A weekly publication of University of Illinois Extension, Dec. 8, 2006, Vol. 8 No. 33 Start your day at: www.Farmgate.uiuc.edu , a blog for farm decision-makers.

"Your Virtual Research Assistant."

• There is no evidence yet that the higher prices of US corn and soybeans have slowed the pace of export commitments, says IL Marketing Specialist Darrel Good. "Some of the large outstanding sales may represent an accelerated pace of purchases as importers anticipated higher prices, or in the case of corn, reduced availability due to domestic ethanol use and a smaller than expected crop." Read his export update newsletter at: http://www.farmdoc.uiuc.edu/marketing/weekly/html/120406.html
• Technical indicators in the grain markets suggest a downtrend in prices for corn and beans, says Iowa State Extension Specialist Bob Wisner. He says, "Soybean and soybean meal price charts have turned negative, and corn price charts are at a critical point. A close moderately below the Dec 4 settlement price on Mar 2007 corn would indicate prices have temporarily broken out of the 2 1/2 month uptrend." (It has closed lower.)
• Watch for more corn in 2007, says Iowa State's Wisner, because of several reasons:
  1) Seed corn sales are up 10-12% and the best varieties are sold out.
  2) There are temporary local shortages of nitrogen from heavy fall application.
  3) Market forecasting firms show a potential sharp increase in corn plantings.
• Corn demand remains strong, says Wisner. Export sales through Nov were up 35% from 2005. Cattle in the larger feedlots are up 4% from 2005 and 6% from 2004. Farrowing intentions show a slight increase the next few quarters. Read more at: http://www.econ.iastate.edu/outreach/agriculture/periodicals/ifo/ .
• While soybean prices stall, and meal prices fall, Wisner says the soybean oil market is still in an uptrend. He says production cost data for bio-diesel suggest current SBO prices may be pushing some bio-diesel operations into the red. Returns for individual plants will be influenced by how much of the oil supply was locked in earlier at lower prices.
• Will high commodity prices lead to high cash rents? IL Extension economists say that may not be justified in times of uncertain prices. They offer 3 scenarios:
  1) $3.20 corn & $6.90 beans return $254 per acre well above the $182 average return in the years 1995-2005 and operators could reasonably pay relatively higher cash rents.
  2) $2.40 corn & $6.10 beans return $157 per acre, $25 below the $182 historical average and may not cover the non-land costs, which are $41 higher than the1995-2005 period.
  3) $2.56 corn & $6.50 beans are equilibrium prices that result in a $182 return equal to the 10-year historical level and needed to offset loss of USDA payments.
  Read: http://www.farmdoc.uiuc.edu/manage/newsletters/fefo06_21/fefo06_21.html .
• Higher corn prices have not impacted cattle weights, but KS State's Jim Mintert says that could change in 2007. He says commercial carcass weights averaged 649 pounds in 1986, and now are at 774, up 19% in the past 20 years. He says genetics and feeding technology have pushed weights up, but corn prices may push weights down. Mintert says when July 1996 corn hit $5, beef carcass weights fell more than 3%. Read more at: http://www.lmic.info/memberspublic/InTheCattleMarket/cattlemarkets.pdf .
• The additional cost of purchasing corn for feed has affected not only the profitability of cattle finishers, but also dampened the market for feeder cattle, says Iowa State Extension Specialist Shane Ellis. He says while the market value of fed cattle has dropped by 6% between early- Sept and mid-Nov, KS feeder prices have slipped 15% in the same period, and cash corn prices have increased 58% during the same period.
• Cattle feeders who are currently purchasing feeder calves for $110/cwt and can lock in corn at $3.25 per bushel are estimated to need $88-90/cwt in fed cattle prices to break even next summer, says Shane Ellis. If dried distillers grains are used, the breakeven price may be $1-3/cwt dollars lower, depending upon DDGS cost and quantity in ration.
• Memories of the StarLink problem surfaced this summer in the rice industry when unapproved genetic varieties entered the marketing chain. IL Extension ag law specialist Bryan Endres says the ultimate lesson for developers of genetically engineered varieties is that they should submit a GMO detection test along with requests for seed approval.
• Did you have European corn borer this year? IL Extension entomologists surveyed 498 fields in 50 counties, and report the statewide average number of 2^nd generation ECB per 100 plants in IL was lower in 2006 (23.24) than in 2005 (34.4). However, the average percentage of infestation of corn plants was 24.2 in 2005 and 33 in 2006. Their survey results can be found at: http://www.ipm.uiuc.edu/bulletin/article.php?id=644 .
• If soybean aphids are a 2007 concern for you, register for a Cornbelt Extension teleconference focused on management guidelines and the potential for biological control, scheduled for Mar 6. Register at: http://www.ncipmc.org/teleconference/
• Make your tax decisions soon, says Purdue's George Patrick. "Farmers need to sit down before the end of the tax year and figure out where you are in terms of receipts to date and expenses to date, because you can make changes until Dec. 31," he said. "After that it may be hard to accomplish some of the things you are trying to do."
• Ride your horse to Weight Watchers for a weekly weigh-in and ensure your equine diet is not higher calorie than the horse needs for the exercise it is getting. IL Vet Med staff and students say obesity is becoming a problem for horses, because they are getting too much grain or pelleted feeds and not working it off. Also limit the horse's pasture time.