What’s ahead for grain prices, leases for 2017?

    Dr. Gary Schnitkey, professor of Agricultural and Consumer Economics at the University of Illinois Champaign-Urbana, looked into his crystal ball and projected what 2017 might have in store for farmers regarding grain sales and cash rent leases at Chicago Farmers’ September 12, 2016, meeting. Nearly 100 people were in attendance for the informative afternoon.

    It is a good news-bad news story. The last several years have produced good yielding crops. There has not been a shortage of crops since 2013, said Dr. Schnitkey. There have been good supplies. As a result, the $4.70 average price of corn per bushel that was driven by ethanol and hit a plateau in 2006, has fallen and continues to be below the $4.30 mark since 2013.

    Dr. Schnitkey noted that when the December contract futures of $4.30 were set in June, the weather was hot and dry. However, July and August were perfect in Illinois and Iowa for corn and soybean production. Now corn is in the $3.40 - $3.50 range and soybeans are at $9.10 per bushel, down from the high of $10. There have been record productions of corn and soybeans in the United States, said Dr. Schnitkey. “This will push down prices for 2017 and affect revenue.”

    He noted that since 2014, soybeans have been more profitable than corn because corn seed costs have increased. Also affecting revenue is the Agricultural Risk Coverage (ARC) and Price Loss Coverage. The payments in 2016 were lower than those in 2015 and it is anticipated the coverage will be lower still in 2017.  On the plus side, said Dr. Schnitkey, fertilizer costs are decreasing and this could continue into 2017. He went on to say that the average cash rents have been coming down since 2014.

    How long will prices stay low? Until a short crop occurs in the world and until then, prices will hover around $4 per bushel for corn. In planning budgets, Dr. Schnitkey suggested that farmers plug in $4.30 per bushel for corn and $10.30 per bushel for soybeans. He said if these prices do not work, it may be time to initiate variable cash rents.

    Dr. Schnitkey noted there are continued low incomes for 2016; there is potential for low returns in 2017; and to mitigate the losses, non-land costs and cash rents must continue to decline.

    “The outlook will turn around,” said Dr. Schnitkey. “You are still in a fundamentally good business.”

    To help ensure a more positive situation, Dr. Schnitkey suggested:

    • Consider planting more soybeans.
    • Lower all costs.
    • Lower cash rents and negotiate new leases in the fall; don’t negotiate during a price spike.

    2016-2017 Wisconsin-Madison Scholar

    Growing up on my family’s cash crop farm in Waupun, Wisconsin, I realized at a young age that I wanted to be part of the agricultural industry. This being so, I came to the University of Wisconsin-Madison to pursue a bachelor’s degree in Agronomy. While on campus, I have become involved in the Badger Crops Club where I have been able to have hands-on experiences in agronomy. Through the club, I have competed on both the Weeds and Crops judging teams, and I have had the opportunity to attend conferences all around the United States with other agronomy students. These experiences have helped me grow my agricultural knowledge base and have better prepared me for my agricultural career. I hope to continue with my education and earn a master’s degree enabling me to become an extension agent. - Rachel Perry, 2016-2017 University of Wisconsin-Madison Scholarship Recipient

    Chicago Farmers visit Chicago High School for Agricultural Sciences

    Students from Chicago High School for Agricultural Sciences (CHSAS) have attended The Chicago Farmers’ meetings numerous times. As recipients of TCF scholarships, the students are always welcome and enjoyable to meet. On August 11, it was our turn to visit their school for TCF’s summer program. TCF has visited in the past, but we learn something new each time we visit and we meet students we have not previously met.

    Located on the far Southwest Side of Chicago, CHSAS educates 720 students in freshman through senior years. It receives 3,000 applications each year for 180 freshmen seats, according to Bill Hook, principal at CHSAS. Students are selected through a random lottery and hail from all parts of the city; some from nearby neighborhoods and others from the far North Side with one-way commutes as much as 1.5 hours.

    “The University of Illinois receives the majority of our graduates, but all of the land grant colleges are popular destinations for our students,” said Hook. “Thirty percent of our students become ag majors in college and two-thirds don’t pursue agriculture as a study. However, 100 percent of our students are well served by the program at CHAS. They learn important skills and become responsible young adults. We thank The Chicago Farmers for their scholarships and it is great when our students attend your meetings. They offer discussions about current events and wonderful topics that we connect with our curriculum.”

    Hook went on to say, “CHSAS has a 92 percent graduation rate and 83 percent of our students continue on to college. CHSAS is everything that is good about education.”

    Opened in 1985, CHSAS and its fields sit on 78 acres, of which 38 acres are farmed. The site has been owned by Chicago Public Schools for 100 years and was leased by a family that farmed it until 1980. Although CPS had decided to sell the land, the neighborhood urged the system to keep the farm and build a school. Hence, CHSAS was built, one of only two such schools in the United States.

    A short video narrated by Max Armstrong gave us an overview of CHSAS before we started out on our tour. “The school takes urban students and makes them aware of agribusiness and where food comes from,” related Armstrong. Following the video, we divided into groups and hooked up with a pair of tour guides. The guides were seniors and included Jennifer Ventura, Shane La Faire, Danielle Wood, Carleton Johnson, Caitlyn McFadden, and Emily Neeson. Each student had either spent the summer in an internship at a U.S. university or traveled abroad for an internship.

    CHSAS offers a unique approach to education, said Hook. It has college prep education and ag courses. After sampling the six pathways offered by the school (Ag Education, Horticulture, Ag Finance, Food Science, Animal Science, and Ag Mechanics) during freshman and sophomore years, students rank the pathways in order of their preference and then pursue one of them during junior and senior years.

    The livestock, which includes horses, cows (students built a shelter for the cows), pigs, goats, chickens, and turkeys, provide hands-on experience for students. The horse manure serves as fertilizer for the school’s crops, which are sold at the school’s farm stand that students manage. Lettuce raised by students was sold to Cooper’s Hawk Restaurant. Students in the Horticulture Pathway mount exhibits for the annual Chicago Garden Show at Navy Pier in March. Half of the honey produced at the school is sold at the farm stand and the other half is sold to Eli’s.

    Caitlyn McFadden, who is studying in the Ag Education Pathway, kept us informed along with her partner guide, Shane LaFaire, who is in the Horticulture Pathway. Caitlyn is considering attending the University of Tennessee, where she completed an internship this summer, and Shane is looking at either the University of Iowa or Iowa State University. “I picked CHSAS because it is a good school, but I ended up falling in love with ag,” said Caitlyn.

    In addition to learning about and caring for animals, students have the opportunity to learn about honey production, hydroponic farming and the raising of fish (tilapia) that are sold to DiCola’s, a local seafood shop. Caitlyn noted that a STEM (Science, Technology, Engineering, and Mathematics) program is being added this year. Baseball, football, soccer, and water polo (the school has a pool) are offered.

    The day culminated with lunch that featured student baked zucchini bread and hamburgers and Italian sausage that were made with the meat from the cows and pigs raised at CHSAS.

    “This is an inspirational place,” said Barbara Clark, TCF president, as the day was wrapping up. “CHSAS is a good news story about Chicago’s public schools. It was a great opportunity to be here today.”