At the end of the year, corn farmers have a lot of balls to watch out for in the air, or perhaps knives. Nathanael Thompson, associate professor of agricultural economics at Purdue University, gave three tips to corn growers:
1. Understand and use the basics;
2. Do not keep your harvest too long in reserve; and
3. Understand delivery costs and pre-harvest marketing opportunities.
In general, Thompson said he recommends growers keep a smaller portion of their corn in an uncovered warehouse in 2022.
According to James Mintert, director of the Center for Commercial Agriculture at Purdue University, while export numbers will be critical for corn and soybeans for 2022, corn export numbers look slightly better.
Part of the reason, according to Naomi Blohm, senior marketing advisor at Total Farm Marketing, is that corn production is declining in China, due to too much rain in the past two years. Global corn stocks are at their lowest since 2016. Blohm and Mintert believe they’re actually tighter than the US Department of Agriculture estimates. About 60% of these global stocks are in China, which may be inferior and of inferior quality to what has been reported. “China will expand its feed imports around the world” in part to downplay the notice of its increased purchases, Blohm said.
Chinese pork supply stabilizing?
On the other hand, China officially claims to have reached a plateau with its pig population after years of battling African swine fever, and even claims a glut of pork. Agricultural news sources began reporting a slowdown in Chinese pork imports from August. On December 15, China’s finance ministry announced it would increase import tariffs on most pork products next year, saying the country had rapidly increased domestic production and reduced import requirements. This is important because when China rebuilt its herd of pigs, it not only reverted to previous levels, but took the opportunity to revamp its pork production industry, replacing low-quality traditional foods with high-quality grains. best quality.
New uncertainties introduced by the resurgence of the omicron variant of COVID-19 have raised new questions about whether lockdowns and travel restrictions will be necessary again. Farmers are paying close attention to recent Environmental Protection Agency action regarding ethanol blending levels.
Earlier this year, the EPA was issuing signals that it could reduce mandatory mixing levels below 2020 levels. It took recent bills in Congress to prevent the proposed actions. On December 14, the Renewable Fuels Association, which represents ethanol producers and refiners, thanked the Senses. Amy Klobuchar, D-MN, and Chuck Grassley, R-IA, for bipartisan legislation filed that day prohibiting the EPA from reducing the applicable minimum. volume of biofuels in transportation fuel once the obligations are finalized for a given year. About a third of the corn crop is turned into ethanol each year.
“This bill comes at a critical time,” said RFA President and CEO Geoff Cooper. “Just last week, the EPA proposed an unprecedented retroactive reduction in the renewable energy volume obligations for 2020 that were finalized more than two years ago. The RFS was created to provide long-term market certainty for ethanol producers and farmers in our country. Going back in time to reduce RFS volumes, long after they have been finalized, undermines the purpose and intent of the program and destabilizes the market. We thank Sens. Klobuchar, Grassley, Duckworth and Ernst for working together to ensure the integrity of the RFS and the EPA is held accountable.
The same legislation was introduced in the House of Representatives last month by Representatives Ashley Hinson, R-IA, Rodney Davis, R-IL, Angie Craig, D-MN and Ron Kind, D-WI.
Cooper noted that the EPA’s proposal to revise the 2020 RVO to take into account market anomalies related to COVID is not necessary, because the annual RVO already includes a self-correction mechanism that causes actual volume requirements to occur. renewable fuel levels adjust downward with reduced gasoline and diesel consumption.
Summertime E15 barrier action requested
On December 9, six national farm and biofuel organizations wrote an open letter asking the EPA to pass new regulations requiring low volatility conventional gasoline blends during the summer. This would result in reduced exhaust and evaporative emissions during the summer ozone control season, the groups said, and improve air quality. In a letter to EPA Administrator Michael Regan, the Renewable Fuels Association, American Farm Bureau Federation, Growth Energy, National Corn Growers Association, National Farmers Union and National Sorghum Producers said reducing volatility gasoline of just 1 pound per square inch would give significant environmental benefits. Regarding air quality, the six organizations referenced and attached a new study using the EPA’s modeling tools, showing that a reduction in the vapor pressure of the conventional gasoline blend would be beneficial for air quality.
The USDA is now forecasting a modest recovery in ethanol consumption. Ethanol refining margins have remained near record levels, Mintert said. “Only a decline in the economy would slow down ethanol,” he added.
Blohm believes there is a tighter corn carryover than the USDA predicted. She thinks the demand for crushing will increase. “So many companies need to show carbon reductions,” she told the High Plains Journal, and noted that four new crushing plants will come online over the next two years.
“That’s not a pretty picture” if you haven’t locked in all of your input costs for the 2022 growing season, according to Blohm. About half of the producers had done so when she spoke to the High Plains Journal in mid-December. Michael Langemeier, a professor in Purdue’s agricultural economics department, said corn fertilizer costs are 80% higher than last year. And it’s not just the cost, but whether it will be available at all, due to supply chain constraints. Langemeier said that for the first time ever, fertilizer costs per bushel are higher than rental cash costs per bushel. He suggested reducing nitrogen fertilizers, saying a reduction could save substantial production costs with only a slight reduction in yield.
Langemeier believes that while corn will remain competitive with soybeans on above-average soil, he believes corn area will be reduced on the drier lands to the west.