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When working on her masters in agricultural economics, Jacqueline Holland focused her research on large farm decision-making and precision crop technology. She brings that strong knowledge of large agribusiness management to her daily reporting as a grain market analyst with Farm Futures. Tune in to hear Holland’s thoughts on the market, technology, and industry stories she’s keeping an eye on headed into the 2022 growing season. Note: this episode of GrainWaves was recorded in October of 2021.
Rodney Connor: All right, welcome to GrainWaves. Jacqueline Holland, joining us on the show today. Jacqueline's a grain market analyst with Farm Futures. Jacqueline, thanks for coming on today.
Jacqueline Holland: Thank you for having me, Rodney.
Rodney Connor: Hey, I'm really excited to learn about what you do. I've been following Informa, which I understand is related to Farm Futures for sure, for a really long time. So interested in how your role is with that. But also, interested to find out you're a Northern Illinois girl, right?
Jacqueline Holland: I'm from Apple River, Illinois. It's close to Galena, Illinois right on the Wisconsin and Illinois State Line. I grew up on a 300 cow dairy farm in that part of the world and spent my whole childhood helping my parents grow the farm, doing chores, everything from feeding calves to milking cows to doing field work in the summer. I got to do all of it, so grew up with both feet in the industry and have been passionate about it all my life.
Rodney Connor: Yeah, good. Dairy farm, that's more work than farms I'm from. That's every day you've got something to do there?
Jacqueline Holland: Yes. Three and three. In the morning at 3:00 AM to start morning milking and then do it all again at 3:00 PM the following afternoon.
Rodney Connor: Oh man, not for me.
Jacqueline Holland: I started out as a finance major at Illinois State, but realized once I got off the farm that I really liked learning how numbers worked on the farm side. So tacked on an ag business double major while I was there. Did a little bit of work in ag banking when I got out of undergrad. And then eventually went to Purdue to get my master's in ag economics.
Jacqueline Holland: But my thesis dived into buying behaviors of large commercial farmers because they make up a significant amount of the ag economy and how they make decisions is really important for retailers to understand so that they can better market to those producers. I did several areas of research, I looked at precision technology, but my bread and butter was looking at success strategies for large farms. And my big finding in my research there was that the most successful farmers primarily focus on either controlling costs or managing production.
Jacqueline Holland: That's really important when ag retailers approach these farmers and when they're proposing their sales pitch, it just helps them know how to frame that. If you have a farmer who is focused on yields, then you're going to want to cater to that. But if they're more focused on their cost margins, then that's how you need to approach that conversation.
Rodney Connor: Yeah. Gotcha. So kind of a marketing spin on the input side then? How to talk to these guys was the goal?
Jacqueline Holland: Exactly. And just trying to assign some real quantitative values to how those qualities and those traits can actually be measured in the farm economy.
Rodney Connor: Yeah, nice. Is there something specific about the large farmer that's different than, say, the medium farmer? What is it that separates them?
Jacqueline Holland: Their management acumen, I would say, and obviously the scale. There's obviously higher costs involved, more people. Because it's so much more management intensive, there's definitely a need for more support for those growers.
Rodney Connor: Yeah, I agree. I've always been a grain guy, so I've never crossed over to the input side of thing. I'm lucky, I get to write checks, I never have to collect checks, which is kind of my style. But I have seen, as I worked at Co-ops and stuff like that, approaching these farmers, it seemed like it would shift. Sometimes it was about maximizing yield and really digging hard into every dollar you spend is going to earn you back in gross revenue kind of situation. And then other times I see, it's all about cost reduction, that kind of thing. Is it a producer mindset or do you think it changes year in and year out, depending on the economics, how they think about that?
Jacqueline Holland: That's a good question. I think the easy and obvious answer is definitely both because as we've seen definitely in the last year and a half, so many of these economic forces do have huge impacts at the farm gate. So I think there's definitely that. But another part of my research looked at loyalty, and the key takeaway there was, how you interact with your customers, as well as their management structures, really matters. So you have to be willing to change, not only to the current environment, but to whatever managerial practices that they already have in place on their farms.
Rodney Connor: Yeah. Well, good. So that was one stint, right? Straight through to your master's? All school?
Jacqueline Holland: No, I worked as an ag banker at a local bank close to my hometown for a little bit in between my undergrad and my master's.
Rodney Connor: Nice. Close to your hometown, so did you know those farmers then personally that you were dealing with walking in?
Jacqueline Holland: Yes.
Rodney Connor: How's that dynamic?
Jacqueline Holland: I loved it. When you're young, it's so easy to leverage that youth in some of those relationships and say, "Hey, I kind of know this, but teach me more about your operation and teach me more about this industry." And the farmers were great. They were happy and so eager to show me the ins and outs of their farms and then also give me some broader market knowledge so I could help them prepare for what was coming. Granted, that was in 2007 and 2008 so there were only good things coming for farmers back then. Made my job pretty easy.
Rodney Connor: Sure. Yeah. Good. So where have you spent your time since your master's? Have you gotten to use that?
Jacqueline Holland: Yes, absolutely. I went out to Colorado State after I graduated from Purdue. I worked on my PhD for a year out there, but then ultimately went to work for JBS, doing supply chain analysis for their poultry division, Pilgrim's Pride. And then I also worked at a mozzarella manufacturing company also out in Colorado. So have spent a lot of my professional life working in corporate finance for food production companies.
Rodney Connor: Yeah. What's your favorite part of that? What do you find so interesting about it?
Jacqueline Holland: I loved working on the buyer side. Up until that point, I had worked primarily with farmers and really focused on the farm gate. The four or five years leading up to me taking this position that I worked in food production, I got to see that other side. I got to see how the raw commodities get transformed into food products and just really see on a much more microscopic level, the buyer/seller dynamics, both between the processors and the farmers, but also the processors and the retailers.
Rodney Connor: Yeah, that's great. Any takeaways from those relationships? I know they can be all over the place probably.
Jacqueline Holland: Consumer demand has so many farther impacts up the food chain and working at the food production companies you could see that a little quicker than you could see at the farm level. So I appreciated learning how that worked and getting a better understanding of the timeliness for it. And with the role I'm in now, it helps me to better communicate to farmers what some of these demand shifts mean and when and how they'll affect farmers.
Rodney Connor: Yeah, perfect. Let's hear about that role you're in right now. So at Farm Futures, right?
Jacqueline Holland: Yes.
Rodney Connor: Yep. So what's that role like?
Jacqueline Holland: So I'm the grain market analyst at the Farm Futures team. Our parent company is Informa, but Farm Futures is also part of the broader Farm Progress company. So we just wrapped up Farm Progress Show down in Illinois at the beginning of September, and then Husker Harvest Days in Nebraska a couple weeks ago. But we also have all of our state publications, our Prairie Farmer, Wallaces Farmer, Indiana Farmer. And my role within the company, I do grain market analysis, I write a morning report every morning, I cover key USDA reports as they come out. And then I also do a podcast over on our site with one of my coworkers. And then I also have a running column called E-corn-omics where I provide running market commentary.
Rodney Connor: Nice. I haven't caught E-corn-omics yet, I'll have to check that out. That's a ton of stuff you're doing by the way, that dairy work ethic has clearly stuck with you here into your career, no doubt about it.
Jacqueline Holland: Yes.
Rodney Connor: But you're more of an analyst, right?
Jacqueline Holland: Right.
Rodney Connor: So you are taking information that you're finding, tell me a little bit about how you hunt that information down, where you access it, that kind of stuff.
Jacqueline Holland: So I'm very fortunate... I think we're all very fortunate that USDA provides so much readily accessible data to everybody who's interested in ag markets. So a lot of my data I get directly from USDA, but I also spend a lot of time looking at Futures prices on the Chicago Board of Trade, as well as the exchanges in Kansas City, Minneapolis, ICE. So making sure that I'm aware of what's going on with market prices and can speak to why they're doing what they're doing.
Rodney Connor: Yeah. Great. Yeah, I should have asked, what commodities are your specialty or do you cover all of them over there?
Jacqueline Holland: I cover corn, soybeans and wheat specifically, but as I'm able to derive good insights about some of the sauce in livestock and dairy, I'll add those commentaries as well.
Rodney Connor: Yeah, nice. So what are you tracking this year? I say this every year, I've been doing this for 16 years now, this year is the craziest year I've ever been a part of and I know I said that last year and the year before. So what is the hot topic this year?
Jacqueline Holland: It's really funny you say that, so I started this role literally a year and a half ago, and a friend who's a fellow analyst told me, "Man, you really couldn't have picked... It's such a crazy time right now." And he's like, "It's too bad you couldn't have learned when it was normal." And I was like, "Oh, maybe in 2021. Just kidding."
Rodney Connor: Yeah, I'm sure that'll be good. Well, two things I'll teach you, there is no normal, no such thing as normal in the grain business for sure. And then also, volatile markets, I think people that come online during volatile markets learn faster and more efficiently. I have seen people that came on during those easy years and things are too easy, it's too predictable what's going to happen and then you get side swiped by something like we saw here with the rally in Futures, you're not ready for it.
Jacqueline Holland: Yeah, the last year and a half, there have been too many questions to not ask.
Rodney Connor: Yeah, exactly.
Jacqueline Holland: There's just been so much to take in. But the big thing that is definitely top of mind for me right now, is input prices. With the pandemic, there are so many more issues with our supply chains right now, and we're really starting to hear some concerns that fertilizer companies aren't going to be able to keep up with global acreage expansions. And all of the logistic problems that we've seen over the last year, are going to snowball and could potentially result in shortages for producers next spring. So to that end, we're hearing a lot more farmers talk about, "Well, what are our rotations for '22 going to look like?" Just looking at Illinois prices right now, a year ago tomorrow the cost of a ton of ammonia, anhydrous ammonia, was $435 a ton. As of two weeks ago, it costed $788 a ton. That's an 81% increase.
Jacqueline Holland: Global trade disputes, specifically with phosphate and UAN imports, issuing tariffs against countries like Russia and Morocco on phosphate and Russia and Trinidad and Tobago for UAN. The markets haven't quite yet recalibrated themselves, so whereas we used to get super cheap phosphate imports from Russia and Morocco, we haven't found a cheap and readily available source to buy those phosphate supplies from quite yet. So as a result, we've seen map prices in Illinois go up 84% in the last year. Looking at phosphate in Illinois, those prices have doubled and the most significant price increases for phosphate products has definitely come in the last three months. In that time, the US levied economic sanctions on Belarus, I believe because of how the government was handling political dissenters. So these geopolitical impacts have just had such a huge, huge negative effect on profit margins at the farm level.
Rodney Connor: So 81 to a hundred percent on just about everything that goes into raising a crop and we didn't go over maybe chemicals. But what's that do to a break even price for a farmer in Illinois or the United States.
Jacqueline Holland: So for growers in Illinois, I am calculating that 2022 break even prices for corn are probably going to be around the 420 to 430 per bushel price range. And for soybeans, I'm expecting that break even number to range between 1010 per bushel and about 1025 per bushel.
Rodney Connor: Okay. Yeah, scary. That's scary. Looking out the next year, do you have a sneak peek into what you think acreage might be? Are you looking at that this early?
Jacqueline Holland: Absolutely. So our team runs three surveys every year, one ahead of January's USDA reports, one in August to predict yield and then another one in March to predict acreage. The survey we just ran in August, we asked growers what they anticipate on planning in 2022. I am very excited to share those results with you today.
Rodney Connor: Nice.
Jacqueline Holland: Our growers indicated that they would be planting 94.3 million acres of corn, 90.8 million acres of soybeans, 35.4 million acres of winter wheat, 14.3 million acres of spring wheat, which is both red hard spring and durum wheat. So total wheat acreage is expected to shake out to 49.7 million acres, and that results in a total acreage for all three crops of 234.8 million acres, which sounds high. If it sounds high it's because it is, it would be the third highest acreage for all three crops on record. The only two years that would beat it are going to be '82 and '83. If growers hear that and think that it sounds scary, it kind of does because those years are really what triggered the high supplies that led to so much economic distress in the eighties.
Rodney Connor: Yeah. Geez, I had no idea that was the case. How high is that compared to last year for total crop area?
Jacqueline Holland: For total crop area, that's a 3% increase from last years.
Rodney Connor: Where's that ground come from? This is like CRP rolling out or what?
Jacqueline Holland: That's a great question. For starters, I do want to say we did this study back in the end of July, so prices were still very high. There was a lot of market optimism and we hadn't quite seen the input market take off as much as it has this fall. But I think that it's probably more realistic based on how current supply and demand estimates are laid out by USDA right now, that farmers will probably only plant 91 million acres of corn just to maintain those profitable price levels.
Jacqueline Holland: But in the event that they are more bullish on corn, I think that those acres are going to either come from the plains, where we've seen a massive amount of US cattle hard be sold off this summer, because of the drought and terrible pasture conditions and high feed prices. So I think there's a good chance that next year we might see some of those forage crops shift into row crops instead. I've been playing around with crop budgets and I've got to tell you, those double crop soybean and wheat rotations in some of the more marginal areas of the country, I'd say outside of the key I states, but those rotations are very profitable right now. Especially with input prices going up, it could be a very lucrative way to farmers to procure a good profit, given the current input constraints.
Rodney Connor: I understand you've done some estimates on calculating risk tolerance for farmers, you want to talk a little bit about that?
Jacqueline Holland: Absolutely. So I run a few models of my own using a lot of data from USDA and just projecting at how different changes in these yields could impact farmers. It's back in the napkin math.
Rodney Connor: Sure.
Jacqueline Holland: Michael Lewis just came out with a really good book called The Premonition. It's about the early days of the pandemic when nobody really knew how the virus worked, nobody really knew how to make estimates to create policies. And it really reminded me of the farmers I talk to, because so many of them right now, they're in the fields, they're trying to make 22 plans, but they don't have all of the information they need, but they need to be making marketing decisions. They're very similar scenarios. So there was an oddball group of figures in Michael Lewis' book that were involved in private industry, the government, healthcare. And they put their heads together, did some back of the napkin math based on how they knew viruses worked and what they thought it was going to do.
Jacqueline Holland: And ultimately, a lot of these projections turned out to be very reliable. And they affectionately coined this term, "redneck math", so being from a dairy farm in Northwestern, Illinois, and being the numbers nerd that I am, I was like, "I do redneck math all the time for my farm. This is perfect." So the redneck math that I come up with shows me that at USDA's current levels of supply and demand, if they change corn yields... If they go up or down by four bushels per acre in this October report, it's a very wide range, but the math that I get finds that a four bushel per acre change will change farm price received by 34 cents a bushel at the October report.
Rodney Connor: This is corn?
Jacqueline Holland: That's for corn. For soybeans, if USDA makes a change of 1.5 bushels per acre, that's going to be a 33 cent up or down range. So it's not perfect, but it gives farmers an idea of what their risk tolerance can be. So they can be looking at some of the basis prices that they're seeing at ethanol plants right now and saying, "You know what? I know that even if the market finds more bushels, if I make sales now, I know that I'm still going to be profitable. And if I have more sales to make down the road, I know what my risk tolerance is. So I can sleep at night knowing that I've made sales that are good for my farm."
Rodney Connor: Yeah, that's a good approach. And I'd imagine, this is why you do what you do, Jacqueline, right? I'm looking over the things that you produce every day, you're helping farmers make marketing decisions, right? Well, grain marketing, probably purchasing decisions as well. So even more than I'm used to. What are some nudges you're using to get them to do that? Do you see that your work is working with these guys? What makes you cheer at the end of the day, knowing you did well for these guys?
Jacqueline Holland: Well, it was so great being back at in-person farm shows after so long, because I was able to talk to farmers and I did have some come up and say, "Hey, your reports really help with my marketing plan." And the other outlet, I've been active on Twitter, trying to tweet out fun market facts as I unearth them. And I get a lot of good feedback there too.
Rodney Connor: Yeah. Good. We're getting close on time here, so I wanted to talk to you a little bit about more on decision making, I know that's a good key part of your work. So I want to talk about some technology that can... Your thoughts, not my thoughts, on technology that can help producers make better decisions, right? So I'm going to start at the farm level. What are you excited, at the farm level, about helping producers make better decisions? I'm talking drones, data management, inventory management, tools like that. What's got you excited there?
Jacqueline Holland: Having worked on the food production side and there was such a focus on cost management, looking at some of the software in managerial accounting tools that farmers are using to put dollar values on productivity, I think that's phenomenal. It was working on the food side and being able to measure the impacts of, what's an extra hour of work cost? Or weigh that against revenue benefits. It really challenges managerial skills. And I think at the end of the day, it makes farmers better managers, which is going to make them more sustainable figures to come, which obviously we need because we all love food.
Rodney Connor: Yeah. I think the farmer has to be a better manager. You nailed that. They have to be a little sharper on all those numbers, understand their return on investment, things like that.
Jacqueline Holland: Yep. And had some really great conversations with farmers about those things at farm show and I'm excited to be able to help them develop their marketing plans and inventory management too is huge. So being a part of being able to help farmers manage that, is really an incredible opportunity.
Rodney Connor: Great. How about just other private industry in general, other folks coming in to help the farmer, what's got you excited there?
Jacqueline Holland: The technology that goes into satellite imagery right now is so impressive. With your company, the results that you released about your acreage estimates and yield estimates, both for the US and down in Brazil. I think it's so valuable because it provides so many more insights for the broader market to learn, what's going on at the farm level in Brazil? What's going on in the fields and the plains? What's going on in the terminals down in the Gulf? I think having those private industry contacts and the resources are so important to help our markets trade more efficiently and more accurately.
Rodney Connor: Yeah. No, that's good. Yeah. Also, I rarely plug Indigo on this podcast explicitly, but I got to think from your standpoint, that weekly number, yield number for a farmer, to go back and look at that and say, "Hey, today I've got 240 bushel corn." But next week it's 239, that really matters. The little ebbs and flows in that.
Jacqueline Holland: Exactly. And it really helps give farmers a better idea of where their risk tolerance can be.
Rodney Connor: Yeah. As opposed to plugging in a number in January when you're buying your seed and never looking at it again, right?
Jacqueline Holland: Yeah. So much changes so quickly with these markets and you have to keep up with them or else you literally lose money.
Rodney Connor: Yeah. I know I've also seen some updates out of USDA coming along, I know you work closely with them. What should we be paying attention to over there?
Jacqueline Holland: So USDA is constantly expanding their tool kits of resources that they use to collect farmer data. They have a very interesting satellite imagery program that they've invested quite a bit in. Their statistical resources are among the best in the world. And they have access to, not just farmer level data here in the US, but across the whole world too.
Rodney Connor: Yeah. Good. Yeah. I'll tell you, over the years I've been doing this, I think the globe matters more today than it did 15 years ago, as little as 15 years ago. It mattered, but man, today it really affects the market every day. I'm shocked by it.
Jacqueline Holland: We've seen that play out so vividly over the last year, in between China's massive buying spree of US grains over the last year. The global acreage expansion that has really been focused in China, Brazil, the US and Russia, as well as looking even closer into Brazil, Brazil is going to plant 200 million acres of corn, soybeans and cotton by the year 2030. Just for a little perspective, the US only planted, barely planted, 192 million acres of all three of those crops this year. As we're seeing more infrastructure be built up in these countries, we're definitely going to see more competition on the global scale, in terms of grain supplies and also input stocks.
Rodney Connor: Yeah, that's right. Doesn't help input stocks at all.
Jacqueline Holland: No.
Rodney Connor: I'm excited about anybody here trying to help farmers make better just decisions. I don't think there's enough people doing that. I don't think farmers have enough access to it. So let's take a second just to plug your things that you're working on. I imagine I could ingest your stuff all day long, so why don't you run through what those are?
Jacqueline Holland: Absolutely. So if you go to our website, www.FarmFutures.com, you can find my daily articles, as well as all of my E-corn-omic posts, our USDA coverage and everything else that we do to help farmers make better decisions.
Rodney Connor: Great. And what's your Twitter handle?
Jacqueline Holland: It's @jkholland89.
Rodney Connor: Cool. And how about that podcast name? Did I miss that?
Jacqueline Holland: It's called Midweek Markets.
Rodney Connor: Midweek Markets. All right, appreciate it. Jacqueline, thanks again for joining us on GrainWaves. It's been a ton of fun for us. For our listeners, thanks for tuning in and remember, you can ask us questions or you can recommend a guest for the show, whatever you want to do just send a note to email@example.com and we'll see you next time.
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