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UPDATE for June 15th, 2023

Omega Blocking Pattern set to Return to U.S. Corn Belt

This week’s USDA crop conditions report showed further deterioration of the corn and soybean crops. The national average corn GD/EX rating currently is 61% a downgrade from last week’s average of 64% vs 72% rated GD/EX last year. Adding to the urgency in this data is that several of the states with the most substantial decreases are the top producing regions of the Corn Belt.

• Iowa, Illinois, Nebraska and Minnesota all recorded losses in the GD/EX rating of 2%.

• Indiana GD/EX corn conditions fell from 62% down to 57%.

• Ohio went from 64% last week down to 57%.

Many other states also saw ratings fall this week. The map and graph below illustrate these adjustments.

Typically, these ratings would have a larger impact on market prices but right now weak demand and weakness in crude oil are keeping prices from rallying back to previous highs earlier this spring. If the forecast included below holds true, these outside issues may become less influential in market prices.

Soybeans also suffered losses this week. Like corn many of the nation’s top soybean producing states also received lower ratings, the national average soybean GD/EX rating fell from 62% to 50% vs 70% last season. The map and graph below illustrate these adjustments.

We’ve been hearing for weeks that Brazil has a record large crop and that it is getting larger. While that could be true, current USDA production estimates for Brazil’s crops are still higher even after CONAB (Brazil’s USDA) raised their production estimates this week. As of Monday, CONAB estimated the countries corn crop at 125.7 MMT vs their previous estimate of 125.5 MMT compare this to the USDA’s estimate of 132 MMT. The current CONAB soybean estimate increased from 154.8 MMT up to 155.7 MMT vs the even larger estimate by the USDA of 156.0 MMT. CONAB also projects the nation will see near-record corn exports and set a new record in soybean exports.

Ukraine is accusing Poland of approving more subsidize for their ag sector than is permissible according to World Trade Organization rules. Unfortunately, the surge of cheaper grain into Poland from Ukraine has caused tension between the two nations as Poland attempts to protect their own nation’s agricultural community from heavy financial losses.

Once again Vladimir Putin is threatening to end the Black Sea grain deal. During a televised meeting he stated that the Black Sea agreement and added extensions were granted solely for the benefit of their allies in Africa and South America and were in no way intended to aid Ukraine. Prior to this current extension that was granted in May Ukraine had accused Russia of purposefully slowing inspections and blocking ships bound for Ukrainian ports. The actions taken by Russia managed to pushed the total volume of agricultural exports to their lowest level since the agreement was first implemented last July.

Iowa State University conducts a survey every 5 years called the “Iowa Farmland Ownership and Tenure Survey”. The purpose is to provide an updated snapshot of the various forms of ownership, tenancy, and transfer of the state’s farmland. This series of studies that collects data regarding land ownership began in 1949 by researchers at Iowa State and is exclusive to Iowa . The information collected is very useful and for that reason the state of Iowa mandated the survey be conducted every 5 years in 1989. Data collected in the report regarding the current trends in the state were concluded last July, results were just recently finalized:

AMES, Iowa — As the average age of Iowa’s farmland owners continues to rise, other trends in landownership have begun to emerge.

According to an Iowa State University study, 58% of Iowa’s farmland is now leased out, a significant increase from the last time the same study was conducted in 2017.

“There is a long-term trend toward farmland leasing since 1982,” said Wendong Zhang. Zhang is an assistant professor of economics at Cornell University and conducted the Iowa Farmland Ownership and Tenure Survey with Jingyi Tong, a PhD student in the Department of Economics at Iowa State. “The percentage of farmland being leased in Iowa increased from 53% in 2017 to 58% in 2022. This represents a relative increase of roughly one million acres over five years, which is quite significant,” Zhang said.

Conducted by Iowa State since the 1940s, the Iowa Farmland Ownership and Tenure Survey—completed every five years—focuses on forms of ownership, tenancy and transfer of farmland in Iowa, and characteristics of landowners. The latest survey was conducted in July 2022, and was funded by Iowa State’s College of Agriculture and Life Sciences, Iowa Nutrient Research Center, Leopold Center for Sustainable Agriculture, Department of Economics, Center for Agricultural and Rural Development and Iowa State University Extension and Outreach.

Farmland leases also increasingly favor cash rent over crop sharing and owner-operating arrangements. In 2017, 82% of leased farmland was cash rented, but cash rent, predominantly fixed-cash rental contracts, now account for 87% of leased land.

“The rise of cash rent, especially fixed cash rent, correlates with the growing percentage of landowners who are part-time and non-residents of Iowa,” said Wendong Zhang. “Fifty-five percent of land is owned by an owner who did not farm in 2022, and, of them, over half do not have farming experience. Especially for those landowners, a fixed cash rental contract is a natural choice,” Zhang said. According to the study, 47% of farmland was directly operated by the landowner in 2017, but that number has now fallen to just 42%.

The survey found that the average age of Iowa’s farmland owners is still increasing. In 1982, only 29% of Iowa farmland was owned by those over the age of 65. That percentage has steadily increased over the years, totaling 60% in 2017 and 66% today. Tong noted that women own 46% of Iowa’s farmland, and they hold a larger share among senior owners.

Tong indicated several factors are contributing to the increasing age of Iowa’s farmland owners, including the increase in using farmland as an inheritance or long-term investment, fewer young people going into farming, and those young farmers facing large start-up costs. “Also, some senior farmers may retain ownership of their land due to a lack of succession planning, thus keeping the farm even if they aren't actively farming. The survey shows 17% of landowners neither have a successor for ownership or management,” Tong said.

However, Tong noted that survey results show three of every four landowners in Iowa are interested in selling land to beginning farmers when incentivized with federal and state tax credits. “At the same time, over half of Iowa landowners expressed concerns about difficulty finding quality beginning farmers as well as beginning farmers’ ability to pay the best prices for land,” Tong said.

The recent survey also reveals changing trends in how ownership of Iowa’s farmland is held. In 1982, 80% of Iowa’s farmland was owned through a combination of sole ownership and joint tenancy; however, those now only account for 52% of Iowa farmland ownership. Meanwhile, the amount of farmland held in trusts has skyrocketed from 1% in 1982 to 23% today.

“Trusts have grown in popularity due to their numerous benefits. Particularly for farmland owners, trusts can ensure the preservation of the farm within the family, manage land transitions, and potentially provide tax benefits, making them a valuable tool in succession planning,” said Zhang.

The percentage of farmland owned debt-free has also continued to increase—84% of Iowa farmland is held without any debt, the highest level observed. This represents a steady and significant increase from 1982, a year that marked the onset of the farm debt crisis, when only 62% of the land was held without debt. Tong said that some of that recent increase is due to the hike in commodity profits, aging landowners coupled with longer lengths of ownership, and government payments during the COVID-19 pandemic.

Zhang said that the survey also found interesting trends in the use of conservation techniques on Iowa farmland. He noted that no-till farming saw a significant increase from 21% of owners and 27% of acres in 2017 to 29% and 30%, respectively, in 2022. “The use of cover crops also saw a slight increase over this period, from 5% of owners and 4% of acres in 2017 to 7% for both owners and acres in 2022,” he said. However, only 2% of Iowa landowners have already participated in a carbon credit program and another 3% are considering doing so, but, Zhang said, “most landowners are either not interested or have never heard of them.”

A weak cold front will move through the region today. There should be a moderate increase in moisture, but the other ingredients needed for widespread rainfall will be absent so any showers that do develop will be isolated. Thursday night more dry air returns delivering precipitable water amounts that are only 30 to 35% of normal.

Another upper air system will move in Saturday night into Sunday morning that will offer better odds of precipitation but a blocking pattern may prevent most of the state from receiving any rainfall. There is still a chance that the track could shift to the north but the odds of that happening are not good. If this fails to develop over our region it may be several more days before we see any more rainfall opportunities.

In May we had a blocking pattern develop with a trough-ridge-trough configuration. The EURO ensemble mean for June 29th is showing that this same Omega block pattern will return. This type of scenario is remarkably strong and is very efficient at blocking any precipitation that tries to enter.

The EURO ensemble for the next 15 days is shown in the first map below. The following GFS ensemble map runs through July 31st. Each show the significant rainfall departures that are expected over key states in the Corn Belt.

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