USDA is now expecting corn acreage to increase 8.7 mil. acres to 87 mil., slightly above the level recently reported by USDA in its 10-year baseline. This would be the highest corn plantings since 1946. Soybean acreage is projected 5 mil. acres lower at 70.5 mil., the lowest since 1997. The figures originated Thursday at USDA's Outlook Conference.
USDA's Chief Economist Keith Collins told the Outlook Conference "Corn production is expected to reach a record 12.2 billion bushels in 2007. Nevertheless, production could once again fall short of demand pulling ending stocks down further in 2007/08 and propelling corn farm prices even higher. Farm prices are expected to average a record-high $3.60/bu for the 2007 crop, up $0.40 per bu. from this year's expected price."
Both exports and the crush remain at a healthy rate for soybeans, says IL Extension's Darrel Good. With a 2.88 bil. bu. consumption forecast for the current marketing year, that is nearly 200 mil. bu. above last year. Darrel says beans are being crushed for meal, and the first quarter of the meal year was nearly 5% above the prior year.
US soybean exports through mid-Feb were 6.6% above last marketing year, and unshipped sales were 43% above last year. Darrel Good says with soybean exports and commitments 19% more than last year, he believes the USDA target will be reached. His newsletter is at: http://www.farmdoc.uiuc.edu/marketing/weekly/html/022607.html .
Even with a record level of consumption that may exceed current USDA projections, Good says, "Supplies of US soybeans will be extremely large at the end of the current marketing year. All of the recent strength in soybean prices is in anticipation of sharply lower production in 2007. Unless, the US average yield falls below trend value, however, a shortage of soybeans will not likely occur until the 2008-09 marketing year."
Corn supply will remain tight believes economist Matt Roberts at Ohio State, who says, "With 10 mil. acres and a 143 bu/A yield, I would expect harvest prices of at least $4.75, and possibly as high as $6. If yields are high, I expect harvest prices to be near or below $3.00. Even in a high-yield scenario, I don't see prices falling much below $3, as this will spur increased interest in expanding the ethanol industry, which will provide support for the '08 and later corn contracts, which will, in turn, support the '07 contracts."
Roberts believes a 12 mil. growth in corn acres would take 30-40 cents off the market, so he's suggesting some protection with options. "I would like to carry very little old crop risk into late March. You can buy some short term protection with July $4.10 puts for 16 cents or so, with the intention of selling them if the market holds or rallies after the report. In any event, they should still be worth 6-8c in the first week of April."
Reports of La Nina (hot, dry summer) spurred the market a week ago, and Ohio State's Roberts says that was the first of the 2007 weather market. "As the industry waits for the March 30 report, it will also keep an eye on Southern Pacific water temperatures. As we end March, the market will begin to watch sub- and topsoil moisture levels, worrying that each system that moves through the Cornbelt will delay planting." Roberts believes that the entire crop production season will be a weather market without let-up until harvest. More is at: http://aede.osu.edu/people/roberts.628/extension/newsletter/g07.pdf
GRIP crop insurance may be an option for many Cornbelt farmers, and has not changed since last year, except premiums are more expensive because crop values are higher. GRIP pays out more indemnity checks over time than premiums paid in because of its design. However, few payments were paid last year, causing many to question whether to use GRIP this year. IL Extension economist Gary Schnitkey says, "Farmers in more vulnerable positions should choose farm-level products over GRIP." Read more at: http://www.farmdoc.uiuc.edu/manage/newsletters/fefo07_04/fefo07_04.html .
The price of cornflakes and tortillas won't be affected by higher corn prices, but Univ. of MO economist Ron Plain says the meat counter will see the impact. For example: 1) For every dime corn goes up, there is a $5 per head drop in the prices for feeder cattle. 2) For every dime corn goes up, there is a $2 per head decrease for feeder pig prices. 3) Corn prices have gone up $1.60, that's $80 less per head for the cow-calf operator. 4) Ethanol and inflation will raise meat and dairy prices around 12 percent by 2009. 5) More: http://agebb.missouri.edu/news/queries/showcur.idc?story_num=4040&iln=293
Evaluate your wheat stand before you automatically plant the field into corn: 1) At random locations in the field, use a 19 in. hula hoop (2 sq. ft) to count plants. 2) 30-35 seeds planted per sq. ft. will give a good stand, but less is acceptable. 3) For 7-in. rows, 20.6 in. of row is 1 sq. ft. For 7.5-in. rows 19.2 in. of row is 1 sq. ft. 4) 1 healthy main plant and 1 good tiller can each develop 1 good seed head. 5) 1 good seed head per foot of row usually translates to 1 bushel per acre. 6) If you are planting a cover crop to barren areas, consider previously applied chemicals 7) Before destroying the crop, notify the FSA and consult with a crop insurance agent.
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 .
