Extension Update on Ford-Iroquois Agriculture

A weekly publication of University of Illinois Extension, October 20, 2008

Prepared in part by Stu Ellis, former Extension specialist & Aimee Chandler, Ag Program Coord., Ford-Iroquois Unit

Our address is University of Illinois Extension, 912 W. Seminary, Onarga, IL 60955. 815-268-4051

Our Internet homepage is at www.extension.uiuc.edu/ford

• Lady Landowners group will meet on Wednesday, October 22 at 1:00 p.m. at the Extension office in Onarga. Mary Dickinson, Ford-Iroquois Master Gardener, will be speaking on "Planning Before You Plant." Those interested in attending should call 815-268-4051 to RSVP or e-mail Aimee at alchandl@illnois.edu.
• The Wall Street crisis has not spread to ag credit say IL Extension economists in a special report on the global financial issues. Agriculture's debt to asset ratio is only 9.6% and both commercial banks and Farm Credit are in strong financial health. Read more at: http://www.farmdoc.uiuc.edu/IFEU/IFEU_08_02/IFEU_08_02.pdf . Some facts include:
  1) Most commercial ag banks are local lenders, which are composed of local deposits.
  2) Over 50% of ag banks reported net income higher than the prior 6 month period.
  3) Farm Credit associations have strong balance sheets, and have helped their primary lender Farmer Mac, which suffered losses in its diversified investment portfolio.
• Initial declines in grain prices this summer resulted from the potential production of adequate supplies, but declines in the past weeks have resulted from problems in the credit markets, according to IL Extension economists in a new economic report. http://www.farmdoc.uiuc.edu/IFEU/IFEU_08_03/IFEU_08_03.pdf . They report:
  1) Agricultural prices do not behave consistently during recessionary periods.
  2) The farm economy is a bit more recession proof, since people need to buy foods.
  3) Based on ethanol demand, $70 oil prices puts corn values in the $3.00 to $4.00 range.
  4) With $50 hogs & $70 oil, corn is valued at $4, and a 1:2.3 ratio puts beans at $9.20.
• The fall of commodity prices points to the potential for indemnity payments for farmers with revenue crop insurance policies say IL Extension economists in a new economic report at: http://www.farmdoc.uiuc.edu/IFEU/IFEU_08_04/IFEU_08_04.pdf .
  1) Base prices of $5.40 for corn and $13.36 for soybeans are above current market levels.
  2) At guaranteed yields, payments will be made on 75% corn and 70% bean policies.
  3) With limits on price declines on CRC policies, some may not pay indemnities.
  4) GRIP policies have the potential for large payments, if purchased at the 90% level.
• Declining commodity prices will complicate the negotiations between land owners and operators over cash rents for the 2009 crop. In a new report IL Extension economists say: http://www.farmdoc.uiuc.edu/IFEU/IFEU_08_05/IFEU_08_05.pdf
  1) If possible, use crop share leases or variable cash rents based on yields or prices.
  2) If possible, delay the setting of fixed cash rent payment levels until March.
  3) If possible, re-negotiate 2009 rents if set previously at unsupported high levels.
• Grain prices continue to weaken following USDA's Oct. Crop Report that raised yields, carryout, and even acreage in the case of beans. IL Extension specialist Darrel Good says price direction should now shift to demand where exports are up, feed prices support favorable livestock margins, and ethanol margins exceed operating costs.
• Yes, demand should increase, agrees Kansas State's Mike Woolverton, who says an 80% decline in ocean freight rates will more than offset a 12% increase in the value of the dollar, to give a boost to the export trade. He says corn is now competitively priced with European feed wheat, and beans were exported during the Argentine farmer strike. He says another droughty period is shaping up for Argentine and Australian wheat.
• Globally, grain production is up, says Chad Hart at Iowa State. Corn production will be 30.9 bil. bu. up 0.3% from Sept. and world soybean production will be 8.8 bil. bu., up 0.6% from Sept. He says the bulk of the soybean increase came from the US.
• With increased grain supplies and lower prices, Purdue economist Chris Hurt urges a diversified pricing strategy, "This means farmers could price their crop periodically throughout the next six to nine months to help them get the average price and hopefully the average will be a level that at least can pay the bills for the 2008 crop."
• Hurt anticipates improved price prospects in coming months. "Prices could strengthen $1 to $2 through the winter and into the spring. Like corn, there is a premium for storing soybeans returning at least 50 cents a bushel above interest costs." Read his corn and bean newsletters at: http://www.agecon.purdue.edu/extension/prices/grains/ .

• Why are P & K prices high? OH Extension fertility specialists say for phosphorus and potassium fertilizers, one factor was increased commodity price. "After commodity prices increased in the fall/winter of 2006 demand for fertilizer products increased the following year. Additionally, South America and eastern Asia increased their imports of both phosphorus and potassium. These events put severe pressure on fertilizer supplies."
• N & P prices have dropped, because the high prices have dampened the interest in applying fertilizer and demand has been cut. The OH specialists say that is the right decision for some farmers, "The dollar has also strengthened. So, in the last few months, nitrogen and phosphorus prices have dropped (not a tremendous amount, but any amount helps). This is especially true for urea." They say K prices will remain rather high.
• Because of the explosion in export demand for pork in 2008, MO livestock economist Glenn Grimes says it will be difficult for 2009 to keep pace. Export demand accounts for $40.26 per head, and that is a $2.7 bil. contribution to pork producers from importers. He says that is a big return from the $5 mil. spent by the Pork Board on export promotion.
• Hoofprint or footprint, the dairy industry is having a smaller impact on the environment says IL Extension dairy specialist Mike Hutjens. Compared to 1944 when the US dairy herd topped at 25.6 mil. head, the 9.2 mil. head today is producing 186 bil. lbs of milk compared to 117 bil. lbs in 1944. Comparatively, the 31 lbs. of carbon dioxide produced per gallon of milk in 1944 has declined significantly to 12 lbs. per gallon in 2007.
• Moving toward organic dairy production changes the trend for dairy's carbon footprint says Hutjens. It "would require 25% more cows than now used, 30% more land for feed production, 39% more manure nitrogen and a 13% increase in global warming potential."
• More grass and less grain will produce beef that may not meet customer expectation says meat scientist Mike Dikeman at Kansas State. Efforts to save money by feeding less than 100 days will result in lower dressing percentage, reduced marbling, yellow fat, less attractive meat color, altered taste and tenderness, and less total output per animal.
• Purple or discolored soybeans have been widely reported, but that is because of weather during the growing seasons and the diseases it spawned. MO Extension specialist Laura Sweets says, "The late season soybean diseases which can lead to discolored soybean seed tend to be favored by wet conditions including frequent rains, heavy dews and high humidity. Discoloration of soybean seed this year appears to be the result of environmental stress compounded by late season stem and pod diseases." Identify your problem at: http://ppp.missouri.edu/newsletters/ipcm/archives/v18n16/a3.pdf .
• Blending wheat seed at planting time can provide yield stability, since the field will yield an average of the varieties, and not just the yield one variety that may be suffering a down year. Kansas St. agronomist Jim Shroyer says the blend will not be the highest yield, but can avert land owner complaints if they have a share in the crop. He also says a blend will not provide the same level of management flexibility as a pure variety.
• If you plan to blend wheat seed, Shroyer offers these recommendations:
  1) Use varieties with different types of disease resistance is the most important issue.
  2) Use varieties with no more than 3-5 days difference in maturities.
  3) Spreading out the maturities spreads out the benefits from weather patterns.
  4) Use varieties with different levels of winter hardiness and spring green-up tendencies.
• Conserve cropland by focusing biofuels toward miscanthus, says IL agronomist Stephen Long. He says the White House goal of biofuels supplying 20% of motor fuel needs means ethanol from either corn or biomass. However, Long says that takes 25% of cropland out of food production, and miscanthus achieves the goal with 9.3% of land. Compared to corn, miscanthus produces vegetation 6 weeks earlier, and compared to switchgrass, Long says side by side plots show miscanthus is twice as productive.
• Delays getting into the field this spring may increase your desire to address winter annuals this fall, but MO Extension agronomist Kevin Bradley says, "A fall herbicide application must replace the need for the spring burndown. Otherwise, it seems to me a fall herbicide application is just an added cost in the overall weed management program. With our current herbicide arsenal, the early spring timing is better." Bradley adds:
  1) Control of winter annuals with glyphosate plus 2, 4-D in the fall has been extremely variable.
  2) Herbicides should have enough residual control to prevent germination of early spring weeds.
• If your marestail is the talk of the coffee shop, don't try to apply any herbicides this fall and hope for residual effect next spring. Save your money. OSU weed scientist Mark Loux says, "The most effective control of marestail has occurred from a combination of 2,4-D ester, residual herbicides and either glyphosate or paraquat applied in April, when the marestail is still in the rosette stage or has only an inch or two of stem elongation." Loux recommends marestail control along with winter annuals. http://corn.osu.edu/#D