Illinois Grain and Feed Association


FarmDoc Daily July 20, 2017

Interest Rates and the Cost of Short-Term Borrowing

July 20, 2017

Todd Kuethe and Todd Hubbs

In June, the Federal Reserve’s Open Market Committee (FOMC) raised the interest rate on overnight deposits (the discount rate) 25 basis points to 1.75%, mirroring similar rate increases in March 2017 and December 2016. The long-run expectations of FOMC members suggest that future rate hikes are expected. As interest rates move higher, farmers may see rising interest expenses on their operations. This article examines the relationship between the discount rate and the interest on farm operating loans.

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FarmDoc Daily Update

Daily Update

June 15, 2017

The Role of Weather in the Pattern of Corn Prices over Time

June 14, 2017

Scott Irwin, Darrel Good, and Todd Hubbs

In the farmdoc daily article of June 7, 2017, we examined the long-term pattern of corn prices during the era spanning from 1973 through November 2006 and the new era that began in December 2006. We concluded that: (1) there is a long-run average nominal price of corn for different eras that tends to emerge fairly early in each era; (2) corn prices revert to the average within each era; and (3) the deviations and reversions to the average price do not occur in a predictable cycle in terms of either magnitude of deviations or duration of the deviations. In other words, we argue that long-run crop prices have a stable average within a defined era and adjust to supply and demand shocks in a classic cobweb fashion. However, the price adjustments do not follow the repetitive cyclical pattern of the classical cobweb model, but rather are highly volatile and difficult to forecast due to the substantial variation in supply and demand shocks over time and the exact market reaction to those shocks.

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New ADM Flour Mill for Illinois



CHICAGO, ILLINOIS, U.S. —Archer Daniels Midland Co. (ADM) announced it is constructing a new flour mill in Mendota, Illinois, U.S. The high-capacity, modern facility will allow the company to continue to meet growing demand for flour throughout the Midwest.

Mark L. Kolkhorst president of ADM Milling
Mark L. Kolkhorst, president of ADM Milling.

“ADM’s new facility in Mendota will help us provide additional capabilities to meet ongoing demand growth in the Midwest, where we are seeing bakers expand their production capabilities,” said Mark L. Kolkhorst, president of ADM Milling. “In addition, our new mill will enable us to drive efficiencies, thanks to the use of new technologies and equipment, and the ability to leverage capabilities of ADM’s existing grain facility in Mendota — such as unloading 110-car shuttle trains. We are pleased to expand our presence in Mendota and continue investing in Illinois.”

During the last two years, ADM has announced projects totaling more than $250 million in the state of Illinois, including the Mendota flour mill, new Animal Nutrition production facilities in Effingham and Quincy, and the company’s partnership with DuPont Industrial Biosciences to produce furan dicarboxylic methyl ester (FDME) from fructose.

The new facility will have a daily milling capacity of 30,000 cwts, and the ability to grind soft and hard wheat varieties. It is targeted to begin operations in mid-2019. When it is fully operational, ADM intends to end production at its current wheat mill in Chicago, Illinois.

According to the 2017 Grain & Milling Annual, ADM Milling’s Chicago, Illinois, mill has a capacity of 13,700 cwts. The company’s total U.S. wheat flour capacity is 286,900 cwts and it currently has 23 mills in the United States.

“We are continuing to create shareholder value by expanding strategically and driving operational efficiencies,” Kolkhorst said. “We are excited about this important investment, and committed to meeting our goals to deliver value for customers and shareholders alike.”

ADM Milling is one of the world’s largest flour millers, with multiple wheat flour mills in the United States as well as in Canada, the Caribbean, Central America and the United Kingdom.

The announcement is the latest in a series of expansions for ADM in the past few months.  In May, the company finished a series of expansions at its export terminal in Santos, in the Brazilian state of São Paulo.  The project added a second ship loading line and a fourth truck unloading station, allowing for more efficient operations.

Also in May, the company reached an agreement to purchase a controlling interest in Industries Centers, an Israeli company specializing in the import and distribution of agricultural feed products. The transaction is subject to regulatory approval in Israel. ADM anticipates completing the deal in the coming months.

In late March, the company began talks to acquire Chamtor, a French producer of wheat-based sweeteners and starches. The transaction is expected to close by this summer.

The company also has been focusing on its pet food and animal nutrition services in the past few months. In mid-January, ADM signed an agreement to acquire Crosswind Industries, Inc., a Kansas, U.S.-based producer of dry-expanded, dual-texture, semi-dry and semi-moist treat products for pets.

Farm Policy News June 1, 2017


June 1, 2017

Latest News Summary

Federal Reserve: Observations on the Ag Economy- May ’17

June 01, 2017

On Wednesday, the Federal Reserve Board released its May 2017 Beige Book update, a summary of commentary on current economic conditions by Federal Reserve District. The report included several observations pertaining to the U.S. agricultural economy.

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NGFA, NAEGA Commend Ag Secretary Purdue for Trade Undersecretary Announcement


Media Contact Sarah Gonazalez, NGFA Director of Communications

202-289-0873, ext. 111

WASHINGTON, May 11, 2017 — The National Grain and Feed Association (NGFA) and North American Export Grain Association (NAEGA) today commended Secretary of Agriculture Sonny Perdue for his “decisive and prompt” action in announcing a reorganization of the U.S. Department of Agriculture that includes the creation of a long-sought undersecretary for trade and foreign agricultural affairs position.

“It is highly significant that one of Secretary Perdue’s first actions reflects his recognition of, and strong support for, the essential role that agricultural trade plays in the economic well-being of U.S. farmers, ranchers, agribusinesses, rural communities and the nation as a whole,” said NGFA President Randy Gordon and NAEGA President and Chief Executive Officer Gary Martin. “Reorganizing its structure and mission areas along these more functional lines, combined with the appointment of strong and capable officials to fill these positions, will help ensure the ongoing success of USDA programs that support trade and that USDA plays an influential role in helping inform and develop the Trump administration’s overall trade strategies.”

The NGFA and NAEGA noted that the U.S. food and agricultural sector is the world’s largest and most efficient, providing food security to domestic and world consumers.

The economic benefits of agricultural trade have been enjoyed by U.S. farmers, ranchers, dairy operators, feed mills, grain elevators, feed ingredient suppliers, grain and food processors, and many other agricultural businesses,” Gordon and Martin said.  “But those benefits also have accrued to the broader U.S. economy, particularly in terms of job creation and economic growth.”

The NGFA and NAEGA cited data from the U.S. Department of Commerce, as well as analyses conducted by the U.S. Department of Agriculture, that has found that the food and agriculture sector supports more than 15 million U.S. jobs, creates more than $423 billion in annual U.S. economic activity, and represents the single largest U.S. manufacturing sector – constituting 12 percent of all U.S. manufacturing jobs. Every dollar in U.S. agricultural exports generates an additional $1.27 in U.S. economic activity.

“We look forward to working closely with Secretary Perdue and the new undersecretary for trade and foreign agricultural affairs and their team, as well as the White House, to build an even more robust and prosperous future for U.S. agricultural trade,” Gordon and Martin said.


The NGFA, established in 1896, consists of more than 1,050 grain, feed, processing, exporting and other grain-related companies that operate more than 7,000 facilities and handle more than 70 percent of all U.S. grains and oilseeds. Its membership includes grain elevators; feed and feed ingredient manufacturers; biofuels companies; grain and oilseed processors and millers; exporters; livestock and poultry integrators; and associated firms that provide goods and services to the nation’s grain, feed and processing industry. The NGFA also consists of 29 affiliated State and Regional Grain and Feed Associations, and has strategic alliances with Pet Food Institute and North American Export Grain Association.

NAEGA, established in 1912, consists of private and publicly owned companies and farmer-owned cooperatives that are involved in and provide services to the bulk grain and oilseed exporting industry.  NAEGA-member companies ship and support the vast majority of the highly competitive and fungible U.S. grain export supply.  NAEGA is dedicated to providing for efficient, predictable, reliable and expanded trade via responsible commercial and official practices.  Through a reliance on member action and support, NAEGA acts to accomplish its mission from its office in Washington D.C., and in markets throughout the world.

Farm Policy News May 4, 2017

Prices Concern Farmers and Ag Lenders; Sec. Perdue Comments on NAFTA; Spring Weather Causes Havoc

Today’s update looks briefly at the U.S. agricultural economy from a variety of perspectives. A recent news report has shown that some Corn Belt producers may be losing money from farming this year, while a survey of agricultural lenders this month demonstrates that many are concerned about commodity prices, liquidity and farm income. Secretary of Agriculture Sonny Perdue has stated that U.S. farmers won’t be worse off if NAFTA is renegotiated, and adverse weather conditions continue to adversely impact farmers and ranchers in the Nation’s midsection.

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Farm Policy News April 30, 2017

Secretary Perdue Intervenes on NAFTA- Trade Issues Persist
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Secretary Perdue Intervenes on NAFTA- Trade Issues Persist

During last week’s tumultuous developments on trade, news reports indicated that Secretary of Agriculture Sonny Perdue was providing President Trump with data driven advice with respect to NAFTA and agriculture, and urged him not to trigger a U.S. withdrawal from the trade accord. Nonetheless, recent remarks from a Senator from Mexico regarding corn imports, and potential NAFTA renegotiation issues means trade policy will likely remain an ongoing concern for Illinois producers and farmers throughout the U.S.

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Ag Economy Barometer: Producer sentiment slips in March

WEST LAFAYETTE, Ind. and CHICAGO, April 4, 2017 /PRNewswire/ — Producer sentiment toward the agricultural economy dropped to 124 in March marking the second consecutive month of decline, according to the Purdue University/CME Group Ag Economy Barometer.

The decrease is a 10-point drop from February’s reading of 134. The barometer is based on a monthly survey of 400 agricultural producers from across the United States.

“The barometer has been moderating in recent months after a large jump in sentiment that began in November 2016,” said Jim Mintert, director of Purdue’s Center for Commercial Agriculture and principal investigator for the barometer. “While sentiment has settled lower, it’s important to note that it is still higher than during all but the last two months of 2016.”

The March 2016 reading was 85.

The barometer’s sub indices — the Index of Current Conditions and the Index of Future Expectations — offer insights into why producer sentiment settled at 124. The Index of Future Expectations, which measures producer sentiment 12 months out and beyond, fell to 126 in March, down from the February reading of 148. The Index of Current Conditions, however, increased from 105 in February to 120 in March.

“At 120 in March, the Index of Current Conditions exceeded recent highs and is at a level that we haven’t seen since late 2015,” Mintert said. “Producers’ reduced optimism about future economic conditions in agriculture are what drove this month’s barometer lower.”

Producers’ optimism toward the overall U.S. economy continued to be strong in the March report, a trend that started in November 2016. In October, just 35 percent of respondents said they expected widespread good times in the U.S. economy over the next five years. By December, this number had jumped to 71 percent. It improved again in the March survey, increasing to 77 percent.

“These results are consistent with producer responses to other questions about the U.S. economy,” said David Widmar, senior research associate for the Center for Commercial Agriculture and leader of the barometer’s research activities. “Two examples are that 59 percent of producers said that they expect the U.S. economy to expand and 78 percent expect the U.S. stock market to be higher or about the same over the next 12 months.”

Read the full March Ag Economy Barometer report at This month’s report includes information about farm finances and livestock commodity price expectations. The website offers additional resources, such as past reports, charts and survey methodology, and a form to sign up for free monthly barometer email updates and quarterly webinars.

The Ag Economy Barometer, Index of Current Conditions and Index of Future Expectations are available on the Bloomberg Terminal under the following ticker symbols: AGECBARO, AGECCURC and AGECFTEX.

About the Purdue University Center for Commercial Agriculture
The Center for Commercial Agriculture was founded in 2011 to provide professional development and educational programs for farmers. Housed within Purdue University’s Department of Agricultural Economics, the center’s faculty and staff develop and execute research and educational programs that address the different needs of managing in today’s business environment.

About CME Group
As the world’s leading and most diverse derivatives marketplace, CME Group ( is where the world comes to manage risk. Through its exchanges, CME Group offers the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. CME Group provides electronic trading globally on its CME Globex platform. The company also offers clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives through its clearinghouses CME Clearing and CME Clearing Europe. CME Group’s products and services ensure that businesses around the world can effectively manage risk and achieve growth.

CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex and E-mini are trademarks of Chicago Mercantile Exchange Inc. CBOT, Chicago Board of Trade, KCBT and Kansas City Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. Dow Jones, Dow Jones Industrial Average, S&P 500 and S&P are service and/or trademarks of Dow Jones Trademark Holdings LLC, Standard & Poor’s Financial Services LLC and S&P/Dow Jones Indices LLC, as the case may be, and have been licensed for use by Chicago Mercantile Exchange Inc. All other trademarks are the property of their respective owners.


Related website:
Purdue University Center for Commercial Agriculture:
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