• Sky high futures prices, but a mediocre cash price has plagued the soybean market for nearly 2 years, and IL Extension Marketing Specialist Darrel Good says the fact that futures and cash prices do not converge at delivery points "implies that the delivery mechanism is failing to some extent." And he says that may continue for a while.
• Darrel Good says, "Persistence of futures prices above cash value at maturity may indicate that the extremely large speculative activity in the futures markets is holding futures prices artificially high and that the delivery mechanism is not robust enough to force convergence of cash and futures prices." He says the weak basis is more than just transportation, storage cost and availability, insurance, and interest on a high value crop.
• The wide soybean basis has affected short hedgers, because the basis has not improved as expected to cover storage costs. Some elevators have also taken steps to limit futures margin exposure by curtailing use of hedge-to-arrive contracts, and forcing producers to hedge themselves. http://www.farmdoc.uiuc.edu/marketing/weekly/html/012208.html .
• Farm stored corn will benefit from the carry through July, says Michigan State's Jim Hilker. "We have the smallest world coarse grain ending stock projected in 3 decades; it is hard to set a strategy. One could consider selling smaller amounts on up market days and spread remaining 2007 crop sales over the next six months. If you are paying commercial storage, check out a basis contract, and see if you can use the same strategy."
• Hilker's price probability for corn is an 80% chance for March corn to be between $5.28 and $4.51, with a 10% chance it will be either above or below those levels. The 80% probability range for December corn is from $3.56 to $6.72.
• Hilker's price probability for beans is an 80% chance for March beans to be between $13.62 and $11.21, with a 10% chance it will be either above or below those levels. The 80% probability range for November beans is from $8.78 to $16.02.
• Hilker's price probability for wheat is an 80% chance for March wheat to be between $11.04 and $7.76, with a 10% chance it will be either above or below those levels. The 80% probability range for December wheat is from $5.72 to $12.58.
• If you are nervous about market volatility, MO economist Melvin Brees suggests selling cash grain and re-owning it with options. "Put options or various option spread strategies can also work, but premiums are ex­pensive. The premium cost often results in considerable cash outlay and produces protect­ed price floors well below current prices. However, in most cases these still represent prof­itable prices."
• Given the huge supply, retail pork prices aren't doing badly, say MO economists Glenn Grimes and Ron Plain. "December pork prices at retail averaged $2.859 per pound, up 9.1 cents compared to 12 months earlier. Domestic pork demand ended 2007 on a strong note. The growth in pork demand was stronger in the fourth quarter of 2007 than the other three quarters. This is a good lead-in to 2008. Hopefully, high energy prices and rising unemployment won't disrupt the trend." http://agebb.missouri.edu/mkt/bull1c.htm
• Grimes and Plain also say, "The feed situation appears to be impacting on fed cattle prices. Short pastures pushed a lot of feeder cattle into feed yards during the fourth quarter of 2007 and high corn prices are keeping the feeding periods fairly short." They also report continued high cow slaughter because of dry pastures and high feed costs.
• Spring is not far off, if it is time to frost seed your pasture and Iowa St. agronomists say Feb. & Mar. is time to do that because of the freeze-thaw cycles giving seed a shallow cover. Red clover gives the best success, when spread on the thinnest, least vigorous areas. But they say success requires average or better rainfall and growing conditions. Read more at: http://www.extension.iastate.edu/Publications/PM856.pdf .
• Avoid high N expense on pastures by inter-seeding a legume crop that transfers 20% of its N to surrounding grass. MO agronomists say legumes, such as red clover or lespedeza can provide 50-300 lbs. of N per acre. Potash and pH are important, since legumes need high soil tests. http://ppp.missouri.edu/newsletters/ipcm/archives/v18n1/a1.pdf .
• If your pasture needs N, fertilize when the plant can respond and maximize forage utilization, since it only pays if you can increase beef or milk production or hay sales. MO agronomist John Lory suggests that "manure nitrogen is typically 50-60% available when it is surface applied but 100% of manure phosphorus and potassium is available to the crop." More: http://ppp.missouri.edu/newsletters/ipcm/archives/v18n1/a2.pdf .
• Soils that have a history of adequate or perhaps even a little excessive P and K fertilization resulting in a high soil test levels are unlikely to benefit (yield-wise) from the inclusion of P and K in a starter fertilizer, say Ohio St. agronomists Robert Mullen and Edwin Lentz. Soils that are below the established critical value in P and K can benefit, especially if broadcast applications were not made the previous fall or in the spring.
• Don't forget to update your records if you are a certified applicator and have used restricted-use pesticides this year. They should include product name and EPA number, amount applied, location, acreage, date, crop, and certification number of the applicator. Information and forms are at: http://www.ams.usda.gov/science/sdpr.htm .
• Corn, which can deliver Vitamin A, is being bred at the Univ. of IL where researchers have discovered genetics that can steer the corn plant's biochemistry to produce higher levels of the vitamin. The corn is being prepared for use in Sub-Saharan Africa and the Americas, where 17-30% of children under 5 years of age have a Vitamin A deficiency.
• Popcorn growers will have to become more educated about the crop they have. You are not just growing popcorn anymore, but there are three main groups. Iowa St. and USDA researchers compared 29 traits and grouped them into: North American Yellow Pearl, which contains most commercial varieties; North American Pointed Rice; and North American Early Popcorn. More is at: http://www.ars.usda.gov/is/pr/2008/080111.htm .
• Soybean seed quality is being questioned by Ohio St. specialists Anne Dorrance and Jim Beuerlein. "Much of the seed supply in the eastern Midwest has lower than normal quality due to a stressful growing season and being harvested at low moisture. Physical damage caused by harvest and handling is causing low vigor and more abnormal growth in germination test than normal." They recommend several steps you can take:
  1) A fungicide treatment will protect against early season seed rot.
  2) Fungicide returns best on fields with poor drainage, no-till, or continuous soybeans.
  3) Fungicide will protect against seed-borne diseases, such as phomopsis.
  4) When buying seed, ask for results of a cold germination test on the seed.
• Low germination rates may be seen on seed beans, or at least less than the typical 92% floor. WI Extension's John Gaska says some may be marketed as low as 80% because of environmental adversity in 2007. The result is thin seed coats which are damaged during the conditioning process. Gaska says while a seed treatment might be needed, he is not a strong advocate, since further handling can further damage the seed coat.
• If 180,000 drilled seed beans emerge at a 90% rate, but only 80% of the original seeds germinate, the plant population is below 130,000 per acre. Gaska says, "Under most environmental conditions 129,000 plants/acre would produce 100% yield potential, however if we do not achieve our assumed 90% emergence rate due to poor early season growing conditions we rapidly approach stands where yield loss may occur."
• Germination tests can be performed by state crop improvement agencies, or at home. Count out 100 seeds, fold them into a damp paper towel, seal in a zip lock bag, and store in a warm location out of the sunlight. Count the seeds with an intact root and shoot after 5 days. Repeating that 4 times with seeds selected from random bags is a better test.
• Growing switchgrass? Iowa St. Economist Mike Duffy tallies the $113.66 per acre production costs at: http://www.extension.iastate.edu/agdm/crops/html/a1-22.html .
  1) Establishing the crop, prorated over 11 years is $34.26 per acre.
  2) Re-seeding the crop 25% of the time, prorated over 10 years is $6.18 per acre.
  3) With a 4 ton per acre yield, the per ton production cost would be $82.23.
  4) The need to store it requires a building, with costs estimated at $16.67 per ton.
  5) Transportation to storage is $6.10 per ton, then $8.65 per ton to the plant.

• $5-plus corn and going strong. Extension's Darrel Good says strong crude oil prices are bullish for ethanol; expanding hog numbers are bullish for feed demand; a weak US dollar is bullish for export trade; and declining stocks indicate usage was 9% larger than 2007. But he says watch for developments that might suggest waning fundamentals.
• $12-plus soybeans and going strong. Darrel Good says ending stocks next August will be a meager 175 mil. bu. complicated by a small So. American crop. One caution flag is the dramatic slowing of soy oil use for biodiesel production, says Good, which apparently hints at rationing from high soybean oil prices; but use will be 1 bil. lbs. over 2007.
• Large crops will be needed in 2008 says Darrel Good, and the market cannot allow any sharp decline in acreage for any commodity. But he says growing season weather cannot be over emphasized, since a legitimate threat to average yields could send prices higher. Read his newsletter: http://www.farmdoc.uiuc.edu/marketing/weekly/html/011408.html .
• USDA will make its acreage estimate at the end of March. However, the market is anticipating 87 mil. planted acres of corn, compared to the 93.6 mil. in 2007. For soybeans, the market is expecting 70.8 mil. acres, compared to the 63.7 mil. in 2007. For wheat, the market has estimated 64.4 mil. acres, compared to the 60.4 mil. in 2007.
• Adjust your marketing plan when making crop marketing decisions says Mike Woolverton at Kansas State. Factors include: domestic and global supply and demand balances, Southern Hemisphere crop harvests, the battle for acres, Great Plains wheat growing conditions, and profit margins of commodity buyers such as livestock feeders and ethanol producers. He says high prices choke off demand and stimulate competition.
• "The energy bill signed into law will have greater impact on farm commodity prices than any farm bill being considered," says MO economist Pat Westhoff at FAPRI. "Mandates to use set levels of biofuels increase demand for corn and vegetable oil and affect market-driven prices more than current or proposed farm bills." FAPRI analyzed the energy legislation, which could raise ethanol production 24% and bio-diesel 89%.
• In one scenario by the MO food policy researchers, feed costs increased by an average of $750 million per year because of the energy bill, economist Westhoff said. "However, in another scenario the net change in feed costs was very small. The results depend on many factors, including how large the increases are in ethanol and biodiesel production." The report is available on the MU FAPRI Web site at www.fapri.missouri.edu .
• Fertilizer supplies are tight, and Kansas State agronomist Dale Leikam says it is currently difficult to buy nitrogen for either wheat or spring row crops, regardless of the posted price. He says the tight supply applies to UAN, urea, and anhydrous ammonia. He urges producers to keep in contact with suppliers or it may not be available.
• Over 50% of nitrogen used in the US is imported and the amount increases annually says Kansas State's Leikam. US facilities are closing for a variety of environmental and economic reasons, global demand is increasing, and more fertilizers are being imported from natural gas suppliers in the Middle East, South America, and former Soviet Union.
• Nitrogen application rates need your attention, says Purdue agronomist Bob Nielsen. "We've found the nitrogen rate needed for maximum yield (or agronomic optimum) for corn following soybean rotation is about 173 pounds of nitrogen per acre, but if nitrogen costs 60 cents per pound and the grain price for corn is $4, then the economic optimum rate drops to only 147 pounds of nitrogen per acre," Nielsen said. "For corn following corn, agronomic and economic optimum nitrogen rates are about 30 pounds more." His N summary is at: http://www.kingcorn.org/news/articles.07/NMgmtUpdate-1206.pdf .
• Reliance on manure can be a good fertility option if managed, says Ohio State's Jon Rausch. He says, "Swine manure applied as a sidedress to corn and injected into the soil could potentially generate nutrient value (nitrogen, potassium, phosphorus) of up to $136 per acre. By contrast, swine manure applied on the soil surface only results in a value of about $80 per acre due to nitrogen losses." He says manure is an alternative to N at 60¢.
• Low market prices in 2006, high costs in 2007, and significant red ink in 2008 have been challenging to pork producers. IL economist Dale Lattz reviewed hundreds of pork farm records and says the 2007 combination of high feed prices and low market prices indicates that producers will have operated at near breakeven levels for the past year. More: http://www.farmdoc.uiuc.edu/manage/newsletters/fefo08_02/fefo08_02.html .
• It takes 15-16 months of red ink for pork producers to begin reducing production, say MO livestock economists Glenn Grimes and Ron Plain. And the losses began in October according to Iowa State data. Grimes and Plain say, "If producers respond as quickly to losses as they have in the past, pork production will likely drop below year earlier levels in the first quarter of 2009." Read more: http://agebb.missouri.edu/mkt/bull1c.htm .
• Grimes and Plain say hog producers currently have a good financial foundation. Hog production has been profitable for a record high of 35 consecutive months, ending in December 2006. If you eliminate the 60¢ per head loss last January, and add in the next 9 months, hogs have been profitable for 43 out of the past 44 consecutive months.
• Because of dry weather in the southeastern US during 2007, the cattle herd on Jan. 1 is expected to be down a little from a year earlier, say Glenn Grimes and Ron Plain at MO Extension. They point to a 6.3% increase in cow slaughter for the first 51 weeks of 2007.
• Demand growth for fed cattle through 2007 was up 3.5% through November and beef demand at the consumer level was up 0.9%. If demand growth for both live fed cattle and beef can be continued through 2008, fed prices will probably equal or exceed the 2007 price. But Grimes and Plain say their ability to predict demand action is very low.
• Are you planting more corn or more soybean acres, or do you know yet. Work out a crop budget on a spreadsheet or notebook paper. If using the latter, follow the idea of SD Extension specialist Burton Pflueger, "The typical partial budget usually consists of a seven-point plan. The seven components are additional costs, reduced returns, reduced costs, additional returns, totals of the first two and the second two, and a net difference."
• The optimum soybean population is about 125,000 plants per acre to maximize yield says IL agronomist Eric Adee whose 10 years of research at several locations tested populations from 31 to 235,000, with yields of 35 to 78 bu. He says 125,000 population gave the highest yields, and with 90% survival the optimum number of plants varied from 100 to 109,000. Adee says soybeans are able to flex with conditions they encounter. More: www.cropsci.uiuc.edu/research/rdc/monmouth/newsletters/2007/Nov_2007.cfm .
• If you have wheat or alfalfa, you'll prefer snow over ice. An ice blanket locks out exchange of oxygen and carbon dioxide, and causes tissue decline. Mechanical ice removal with a disk or chemical ice removal with fertilizer is not enough to help save an alfalfa crop. Snow cover insulates plants, but persistent protection can stress them.
• Snow mold on wheat results from fungi living in the soil and taking advantage of a snow blanket to coat the wheat plants with a slimy fungal growth. The plant will die if the crown of the wheat plant is infected, but they can recover if not substantially infected. Protect alfalfa by avoiding planting in high-risk areas, choosing hardy seed and adapted cultivars. Invite a snow blanket by planting alfalfa with alternate strips of grass.
• As strong milk prices head lower, Nov. milk production in the 23 dairy states was up 3.8% from 2007. Iowa State economists say cow numbers were up 101,000, and milk per cow was up 40 lbs. They add, "Strong milk prices, even in the face of much higher feed costs, have encouraged dairy producers to keep cows and build herd numbers."
• Does your farm have an operator transition in its future? If so, a series of fact sheets from Ohio State Extension should come in handy. Issues include asset transfer, timetables, future generations, plans for retirement and estates, goals and objectives, and conducting family meetings. More: http://ohioagmanager.osu.edu/resources/index.php .
• Grandpa burned corn for heat when it was 10¢ per bushel, but would you burn $4.50 corn? That depends on the price of alternate fuels. IL Extension Specialist Bob Frazee says when comparing the heat produced per mil. BTU from various energy sources, corn at $4.50/bushel would provide a considerably cheaper source of heat than propane, fuel oil, and electricity, but would be slightly more than the cost of natural gas.

Dr. Tony Vyn, a nationally-recognized agronomist and researcher from Purdue University will be the featured speaker at the West Central Illinois Tillage Seminar, scheduled for Wednesday, Feb. 6, 2008, at Hamilton's in Jacksonville, Illinois.

Tony has received national acclaim for his applied research associated with strip-till and no-till farming systems. The program, featuring numerous state and nationally recognized speakers, runs from 9 a.m. to 3 p.m. It is co-sponsored by University of Illinois Extension, Soil and Water Conservation Districts, NRCS, AISWCD, and the Illinois Department of Agriculture. Seed, chemical, machinery dealers and other agri-businesses will be featured as exhibitors. This Tillage Seminar will provide 5.0 CEU's for Certified Crop Advisers (4.5 Soil & Water Management and 0.5 IPM).

Pre-registration is necessary and the deadline is January 30. Seating is limited so registration will be taken on a first-come basis. A $15 per person fee will be charged to cover room rental and noon luncheon. To register, include the following information with your check: West Central Illinois Tillage Seminar, your name, address and county of residence. Please make your check payable to "University of Illinois Extension" and send to: Morgan County Extension Office, 104 North Westgate, Jacksonville, IL 62650.

"This is the largest number of Simmental bulls offered in recent years and includes two long-aged senior division bulls calved during January 2006, six junior division bulls calved between July and December 2006, and 35 yearling division bulls calved from January through March 2007," said Dave Seibert, University of Illinois Extension animal systems educator who oversees the sale.

"Simmental bulls typically add more growth and muscle than British breed bulls, and EPDs allow for a breeder to match genetic selection to his individual cow herd needs for calving ease, growth, milk, and carcass traits."

Also on the sale program are a combination of 28 purebreds, five three-quarter blood composites, and 10 half-blood composites. Most of the composite bulls are Angus-based. All of the bulls are black except for one red bull, and all of the bulls are polled except for two that are polled/scurred.

"In addition, five of the bulls are eligible to be used on heifers in the Illinois Heifer Development Program because of exceeding the plus-11.2 EPD Calving Ease Direct for purebreds or minus-2.1 EPD Birth Weight for composites," he noted.

Interested bull buyers can obtain a copy of the sale catalog by contacting Seibert at (309) 694-7501, extension 224, or by e-mail at: dseibert@uiuc.edu, or by mail at 727 Sabrina Drive, East Peoria, 61611. A copy of the sale catalog is also available on the web at: http://www.IPTBullSale.com

• USDA's Final 2007 Crop Report put corn production at 13.074 bil. bu., a 1% drop from Nov. The average yield was estimated at 151.1 bu.. USDA estimated the carryout at 1.438 bil. well below the trade estimate, helped by a 300 mil. bu. increase in feed usage. The season average cash price was raised 35¢ to a range of $3.70 to $4.30.
• The final USDA soybean estimate was 2.585 bil. bu., compared to 2.594 bil. bu. in Nov. USDA estimated the average yield was 41.2 bu., down 0.1 from Nov. USDA dropped carryout estimates to 175 mil. bu. and raised the season average price to $9.90 to $10.90.
• The USDA Quarterly Stocks Report estimated corn at 10.268 bil., under the market guess of 10.584 bil. Soybean stocks were estimated at 2.329 bil. bu. less than the 2.265 bil. estimated by the market. Wheat stocks were pegged at 1.128 bil. bu.
• USDA's Winter Wheat Seedings report estimated total acreage up 4% from last year to 46.6 mil. However only 44% is in good to excellent condition, which is a drop from 56% at this time last year. Soft red wheat acres are up 21% due to strong prices in SRW areas.
• Commodity shortages and heavy global demand for ag products are pushing up prices, but Purdue economist Mike Boehlje says that will not mean more money in farmer pockets. He says domestic demand is growing because of biofuels, and foreign demand is growing because of the weaker dollar and burgeoning economies in China and India. But he says higher cash rent and production prices will preclude additional farm profits.
• "We became confident that La Nina would exist in 2008 when atmospheric pressure statistics reached threshold levels on December 25, 2007," says Iowa State meteorologist Elwynn Taylor, who says it began October 21, 2007. The US weather pattern typical of a La Nina (moist in the Ohio River Valley, dry in the High Plains, and extreme Midwest temperatures) was apparent by the end of November. The last El Nino ended in October 2006, the La Nina began one year later, and La Nina patterns typically exist for 6-9 mos.
• As you prepare marketing and risk management plans for your 2008 crops, monitoring the depth or shallowness of the La Nina may become important to you. Monitor the maps at: http://www.cpc.ncep.noaa.gov/products/precip/CWlink/MJO/enso.shtml .
• "As you were" on that order by the Dept. of Homeland Security requiring farmers to register their stored amounts of ammonium nitrate fertilizer, anhydrous ammonia, propane, biogas and certain other chemicals. The requirement has been postponed indefinitely, so disregard the Jan. 22 deadline; but beware of a future mandate to register.
• 1998 will be replaced by 2008 as the worst financial year for pork producers in modern history says Purdue economist Chris Hurt. A combination of too many hogs and high feed prices may result in a $25 per head loss on average for the year. Hurt says 2008 cost prospects are over $55 per head, compared to the 10 year average under $41 per head.
• Livestock economist Chris Hurt says pork producers will have to go into survival mode for the year, until a spring 2009 recovery. He urges retailers to lower their pork prices to move the product, assured that wholesale pork prices will remain low for months to come. He says producers should cut market weights and analyze their feed efficiency. Read more at: http://www.farmdoc.uiuc.edu/marketing/weekly/html/010708.html .
• The global market may demand US commodities without GMO content, but USDA cannot meet that guarantee says IL Extension Ag Law Specialist Bryan Endres. He says USDA lost the Roundup alfalfa lawsuit because it was unable to show other producers would not be impacted. USDA's policy of "Low Level Presence" is a permissive strategy says Endres, and he adds that the industry has a self policing policy of securing international markets for a biotech product before public release, but it has not happened.
• If tax preparation is on your agenda, IL Extension tax specialist Gary Hoff says don't get caught in the 2 person trap. He says the IRS is looking at farms where the husband and wife are collecting government payments as two persons; and checking to see if each of them are paying self-employment tax. He gives several examples in his newsletter at: http://www.farmdoc.uiuc.edu/legal/articles/ALTBs/ALTB_08-01/ALTB_08-01.pdf .
• The cost of forage production is tied into the cost of harvesting equipment and the labor needed to deliver forage. Consequently, Purdue forage specialist Dennis Buckmaster says match the equipment's capacity with your operation. He says select a set of machinery, not individual implements, within the particular size range for your farm.
• Your Dad didn't have a waterhemp problem, but you do. Extension weed specialists have produced a new tell-all waterhemp booklet that explains why the problem is yours. Obtain the publication at: http://www.ces.purdue.edu/extmedia/BP/GWC-13.pdf .
  1) Increased use of no-till and reduced tillage favors spread of waterhemp. Small seed remains at soil surface and reduced cultivation favors many late-emerging plants.
  2) 30 years ago farmers relied on soil applied herbicides with long residual activity; but wide use of ALS-inhibiting herbicides allowed survival of ALS-resistant waterhemp.

The yields from 2007 showed that the crops did quite well in a year without much rainfall in the middle of the growing season. The season started with a full soil moisture profile and the field received about 5 inches of rain in May. Then it turned dry in June and July, with only about 1 inch and 2 inches of rain, respectively. From August 1 until September 18 (crop maturity), an additional 5.8 inches of rain fell, helping the soybeans but coming a little late for the corn. The no-till plots had the highest yields and the best profitability as they didn't have any tillage costs (see Table 1).

Historically, row crop cultivation has been used for weed control and these plots included no-till with and without cultivation from 1981 until 2006. In 2007 the plots were not cultivated and it was interesting to note the effect of previous cultivation on yields, almost the same as doing tillage this year. As many producers are doing, postemerge herbicides have been used on these plots the past several years in combination with an early preplant application, making row crop cultivation unnecessary. In the previous years, row crop cultivation did not increase yields unless there was severe weed competition not controlled by herbicides.

The continued use of no-till has improved soil structure and protects the soil surface with residue. With less crusting and reduced runoff, more soil moisture is available for the crop, resulting in higher yields. After the 2007 harvest, a cereal rye cover crop was drilled into one of the no-till treatments (no-till cultivated in the past) and one of the disk treatments (disk). This use of cover crops will continue and add a new dimension to the tillage study, looking at the effects of the extra roots and biomass in the soil system.

Paul Jasa
Extension Engineer

URBANA - Computer workshops to help agricultural producers manage risk and make better financial decisions will be offered in February and March by University of Illinois Extension. The workshop series is part of the Farm Analysis Solution Tools (FAST) program.

"These FAST Training Workshops are two-day sessions," explained Paul Ellinger, U of I Extension farm financial management specialist. "Both days involve computer training. The first day focuses on spreadsheet development and financial management. The second day provides computer training in risk management.

"Producers may attend one or both days."

FAST is a series of Microsoft Excel spreadsheets that aid producers in making various farm business decisions.

Each workshop begins at 9:30 a.m. and concludes at 4 p.m. The $45 registration fee per workshop includes both lunch and materials. The registration charge for both sessions is $65.

Registration is due one week before the workshop you plan to attend. Each workshop is limited to 30 participants. Additional information can be obtained by contacting Garrett Stoerger at (217) 333-1817, gstoerge@uiuc.edu, Ellinger said.

Also sponsoring the workshops are U of Extension's farmdoc program and the USDA Risk Management Agency.

Dates and locations for the workshops are:

Feb. 5-6, Oregon, Ogle County Extension office

Feb. 7-8, Bloomington, McLean County Extension office

Feb. 14-15, Galesburg, Knox County Extension office

March 4-5, Mount Vernon, Rend Lake Marketplace.

• Wheat and soybean prices have outdistanced corn in recent weeks, but Marketing Specialist Alan May at South Dakota State says farmers have real homework to do, "This represents the corn market's desire to buy acres at a time when many are predicting that 2008 corn acres will decline due to higher fertilizer prices and a more rapidly improving soybean and wheat market. It will be important in the weeks and months ahead to legitimately evaluate the costs v. returns of a corn enterprise compared to other crops."
• If you have old crop corn to sell, Alan May says the returns to storage are substantial, with the help of the carry in the market. Using a forward contract, May says, "You will establish a floor price today for your corn and have protection against any price decline during the storage period. The drawback is that if corn prices continue to move higher, you would not be able to take part in that rally on the corn in the cash forward contract."
• If you don't want to forward contract, May says write a marketing plan that calls for periodic sales, "You could simply set a series of target prices you would sell corn as the market moved higher and sell all or portions of your old crop corn. It would be strongly encouraged that if you are currently storing corn with no price protection, you should at least have a "back-stop" price that may be 40-60¢ or more below the current cash price."
• The soybean market does not offer such a clean profit on forward contracts, says May, "You could commit to a cash forward contract on soybeans currently in storage for delivery in the next three to four months and possibly capture a price higher than today's current price. However, due to the high value of soybeans and the corresponding interest costs, you may not be able to cover the cost of storage over the storage period."
• Beware of the inverse market for soybeans says May, "There is an inverse value of $1.00 when you compare the November '08 soybean futures contract with the nearby March '08 contract. This means that new crop bean prices are a full dollar less than the spot cash bid on old crop beans. Don't make the mistake and assume new crop values match old crop values. However, with new crop soybeans prices (offered by many elevators at profitable levels), there is no time like the present to make some sales."
• Budget an extra 30-40% for spring diesel fuel costs. That's the projection of Kansas State economist Kevin Dhuyvetter, who analyzed futures prices for crude oil. He says March will be about 42% above 2007, April and May will be 31% higher than 2007. He says they will taper off during the year, but will not drop below 2007 futures prices. Visit his price analysis charts at: http://www.agmanager.info/energy/PriceForecasts.pdf .
• A $29 per head loss for farrow to finish operators in November was calculated by Iowa State economist John Lawrence. He says, "Losses on hogs sold in December are expected to nearly as large. Given corn and soybean meal prices predicted for 2008, cost of production for farrow-to-finish operations is projected to be near $70/cwt carcass weight or in the mid-$50/cwt live weight." He says 2008 will be a negative return year. His newsletter is at: http://www.econ.iastate.edu/outreach/agriculture/periodicals/ifo/ .
• Pork exports will set a record in 2007, says Lawrence and he is expecting a 10% increase in 2008. "The lower wholesale pork prices and weaker US dollar has increased the pace of exports in the fourth quarter." Lawrence says demand remains strong:
  1) 4Q production was up 9%, but wholesale prices dropped only a little more than 10%.
  2) Cold storage inventory climbed only 1.6% indicating strong consumption trends.
• The holidays interrupted hog marketing, says MO economist Glenn Grimes. "The record high hog slaughter for the week of Dec. 22 contributed to pulling the average live weight of barrows and gilts in Iowa-Minnesota down 0.7 lbs per head to 268.5 lbs. This weight was also 0.7 lbs per head below a year earlier. However, average weights are likely to increase for the two holiday-shortened weeks ending Jan. 5.
• Grimes says hog slaughter is at capacity. "Our estimate is for total slaughter in 2008 to be near 113.5 million head. If fourth quarter slaughter is close to farrowing intentions, slaughter in the fourth quarter will be up only about 1%. This number is getting close to the level that could mean not enough slaughter capacity, but unless we lose some of today's capacity, we will likely be able to get by without much of a problem."
• A forage analysis is important when feeding livestock. IL Extension's Jim Morrison says it indicates values for many dry matter nutrients, but first needs a good sample.
  1) Acid detergent fiber calculates digestibility, and the lower the number the better.
  2) Neutral detergent fiber will indicate forage intake, and again, lower numbers are better.
  3) Crude protein value is 6.25 times the N content, and larger numbers are desired.
  4) Dry matter is the percent that is not water, and the value should be 100%.
  5) Relative feed value ranks digestibility and intake potential, the higher the better.
  6) Relative forage quality parallels RFV, but includes digestible fiber.
• Forage tests will only need a few grams of material from the tons you may purchase, but should be a representative sample. For sampling and evaluating forage tests, Morrison says additional information can be found at the National Forage Testing Association brochure: http://www.foragetesting.org/files/UnderstandingForageQuality.pdf .
• Your volunteer Bt corn should be controlled, or your fields may begin incubating corn rootworms. Purdue entomologist Christian Krupke warns that volunteer Bt corn in your soybeans creates a continuous opportunity for corn rootworms to become immune to the Bt toxins. He says stronger, tougher-to-control rootworms will result, since they are feeding on maverick Bt corn plants which may not carry the intensity of the Bt toxin.
• Entomologist Krupke says the rootworm adults that survive the Bt toxin are larger and lay more eggs than those susceptible to the Bt gene. If you have a rootworm concern, and have a problem controlling volunteer Bt corn, Purdue weed scientist Bill Johnson suggests the use of Assure II, Select Max, Fusion or Raptor, tank-mixed with glyphosate.
• On your tax return, Purdue economist George Patrick says there is a tax liability on conservation payments. "In general, these payments are ordinary income that is subject to income and self-employment taxes. In the case of some cost-sharing payments, there may be an offsetting deduction, or some payments may qualify to be excluded from income." Read more at: http://www.agecon.purdue.edu/extension/pubs/TAXPLAN2007final.pdf .
  1) Conservation Stewardship Program payments are ordinary income and require SE tax.
  2) Depreciation may not be eligible on practices that are funding with cost-sharing funds.
  3) Cost-share payments are offset with expenditures, reducing income & SE tax liability.
  4) CRP rent is ordinary income and subject to SE tax as of 12/06.
  5) Payments from EQIP, WRP, CREP, are ordinary income and subject to SE tax.
• With higher commodity sales income in 2007, many farmers will benefit from income averaging, that allows amended returns from the past two years to absorb some 2007 income at lower tax rates. Purdue's Patrick says it is all still subject to the Alternative Minimum Tax. However, Congress recently adjusted the AMT upward for 1 year.
• Everything you wanted to know about ethanol is compiled in a comprehensive 179 page report created by Univ. of IL ag economists available on the FarmDoc website, http://www.farmdoc.uiuc.edu/index.html . The report, covering economics, DDGS, and community impact, was downloaded 35,000 times in its first 3 weeks on the Internet. Get it here: http://www.farmdoc.uiuc.edu/policy/research_reports/ethanol_report/index.html .
• You have probably received your Ag Census form in the mail. If you are ambivalent about completing the form, USDA reminds everyone that it is a mandatory form, and farms not completing a form will be called or visited by enumerators who will collect the necessary data. It seeks information about agriculture unavailable elsewhere, and will be published in early 2009. Find out more at: http://www.agcensus.usda.gov .
• Mark your calendar for a tillage seminar on Cornbelt strip-till and no-till systems 2/13 in Rock Falls, IL. Topics include: rotations, residues, auto-guidance, fertilizer placement, continuous corn management, and conservation cost-share. $15 fee and pre-registration is required by 2/6 at: http://web.extension.uiuc.edu/whiteside/ or call 815/772-4075.

• Ethanol demand for corn will continue to grow, but with reduced corn acres in 2008 prices will be historically high for the 2007, 2008, & 2009 crops with corn priced in the mid to high $4 range according to Purdue Marketing Specialist Chris Hurt. Hurt says ethanol plants coming on line will raise corn usage from 2.5 to 4.0 bil. bu. by July.
• Chris Hurt's forecast is for a 6% drop in 2008 corn acres, with production dropping to 12.4 bil. bu. in the face of a 13.3 bil bu. demand. He says that means the crop will need to be rationed with higher prices. As a result the ethanol industry will cut use back to 10 to 12% below capacity. Hurt thinks corn production will be insufficient until 2009.
• It is easy to get carried away with bullish enthusiasm about the market says MO crop Marketing Specialist Melvin Brees, "A number of factors could produce lower prices, maybe significantly lower prices. Fund profit taking or liquidations of commodity holdings, improved production prospects in other countries (especially South America), softening of oil/fuel prices, strength in the dollar, or rationing of demand by the current high prices." He says are valid arguments for higher prices, but a lot of downside risk.
• Melvin Brees recommends against trying to hit the highs, and spread sales out to capture good prices. It is important to follow the markets closely and be prepared to act quickly on market signals that a price high is in or an uptrend is broken. Whatever marketing strategy is chosen, focus on favorable prices or market signals and not on how high prices will go. Read Decisive Marketing at: http://www.fapri.missouri.edu/ .
• The post-Christmas La Nina forecast was unfriendly to the Cornbelt says Iowa State meteorologist Elwynn Taylor. He says the Pacific sea surface temperature statistics reached a threshold level which points to a yield risk from a potential 2008 drought. He says there is now a 68% chance of corn being below trend yield which is about 151.6 bu. Taylor says there is only a 15% chance of a record high, and a 35% chance of a drought. His complete advisory is: http://www.extension.iastate.edu/notes/detail.aspx?id=15947 .
• USDA's Hogs and Pigs report counted the inventory at 65.1 mil. head, up 4% from last year, and down 1% from September. The breeding inventory was up 1% from last year and the market hog inventory was up 5% from 2006. The fall pig crop was up 4%, and winter farrowings will be up 2%. The numbers were at the high end of trader estimates.
• Livestock economist John Lawrence at Iowa State says the only opportunity for pork profits might be in the summer of 2008, but otherwise costs will exceed market prices in the coming year. He says the last quarter of 2008 may show the expansion is slowing.

• Biodiesel demand may get a boost with research by Univ. of IL Ag engineer Al Hansen who says its nitrogen oxide emissions can be controlled with an adjustment in engine timing to retard combustion. He's has a sensor that adjusts the timing by detecting the amount of biodiesel in the fuel blend. The result is reduced environmental concerns.
• Biodiesel demand is also fueling the consumption of soybean oil, which IL Extension Specialist Darrel Good says we'll use 8% more soy oil than last year in the domestic market. His recent calculation indicated soybean prices were 42% higher than a year ago, and soybean oil prices were 48% more than a year ago, thanks to biodiesel.
• Soybeans have the capacity to produce 100-plus bushels, but Iowa State agronomist Palle Pedersen says that rarely happens. He and colleagues at 5 other universities will use a USB soybean check-off grant to link the yield correlation, genetics, and agronomic practices. He says the initiative is designed to ensure soybean acres are not lost to corn.
• Are you buying seed corn, based on the labels "triple" or "double?" Ohio State agronomist Peter Thomison says in the 2007 yield trials, 8 of the top 10 hybrids were triple stack, 1 was a double stack, and 1 held a single genetically modified trait. And he said of the bottom 10, 9 were triple stack and 1 was a double stack. Thomison's point is hybrids will perform differently, based on region, soils, and environmental conditions.
• Timber draws hardwood buyers, but IL Extension forester Jay Hayek says don't sell on the first offer. Professional foresters will advise on value and language for sale contracts:
  1) Agree on price, which trees are harvested, and acceptable amount of residual damage.
  2) Establish time limits on logging operations, which may typically be 12-18 months.
  3) Establish stiff penalties for taking unmarked trees, which protects owner from theft.
• Your timber may be your retirement, says Hayek, "Astute forest landowners will treat their standing timber just like a 401K or an IRA. It's simply another long-term investment tool that can be a vital part of their financial portfolio. Therefore, manage it wisely."
• If you are converting to organic production, plan to attend the Midwest Organic Production and Management Conference Jan. 17-18 in Urbana, IL. Topics include: economics, developing markets, livestock, agronomic and horticulture crops, aquaculture, and organic management. Pre-register at: http://orgconf.sustainability.uiuc.edu/ .
• Plants are basically designed for survival, but future crops may be reconfigured for increased productivity, according to IL crop scientist Stephen Long. He and a cohort have built a computer model that mimics photosynthetic responses to environmental change. Long says plant productivity could be improved and farmers would benefit, if, for example, they re-direct nitrogen to boost certain leaf proteins relative to others.