November 26, 2007

Extension Update from Stu Ellis

• Production factors are driving the market says Extension Specialist Darrel Good:
  1) Only 45% of US winter wheat is reported by USDA in good to excellent condition.
  2) Dry soil in India and frost problems in Argentina are threatening wheat crops.
  3) Increases in Brazil's soybean crop will be insufficient to cover the US shortfall.
  4) Sufficient 2008 US soybean production may be threatened by high corn prices.
• Consumption factors are driving the market says IL Extension's Darrel Good:
  1) Corn and bean demand is up from increased cattle, hog, and broiler production.
  2) Continued high oil prices will positively impact ethanol and soy diesel demand.
  3) China's potential demand for US beans, soybean oil, and possibly corn is growing.
• But volatility will continue in the market says Good. "Sustained weakness in corn, soybean, and wheat prices is not expected in the near term as supplies remain tight and demand is firm. Tight world stocks will continue to magnify the impact of production uncertainty into the foreseeable future. Volatility in energy and currency markets will also add to the volatility of crop prices. Risk has increased significantly." Read more: http://www.farmdoc.uiuc.edu/marketing/weekly/html/111907.html .
• Outlook Specialist Bob Wisner agrees with Good about the volatility. He also suggests it may take an $11 soybean price to achieve a 5.5% to 6.5% increase in US soybean acreage next year, and a 6% to 8% increase in South American soybean acres. The price volatility will occur until the size of the South American crop is known, says Wisner.
• Soybean prices for the 2008 crop may mirror corn prices for the 2007 crop, according to Wisner. "If so, farmers and soybean users should expect the soybean market to follow a pattern similar to that of corn last winter and spring. Prices rose sharply into January and then drifted lower as private surveys showed sharply higher plantings were likely."
• Corn exports are an enigma to Wisner. He says cumulative shipments and unshipped sales are up 35% from 2006. But he says Cumulative export inspections through Nov 8 were up only 5.7% from 2006 and have lagged behind sales. He believes the 71% jump in wheat exports over last year may have held down corn shipments by congesting ports. www.econ.iastate.edu/outreach/agriculture/periodicals/ifo/documents/IFO111607.pdf .
• How do you manage volatility? Alan May at South Dakota State says, "Establishing a marketing plan for old and new crop corn that incorporates breakeven in production costs and profit is critical. The corn market will likely be highly volatile, but it is a market that is still providing very sound opportunities for pricing 2007 and 2008 corn."
• Hog prices have been falling as slaughter rates climb says Extension's Shane Ellis at Iowa State. Slaughter has been up 5% and will soon climb to 10% over last year, but hog prices are down nearly 15% as a result. While the fourth quarter usually sees a 12% drop in hog prices, the average hog prices this year are 20% lower since early September.
• Hog slaughter rates will return to normal, says Ellis, but have been unexpectedly high:
  1) The Sept. Hog & Pig Report indicated inventories were up 3% from 2006.
  2) There were greater numbers of heavier weight market hogs within weight classes.
  3) Canadian hogs coming into the US have increased 7% since the first of Sept.
• More cattle, and heavier cattle, are entering feedlots according to USDA's estimates. Placements were 13.6% higher than Oct. 2006, and placements of cattle weighing over 800 lbs were up 23.1% from 2006. Nebraska's Darrell Mark says the trend toward more cattle in IA, NE, and SD continues, but the October Cattle on Feed report indicated that more cattle were placed in feedlots in TX, OK, and KS, but were still steady with 2006.
• Don't spend too much on nitrogen if you are budgeting, and are concerned about corn production expense. The key to nitrogen application is no longer based on yield, but "a maximum return to nitrogen" and is calculated from nitrogen costs at corn prices. Find the calculator at: http://extension.agron.iastate.edu/soilfertility/nrate.aspx .
• The increasing concern by Extension specialists about the failure of SCN resistant varieties of soybeans is resulting in more recommendations for soil testing. Since most resistant varieties get their genetics from PI88788, but 10% of SCN have been able to reproduce on it, they suggest collecting soil samples before the soil freezes and testing them for SCN. http://www.ipm.iastate.edu/ipm/icm/2007/11-12/scnsample.html .
• Why does your Bt hybrid yield better? KY agronomists Ric Bessin and Chad Lee say the breeding methods used to add a gene into a hybrid involves backcrossing an experimental line with the gene of interest into one or both of the inbred parents used to make a hybrid. The number of times it is backcrossed determines the degree which it is genetically similar. The differences in yield are not due to the Bt trait, but instead due to the agronomic characteristics of the inbred parents and the whole genetic package it has.
• Round bales stored outside can lose up to 30% of their nutrient value if unprotected. At Iowa State Stephen Barnhart says most of the loss of dry matter and nutrient quality comes at the bottom of the bale where it is constantly in contact with the moist ground. He says storing bales on pallets, tires, or crushed rock can prevent nutrient loss.
• Hay value can also be lost with improper feeding. Barnhart estimates 50% of the hay value is lost from either storage or feeding. He suggests feeding small amounts at a time to reduce what is trampled, plus the use of a rack or hay ring. Unrolling a bale wastes 40% or more from trampling. Feed hay stored outside before feeding protected hay.
• US hay acreage may increase in 2008 says the Livestock Marketing Information Center; but competition from other crops, especially in irrigated areas, will remain intense. National average hay prices are expected to remain well above 2006 for the balance of the 2007-08 crop-marketing year. Hay prices will remain very high next crop year (2008-09) and may average over $100.00 per ton in 2008-09 for the third consecutive year.
• To till or not to till. That is the question which frequently results in the wrong answer, says Iowa State agronomists, who are concerned about the impact on wet soils, as well as the added cost of tillage because the soil was wet. They say moisture below the surface will not be tapped off by plant roots, and soil will not fracture the way you believe it will.
• Wind and water erosion can be increased when corn stover is removed according to a NE Extension team. They say on soils of low erodibility, 2 to 3 tons of stover per acre should maintain soil organic matter and protect against erosion; but little if any should be harvested if the soil is highly erodible. A ground cover of 30% to 60% is estimated to reduce wind erosion by 70% and 90% respectively, when compared to bare soil. Those facts are included in a Nov. 16 report on corn stover harvest. http://cropwatch.unl.edu/ .
• Ohio and Michigan are the only major soybean producing states east of the Mississippi River to remain free of Asian rust. Even rust was recently found on soybeans in the Canadian province of Ontario, approximately equal to Chicago in latitude. USDA's rust website: www.sbrusa.net reports it was found in 285 counties in 19 states since January.
• Farm techies may benefit from a variety of websites and electronic services which can improve management abilities, says Ohio State Extension's Andy Kleinschmidt, who's newsletter is at: http://ohioagmanager.osu.edu/~ohioagmanager/news/index.php#techtips
  1) Call the phone number at http://www.Jott.com and it sends an e-mail message.
  2) Extensive yield records and GPS maps can be backed up on line at www.box.net .
  3) A free tool to keep your computer virus free is available at: http://free.grisoft.com .
• Let's explore the concept of paying farmers for protecting the environment, says a new United Nations Food and Agriculture Organization report, written by IL ag economist Gerald Nelson at: http://www.fao.org/docrep/010/a1200e/a1200e00.htm He says farmer incentives could assist in addressing issues such as climate change or water purification:
  1) A payment could be made to get farmers to change their current production practice.
  2) They can change the way they use the land to provide more environmental services.
  3) They can choose not to make a change that is motivated by market forces.

Posted by John Fulton at 7:30 AM | Permalink |

November 16, 2007

Extension Update from Stu Ellis

• Farm Bill Update. The Senate's consideration of the 2007 Farm Bill has become mired in political debate over which of 240 amendments can be considered, many of which have little to do with agriculture. In the House, a contingent of 22 Republican Members has co-sponsored a 1-year extension of the 2002 Farm Bill to continue current policy until the Senate can winch its way out of being stuck. Don't expect a quick resolution.
• The up and down USDA estimates of the corn crop are parallel to certain prior years says IL Extension's Darrel Good. And using those trends, he says the 13.168 bil. bu. estimate in November could fade to 13.083 bil. in Jan. He bases that on the 153 bu. average yield fading to 152 bu./A which parallels the 1990 and 2006 crop forecasts. Both of those trended higher in the September report, then dropped in October and November.
• Darrel Good expressed surprise at USDA's lowering of its estimated feed use of corn in the November Crop Report, given the current record level of hog production. With year ending stocks forecast at 1.897 bil. bu., Good says if the crop is smaller than currently estimated and feed use larger than estimated, ending stocks may decline more. Read more at: http://www.farmdoc.uiuc.edu/marketing/weekly/html/111207.html .
• World wheat buyers have switched from US to cheaper Black Sea markets says Kansas St. Outlook Specialist Mike Woolverton. But he says the US supply will be rationed over the next 7 months. He says USDA lowered Australian wheat estimates again because of quality, however he says the global wheat supply shortage eased a little with improved prospects for Argentine yields, however, the world supply is still at a thirty year low.
• Woolverton urges farmers to watch the energy and financial markets which are linked to commodity markets. "The value of the dollar has dropped relative to other major world currencies recently. When the Fed lowered the interest rate, the dollar fell to an all-time low against the Euro. That caused global oil prices, which are quoted in US dollars, to jump to the mid-$90 range. Commodity prices rose, but the lower valued dollar made them seem less expensive to foreign buyers. US exports, including agricultural commodities, have been strong all year improving our trade deficit. That meant higher than long-term average prices for commodities sold by US agricultural producers."
• Woolverton says that may sound good, but he says if the dollar continues to weaken overseas banks and investors will shift holdings out of dollars to Euros, setting off an inflationary cycle that would hurt agriculture. He says, "It means that agricultural producers have another set of factors to watch as they make commodity marketing decisions." http://www.agmanager.info/marketing/outlook/newletters/default.asp .
• Don't be fooled by TV commercials say Purdue entomologists who studied corn roots. "Side-by-side root rating comparisons of Bt-corn rootworm hybrids with different events (i.e., Agrisure, Herculex, YieldGard) are not possible. Plant genetics that determine a hybrid's root mass, architecture, and rooting depth make direct root rating comparisons between the Bt events virtually impossible, since the plants are different in many ways, not just the presence or absence of Bt. Read their analysis of rootworm product performance http://extension.entm.purdue.edu/pestcrop/2007/issue26/index.html#top .
• The effectiveness is faltering for the gene that makes soybean varieties resistant to soybean cyst nematode. The gene is PI88788 and has been a 30 year veteran in 97% of the SCN resistant soybean varieties. But Purdue nematologist Jamal Faghihi says it is not working as well as expected since failure was first noted in 2005. He says Tennessee beans are no longer resistant; but Canadian beans are still resistant; and Illinois and Indiana beans are in between. He said beans with Peking and CystX genes resist SCN.
• Test plot averages of 246 bu./A for corn and 70 bu./A for beans are enticing, but what varieties were planted? That is revealed in the IL Variety Trials website located at: http://vt.cropsci.uiuc.edu/ . Yield results are available on 311 corn hybrids, 544 soybean varieties that are glyphosate resistant, and 57 conventional soybean varieties.
• When looking for seed corn, Ohio State, agronomist Peter Thomison says, "It may become increasingly difficult for growers to get good information on the performance of non-transgenic hybrids simply because there won't be as much information out there. From a cost standpoint, growers don't want to pay for features they may not need, but from a production standpoint, fewer transgenics will be available in the future."
• It may not only be the two-legged critters who steal your nitrogen, but it may be stolen by a healthy crop of giant ragweed. Weed specialists at Wisconsin applied 180 lb of N to a field prior to planting corn. The giant ragweed emerged with the corn, and by the 16 in. level ragweed had removed 10 lbs of N. By the end of the season, giant ragweed had removed 58 lbs of N while the corn had accumulated 97 lbs. It has expensive tastes.
• Your combine is beginning a long winter, spring, and summer nap, and probably well deserved. But it also deserves some TLC suggested by MO Extension's Bill Casady:
  1) Dust and chaff make good rodent bedding, so make sure it is eliminated.
  2) A "clean" combine may still hold a bushel of grain, which is great rodent food.
  3) Mice in the combine gnaw on wires, and you'll wonder why that gauge won't work.
  4) Birds that like your combine for its grain will make a nest that is a fire hazard.
  5) Before maintenance, remove the key and teach everyone around about the hazards.
  6) Compressed air is a better choice than water to clean debris and dust and prevent rust.
  7) Avoid allowing a high pressure washer to hit any seals and bearings on the combine.
  8) Remove the battery, lightly oil the terminals, and store it with periodic charging.
  9) Clean the air and fuel systems, drain the water, and use a stabilizer in the fuel tank.
• Food prices are 4.4% higher this year than one year ago, thanks to a 15% rise in dairy prices and a 45% hike in egg prices. Purdue economist Corinne Alexander said energy costs are higher and food retailers are passing that onto the customer in the food bill. She also said prices of foods made with wheat are up 10%; and while the Thanksgiving turkey will cost about 94 cents more than last year, prices of the trimmings are lower.
• Weekly hog slaughter remains above 2.3 mil. head for the fifth consecutive week says MO Extension's Glenn Grimes, but he says prices are holding well despite cold storage and the pipeline being full. He believes prices may be pushed lower indicated by the futures market, but he says packers have handled record numbers quite well so far.
• Overall meat demand is up says Grimes and colleague Ron Plain who compared Jan. through Sept. to 2006. Beef was up 0.2%, pork up 1.4%, and turkey up 2.3%. Broiler demand was down 2.3%. They report live fed cattle demand was up 3.3% and live hog demand up 3%. They attributed the demand for fed cattle to the increase in beef exports.
• Cattle economist Dillon Feuz has urged cattle feeders to consider ethanol co-products, specifically WDGS at 30-40% of the ration and DDGS at 20-30% of the ration, "At these rates, it appears that average daily gain is increased and feed efficiency is also improved for cattle on finishing programs. There does not appear to be much if any impact on marbling and yield grades from feeding these levels of distillers grains in the diet."
• "The concern among cowboys," says Feuz are the politicians who try to beat each other at raising the renewable fuels mandate, which he thinks will be 15 billion gallons from grain, which means 5 bil. bu. of corn, equal to what is being fed to livestock, "Corn prices will be higher than present levels. All other grain, oilseeds, and hay prices will likely be higher. The feedlot industry will adjust to higher grain prices, and feeding of DDGS will help. But, calf prices will likely be lower." http://cattlemarketanalysis.org/index.html
• If you are buying hay, weigh some bales to make sure you are getting what you pay for says Purdue beef specialist Ron Lemenager. And he says that is particularly true for those who buy baled corn stalks. A 1,000 lb.-sized bale might only weigh 800 lbs. and the cattle will only eat 60% of it, so the bale has only 480 lbs of usable feed value. But he said using a grinder will improve consumption and digestibility of the corn stalks.
• Coincidental to the override of the veto of the Water Resources Development Act, which will finance renovation of locks and dams on the Mississippi and Illinois Rivers, MO economist Seth Meyer says lock failure on either would cost a half billion dollars to corn and soybean producers from diminished prices. Meyer says, "When you shut off the river, you push down prices in Iowa for corn and push prices up at the Gulf."
• Meyer's study examined Lock 25 north of St. Louis and the LaGrange Lock on the Illinois River. He says over 60 million tons of goods, valued at more than $29 bil. went through the locks in 2005 and a failure of either increases the cost of products all the way from Iowa to the Gulf. But he says lower grain prices at upper Midwestern locations means farmers may store grain to increase demand, anticipating the river will reopen.

Posted by John Fulton at 12:43 PM | Permalink |

November 6, 2007

Estate Planning For Farm Women Seminars

Posted by John Fulton at 12:13 PM | Permalink |

November 6, 2007

Economics Summit Workshops Scheduled

URBANA - Are the current boom times for U.S. farmers the start of a new era or merely

a prelude to historical pattern ending in a bust? Answering these and other related

questions will be the focus of three programs in December sponsored by University of

Illinois Extension.

The 2007 Illinois Farm Economic Summit, to be held Dec. 11 in Effingham, Dec. 12 in

Bloomington, and Dec. 13 in Sycamore, is the successor to the Farm Income Seminar

series held in past years, said Paul Ellinger, U of I Extension farm finance specialist who

is organizing the program.

"We've revised and re-tooled the program to reflect the immediate situation," he noted.

"Farm profits are at an all-time high this year. Net farm income for the United States is

forecast to be $87.1 billion, up $28.1 billion from 2006 and $29.7 billion above its 10-

year average of $57.4 billion.

"A question on everyone's mind is: Will the good times last?"

At each meeting, speakers from U of I Extension's farmdoc team will explore the farm

profitability outlook from several perspectives.

"These include the direction of prices, new farm policies, new technology and corn and

soybean yields, bio-fuels, production costs, and farm lease trends," said Ellinger. "The

format will be fast-paced and allow plenty of time for questions from the audience."

Joining Ellinger on the program will be Darrel Good, Bob Hauser, Scott Irwin, Dale

Lattz, Nick Paulson, and Gary Schnitkey, all from the U of I Department of Agricultural

and Consumer Economics and part of the farmdoc team. Todd Gleason, an Extension

communications specialist, will moderate the meeting.

Registration for each location is $50 per person and includes all meeting materials,

breaks, and lunch. Registration at the door will be $55 as space permits. Each meeting

begins at 8 a.m. with registration and concludes at 3 p.m.

Online registration is available at farmdoc (http://www.farmdoc.uiuc.edu) by filling out a

registration form and returning it with a check for $50 payable to the University of

Illinois. Brochures and other information may be obtained by contacting Sue Esposito at

(217) 333-5506. Registration brochures will also be available at the local University of

Illinois Extension unit office.

The Effingham meeting will be held at the Keller Convention Center. The Interstate

Center is the site of the Bloomington meeting and the Sycamore meeting will be in the

Center for Agriculture.

Posted by John Fulton at 8:32 AM | Permalink |