1. We keep getting rain around here. About a half an inch last night. We are pushing 7 inches this week in Champaign County. I went out to what I call the Field of Dreams to walk our dog this morning and it is still hard to believe how good the corn and beans look. But, call me paranoid, this got me thinking about whether we were starting to get too much rain this month? 2. So, you know me, I ran back to my computer and starting digging out the data to check out the relationship between July precip and corn yields. I was relieved to see that, no, we are not in the territory of too much July precip.

1. Man, I really hate to do this tonight after a day like this in the grain market. But we gotta start talking about the potential scale of financial losses for producing corn and soybeans in 2024. This is an updated budget from this FDD: farmdocdaily.illinois.edu/2024/06/revise…
2. I am going to use the following yield/price combinations just to get the convo started. Corn: 240 bu./$3.70. Soybeans: 75 bu./$10.30. I use higher yield expectations based on the expectation that Beryl rains will go a long ways to improving prospects. Mr. Market sure thinks so. Without taking into account LDP and crop insurance proceeds, this results in estimated farmer returns of -$244/acre for corn and -$98/acre for soybeans. For farms with 50/50 rotations that results in average farmer returns for all acres of -$171 per acre.

1. I guess today is the day to talk about corn yields. Just received an email from @aaea announcing a new Choices article "A Slowdown in US Crop Yield Growth" by David Boussios. Here is the link: choicesmagazine.org/choices-magazi… 2. The author of the Choices article argues: "The statistical evidence of a productivity slowdown in crop yield growth builds each year. The linear yield growth trends since 2013 for corn, soybeans, and wheat are all statistically lower than one starting in 1988. Models, forecasts, market participants, and policy makers should consider that yields in the future will probably be lower than forecasted by the USDA and that extrapolating trends into the future without revision is problematic."

1. Recommended Reading for the Day: Fascinating new FDD from my colleagues on the farmdoc team, led by Carl Zulauf. Long-term look at real crop prices. farmdocdaily.illinois.edu/2023/10/the-po… 2. It has long been a staple of economic thinking that real (inflation adjusted) commodity prices have a strong tendency to decline over time. Probably the most famous example of in this regard is the bet about real commodity prices between Julian Simon and Paul Ehrlich in 1980. See the details here:

1. Excited to announce that the band is back together! Actually, talked Darrel Good into coming out of retirement to work on this FDD: "The New Era of Crop Prices: A 15-Year Review." farmdocdaily.illinois.edu/2023/09/the-ne… 2. When crop prices started to take off in 2006-07, a huge question was whether this was just another spike like we had seen so many other times, or was this the beginning of a permanent jump in the level of average prices, like in 1973.

1. Ok, I have hopefully convinced you that the RIN cliff scenario is a logical possibility. Now what are the chances of it actually happening? The first step is to estimate QM in the graph below. Turns out the proposed RVOs released by EPA last December are the place to start. 2. We can use the proposed RVOs to come up with a defensible estimate of the maximum demand for biomass-based diesel (BBD) for 2023, 2024, and 2025. We can do this because we know mandates are and will be binding.

1. Ok, had to take a brief pause for the cause (a meeting). Anyway, diving into the heart of the RIN cliff idea in this thread based on our latest FDD. farmdocdaily.illinois.edu/2023/05/is-the… 2. Here is how RIN pricing works when BBD production is equal to the mandated quantity. In this case, looking at an example of D4 biodiesel RIN pricing on May 4, 2023. Predicted D4 RIN price is $1.61 and actual on this date is $1.58. Pretty close. Everything A OK.

1. Our latest FDD on the renewable diesel boom is titled "Is the U.S. Renewable Fuel Standard in Danger of Going Over a RIN Cliff?" That should get your attention this morning. It is going to take me several twitter threads to go through the highlights.

farmdocdaily.illinois.edu/2023/05/is-the… 2. In this thread, I am going to go through the first part of our analysis. Start with the very basics of binding and non-binding RFS mandates. In a standard supply/demand framework, here is a binding mandate.

1. Put out a new blog post yesterday on corn trend yield for the US. Always a topic of interest this time of year. My post was inspired by one that Bob Nielsen of Purdue did a couple of weeks ago. Here is the link to my post scotthirwin.com/2023/02/21/cor… 2. The chart is copied directly from Bob Nielsen's post, which can be found here agry.purdue.edu/ext/corn/news/… What an important chart for so many reasons!

1. Recommended Reading for the Day: "Obesity Since the 1980s" by @JaysonLusk. This is one of the most thought-provoking things I have read in some time, and on a topic of almost universal interest. jaysonlusk.com/blog/2023/2/3/… @JaysonLusk 2. Jayson's insight is captured in the text shown below. There are no easy answers to obesity because they are due to the sum total of huge lifestyle, cultural, and economic changes that have been going on for over a century.

1. With the markets closed, I want to highlight a very interesting FDD article published a couple weeks ago by the newest member of the FD team, Mark White. We are very excited about the background he brings in rural economic development to farmdoc. farmdocdaily.illinois.edu/2023/02/agricu… 2. In this article, Mark looks at the available data on the GDP contribution of production agriculture. Some may be surprised by the data, which actually has not change that much in recent years.

1. Soapbox alert. Going to step up here. A little background. There is a growing chorus of ag economists (all of whom I respect greatly) who argue that US ag has experienced a productivity slowdown in the last couple of decades or so. Some attribute it to climate change. 2. But then I look at trends in output efficiency like pigs per litter and crop yield per acre and they just keep going up and up and up.

1. Here is something really remarkable in US ag that almost no one talks about. Well, except on FDD, of course. Incredibly interesting FDD article from Michael Langemeier of Purdue on pigs per litter trend in US farmdocdaily.illinois.edu/2023/02/long-t… 2. Here is the data on pigs per litter in the US going back 30 years. In simplest terms, each sow (female pig) in the US now produces 11 pigs per litter and produced only about 8 per litter 30 years ago. +38%!!

1. Seems like everyone is complaining about egg prices on my FB page. Why now and not a few months ago? I have no idea. But if you are interested in a great post on what is driving egg prices see this from @JaysonLusk jaysonlusk.com/blog/2023/1/27…

https://twitter.com/FarmPolicy/status/1623668844748324865

@JaysonLusk 2. Jayson has the lowdown on egg prices in this chart. Yes, egg prices have gone up a lot lately.

1. A big topics of discussion in ag today is the renewable diesel boom. I have been working on a project for much of the past year to dig into the economic drivers of the boom for the USDA. Very excited to announce the first fruits of the project! farmdocdaily.illinois.edu/2023/02/biodie… 2. We are writing a series of FDD articles related to the renewable diesel boom. The first one released today looks at the technical production processes for FAME biodiesel and renewable diesel. You would be surprised how difficult it was to dig this out, especially for RD.

1. Recommended Reading for the Day: Robots for Week Control. Another outstanding read from @ASmithUCD. Post is interesting from several perspectives. Here is a pic of the robot weeders Aaron is studying. Obviously a big deal in vegetable production. agdatanews.substack.com/p/robots-for-w… @ASmithUCD 2. Besides a glimpse at very cool new ag tech, I found the discussion of the economic impact of new tech to be the most interesting. Really like this "layered" way of thinking about the economic impact of new tech.

1. Recommended Reading for the Day: Terrific post on the impact of automation in ag by @ASmithUCD. Such a basic point of economics but so widely misunderstood. Machines will never cause mass unemployment for the population as a whole.

https://twitter.com/ASmithUCD/status/1621666387361140736

@ASmithUCD 2. We have nothing to fear in general from machines and automation based on a long history. There will always be new jobs created (that we could not imagine) to replace the old lost ones due to automation. Market economies are job machines in the long run.

1. Recommended Reading for the Day: This really is a "wow" article. In 10 minutes or reading you can learn alot here about organic vs. conventional farming returns. Thanks Mike Langemeier! #boilerup

https://twitter.com/FarmPolicy/status/1556599199235457024

2. An awfully lot of opinion out there about organic vs. conventional crop returns. Mike has assembled invaluable comparisons from the same FINBIN database. Here are five-year average yields. Hits to organic yields are obvious and big for corn and soybeans.

1. State of play on precip in the Corn Belt. Start with 7 day total precip map. Definitely some very nice rain in northern growing areas and some in the east. 2. Here is the 30 day % of normal. Shows the accumulating dryness in the western Corn Belt. Southern half of IA is a major area of concern. Most of the IA has really dried out the last few weeks.

1. Recommended Reading for the Day: 2023 Crop Budgets: Higher Costs and Lower Returns. Some truly eye popping numbers in these first corn and soybean budget projections for 2023 farmdocdaily.illinois.edu/2022/08/2023-c… 2. When I see this chart on costs of producing corn I think "up, up, and away..." Non-land costs have increased dramatically since 2020, from $577 to a projected $860 in 2023, an increase of $283 per acre, or a 49% increase. Think about that. Non-land costs pushing $900.

1. Weekend Reading: I am very excited to discuss my latest article published in AEPP with Dwight Sanders and Lei Yan, "The Order Flow Cost of Index Rolling in Commodity Futures Markets." Seems like a niche topic but ends up having some profound results. onlinelibrary.wiley.com/doi/10.1002/ae… 2. This research is a part of the "financialization" literature that studies the impact of large-scale investment in commodity futures markets by financial index investors. You know, the famous GSCI. Some measures of $ investment below and stages of financialization.