Questions about mold development in corn continue. Mold can reduce corn test weight, quality of the grain, nutrient content, and increase the risk of mycotoxin formation. Mycotoxins are chemicals produced by fungi or mold under certain conditions and they may be toxic to livestock or humans so detection is very important.

In last week's column, it was noted that in Illinois grain can be tested for mycotoxins at the Department of Agriculture's Centralia Animal Disease Laboratory; www.agr.state.il.us/AnimalHW/labs/centralialab.html The laboratory is located at 9732 Shattuc Road, Centralia, IL 62801, phone 618-532-6701.

It is important to follow general guidelines for collecting and mailing a sample to the Department of Agriculture's laboratory. Due to variation of mold field-to-field and within a field, getting a representative sample for laboratory diagnosis is critical.

The Department of Agriculture suggests using a cup or similar container to periodically sample the grain stream from the combine or grain cart. Continue sampling until one accumulates 15 pounds of shell corn. Mix this amount well and remove a five pound subsample that will be sent to the laboratory.

Mail the five pound sample the same day as it is collected, and early in the week to prevent the sample from sitting over the weekend. Plastic, gallon sized zip-lock bags work well unless the sample is very wet, and in which case paper or cloth packaging should be used.

Contact the above-mentioned laboratory for costs, time required for analysis, and other information.

Mycotoxin concentrations are almost higher in fines and screenings so combines should be adjusted to reduce the amount of fines and small, shriveled or broken kernels. Drying corn grain to 15 percent moisture shortly after harvest and cooling it below 50 degrees F will prevent further mold growth.

Sharply higher crop prices over the past six weeks allows producers to be more aggressive with harvest time sales, especially in light of price uncertainties expected after harvest, says Darrel Good, University of Illinois economist.

"The big factor supporting corn and soybean prices in recent weeks has been the delay in getting the crops harvested. Futures prices have moved sharply higher and basis levels have been unusually strong as supplies in the cash market are limited," he said.

In addition, the delayed harvest has increased concern about yield losses and additional deterioration of overall quality of the crop.

"It appears that the market thinks yield loss to date has been minimal, but it also recognizes the potential for more significant losses in both quantity and quality as time passes," Good said.

The next assessment of production potential will be available with the USDA's November Crop Production report to be released on November 10. Following that report, the final production estimate will be released in the second full week of January 2010.

"In the longer term, the price implications of crop size will be determined by the strength of demand for corn and soybeans. It is the combination of crop size and demand strength that will influence the post-harvest price pattern, and it is that combination the market is trying to anticipate," Good said.

Also the timing and the magnitude of U.S. economy's recovery as well as the recovery of the world economy will be an important factor in determining future demand strength for corn and soybeans and other commodities.

"Prospects for income growth and lower unemployment rates would suggest a recovery in demand for meat and therefore a strong demand for feed ingredients. Similarly, higher energy prices would point to strong demand for biofuels. Similarly, lack of economic recovery would likely result in weak demand in each of these sectors," Good said.

As the marketing year progresses the rate of consumption of corn and soybeans will be used as a measure of demand strength.

"The rate of consumption, however, needs to be evaluated in relation to the price level. A high rate of consumption at high price levels, for example, is an indication of strong demand. At the other extreme, a low rate of consumption at low prices is an indication of weak demand," Good said.

For soybeans, the pace of export sales remains very large. As of October 15, the USDA reported total export commitments for the current marketing year stood at 818 million bushels, 63 percent of the projected shipments for the year. A year ago, commitments totaled 470 million bushels, or 37 percent of eventual shipments.

"Aggressive buying by China accounts for the large year-over-year increase. The market will be watching for a slowdown in the pace of sales and will be evaluating South American production potential to determine the level of competition for U.S. soybeans during the last half of the 2009-10 marketing year," Good said.

The domestic soybean crush during September, the first month of the 2009-10 marketing year, was at a 12-year low of 114 million bushels. A small inventory of old crop soybeans and delayed harvest of the 2009 crop may have limited availability for crush.

"But large crush margins during the month provided strong motivation for crushing more soybeans. Apparent consumption of soybean meal during September was also at a 12-year low while apparent consumption of soybean oil was at an 8-year low. Ample month-end stocks of soybeans, meal, and oil at processing plants hinted of some weakness in meal and oil demand," Good said.

For corn, the pace of export sales has moderated, totaling only 9.2 million bushels during the week ended October 15. Total export commitments as of that date represented 31 percent of the USDA's current projection of exports for the year and were only 4.5 percent larger than commitments of a year earlier. New sales will need to average about 32 million bushels per week to be on pace to reach the USDA projection of 2.15 billion bushels for the year.

"The economics of ethanol blending and production remain very robust, with all indicators pointing to a return to reasonable returns for ethanol producers even as corn prices have increased," Good said.

"Higher gasoline and ethanol prices have compensated for higher corn prices. Strong blending economics have resulted in higher ethanol prices as gasoline prices increased. Demand for ethanol is strong. The level of gasoline prices in relation to corn prices will be important in determining ethanol demand as the year progresses," he said.

Feed and residual use of corn during the first quarter of the 2009-10 marketing year will be revealed in the USDA's December Grain Stocks report to be released in the second full week of January 2010. Low livestock prices, declining livestock numbers, and increasing production of distillers' grain all point to weak feed demand.

The USDA's November Crop Production report forecast the size of the 2009 U.S. soybean crop at 3.319 billion bushels, 69 million bushels larger than the October forecast, and the 2009 corn crop at 12.921 billion bushels, 97 million bushels smaller than the October forecast.

"With these forecasts, price patterns will now reflect the pace of harvest, which has accelerated rapidly over the past 10 days; the progress of South American crops; and perceptions about the strength of demand," said Darrel Good, U of I Extension economist.

"The declining value of the U.S. dollar, higher crude-oil prices, and advances in the stock market have been encouraging for demand prospects. Still, soybean prices appear to be a bit overvalued in light of the large South American crop prospects. Particularly puzzling is the movement from an inverse to a small carry in the futures price structure given prospects for large supplies next spring," he said.

The U.S. average soybean yield is now forecast at 43.3 bushels per acre, 0.9 bushels higher than the October forecast. The largest month-over-month increase in average yields came in Indiana and Kansas. Those yield estimates were increased by 3 bushels.

"Average yield estimates were lowered for some southern states, including Arkansas, Georgia, Mississippi, and Texas, and for Iowa. The U.S. average yield forecast is 1.1 bushels below the average of forecasts based on our crop weather and crop condition models," Good said.

The USDA also increased the expected size of the 2010 harvest in Brazil, Argentina, Paraguay, Bolivia, and Uruguay. The South American harvest is now forecast at 4.623 billion bushels, 80 million bushels larger than the October forecast and 1.113 billion larger than the drought-reduced harvest of 2009.

"The largest increase is expected in Argentina. The strengthening of the El Nino weather pattern bodes well for South American growing-season weather in spite of some early season dryness in parts of Argentina," Good said.

The USDA increased the forecast of 2009-10 marketing year soybean exports by 20 million bushels and the forecast of the domestic crush by 5 million bushels.

"The larger export forecast reflects expectations of larger imports by China and the European Union, offsetting larger South American exports. The larger crush forecast reflects expectations of a slightly lower yield of soybean meal per bushel of soybeans. The forecasts of soybean oil and meal consumption were not increased," Good said.

"Year-ending stocks of soybeans are now projected at 270 million bushels, 40 million larger than the October forecast. However, the marketing-year average farm price is expected to be between $8.20 and $10.20, $.20 above the October forecast," he said.

For corn, the 2009 U.S. average yield is now forecast at 162.9 bushels, 1.3 bushels below the October forecast. State average yield forecasts were lowered by 5 bushels in Illinois, Iowa, and Mississippi. Yield forecasts were increased for Colorado, Kentucky, Minnesota, Tennessee, and Washington. "The U.S. average yield forecast is two bushels less than the average of forecasts based on our crop weather and crop condition models," Good said.

The USDA reduced the forecast of 2010 corn acreage, yield, and production for Brazil. Production there is now forecast at 2 billion bushels, 39 million below the October forecast, but equal to the 2009 harvest. Conversely, the forecast of the South African harvest was increased by 39 million bushels. That crop is forecast at 453 million bushels, 49 million less than the previous harvest.

"The forecast of 2009-10 marketing year U.S. corn exports was reduced by 50 million bushels, to a total of 2.1 billion bushels. This is the second consecutive month for a lower forecast and reflects the slowing pace of export sales and increased competition from feed wheat," Good said.

Year-ending stocks of U.S. corn are forecast at 1.625 billion bushels, 47 million below the October forecast. The 2009-10 marketing year-average farm price of corn is forecast in a range of $3.25 to $3.85, $.20 above the October forecast.

The 2009 U.S. wheat harvest is now forecast at 2.216 billion bushels, just 4 million below the previous forecast resulting from a slightly smaller estimate of the spring wheat harvest.

"The projection of 2009-10 marketing year exports were dropped 25 million bushels, reflecting prospects for increased competition from larger wheat supplies in Russia, Kazakhstan, and the Ukraine. Year-ending stocks are projected at 885 million bushels, 21 million larger than the October projection and 228 million larger than stocks at the start of the year," Good said.

The USDA will release final estimates of the size of the 2009 U.S. corn and soybean crops in the second week of January 2010.

In the short run, another round of harvest delays has supported corn and soybean prices, and strong demand for corn for ethanol may also provide longer term support. However, according to University of Illinois Economist Darrel Good, at some point, the soybean market may suffer from a very large South American harvest.

Corn and soybean prices continue to trade in a relatively wide range, but are currently near the highs of the past 10 weeks, and Good says basis levels have weakened some as harvest accelerated.

"The average cash price of corn in central Illinois peaked at $3.83 on October 22, declined to $3.41 on November 6, and stood at $3.62 on November 13. The average cash price had dipped under $3.00 in early September. The average cash price in central Illinois was $.28 under December futures on November 13, compared to about $.15 lower four weeks earlier," Good said.

He says corn prices have been supported by ongoing harvest delays as well as expectations that demand for corn-based ethanol will remain strong in the months ahead.

"Ethanol prices have moved sharply higher since late September, supported by very favorable blending margins. Reduced imports of Brazilian ethanol and some exports of U.S. ethanol have contributed to those margins. The EPA ruling on increasing the limit on blending from 10 percent to up to 15 percent will be important for determining domestic market size moving forward. It appears that the self-imposed deadline of December 1, 2009 for making that decision will not be met," Good said.

The level of corn export sales in recent weeks has been disappointing.

"Sales averaged only 16.3 million bushels per week for the four weeks ending November 5. Sales need to average well over 30 million per week in order to meet the current marketing year export forecast of 2.1 billion bushels. Weekly export inspections averaged 26.5 million bushels per week during the five weeks ending November 12. Shipments now need to average nearly 42 million bushels per week through August 2009 in order to reach the current USDA projection," Good said.

The jury is still out on the likely level of feed and residual use of corn this year.

"Some analysts believe that the generally poorer quality crop will result in higher rates of corn feeding, while others believe the poorer quality will lead to higher levels of feeding of other ingredients, particularly soybean meal. Initially, the large supply of low-priced corn screenings might result in at least a normal rate of corn feeding per animal," Good said.

It is still almost two months before the December 1 corn stocks estimate, which will allow a calculation of feed and residual use of corn during the first quarter of the 2009-10 marketing year.

The average cash price of soybeans in central Illinois dropped below $9.00 in early October, peaked at $9.96 on October 21, and stood at $9.635 on November 13. The average cash price on November 13 was $.29 below March 2010 futures, compared to about $.11 below three weeks ago.

"Soybean prices have been supported by a rapid pace of exports and export sales. Through November 5, export commitments, or exports plus outstanding sales, stood at 68.5 percent of the total exports projected for the marketing year. For the four weeks ending November 5, new sales averaged about 31 million per week."

"To reach the USDA projection, new sales now need to average about 10 million per week. For the five weeks ending November 12, USDA export inspections averaged 55.8 million bushels per week. Shipments need to average about 23 million per week for the rest of the year to reach the USDA projection," Good said.

The Census Bureau estimate of September 2009 exports was about 5 million bushels above the USDA estimate, indicating that USDA estimates may lag Census Bureau numbers this year, as has been the case in recent years. Export demand for U.S. soybeans will be concentrated in the first half of the marketing year and is expected to drop sharply with the availability of the South American harvest.

The domestic soybean crush was extremely small in September, but the National Oilseed Processors Association estimates showed a sharp rebound in October. The October 2008 crush estimate exceeded that of a year ago. Good says part of the increase in crush reflects a lower yield of both oil and meal from this year's soybean crop. In addition, the larger crush resulted in a sharp increase in soybean oil stocks.

He says, if confirmed by the Census Bureau crush estimate, the October crush figure suggests that the 2009-10 marketing year crush could exceed the current USDA forecast. At this juncture, however, the larger crush seems to reflect lower product yield more than an increase in consumption.

"Prices of corn and soybeans have also been supported by a low valued U.S. dollar and strength in the financial markets. A low valued U.S. dollar may result in importers being able to pay a higher price for U.S. commodities, but there is no historical statistical relationship between the value of the U.S. dollar and the volume of marketing year exports," Good said.

Soybean cyst nematode (SCN), a microscopic roundworm, is the most damaging soybean pathogen in Illinois. It is estimated to cause more than $200 million in yearly losses to producers. SCN is known to occur in every county in the state.

The only way to confirm its presence and population is by taking a soil sample, says Jim Morrison, University of Illinois Extension crop systems educator. Fall sampling is suggested because the overwintering survival of SCN approaches 100 percent, so the number of nematodes in the fall is highly predictive of the number that will be present in the spring. Samples can be taken until the ground freezes.

For detection purposes, one sample should represent no more than 10 acres and be comprised of 20 to 30 subsamples. Each subsample should be taken 8 to 10 inches deep. Mix the subsamples together in a bucket and remove enough soil to fill a 1-quart plastic bag. Mail this bag to a qualified laboratory for analysis. Results will be reported in either number of cysts per 100 cc of soil or preferably the number of eggs per 100 cc of soil.

Even though you cannot eliminate SCN once it infests a field, yield losses can be reduced by following the "three R's" of rotation:

• Rotate the field with a non-host crop, for instance corn and alfalfa.
• Rotate with SCN-resistant varieties. Level of resistance is available at www.vipsoybeans.org.
• Rotate resistant varieties. Never grow the same SCN-resistant variety in the same field twice. No variety is completely resistant to SCN.

If SCN numbers appear to be increasing in a field that has been managed by rotation of resistance, it is likely a race shift has occurred. This means that the nematodes in the field have adapted to the resistant varieties that have been grown in the field. The nematodes may be causing a yield loss even though "resistant" varieties have been grown. In this case, the best way to plan a management strategy is to have a "SCN type" test done by the University of Illinois Nematology Lab, Department of Crop Sciences, AW 101 Turner Hall, Urbana, IL 61801.

More information is in the Nematode chapter of the Illinois Agronomy Handbook, available from your local U of I Extension office, www.extension.uiuc.edu.

Congress is considering a climate bill that would set the nation's first-ever mandatory limits on heat-trapping gases in an effort to curb global warming. U of I Agricultural economist Madhu Khanna, an expert on environmental policy, discusses the potential consequences for the nation's farmers in an interview with News Bureau Business & Law Editor Jan Dennis.

What are the implications for agriculture under the climate bills now floating in the House and Senate, which propose a cap-and-trade system to curb carbon emissions?

As it stands, agriculture is excluded from the caps, which would focus largely on reducing carbon emissions of major energy producers such as power-generating plants and fuel refineries.

Still, those caps would lead to higher energy prices — and therefore higher fuel and fertilizer prices — which would raise farm-production costs. At the same time, farmers could benefit from market-based payments for offset activities that sequester greenhouse gases, such as no-till farming or installing digesters that capture methane on livestock farms and convert it to electricity. They would also benefit if higher fossil-energy costs create even more demand for renewable energy and biofuels, raising prices for corn and other commodities.

As a result, there could be a significant net increase in farm income because of the climate bill; some studies estimate that with carbon prices in the range of $30 per ton of carbon-dioxide, the agricultural sector could benefit by as much as $8 billion to $13 billion per year.

Do you foresee a dramatic increase in biofuel demand if the climate bill is approved?

The climate bill will create incentives for production of low-carbon biofuels. But our research indicates that a fairly high price on carbon emissions would be needed to really stimulate demand for second-generation, cellulosic biofuels, the ones with a greater potential to reduce greenhouse-gas emissions per gallon used than corn ethanol.

This is because cellulosic biofuels are currently very expensive to produce, so the price of carbon would have to be $50 or $100 per ton of carbon dioxide, not the $15 to $30 forecast under the climate bill. But technology is continually evolving, and if production costs come down they do offer significant potential to raise agricultural incomes and reduce greenhouse-gas emissions.

Currently, biofuels mandates under the federal energy bill of 2007 that call for 15 billion gallons of corn ethanol by 2015 and 36 billion gallons by 2022 are expected to drive demand for biofuels in the short term, not the climate bill.

While the expected carbon price might not be high enough to stimulate cellulosic biofuel production for transportation, it could go a long way toward increasing demand for biomass to generate electricity. Coal is currently very inexpensive but very carbon intensive, so even a small price on carbon could create demand for agricultural-based energy sources to complement other renewable energy alternatives to coal. Moreover, the climate bill proposes to establish a Renewable Portfolio Standard that would mandate a percentage of electricity be produced from renewable sources. This would create additional market opportunities for agricultural residues and dedicated energy crops as inputs for co-fired electricity generation.

Is a cap-and-trade system that targets major energy producers the best approach to combat global warming?

A cap-and-trade system imposed on energy producers is easier to administer than one imposed on energy consumers. From an efficiency perspective, however, either approach will have the same effect of raising the price of energy based on its carbon intensity and leading consumers to find the least costly ways of reducing energy use and, therefore, carbon emissions.

A cost-effective cap-and-trade system would be one that caps all sectors of the economy, rather than leaving some sectors uncapped. This would create incentives for all sectors to find the lowest cost solutions to carbon emissions and lower the costs to the overall economy of meeting the cap. The climate bill does create some incentives for the uncapped agricultural and land-management sectors by rewarding carbon offsets generated by adopting practices that curb greenhouse-gas emissions. It is, therefore, a step in the right direction. But leaving land management and agricultural activities outside the cap could result in foregoing some opportunities for low-cost carbon abatement while also allowing for carbon leakages from land-use changes.