Ethanol demand for corn will continue to grow, but with reduced corn acres in 2008 prices will be historically high for the 2007, 2008, & 2009 crops with corn priced in the mid to high $4 range according to Purdue Marketing Specialist Chris Hurt. Hurt says ethanol plants coming on line will raise corn usage from 2.5 to 4.0 bil. bu. by July.
Chris Hurt's forecast is for a 6% drop in 2008 corn acres, with production dropping to 12.4 bil. bu. in the face of a 13.3 bil bu. demand. He says that means the crop will need to be rationed with higher prices. As a result the ethanol industry will cut use back to 10 to 12% below capacity. Hurt thinks corn production will be insufficient until 2009.
It is easy to get carried away with bullish enthusiasm about the market says MO crop Marketing Specialist Melvin Brees, "A number of factors could produce lower prices, maybe significantly lower prices. Fund profit taking or liquidations of commodity holdings, improved production prospects in other countries (especially South America), softening of oil/fuel prices, strength in the dollar, or rationing of demand by the current high prices." He says are valid arguments for higher prices, but a lot of downside risk.
Melvin Brees recommends against trying to hit the highs, and spread sales out to capture good prices. It is important to follow the markets closely and be prepared to act quickly on market signals that a price high is in or an uptrend is broken. Whatever marketing strategy is chosen, focus on favorable prices or market signals and not on how high prices will go. Read Decisive Marketing at: http://www.fapri.missouri.edu/ .
The post-Christmas La Nina forecast was unfriendly to the Cornbelt says Iowa State meteorologist Elwynn Taylor. He says the Pacific sea surface temperature statistics reached a threshold level which points to a yield risk from a potential 2008 drought. He says there is now a 68% chance of corn being below trend yield which is about 151.6 bu. Taylor says there is only a 15% chance of a record high, and a 35% chance of a drought. His complete advisory is: http://www.extension.iastate.edu/notes/detail.aspx?id=15947 .
USDA's Hogs and Pigs report counted the inventory at 65.1 mil. head, up 4% from last year, and down 1% from September. The breeding inventory was up 1% from last year and the market hog inventory was up 5% from 2006. The fall pig crop was up 4%, and winter farrowings will be up 2%. The numbers were at the high end of trader estimates.
Livestock economist John Lawrence at Iowa State says the only opportunity for pork profits might be in the summer of 2008, but otherwise costs will exceed market prices in the coming year. He says the last quarter of 2008 may show the expansion is slowing.
Biodiesel demand may get a boost with research by Univ. of IL Ag engineer Al Hansen who says its nitrogen oxide emissions can be controlled with an adjustment in engine timing to retard combustion. He's has a sensor that adjusts the timing by detecting the amount of biodiesel in the fuel blend. The result is reduced environmental concerns.
Biodiesel demand is also fueling the consumption of soybean oil, which IL Extension Specialist Darrel Good says we'll use 8% more soy oil than last year in the domestic market. His recent calculation indicated soybean prices were 42% higher than a year ago, and soybean oil prices were 48% more than a year ago, thanks to biodiesel.
Soybeans have the capacity to produce 100-plus bushels, but Iowa State agronomist Palle Pedersen says that rarely happens. He and colleagues at 5 other universities will use a USB soybean check-off grant to link the yield correlation, genetics, and agronomic practices. He says the initiative is designed to ensure soybean acres are not lost to corn.
Are you buying seed corn, based on the labels "triple" or "double?" Ohio State agronomist Peter Thomison says in the 2007 yield trials, 8 of the top 10 hybrids were triple stack, 1 was a double stack, and 1 held a single genetically modified trait. And he said of the bottom 10, 9 were triple stack and 1 was a double stack. Thomison's point is hybrids will perform differently, based on region, soils, and environmental conditions.
Timber draws hardwood buyers, but IL Extension forester Jay Hayek says don't sell on the first offer. Professional foresters will advise on value and language for sale contracts: 1) Agree on price, which trees are harvested, and acceptable amount of residual damage. 2) Establish time limits on logging operations, which may typically be 12-18 months. 3) Establish stiff penalties for taking unmarked trees, which protects owner from theft.
Your timber may be your retirement, says Hayek, "Astute forest landowners will treat their standing timber just like a 401K or an IRA. It's simply another long-term investment tool that can be a vital part of their financial portfolio. Therefore, manage it wisely."
If you are converting to organic production, plan to attend the Midwest Organic Production and Management Conference Jan. 17-18 in Urbana, IL. Topics include: economics, developing markets, livestock, agronomic and horticulture crops, aquaculture, and organic management. Pre-register at: http://orgconf.sustainability.uiuc.edu/ .
Plants are basically designed for survival, but future crops may be reconfigured for increased productivity, according to IL crop scientist Stephen Long. He and a cohort have built a computer model that mimics photosynthetic responses to environmental change. Long says plant productivity could be improved and farmers would benefit, if, for example, they re-direct nitrogen to boost certain leaf proteins relative to others.
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 .
