Tag Archives: Soybean

TOPEKA, Kan. — As fall harvest ramps up, farmers should think about the annual Kansas Soybean Yield and Value Contests. Entries must be postmarked no later than Dec. 1.

Kansas State University (K-State) Extension personnel or a designee must witness the harvest. A designee may be anyone not involved with the farm enterprise. For example, a family member or input supplier may not serve as the witness.

Pertaining to harvest, some of the contest rules’ highlights include the following.

  • An entry shall consist of one field of at least five contiguous acres. Farm Service Agency measurements will serve to verify a field’s size if entered in its entirety. If not, the harvest witness must take measurements with a measuring wheel, GPS device or smartphone app. If using an electronic method, a color printout must accompany the entry.
  • Contestants should notify their Extension county offices of when harvest is to begin as early as possible.
  • The harvest witness must inspect the combine’s grain hopper and verify it is empty before harvest begins.
  • Only official elevator-scale tickets shall verify the soybeans’ weight. While a minimum of 5 acres must be checked, the entire field’s weight may be taken.

Thanks to the Kansas Soybean Commission (KSC), the highest dryland and irrigated yields in the contest each will receive a $1,000 award. In each district, first place will win $300, second will earn $200, and third will receive $100. A winner could earn an additional $1,000 for achieving or surpassing 100 bushels per acre.

The No-till on the Plains organization will supply additional prizes in the no-till categories.

Managed by the Kansas Soybean Association (KSA), the contests are free to all Kansas farmers. There is a limit of one entry per field. One person may enter multiple categories — conventional or no-till, dryland or irrigated.

Farmers may enter the value contest, which evaluates protein and oil contents, without entering the yield contest and vice versa.

The complete rules are available at http://KansasSoybeans.org/contests on the web, from the Kansas Soybean office (877-KS-SOYBEAN, 877-577-6923 or info@kansassoybeans.org) and in K-State Extension offices across the state.

Doug Shoup, Ph.D., Scranton, a former K-State crops specialist, coordinates the project for the KSA Board of Directors.

“This is an incentive for farmers to maximize soybean yield and protein and oil contents and an opportunity to share the production practices that achieve those high levels of yield and value,” he said.

Winners will receive their plaques, certificates and monetary awards during the Kansas Soybean Expo, Jan. 9, 2019, in Topeka.

In 2018 Nebraska farmers planted 9.7 million acres of corn, the most of any crop in the state. The primary uses for corn in the state are cattle feed and ethanol production. Nebraska currently has 25 ethanol plants producing around 2 billion gallons of ethanol annually. This capacity consumes approximately 40 percent of Nebraska’s annual corn production.

Ethanol became widely produced in the state after the introduction of the Renewable Fuels Standard (RFS) in 2005, which mandates that a percentage of renewable fuels, mainly ethanol, be blended into transportation fuels. This article explores the changes in corn basis since the implementation of the RFS for five locations across Nebraska.

Changes in basis are important to Nebraska corn farmers’ financial wellbeing. Changes in the average basis value directly impact the farmer’s bottom line. The more negative the average basis value is, the less revenue the farmer is receiving. Furthermore, more volatile basis values result in greater basis risk.

Data

Basis is the difference between the cash price and the futures price. Basis is essentially the fee that grain buyers charge farmers for handling their grain. Many factors influence basis values, including the local supply and demand, transportation costs, quality of the grain, and the cost of doing business. The basis values used for this analysis were calculated using the United States Department of Agriculture’s Agricultural Marketing Service (USDA AMS) Cash Grain Bids report for Nebraska ( WH_GR111). Reports were collected Thursday of each week. Locations shown in this discussion must have had cash prices consistently reported since 1993, and are no closer than 50 miles from one another. The locations that have met these criteria are Beatrice, Greenwood, Grand Island, Lexington and Superior as shown in Figure 1. To obtain the basis, the cash price for each location was subtracted from the closing price of the nearby futures contract for that day. If there were missing observations, these values were interpolated using a simple average of the previous and subsequent basis values around the gap.

Map showing basis reporting locations and ethanol plants
Figure 1. Nebraska Ethanol Facilities and Reported Basis Locations

Analysis

Two periods of basis values were selected for comparison: (1) February 25, 1993 to August 4, 2005 and (2) August 11, 2005 to December 28, 2017. These two periods are divided by the RFS mandate, which was implemented August 8, 2005. Many changes to the corn market occurred during the span of these data. This analysis does not separate factors such as the increase in acreage, genetic advancements, or additional uses for corn that have influenced its demand or supply since 1993. Thus, the analysis will focus on the long-term adjustments in basis values rather than pinpointing the specific causes of these changes.

The summary statistics and coefficient of variation are reported for each location and period in Table 1. The summary statistics show that in all five locations, the average basis value was $0.05 to $0.09 per bushel lower from August 11, 2005 to December 28, 2017 than it was from February 25, 1993 to August 4, 2005.

Table 1: Summary Statistics: Basis for Selected Nebraska Cities
FEBRUARY 25, 1993 TO AUGUST 4, 2005 AUGUST 11, 2005 TO DECEMBER 28, 2017
Obs. Avg. Std. Dev. Min. Max Coef. Var. % Obs. Avg. Std. Dev. Min. Max Coef. Var. %
BEATRICE 650 -0.21 0.207 -0.94 1.34 98 645 -0.3 0.236 -0.68 1.5 80
GRAND ISLAND 650 -0.18 0.163 -0.5 1.09 90 645 -0.26 0.234 -0.73 1.5 91
GREENWOOD 650 -0.24 0.175 -0.6 1.29 73 645 -0.33 0.241 -0.75 1.45 74
LEXINGTON 650 -0.15 0.184 -0.53 1.59 119 645 -0.21 0.269 -0.71 1.76 130
SUPERIOR 650 -0.16 0.175 -0.58 1.2 113 645 -0.21 0.229 -0.58 1.6 107

This lower average basis value indicates that farmers have experienced a larger discount from the futures market price after the implementation of the RFS. This may seem counter-intuitive to farmers, as an increased demand brought about by the expansion of ethanol production would strengthen the corn basis or make it less negative. However, a recent study of North Dakota corn basis values by Fausti et al. (2017) would suggest that the increased corn production during the latter period of this study would outweigh the demand created by increased ethanol production.

The second portion of this analysis measures the differences in basis volatility between the two periods. There are two specific measures of volatility that can be discussed from the summary statistics. The first measure of volatility is the standard deviation (Std. Dev). Normally, the higher the standard deviation, the greater the basis volatility. All five locations experienced standard deviations from $0.03 to $0.08 per bushel larger in the second period. This means that the normal range of basis values for each location would be the average basis ± the standard deviation. For example, the normal basis range for Beatrice before RFS would have been $0.00 to -$0.44 per bushel. After the RFS, the normal basis range for Beatrice is -$0.06 to -$0.54 per bushel.

The second measure of volatility is the coefficient of variation (Coef. Var.). It is a measure of relative volatility and is expressed as a percentage. To calculate coefficient of variation, divide the standard deviation by the mean. The higher the coefficient of variation, the greater the price volatility. The coefficient of variation does not have a consistent result across all five locations. The coefficient of variation was smaller for Beatrice and Superior but was almost equal in Grand Island and Greenwood, and was much larger in Lexington.

Research by McNew and Griffith (2005) found that the farther one is from an ethanol facility, the lower the impact that facility will have on the price. This may hold true for the reported locations in this analysis. The two reported locations where the coefficient of variation improved, Beatrice and Superior, had the fewest number of ethanol facilities in a 50-mile radius. Grand Island and Greenwood experienced a slight increase in volatility. Grand Island has nine facilities with a 280 million bushel crush capacity in a 50-mile radius, and Greenwood has three facilities with a 114 million bushel crush capacity. Lexington has three plants in a 50-mile radius, one of which is located in Lexington itself.

This analysis shows that basis values have changed between the two periods of this study. Structural changes in the market have decreased the average basis value at the reported locations $0.03 to $0.08 per bushel. Basis has also become more volatile, but the amount of variability depends on the relative distance of reported location to an ethanol facility. Overall, these results indicate that farmers who are close to an ethanol facility have greater basis risk.

Increases in basis volatility can influence the effectiveness of a farmer’s hedging strategy. Imagine a corn farmer who takes a short position in the futures market during the growing season for grain he or she plans to deliver at harvest. When farmers place a hedge in the futures market, they do so assuming a specific basis value for harvest. The hedge locks in the futures prices, but leaves the farmer vulnerable to changes in the basis value. This vulnerability is referred to as “basis risk.” The larger the volatility measure is, the more basis risk a farmer has. However, greater volatility does not always imply a more negative outcome for the farmer. The basis at harvest could be stronger (less negative) than the basis value they had assumed when they placed the hedge. This stronger basis would result in a higher net price received. Farmers need to adjust their hedging strategies to account for lower average basis values, and a wider range of basis possibilities in order to account for the structural changes that have taken place in the corn market.

Washington, D.C. (September 5, 2018) — While trade issues remain top priority for the soy industry, the American Soybean Association (ASA) is taking a moment this fall to illuminate the importance of monarch habitat in its overall conservation efforts, which include soil and water quality, and pollinator preservation.

Starting September 5 and running through October 5, ASA’s Twitter, Instagram, and Facebook feeds will be aflutter with monarch messaging designed to shine a spotlight on monarch habitat importance. Outreach will include quick facts, links and suggestions to easily get involved, and a photo contest for farmers and other ASA friends and followers to upload snapshots of their efforts to plant milkweed and protect the pretty, beneficial butterflies.

Three randomly-selected participants who post their unique monarch or monarch habitat pics on Facebook, Instagram, or Twitter with the hashtag #Beans4Monarchs during the contest period will be selected to each win one $100 gift card, to be awarded in October. Photos can be posted directly to ASA social media platforms or on the participants’ feeds, so long as they include the #Beans4Monarchs hashtag and comply with the contest rules. ASA will cross-promote the contest throughout the month with interested and likeminded organizations to widen the social media circle cast on this issue and bring more awareness to why butterflies are important and how soy growers are making a difference in monarch habitats.

Monarch habitat promotes biodiversity and sustainability near farmlands, including attracting pollinators, improving soil health and water quality, housing natural enemies of crop pests, and increasing wildlife diversity. Yet, the monarch population has been alarmingly on the decline since the 1990s. The goal of ASA’s #Beans4Monarchs program is to help turn around those declining numbers and promote fit farmlands through healthy monarch habitat.