With the calendar turning to spring, it is time to make plans for the coming year. It is also a good time to look back at where we’ve come from to help make informed decisions. 2014 was a year of record production for both corn and soybeans, with national corn yields of 171 bushels per acre and soybeans at 47.8 bushels per acre. This has led to a rebuilding of grain stocks and lower prices. The 2013 crop marketing year ended last August with 1.2 billion bushels of corn on hand. Projections for ending stocks at the end of the 2014 crop marketing year are 1.8 billion bushels. Cash corn prices reflect this increase in supply and are currently near $3.70 per bushel, which is about $1 per bushel lower than last year at this time.
By the end of March, all decisions will have been made in signing up your farm for the new government farm program for the crop years 2014-2018. The actual sign up is a two step process. The first step was the opportunity to update base acres and yields based on 2008–2012 production and cropping history. The last time we had the opportunity to do this type of yield update was in the early 2000’s. With yields improving in most cases over time, this was a good chance to boost these numbers. Historically, a higher percentage of corn base acres have been advantageous to government payments, so the chance to increase the corn base acres when possible was the right choice. Updates to bases and yields were required to be signed off on by the farm owner or a representative that had Power of Attorney for the owner.
Last fall this newsletter discussed a retracement of 10-15% in land values from earlier in 2014. Over the winter we’ve seen fewer sales than a year ago with more variability in results. Recent sale results in livestock-strong areas such as Sioux and Lyon Counties have remained high, although perhaps some lower than a year or two ago. Half a dozen properties in that area have sold for $12,800 to $15,600 per acre so far in 2015. Is that lower than those parcels may have brought in 2012 or 2013? Maybe, but those numbers are still a pretty strong ticket.
The Des Moines Water Works is a public utility that provides drinking water for the greater Des Moines area. Their water source is the Raccoon and Des Moines Rivers, both of which run through Northwest and North Central Iowa. The Water Works has a large denitrification facility to take excess nitrates out of the water; this is normally needed only during times of high rainfall when excess water leaches through the soil profile taking soil nitrogen with it into drainage tile lines and eventually water courses. Denitrification is an added expense to the facility
This year’s prices are set from the average of new crop Chicago Board of Trade prices during the month of February, and ended at $4.15 per bushel for corn and $9.73 per bushel for soybeans. In comparing to last year, a farm with a 183 bushel per acre proven yield for corn at 80% coverage level will have a revenue guarantee of $610 per acre, a $70 per acre reduction from last year ( 10.5%). On soybeans, with a proven yield of 53 bushels per acre at 80% coverage, the revenue guarantee will be $413 per acre, also a $70 per acre reduction from last year ( 14.5%).
