USDA analysts project corn exports to be up 2.5% from the 2005-06 marketing year, says Iowa State's Bob Wisner. "Cumulative 2006-crop corn export sales so far this marketing year are up more than 39% from a year earlier and continue to suggest that actual marketing year exports may substantially exceed USDA projections. To reach the USDA projections, sales will have to slow dramatically in the months ahead." Wisner's latest newsletter is at: http://www.econ.iastate.edu/outreach/agriculture/periodicals/ifo/ .
According to Wisner, "With a marketing year corn export gain of 15%, total corn use this season would be 270 mil. bu. larger than USDA projects–unless livestock feeding or ethanol processing uses less corn than projected. Current market indicators suggest cuts in those areas are not yet occurring. Larger use would reduce carryover stocks to about 665 mil. bu. next August 31. That would be a very tight 2.8 weeks supply."
On the issue of soybeans, Wisner says exports through December were 35% above 2005, and USDA predicts a 21% increase for the year. That means exports will need to average 19% above 2005 levels for the balance of the marketing year and the Iowa State outlook specialist doubts that possibility with the prospects for a big So. American crop.
If you have unpriced beans: Wisner says watch the May through July period. "At this writing, bids for soybean delivery in June at some elevators are as much as $0.33 to $0.40 per bushel above current cash markets. For soybeans, the basis reflected for summer delivery generally is similar to the current relatively weak basis."
If you have unpriced corn: Wisner says May through July delivery could be a target. "Bids for corn at some ethanol plants are as much as $0.23 to $0.25 per bushel above cash markets. Corn bids for July delivery at some locations reflect an 8 to 11 cent better basis than for current delivery. With tightening carryover stocks, an even stronger corn basis may occur at times between now and midsummer."
Buckle your seat belt, before visiting with your crop insurance agent. Kansas State risk management specialist Art Barnaby says, "There will be "sticker shock" on the crop insurance premiums this year because the price elections for corn will be about a dollar higher. The higher price will have a bigger impact than the higher volatility, but that too will add to the premium costs." Option market volatility increases premium costs.
The alternative is to avoid the higher costs of crop insurance policies, raise a valuable crop with a high cost of production, then lose it to gray leaf spot or soybean rust, or some significant weather problem. But that's not an alternative for $3.50 corn and $6.50 beans.
Ethanol plants are germinating as rapidly in Iowa as corn on a spring day. 63 are either in operation on some phase of construction with 11 more just across the border in an adjacent state. Iowa State economist Bob Wisner says that ethanol-driven corn demand will be 129% of 2006 production. (A 29% shortage of Iowa corn just for ethanol!)
Iowa State's Wisner says, "As more ethanol plants are built, the basis will become increasingly variable, and in years of short crops, local Iowa cash corn prices could well be higher than Chicago futures. The changing basis environment creates opportunities for farmers with farm storage and semi-trucks. Monitoring daily basis movements at a number of locations will pay large dividends and may also help pay for new bins."
DDGS will soon be tracked. Export volumes will soon be reported, and NASS will begin a study of how livestock producers in 12 states feed the ethanol co-product.
You may change the way you feed cattle, based on the genetics of a particular animal. Missouri livestock specialist says there is a wide variation within a breed for individual animals to convert feed to muscle. Kerley says, "Testing for feed efficiency in advance of feeding may determine the best way to feed particular calves. Such tests also could be used to predict with greater accuracy the quantity and quality of finished beef product."
During 2006 there were 105,423,000 pigs weaned in the US. But retired Nebraska swine specialist Mike Brumm sees a lot of Canadian bacon there, "As of the week ending December 23, producers in the US imported 5,706,968 feeder pigs weighing 55 kg or less into the US from Canada in 2006. In other words, Canada farrowing houses were the 8th largest contributor of feeder pigs to finishing facilities in the US."
Blizzards are threatening CO cattle, but Ohio State economist Brian Roe says USDA projects 2007 beef production to be 2.5% higher than '06 with 5% higher production in the first quarter alone. Pork production is up 4%, and poultry up 1%. His meat supply and demand analysis can be found at: http://fairfield.osu.edu/ag/beef/beef.html .
Cattle prices are too high, says Roe, given the fundamentals. "In short, if April 2007 demand is exactly as strong as last year and supplies equal last year, it would imply that futures prices should be trading in the lower-$80's, not the lower $90's. In order to justify futures prices around $93, we would have to be expecting demand to be slightly stronger than the Atkins-era demand of 2003 or a massive beef shortage (i.e., 7% decline)."
Electronic ID ear tags for livestock should be in the left ear, which allows the animal to be identified in a common system for all animals. IL Extension's Justin Sexten says, "The tag's tamperproof (female) tag portion should be on the inside of the ear, while the male portion of the tag should be on the outside to minimize the likelihood of snagging the larger female part of the tag." Read more at: http://www.livestocktrail.uiuc.edu/ .
The Extension Update on Central Illinois Agriculture is e-mailed on Friday to selected subscribers and is also on the Internet (at www.extension.uiuc.edu/macon/agupdate/ or www.farmgate.uiuc.edu .) It is created weekly by former Extension Specialist Stu Ellis, who remains reachable at: shellis@uiuc.edu .
