** Corn and Soybean Insurance Prices: Spot corn futures this week have reached the best levels since last summer, while the soybean market is back testing highs that were traded in early December. The rally has largely been tied to events away from the US market, and more specifically drought stress across the Argentine corn and soybean belt. This has given producers the chance to catch up on old crop sales, but of course new crop prices are closely being watched as this month’s average will determine crop insurance revenue guarantees, and premiums. There are 10 trading days left in February, but at mid-month, the average for November soybeans is at $10.04/Bu or nearly 26 cents higher than a year ago, while the December corn average of $3.94 is more than 10 cents lower.
** USDA Estimates Higher Corn, Lower Soybean Costs: While new crop prices this week are mixed, so too are new crop cost of production estimates. The chart plots the USDA’s historical production cost estimates, along with their best guess for 2018 that was updated in mid December. The USDA estimated an average per acre corn cost of production at $649, up $4 from 2017 and the highest in 3 years on higher seed and chemical costs. However, it’s worth noting that since the USDA estimates were published, fertilizer prices have increased significantly (C IL anhydrous up $80-100/ton), while their crop budgets estimate a 6% decline in total fertilizer costs. The USDA estimates soybean costs at $455/acre, or $6 less than a year ago. If realized this will be the first year since 2014 that per acre corn costs have increased against soybeans.
** USDA Outlook Conference Acreage Estimates: The USDA Outlook Forum gets underway next Thursday, and the key event for the conference is the USDA’s best estimates for new crop acreage and balance sheets. Initial guidance was offered back in November, when the USDA published results of their 10 Year Baseline projections, which are used for Federal Budget purposes. The chart shows the historical changes in the Outlook estimates, from the Baseline, with a strong tendancy for soy acres to increase. In 14 out of 21 years (67%) soybean acres have increased by an average of 1.2 Mil acres, and there have been just 4 years (19%) that soybean acres have declined. In corn, acres have increased 8 years by an average of 1.1 million, declined in 6 years by an average of 1.3 million, and have been unchanged in 7 years (33%). The Baseline estimates for this year showed 91 Mil Acres each of corn and soy. Our best guess for this year is that with normal spring weather, US farmers will plant 89.5 million soybean and 88.5 million corn acres.