Another inhabitant of "the cage" has been nominated. Former ND Gov. Ed Schafer will move into the office of Secretary of Agriculture, to replace Acting Secretary Chuck Conner, who replaced Mike Johanns. Schafer's experience includes 25% of residents in ND agricultural jobs, responding to state 8 disasters, and launching a pilot program to extend high speed telecommunications for education and healthcare service to rural areas.
Buckle your seatbelt for more bad PR for Cornbelt agriculture. The Environmental Working Group, which put every farmer's USDA payments on the Internet, is promoting a new initiative with IN Senator Richard Lugar, called "Subsidies on Autopilot." EWG and Lugar are critical of the Senate Ag Committee's version of the Farm Bill and want cuts in direct payments. Your local media may be reporting names of local farmers.
Corn prices recovered quickly says IL Extension's Darrel Good because, "of a continuation of strong export demand, higher energy costs, concerns about US acreage in 2008, and a slow down in the rate of farmer selling of the newly harvested crop." 1) There is a lack of Chinese exports, very little feed wheat, and a weak dollar. 2) Rising ethanol prices will keep refineries in the black and corn demand stronger. 3) High corn production costs and high soybean prices mean uncertain 2008 corn acres.
Darrel Good says, "Stored corn that is hedged or sold on a hedged-to-arrive contract will likely continue to earn a positive net return. Opportunities to price more of the 2007 crop may develop over the next few weeks. December 2007 futures above $3.90, however, might require some new fundamental information." Read more of Darrel Good's newsletter: http://www.farmdoc.uiuc.edu/marketing/weekly/html/102907.html .
Prospects for reduced acres next year will keep 2008 corn futures prices trading at strong premiums to the 2007 crop futures, says Purdue's Chris Hurt. This means the prospects for earning strong returns to storage are favorable, which he says is helped by an acreage shift of "8% to 10% more soybean acres and for 4% to 5% more wheat acres in the US. This means corn acres will be down by 4% to 6% in 2008."
Soybean futures may be quite volatile in upcoming months, says Chris Hurt at Purdue. "Extreme weakness of the dollar, rapid export purchases, and unfavorable South American weather are all forces that could move futures to $12 per bushel this winter. Alternatively, if those issues do not develop in a bullish manner for soybean prices, it is not unrealistic to talk of $8.00 futures prices next summer if record yields are achieved in South America and US acreage rises 8% to 10% as currently expected." Read more at: http://www.agecon.purdue.edu/extension/prices/grains/soybean.asp?ID=47 .
Even with high commodity prices, 2007 specialty grain premiums added revenue. IL USDA staff reports details at: http://www.ams.usda.gov/mnreports/GX_GR118.txt . 1) Food Grade Yellow corn, option; variety specific, CBOT +40 to +55 2) White Corn, with white kernel and white starch, CBOT +30 to +45 3) High Oil Corn, 6.5% oil or more, variety specific, CBOT +40 to +60 4) High Starch Corn, 69-70%+ extractable starch, buyers call, CBOT +30 5) Hard Endosperm Corn, CBOT +35 to +40; variety specific +45 to +50 6) Waxy Corn, starch over 99% amylopectin, variety specific, CBOT +20 to +25 7) Non GMO corn, CBOT +20 to +30 8) NON-GMO Soybeans, CBOT +65 to +85, mostly +65 to +75 9) Low linolenic soybeans, variety specific, CBOT +60 to +65
We have not reached a new price plateau says Kansas State's Mike Woolverton, who believes prices will fall back, but not quite as low, since production costs are higher. He says the commodity price cycle process results in volatility over time, which means long periods of high and low prices, but the process works to adjust supply to demand. His newsletter is at: http://www.agmanager.info/marketing/outlook/newletters/default.asp .
Woolverton's wheat price theory says the price cycle is playing itself out with short crops, higher futures prices, and plans for the Northern Hemisphere to expand acreage 3%. The price is trending lower and has fallen $1.25, with the new crop price indicating more price weakness. He says with normal weather and more acres, buyers will wait for lower prices at harvest time and the Great Plains price cycle will have been completed.
Woolverton's bean price theory says the downside has not been reached, since it was a fear of insufficient 2008 acres that caused higher prices. With the mediocre 2007 crop and low 8/08 carryover, prices will remain high until South American crops are growing. He says a good crop will cause prices to fall a bit until the US crop is established, and a 9% increase in US acres could reduce prices to a level that will complete the price cycle.
Woolverton's corn price theory does not support a new price level $1.20 above the long term average price. With high spring 2007 prices, production was spurred 26%, but ethanol demand is slowing as exports and feed demand are strong. Barring late season yield damage from quality problems, carryover will be large at two billion bu., and possibly large enough for prices to weaken from the sideways channel of $3.30 to $3.70.
If you are planting more continuous corn in 2008, manage your costs with more nitrogen requirements and lower yield expectation. Purdue's Bob Nielsen says 2007 N trials indicate that second year corn required an average of 35 lbs per acre more N than corn following soybeans, even though second year corn yields ranged from 7 to 22% less.
Weather delays may put harvest in some areas beyond the Dec. 10 crop insurance deadline. If so, your grain quality issues can still be covered if you contact your insurance agent who can extend the coverage period. Several actions may be taken: 1) An adjustor may need to inspect the field to determine the extent of the losses. 2) Do not abandon the field and assume you will receive a full loss indemnity check. 3) If the crop is standing after freezing and snow, comply with the company's rules. 4) Aflatoxin is justification for a claim, but it must be confirmed in the field.
Diplodia, Gibberella and Fusarium ear rots could pose problems if flood damaged corn is fed to livestock. Pierce Paul at Ohio State says obtain toxicology reports on the corn: 1) Gibberella produces vomitoxin, and the limit for hog feed is 5 ppm in 20% of the diet. 2) Fusarium produces fumonisin, to which horses are quite sensitive, but cattle less so.
If you have a bin full of it, you have probably been watching the news, but just to make sure you are up to date on what corn can enter the export market, several new hybrids have been approved for export to the European Union. They include corn and derived products (such as DDGS) containing the Herculex® RW Rootworm Protection trait, as well as the stack of Herculex® I Insect Protection and Roundup Ready® Corn 2 (RR2).
When the corn basis is wide, it is not a good time for a basis contract for a grain producer, but it may be a great time for a livestock feeder. NE livestock economist Darrel Mark is telling cattlemen to protect against the increasing basis, a cash corn buyer should use a basis contract or other tool that will lock in the currently wide basis. Read his latest newsletter at: http://www.lmic.info/memberspublic/InTheCattleMarket.html .
Cattle producers short of forage face a potential 3-year problem. Purdue's Ron Lemenager says if the cows' nutritional needs are not met, low milk quality will not sustain the calf. He said the cows also need to be prepared for the next breeding season, and insufficient forage will result in less calf vigor and a lower conception rate.
Eastern Cornbelt farmers are being urged to consider double cropping and relay intercropping systems as a result of high commodity prices. Ohio State's Jim Beuerlein says, "Typically you end up with about 85%-90% wheat yields and about 30%-40% soybean yields. When you are talking about wheat prices at $6 and soybean prices at $9, with 80 bu. wheat and 20-25 bu. soybeans, that's equivalent to a 200 bu. corn yield."
Water is the limiting factor in double cropping, but Beuerlien says, "Growers need to increase seeding rates, usually 30% to 50% higher depending on where they are and when they are planting, and since you are working in 15-inch rows, all of the equipment needs to match, something called controlled traffic." Details on double cropping and relay intercropping are at: http://ohioline.osu.edu/b472/index.html .
If FFA was part of your past, let's bring you up to date with the latest statistics: 1) 500,823 members, 7,358 chapters in all 50 states, Puerto Rico and the Virgin Islands. 2) 38% of FFA members are female and hold over 47% of state leadership positions. 3) 81% of FFA membership is Caucasian, 12% is Hispanic and 4% is African-American. 4) 89% are in grades 9-12, 6% are in grades 7-8 and 5% are high school graduates. 5) 27% live in rural farm areas, 40% rural non-farm, and 33% are urban and suburban. 6) 15 of the largest cities, including New York, Chicago and Philadelphia have chapters.
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 .
