Macon County farmers are urged to attend a September 11 meeting to learn about changes in the Farm Service Agency forms for Loan Deficiency Payments. The meeting will be held at the 4-H Center on the Macon County Fairgrounds, beginning at 7:00 p.m. FSA County Executive Director Larry DeSutter will review the changes for the crop year that will impact corn and soybean LDP's to be collected this fall.

Extension staff members will discuss the proposals for replacing the current Farm Bill. Although the current farm program does not expire for 13 more months, it may be replaced as early as this fall and go into effect for the 2002 crop year. Pre-registration is not required.

The idea of twice the revenue from the same field in one year has been a goal of farmers who plant double crop wheat and soybeans. Technology may now make it a possibility in Macon County. Ted Shambaugh of Cerro Gordo has an experimental plot on his farm north of Oakley to test double cropped wheat and soybeans using a polymer-coated soybean. The polymer coat delays germination of the seed for 21days after planting.

The concept is to plant wheat in the fall using a no-till row system. In early May before wheat heads form, the polymer-coated soybeans are planted between the rows of wheat. Over a three-week period heat and moisture break down the polymer and allow the soybeans to germinate. This approach gives the soybeans a head start before the wheat is harvested. Wheat is harvested at the normal time, but straw goes through a speader or chopper on the back of the combine and is not baled. In the fall soybeans should mature at the normal time, and not be threatened by frost because of delayed maturity.

The economic inputs of the system are basically the cost of normally planting and fertilizing one no-till wheat crop and one no-till soybean crop, plus the cost of harvesting two crops. The differences are: 1) one year of land costs provides two years of revenue; and 2) the cost of the polymer coated soybeans are substantially higher than Roundup Ready soybeans. Crop insurance is available for the wheat, however, crop insurance for the soybeans will require a special endorsement.

The system is currently in the experimental stage. Currently the polymer-coated soybeans are not yet commercially available, but results look promising. The developer of the polymer coating plans to test the seed again in 2002, and may make them commercially in 2003 pending successful field trials. The added benefits of soil and water conservation are also significant considerations to the system. If you are interested in testing the polymer-coated seed beans, contact Claude Butt, Landec Ag Inc., Monticello, IN, 219/583-2777, ext. 121

Extension ag economists from Midwestern universities met in mid-August to compare notes on the farm economy and commodity prices. Paul Mariman, Farm Business Management and Marketing Educator, represented Macon County at the conference and provides this summary:

General Economic Outlook

Tim Yeager of St. Louis Federal Reserve Bank pointed out "the economic slowdown squeezed profit margins; equity prices took a hit; and businesses cut investment spending." Household income dropped and consumer spending subsequently dipped. This slowdown was not limited to the U.S., which caused exports to other countries to slip. Also, manufacturers over-produced inventories in anticipation of shortages that did not appear creating surplus inventory. By definition we are not in a recession, but we are just in an economic slowdown. The Federal Reserve Board responded to the economic slowdown by cutting interest rates. Since the beginning of the year the Fed has cut interest rates seven times.

Yeager expects the U.S. economy will skirt a recession. He feels the Fed policy is geared to boost economic activity. He says inventory bulges are dissipating; growth capacity appears to be strengthening; and financial markets are moderately optimistic. He expects the Fed to contain any inflationary outbursts.

China Outlook

Dr. Bob Wisner, Professor of Economics at Iowa Sate University, gave a presentation on the China's role in world trade. In the short term China may increase wheat imports in the next year and if dry weather moderates, China may reduce their corn imports. Longer-term, the prospects for increased purchases of soybeans and soybean products looks promising. Also, China agreed to reduce barriers to imports of U.S. fruit and vegetables.

China represents approximately one-fifth of the world's population, which by sheer numbers, this makes China a large player in the world market place. Although two-thirds of western China is impoverished, as technologies spread from eastern provinces to the west this is a new potential market. China has a policy to curb the population growth, allowing one child per family. The expectation of China is for the population to peak in the year 2030 at a level of 1.4 billion people in the country.

Farm Input Costs Outlook

Dr. Ray Massey, University of Missouri, says fertilizer, seed, and chemicals make up almost 60% of the input costs for corn or soybeans. He suggests that these three areas are the place to start looking when trying to keep costs under control.

Based on the Kansas State's price projections of natural gas anhydrous ammonia prices should return to a level near or slightly below 2000 crop year averages. In 2000 price for NH3 in Kansas had a high of $318 per ton and a low of $218. In 2002 projections suggest the high to be $274 and a low of $233 per ton. On the whole this is about an 18% reduction in price from 2001 that had a high of $408 and a low of $224.

Overall the cost projections for 2002 are: 1) chemical prices should be flat to up to up slightly; 2) seed prices should be up slightly depending whether or not the seed is biotech; 3) diesel fuel should be down about 5% per gallon; and 4) ammonia should be around $235 this fall and $274 for spring 2002.

Soybean Outlook

Gary Adams of the University of Missouri said oilseed production looks to be steady to declining for 2001 because of non-soybean crops. Sunflower production will be stable with canola, rapeseed, and palm oil declining. This could be a short-term trend do to lower yields in Canada and Malaysia.
Brazil and Argentina continue to increase the land in soybean production and show little sign of slowing the acreage expansion. The U.S. competes directly with Argentina and Brazil and the currency exchange rate is a major factor in the sale of U.S. products. Brazil had devalued their currency in 1999 making soybeans cheaper for importing countries. The Argentina economy has raised concerns of a devaluation of their currency.

The weather from now through harvest will play a major role in the final soybean carryover. In 1999 and 1997 crop condition in the August Crop Report was similar to the current crop conditions however the yield averages were 36.6 and 38.9 substantially different due to weather. If the yield for 2001 is 39 bushels per acre stocks are projected to total 305 million. This level would be depressing to soybean prices.

China continues to increase its consumption of soybeans and soybean products. Since 1999 China has become a major importer of soybeans and soybean products. Chinese demand for soybean oil and soybean meal is projected to increase in line with recent trends. Exports of soybean oil are expected to show the strongest growth relative to last year's numbers according to Adams.

Corn Outlook

Darrel Good of the University of Illinois said the USDA August Crop Report reported the national yield average at 133.9 bushels per acre. The report was based on observations that included ear count and ear length, however, USDA did not consider test weight and kernel depth. The weather after the August report could reduce the average yield. If the average yield were reduced to 131.5 on 69.09 million acres planted the crop would be 2% below the August report. This could result in 590 million bushels less than last years' crop and 129 million bushels less than 1999 crop.

Over the past three years the daily cash price in Central Illinois has traded on a $0.60 to $0.70 range during post-harvest period. If the crop is as small as 9.085 billion bushels, the cash price for corn may be above the loan rate. The carry in the market should offer an opportunity for forward pricing a portion of the stored crop.

Wheat Outlook

University of Nebraska's Lynn Lutgen said US and foreign wheat production is down. Exports are expected to increase, but prices have not improved a great deal due to the value of the dollar relative to other countries currencies. For marketing the current crop Lutgen suggests holding the wheat for a few months and watch the price, using the loan as a back-up plan. If you would like a copy of the Illinois Crop Improvement Assn. 2002 Wheat Decision-Maker, contact the Extension office.

August 21 was the Macon County Plot Day and Jim Snow hosted 100 farmers and seed company representatives. Twenty-six seed companies are involved in the 2001 Plot. Represented are 42 corn varieties, 26 Roundup Ready soybean varieties and 12 conventional soybean varieties.

From April 1 to August 21 the plot had 17.1 inches of rain, which is about an inch less than Jim Snow, Jr. said he would like to see. Dennis Bowman, Crop Specialist for the University of Illinois Extension explained some of the insect and disease pressures that have affected crops during the season. Darrel Good, the new Interim Department Head for Agriculture and Consumer Economics at the University of Illinois provided a market outlook for the coming year.

The corn and soybean plots are located south of Elwin on Riley Rd. The corn plot is on the north side of the over pass and the soybean plot is on the south side of the over pass. There is still time to look at the plot before harvest.

The Seventh Federal Reserve District at Chicago reports there has been a reduced demand for good farmland in the first quarter of 2001 that ended April 1. The results are based upon a survey of 325 agricultural bankers in the northern 2/3 of Illinois and states surrounding Lake Michigan.
Farmland values statewide in Illinois did not increase in the first quarter of 2001 but were up 2% compared to a 12-month period ending April 1, 2000. The percent change in farmland value for Illinois regions is given below:

	1/1/01 to 4/1/01	4/1/00 to 4/1/01
N W IL	0	-2%
W Central IL	-1%	0
Central & E Central IL	1%	4%

 

In the entire Seventh District some bankers noted that there has been an increase in the amount of farmland for sale. This was particularly true in Illinois, Indiana and Iowa. Approximately 75% of all the agricultural bankers thought that farmland values would remain stable in the second quarter of 2001.

Farmland leasing arrangements have been shifting over the last decade. District-wide in 1990 about 42% of leasing arrangements were crop-share while in 2001 only 25% were crop-share. On the other hand, 54% of leasing arrangements were cash rent in 1990 and increased to 71% in 2001. In 2001 Illinois leasing arrangements were 55% cash rent and 40% crop-share. Across the District there has been an average 1% year-to-year increase in cash rent for good farmland.

Source: Chicago Federal Reserve District