue to decrease through its harvest. Both of these factors have had a positive effect on soybean prices. However, Chinese demand has also been decreasing, which is negative to cash soybean prices. The local cash soybean price in Windom on April 15th was $14.50 per bushel. This is pretty amazing since cash soybeans were about $12.30 per bushel on January 29th. The majority of our clients are about 90% sold in the 2013 soybean crop with an average of about $13.00 per bushel.

The Prospective Planting Report was released by the USDA on March 31st. Analysts anticipate that U.S. producers are intending to plant a record 81.5 million acres of soybeans, which is almost 5 million acres more than last year. Despite these acreage estimates, 2014 cash soybeans were $11.66 per bushel on April 15th. This is much higher than $10.30 per bushel as they were in late January. The majority of our clients are 20% sold with an average price of $11.55 per bushel.

CORN: The USDA Prospective Planting Report indicated 91.7 acres of corn will be planted in the U.S. in 2014, which is down from the 95.4 million acres planted to corn in 2013 and the lowest U.S. corn acreage since 2010. This is positive for new crop corn price, which was as low as about $3.90 per bushel in January and is now at about $4.50 per bushel. We have been waiting for new crop corn prices to strengthen and have not sold any 2014 crop at this point. We are monitoring U.S. planting progress and will likely be making some new crop corn sales in the near future.

The April USDA Monthly Supply & Demand Report estimated that there is 1.3 billion bushels of U.S. corn ending stocks for the 2013 crop. This is much lower than the nearly 1.8 billion bushels estimated in December. Some of the reduction was a result of a lower estimated national yield (158.8 bu/acre), and some is because of increases in demand from ethanol production, feed usage, and exports. Cash corn has also increased from the low in January of about $3.90 per bushel to about $4.50 per bushel now. At this point, the majority of our clients are 70% sold on 2013 crop with an average of $4.52 per bushel. We will be looking to make the last sales based upon price rallies resulting from weather concerns this spring into early summer.

We are hoping to begin planting corn shortly after the Easter holiday if soil conditions are fit. As of April 14th in the U.S., only 3% of the corn crop is planted, which is below the historical average. There is virtually zero corn planted in Minnesota, Iowa, Indiana, and Ohio for the major corn producing states and only 1% planted in Illinois & Nebraska. This is starting to become a market factor at this point and will become more of one if we see further delays in the next couple of weeks.

REMARKS: Overall, there has been quite a bit of anxiety through the ag sector this winter. Cash corn prices have decreased from $7 per bushel last year to $4.50 per bushel this year. There have been many reports of next income projections being down more than 50% from last year. The threat of corn below $4 per bushel definitely has had an impact on land values, machinery purchases, and potential capital improvements (i.e. tile). Land values were down over 15% in late 2013, but appear to have moved up about 5% in the past couple of months. With lower projected farm income and significant reduction in tax incentives in 2014, there could be a dramatic decrease in capital improvements in 2014. Currently, there is a limit of only $25,000 expensing option using Section 179 of the tax code, which is much less than the $500,000 limit in 2013. Also, there is no bonus depreciation (50% last year) for improvements by those with passive income. We will continue to monitor this situation and be in contact with you if there are capital improvement projects that still make sense for your farm(s).


Figure 3 - This producer was field cultivating on April 15th. This is some lighter soil just northwest of Windom that will be planted to wheat. Some small grains (i.e. wheat, oats) are being seeded, but there likely will not be any corn planted until next week at the earliest.



Figure 4 - This was that same field 24 hours later on April 16th...the snow will melt quickly, but it sure has been a long winter!

GROWING-DEGREE DAYS

 

APRIL 2014 TO DATE INDICATED

TOTAL GROWING DEGREE DAYS

DEPARTURE, FROM NORMAL

LOCATION             
Lamberton

N/A

N/A

N/A

Worthington

N/A

N/A

N/A

 

Corn Growing Degree Days are calculated by subtracting a 50 degree base temperature from the average of the maximum and minimum temperature for the day. The daily maximum is limited to 86 degrees and the minimum is 50 degrees.

 

Grain Markets (April 15, 2014)

 

New Vision,
Windom

Magnolia

Poet Biorefining,
Bingham Lake

MnSP,
Brewster

Current Crop        
Corn

   4.66

   4.53

        4.60

    N/A

Soybeans

 14.50

 14.47

        N/A

   14.51

New Crop         
Corn

  4.58

   4.50

        4.63

  

Soybeans

11.66

 11.56

        N/A

   11.84



 

Rainfall (inches)
 

COUNTY

CITY

 MARCH 15 - APRIL 15, 2014

MARCH 15 TO DATE-2014

MARCH 15 TO DATE-2013

Cottonwood Jeffers      1.34  1.34  1.91
Cottonwood Windom      1.16  1.16  2.33
Jackson Heron Lake

     1.55

 1.55  3.25
Jackson Jackson

     2.12

 2.12  2.14
Martin Trimont      1.91  1.91  2.52
Murray Fulda      1.50  1.50

 3.12

Murray Slayton      1.22  1.22  3.01
Nobles Round Lake

     1.60

 1.60

 5.00
Nobles Rushmore      1.75

 1.75

 3.57

Redwood Redwood Falls      1.25  1.25  2.27
Rock Magnolia      1.39  1.39  3.12

Klay D. Walinga
Vice President
Manager - Farm Services Department
Real Estate Broker
Accredited Farm Manager









E-mail us at: fairland@fairlandmanagement.com