Since last Fall, much of the excitement in the crop markets occurred in the soybean and wheat markets. March 2004 soybean futures moved from below $6.00 in September 2003 to near $8.00 by late October, driven by a small US harvest. March 2004 Chicago wheat futures rallied from about $3.30 in October 2003 to near $4.20 in mid November, driven by prospects for tight world stocks. In contrast, March 2004 corn futures traded between $2.20 and $2.55 from last summer through early January 2004. However, the USDA reports released on January 12 pumped new life into corn prices. March futures moved to a contract high of $2.735 and December futures reached a high of $2.72 on January 16.

The price strength stemmed from the USDA estimates showing a smaller than expected 2003 crop and larger than expected consumption during the first quarter of the 2003-04 marketing year. Use during the quarter totaled 3.258 billion bushels, 9.7 percent larger than use during the first quarter last year and 2.4 percent larger than the previous record use in 1999. Year-over-year increases totaled 20.9 percent for exports, 8.3 percent for domestic processing use, and 8 percent for domestic feed and residual use. Exports for the quarter of 475 million bushels were well below the record 660 million in 1995, while feed and residual use about equaled the record of 1999. Domestic processing use was record large due to expansion in ethanol production. Corn use for all purposes this year is now forecast at 10.23 billion bushels, exceeding the record harvest of 2003 and resulting in year ending stocks under one billion bushels.

As of January 8, the USDA reported that 354 million bushels of US corn had been sold for export, but not yet shipped. That compares to outstanding sales at this time last year of only 222 million bushels. Those with larger outstanding purchases include, Taiwan, Egypt, and Mexico. In addition, sales to unknown destinations were reported at 75 million bushels, up from 41 million at the same time last year. Importantly, cumulative exports plus unshipped sales to Indonesia, South Korea, and Malaysia totals 36 million bushels, compared to a total of only 5.5 million at this time last year. These increases reflect the slow down in Chinese exports. The USDA now projects marketing year exports from China at only 315 million bushels, 20 million below the December forecast and 285 million less than exported last year. The continued retreat of China from the export market, along with reduced South American exports, suggest that US exports could exceed the current forecast of 1.975 billion bushels.

Prospects for small US and world feed grain stocks, along with expectations of a continuation of the high rate of consumption, makes the size of the 2004 US corn crop very important. The USDA will release a Prospective Plantings report on March 31. Until then, there will be considerable speculation about US corn acreage in 2004. Some analysts have forecast a huge increase (3 to 5 million acres) in corn plantings as producers respond to the generally high corn yields and low soybean yields in 2003. Others expect little or no increase in corn acreage due to recent strength in new crop soybean prices and the rising costs of nitrogen fertilizer. As always, planting season weather may have some role in the magnitude of corn acreage.

Based on historical price patterns, in conjunction with current expectations about strong corn demand and uncertainty about the 2004 crop, corn prices should show further strength yet this winter and into the Spring. Based on historical trading ranges, current targets for both old crop cash corn prices and December 2004 futures are about $.20 above current prices. Legitimate concerns about the 2004 crop could propel prices above these targets. On the other hand, lower than expected prices could eventually be generated by some combination of a large increase in US acreage, very favorable growing conditions, or a disappointing turn in exports. For now, it appears that there will be good opportunities for producers to price remaining old crop inventories and a portion of the 2004 crop.

- Dr. Darrel Good

Do you have some rough land that might qualify for enrollment in a conservation program? One of the many conservation programs in the Farm Bill may help you maximize your income.

Plan to attend a statewide Farm Conservation Programs teleconference from 9:00 a.m. to 12:00 Noon on Wednesday, February 18 at the Extension Conference Center, 2535 Millikin Parkway in Decatur.

Presenters will be from the USDA Farm Service Agency, Illinois Department of Natural Resources, USDA Natural Resources Conservation Service, Illinois Department of Agriculture and the Association of Illinois Soil and Water Conservation Districts. Time will be reserved for answering your individual questions.

Interested? Call Extension at 877-6042 to pre-register for the teleconference. To ensure that you receive a copy of the handouts, please pre-register by February 11.

USDA‘s Sustainable Agriculture Network has made available a new publication called, "Building a Sustainable Business: A Guide to Developing a Business Plan for Farms and Rural Businesses". The book is a basic guide for a business plan for anyone wanting to setup a new business or wanting to put together a plan to expand or enhance a current enterprise.

The step-by-step strategies detailed in the 280-page "Building a Sustainable Business" help you develop a detailed, lender-ready business plan or map out ways to take advantage of new opportunities, such as: agri-tourism, on-farm processing, alternative crops, direct marketing, or adding value to your current production.

Much more than a planning document, "Building a Sustainable Business" shows how six farm families set goals, researched alternatives, determined potential markets and evaluated financing options. Blank worksheets in the book help you create and organize your own plan. Your business plan will demonstrate that you have fully researched your idea, mapped out production and marketing strategies, and that you know how to sell your product.

The worksheets are the real key to the publication. There is good explanation of how to fill out the worksheets and what they mean to a new enterprise. The price is $14 and can be ordered on line at: http://www.sare.org/htdocs/pubs/ or you can send a check to:

Sustainable Agriculture Publications
210 Hillls Building
University of Vermont
Burlington, VT 05405-0082

The FAST Tools collection is making the rounds in Illinois at the Illinois Farm Management 2004 Workshops. This year there is a number of updates to some of the previous existing tools like the Simple Balance Sheet. The newest spreadsheet is the "Marketing and Crop Insurance: Risk Model." This is a great spreadsheet to examine the "what if's" of grain marketing and purchasing crop insurance. The volatility of grain prices so far this year has presented some excellent marketing opportunities, but the questions are "What is the impact going to be on the 2004 crop prices?" and "How can I take advantage of the market prices and the crop insurance to protect the price and the yield?"

As with all of the FAST Tools, the spreadsheets require Microsoft Excel 97 or newer version software to run on your computer. The complete FAST Tools Library can be downloaded for free at: http://www.farmdoc.uiuc.edu/fasttools/index.html or a link to a subscription form can be downloaded. The Subscription cost is $60 and provides a hard copy manual and a years worth of quarterly updates mail to you on CD.

Although the calendar says 2004, the Illinois Agricultural Statistics Service just released its 2003 Annual Report, which is a report on the 2002 crop. In defense of the lateness of the statistics, keep in mind that the marketing year for the 2002 crop did not end until August 31, 2003. So the value of the crop could not be computed until all of the 2002 corn and beans were marketed.

For Macon County, 148,200 acres of corn was harvested in 2002, with a 134 bushel per acre yield that generated 19,858,800 bushels. That volume put Macon County in the 33rd spot in the state for corn production. The 2002 soybean crop averaged 49 bushels per acre on the 133,200 acres harvested, for a total of 6,526,800 bushels. That was good enough for 20th place in the state.

Our ranking for livestock production was certainly not as high, which comes as no surprise. Macon County had 7,800 head of hogs and pigs, 3,200 head of cattle and calves, and 1,000 head of beef cows. Those were all good for 87th or 88th place. The value of the livestock sale receipts was $3,350,000, and the value of crop sale receipts was $88,994,000.

To obtain other information collected by the Illinois Agricultural Statistics Service, visit its website at: http://www.agstats.state.il.us. For national numbers, go to: http://www.usda.gov/nass. Brad Schwab is the Illinois State Statistician and he is reachable at 217/492-4295.

University of Illinois Extension is developing its programming for the next four years in an effort to address the long term needs of the agricultural community. To ensure that Extension staff and information is available to you and when you need our help, we are soliciting your assistance in this planning effort. Your financial support provides for our services, so please give some thought to these questions and let us know your answers. Call Stu Ellis or Paul Mariman at 877-6042.

E-mail us at shellis@uiuc.edu or pmariman@uiuc.edu. Or, send us a note at 2535 Millikin Parkway, Decatur 62526.

1. How can Extension be of value to you?
2. What are the major issues confronting agriculture in Macon County?
3. How can Extension help you address those challenges?
4. What types of program meetings should Extension present?
5. When and where should those meetings be held so you could attend?
6. If you cannot attend meetings, how do you want to receive Extension information?