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

GENERAL WEATHER FOR THIS AREA: It has been an interesting past month in Southwestern Minnesota, especially with respect to the weather. On the weekend of June 13-15th, Southwestern Minnesota received significant rainfall. Some areas only received 3.5-6+ inches, which was plenty. However, some parts of Rock County received 13+ inches of rain! As one can imagine, that is a lot of rain in one weekend. As a result, the Rock River flooded, causing significant damage to fields, pastures, parks, and roads in its path. Interstate 90 near Luverne flooded for the first time since it was built in the 1960s. The Rock River crested at 16.85 feet, which is actually 2.62 feet higher than recorded in 1993. Other creeks, lakes, and streams also reached flood stage as well. The Des Moines River in Windom crested at 21.57 feet, which is tied for the fifth highest all-time high water marks on the river in Windom. Fortunately, most of the water receded within about one to two weeks.

Although there is much lingering damage from the excessive water, we have been amazed with how much some of the crops and pastureland have rebounded. In fact, we had very little replanting in Rock County, as most replanting was completed between Windom and Trimont. Another area with a significant rainfall was Redwood Falls. The Minnesota Department of Natural Resources (MN-DNR) reported a record 14.24 inches of rain for the month of June in Redwood Falls. Unfortunately, many of these areas have canning crops (i.e. sweetcorn and peas), which delayed some planting into the middle to the end of June. MN-DNR reported that June 2014 was Minnesota's wettest June and wettest month of the modern record, exceeding records from July 1897 and June 1914 (coincidently 100 years ago). In the Twin Cities, 2014 has the most moisture for January 1 to June 30th on record. At this point, soil moisture is back above average and the drought designation has been removed. Despite the record moisture, we are beginning to dry out. There has only been about one-half to one inch of rain so far in July.

Although we have had some record setting rainfall this past month, temperatures have actually been very moderate during this period. Daily highs have been mostly in the lower 80s and nighttime lows in the mid to lower 60s. We did finally reach 90 degrees this past week, the first time we observed that since mid-September. To keep Minnesota's reputation as a cool spot in the U.S., we recorded the lowest daily high temperature of 65 degrees in State history for July 14th just in time for the baseball All-Star game.

Figure 1 - This was the scene in Rock County east of the Blue Mound State Park on June 17th. As you can see, the river consumed fields and pastures in its path.


SOYBEANS: Soybean development is progressing nicely in most of our region, despite the rainfall noted above. Most are 8-10+ inches tall and have begun to flower. The two main operations during the past two weeks have been replanting drowned out areas and spraying the next application of herbicide. We probably had about a dozen farms that had between 5-20 acres of soybeans replanted, most which are already emerging. Most soybean fields had a pre-emerge herbicide applied just after planting, which worked extremely well this year. Therefore, we began applying the first application of glyphosate around July 1st to most fields. We have been adding in multiple herbicides in most cases to target specific weed pressure. Based upon the effectiveness of the herbicide and stage of the crop, we likely will not spray anymore herbicide this year, just probably some insecticide for aphids.

The latest USDA Crop Progress Report released on July 14th revealed that 62% of the Minnesota soybean crop is rated excellent. This compares to 63% on the same date last year. The national soybean is currently rated at 72% of the crop excellent. This is ahead of the 5-year average of 59% and is the highest national crop rating for soybeans for mid-July since 1994. Crop development is also slightly ahead of normal, with 41% of the soybeans blooming versus the 5-year average of 37%.

Figure 2 - Here are some of the soybeans along the Rock River on July 8th. Although not all of the soybeans look this good after being flooded, we are amazed at the recovery of probably 75+% of the crop.

CORN: The corn crop has turned the corner during the past month in most instances. With the wet conditions as previously described, you can about imagine the difficulty in wrapping up the last applications of herbicide and nitrogen. Fortunately, most of the initial herbicide programs were extremely effective, so there was not any significant weed pressure that would impact final yield. Unfortunately, most of the excessively wet conditions in June came late enough in the growing season that most areas that were over saturated or drowned out were unable to be replanted. In these areas, the corn is stunted, yellow, or dead. Some producers are optimistic after the growing season last year and we even replanted a few acres of corn as late as July 8th. It will be interested to see how that turns out. Overall, we have a good looking corn crop developing, but there are poor spots in nearly every field and some fields that continue to remain stunted/yellow. We anticipate that there will be a wide variation of 150-200 bushel corn yields again this fall.

As of July 14th, the USDA rates the Minnesota corn crop at 64% good to excellent; the same as it was last year at this point in the growing season. Nationwide, 76% of the corn crop is rated good to excellent. This is the highest rating for corn at this point in the growing season across the U.S. in 20 years. Approximately 34% of the U.S. corn crop is silking, which is one point above the 5-year average.

Figure 3 - As you can see, the corn crop is not perfect here in Southwestern Minnesota. Many fields have a few drowned out spots and uneven corn from excess moisture. Yields will likely vary from 150-200 bushels per acre this fall.


REMARKS: The tide has turned on the grain markets the past few weeks, with two USDA reports released, both of which had a dramatic negative impact on grain prices and are considered significant game changers. The first report the USDA released was its Acreage Report and Quarterly Ending Stock Report on June 30th. The estimates for the soybeans are what lead the negative move in crop prices. Pre-report estimates had projected about 82 million acres of soybeans would be planted in the U.S. this year. The USDA's estimate came in at 84.8 million acres, which is 7 million acres more than the previous U.S. record planted soybean acreage. This equates to a lot more soybeans projected to be produced in the U.S. this year. To add to soybean supply, USDA also indicated soybean ending stocks were at 405 million bushels, well above the pre-report estimates of 378 million bushels. These numbers resulted in a 50 cent drop in cash soybeans and 70 cent drop in new crop soybeans on June 30th.

The USDA projections for corn were actually not that far off of pre-report estimates. USDA was right in step with trade estimates at 91.6 million acres of corn estimated to be planted in the U.S. this year, which is the lowest corn acreage in the U.S. since 2010. USDA did project current ending stocks for corn at 3.85 billion bushels, up from pre-report estimates of 3.72 billion bushels. Although these two figures were close to what was estimated before the report, with the negative move in the soybean market, cash corn closed down 23 cents per bushel and new crop corn down 22 cents.

The second report was the USDA monthly Supply & Demand Reports, which was released on July 11th. The numbers compute to a 2014 soybean crop of 3.8 billion bushels (a national record) and a carry out of 415 million bushels of soybeans a year from now. This is over 3 times as much carry out as we have from last year's soybean crop. USDA also projected world ending soybean stocks up as well for both the 2013-14 year and 2014-2015 year, which resulted in another 40 cent drop in cash soybean prices. USDA is projecting a U.S. corn crop of 13.86 billion bushel, which was actually below pre-report estimates. However, both U.S. and world ending stocks for both 2013-2014 and 2014-2015 were higher than anticipated, resulted in another 10 cent decrease in corn price.

In summary, grain prices have decreased significantly since the release of the first USDA Report on June 30th. Cash soybean prices have decreased from $14.05 to $12.20 per bushel and new crop soybeans from $11.65 to $10.20 per bushel. Cash corn prices have decreased from $4.15 to $3.35 per bushel and new crop corn from $4.00 to $3.40 per bushel. The market was down the first 8 consecutive sessions in July, the longest streak into July since 1975 according to one grain analyst. Fortunately for most of our clients, we made the following sales prior to the report at the end of June: (1) Sold the balance of the 2013 soybeans at $15.05 per bushel to reach an average of $13.22 per bushel, (2) Sold half (10%) of the remaining 2013 corn inventory (20%) at $4.20 per bushel on June 26th to reach 90% sold at $4.51 per bushel, and (3) Sold another 10% of the 2014 soybeans on June 27th at $11.77 per bushel to reach 30% sold at $11.61 per bushel.

Obviously, if we thought that prices were going to drop this much this quickly, we would have sold even more ahead of the report. However, we are satisfied that we were as well positioned as we were based upon the free-fall in the market since June 30th. For most of our clients, we will not have to sell any additional soybeans through the balance of 2014 unless there are market signals to do so. We will have to liquidate the last 10% of the 2013 corn in the next month on a rebound in price and will have to sell some additional 2014 corn prior to the end of the year. Overall, we are well positioned for income potential in 2014, especially at the levels we sold for the 2013 crop. As far as potential income in 2015, it appears that it will be significantly less than we have seen in maybe the last decade. That being said, there are a lot of variables that could change with respect to actual 2014 yields and where grain prices are 6 months from now that will impact the bottom line.

We have been continuing to work diligently this past month with respect to the 2014 crop. We have been doing extensive scouting/coordinating with tenants (i.e. weed control in corn, soybeans, and CRP; replanting soybeans; seeding CRP), processing crop input invoices, processing grain sales, certifying acres with the Farm Service Agency (FSA) and reporting acres to crop insurance by July 15th, farm tours, continuing education meetings, license renewals, etc. It has been a very challenging past couple of months in crop production in Southwestern Minnesota, although we have a good potential crop in the field.

Lastly, we are continuing to learn more details about the timing of implementation of the 2014 Farm Bill that was passed earlier this year. It appears that past planted acreage history will be reviewed later this summer and producers will have a chance to update yields in late summer/early fall. Producers will have a one-time opportunity to elect to go with Price Loss Coverage (PLC) or AgRiskCoverage (ARC) during the winter of 2014-2015. Enrollment into the farm program for both 2014 and 2015 is scheduled to occur in early 2015. We are currently working with FSA to clarify when we will need to complete the Adjusted Gross Income forms for 2014 (we will likely be sending these to you yet this summer). We will continue to monitor the enrollment process, options, and timeline and be in contact with you when necessary to complete enrollment.

Figure 4 - Sprayers really had to move through the fields during the past few weeks to stay on top of weed control. Most of the herbicide for the growing season has been applied and we will be scouting for soybean aphids in early August.



 

GROWING-DEGREE DAYS

 

MAY 1, 2014 TO DATE INDICATED

TOTAL GROWING DEGREE DAYS

DEPARTURE, FROM NORMAL

LOCATION       
Lamberton

July 15, 2014

1,141

-50

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 (July 15, 2014)

 

New Vision,
Windom

Magnolia

Poet Biorefining,
Bingham Lake

MnSP,
Brewster

Current Crop        
Corn

        3.42

     3.42

        3.48

     N/A

Soybeans

      12.18

   12.13

        N/A

    12.41

New Crop        
Corn

        3.35

     3.32

        3.47

     N/A

Soybeans

      10.21

   10.18

        N/A

    10.36



 

 

Rainfall (inches)
 

COUNTY

CITY

 JUNE 11 - JULY 15, 2014

MARCH 15 TO DATE-2014

MARCH 15 TO DATE-2013

Cottonwood Jeffers                 6.55                  16.86                  12.18
Cottonwood Windom                 7.38                  15.48                  13.52
Jackson Heron Lake

                5.30

                 13.74                  15.96
Jackson Jackson

                7.45

                 16.60                  14.93
Martin Trimont                 9.03                  19.18                  15.58
Murray Fulda                 9.00                  18.94

                 15.21

Murray Slayton                 6.04                  16.34                  16.06
Nobles Round Lake

              10.02

                 21.38

                 19.44
Nobles Rushmore               10.04

                 22.91

                 17.84

Redwood Redwood Falls                 7.63                  17.88                  12.21
Rock Magnolia               10.52                  22.20                  17.18

Klay D. Walinga, AFM
Vice President
Manager - Farm Management Department
Real Estate Broker










E-mail us at: fairland@fairlandmanagement.com