A winter enigma has been the strength of exports despite high prices. Iowa State economist Bob Wisner says for corn, the increase reflects reduced availability of feed wheat and sharply reduced corn production in the So. Hemisphere last spring. For beans, it reflects less concern about bird flu than last season, good Asian demand, and strong demand for vegetable oils to support Europe's aggressive bio-diesel fuel program.
For the grain markets, Wisner says the key unknown is whether current corn prices are enough higher than soybean prices to get the needed large increase in corn plantings. He expects prices for both corn and soybeans to make at least one or two upward moves between now and mid-April to insure that needed acreage shifts will occur. Wisner thinks corn prices will be stronger if the USDA March 30 report forecasts less than a 9 mil. acre increase, and stronger bean prices if the acreage decreases more than 7 mil. acres.
Can the corn market weaken? Wisner says weaker prices this fall could easily occur: 1) The grain industry will struggle to handle and dry 12-16% more corn than usual. 2) Storage capacity will be needed by at least 2-3% more than the 2006 crop. 3) Reduced carryover stocks will offset a substantial part of increased production.
$4.06 & $8.09 Guaranteed! Those are the spring price guarantees for producers signing up for revenue-based crop insurance products. The prices represent the February average closing prices of Dec corn and Nov bean contracts, and will be the indemnity prices paid by the crop insurance program if your revenue does not match those levels. Mar. 15 is the sign-up deadline. Details are at: http://www.farmdoc.uiuc.edu/cropins/index.asp .
Iowa State weathermeister Elwynn Taylor says 140 bu./A is the most likely yield if we are into a La Nina by the end of May, but the prospects rise to 158 bu./A if we are back into an El Nino by the end of May. He says there is a 50/50 chance of hitting those yields along with a 12% chance of a 163 bu/A yield and a 25% chance of 134 bu/A yield.
FAPRI economists believe corn acreage this year will increase 8.4 mil. acres and reach nearly 90 mil. acres by 2008, and in the long term, corn prices will be above $3 each year for the next ten years. The price is demand driven and FAPRI calculates ethanol will consume 4 bil. bu. by 2009. As corn prices stay high, livestock production declines, even for poultry which reacts to high corn prices with a 50% cut in the annual growth rate.
The ethanol engine may be powering a significant change in cattle feedlots. Nebraska economist Darrell Mark says the Feb. Cattle on Feed report reflected a change northward for the largest feedlot inventories. While winter storms hit the southern plains hard, there is also a 50¢ higher cost for corn in TX than in NE, and less expensive DDGS are more plentiful to feedlots in the northern plains which are closer to Cornbelt ethanol plants.
Hog prices so far this year have been somewhat higher than had been anticipated says Purdue's Chris Hurt. "Using actual cash prices so far this year and lean hog futures prices on March 2 for the rest of the year (adjusted for historical basis), the expected yearly price is $50.37." He attributed the price strength in part to exports being up 15% in the last quarter of 2006, helped by the weakness in the US dollar and weak imports.
Pork production costs are high says Hurt, who estimated costs for the first through fourth quarters, at: $49.00, $50.25, $ 51.25, and $49.75, respectively. "If current futures markets are correct and live hog prices also average near $50 per live hundredweight, then producers will escape a potential bombshell with a nearly breakeven year," he says.
For those willing to take some added price risk, Purdue economist Chris Hurt says buying a portion of corn and meal futures now and then waiting until early May to price lean hog futures would play more favorably to the seasonal price patterns and might enable producers to pick up about $1 to $2 per hundredweight of profits for 2007.
If you are feeding DDGS, rather than corn and soybean meal, what is your savings, if any? Ohio State economist Brian Roe has been tracking the price relationships as they dance with each other, and says the current cost savings is among the highest seen in the past 8 years. By substituting 1 ton of DDGS for 31.8 bu. of corn and 190 lbs. of soybean meal, a livestock feeder would save $19.63. Spoilage and transportation are not included.
Manure is worth its component values when and where it is applied say Iowa State specialists. It needs to be sampled and analyzed, then compared to commercial fertilizer. Downside issues include: soil compaction from application, uniformity of the product and application, impact on planting date and increased weed and disease pressure on the crop. Also beware of problems with manure high in phystase, DDG, and synthetic amino acids. Read more at: http://www.extension.iastate.edu/agdm/articles/leibold/LeiMar07.html .
An alternative to chemical control for pond algae is a strong dose of a blue dye during April. Bright blue water will not hurt the fish but will reduce algae production to levels that are more manageable by reducing light and retarding the ability of the algae to grow. Kill your algae before the water reaches 60 degrees, or decomposition will hurt the fish.
Students and advocates of sustainable agriculture have 6 IL tour opportunities this year: 1) 5/4 Fairbury: heirloom crops, heritage breed animals, conservation, and leek cropping. 2) 6/14 Stewardson: organic vegetables & dent corn, chickens, turkeys, hogs and cattle. 3) 7/30 Farmington: marketing through weekly customized orders via email ordering. 4) 8/17 Elsah: a 150-member Community Supported Agriculture program. 5) 9/14 Dixon Springs: no-till planting, beef cattle research, organic apple production. 6) 10/23 Maple Park: creative agri-tourism with orchards, pumpkin patch, and gift shops. Details are available at: www.extension.uiuc.edu/smallfarm/ . Tour fee is $20.
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 .
