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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