farmgate: Extension Update
Extension Update is a weekly summary of news from Extension, government, and other attributable sources, focused on marketing, farm management, and other issues that are of interest to Midwestern farm owners and operators.
With high land costs and high 2009 production costs, farm profitability could be in jeopardy if crop prices fall much below the early August lows, says IL Extension’s Darrel Good. He expects prices to remain relatively volatile because of uncertainty in both demand and supply. Read his newsletter.
Corn and soybean acreage reported by USDA earlier this month reflects significant abandonment, apparently due to flooded fields. IL Marketing Specialist Darrel Good says the difference between IA planted and harvested corn acres will jump from 350,000 in 2007 to 800,000 this year, and in IL it jumps from 150,000 to 400,000 acres in 2008.
Cracks are developing in the crop demand structure says Darrel Good. That includes:
1) Declining energy and oil prices have pushed down breakeven prices for ethanol.
2) More wheat stocks and a stronger dollar will push livestock feed away from US corn.
3) Domestic feed demand will weaken from the slow US livestock liquidation.
4) Slower pace of the soybean crush and higher world veg oil stocks weaken bean prices.
5) Slower world economic growth and weaker energy prices mean an export slowdown.
It is the demand which has fueled the corn market says IA State economist Bob Wisner, whose latest corn balance sheet indicates that since the 2004-05 marketing year, there has been a 125% increase in corn processed for ethanol. By the end of the next marketing year, ethanol will have consumed 2.5 bil. bu. of corn since the 2004-05 marketing year.
Wisner’s numbers about corn demand also reflect higher export demand and lower feed demand. In the next and the three prior marketing years, corn exports will have increased by an average of nearly 9%, and feed use will have declined by 13%.
Corn supplies will remain tight over the next several years says Wisner, without opening up the CRP or reducing demands for biofuels. But he says that means the demand for additional cropland will also keep soybean supplies tight. View his balance sheet.
Crop report skeptics pushed up corn prices following its release says Mike Woolverton at Kansas St. He says, “That because the corn crop is so far behind in maturity, the USDA’s ear size and weight measurements may not have given an accurate estimate of final yield. Plus, bird’s-eye reports from farmers who flew over corn fields indicated spotty conditions with many drowned out areas and evidence of nitrogen deficiency due to leaching.” His newsletter also says traders had pushed the market down too low, compared to the fundamentals.
Crop prices will remain strong says Woolverton, who notes that Southern Hemisphere wheat production is being hurt by dry soils. Dryness is also prevalent in the Cornbelt and he says yield potential has declined from lack of moisture. Woolverton also says northern states only have 30 days before frost typically hits and crop specialists say crops will not have enough time to reach full maturity, so he expects continued price volatility.
Corn crop #1: From northern to southern IL the accumulation of growing degree days is about 130 behind normal says IL crop production specialist Emerson Nafziger. He says about 500 growing degree days and adequate rains are necessary to get corn to maturity.
Corn crop #2: You are not alone if your corn ears are not filled out all the way to the end of the cob. Apparently pollination failed in many of those kernels that began to accumulate dry matter, then stopped. Kernels were aborted leaving bare ear tips.
Corn crop #3: Pollination problems might be blamed, not on lack of rainfall, but on the lack of sunshine says Emerson Nafziger. With substantial July rain, skies were cloudier, and the resulting 5-7% less sunshine reduced photosynthesis at corn pollination time. Read his newsletter.
Weather-wise, meteorologist Jim Noel at OH State says when the current showers move out of the Cornbelt, there will be a return to drier weather. Temperatures may be slightly above normal in the near term, but temperatures will be average over the next 30-40 days.
Estimate your corn yields so your marketing plan is more on target. OH State suggests the corn yield calculator method that uses a slide rule to come within 20 bu. accuracy. The alternative is the ear weight method that requires corn to be at black layer maturity and 30 to 35% moisture. Find the required steps here.
Early loss of N this year may cause changes in types of N applied in future years, says a MO fertility specialist who compared N performance by soils and drainage. He found:
1) On hills and higher ground it is more cost-effective to use conventional urea.
2) In low-lying areas it was more cost-effective to use a slow-release fertilizer.
3) Slow release gave $80/A more profit over conventional in low lying areas.
4) Conventional urea gave $50/A more profit over slow release in well drained areas.
5) Selective application may cost $10-12/A more, but spreads 2-3 products in one field.
This may be a surprise. The optimum rate for nitrogen application is not dependent upon the corn yield potential, say Purdue agronomists. Instead their theory is that the best rate for nitrogen application depends on the ability of the soil to supply the N to the corn. That is a function of organic matter, soil drainage, rainfall, soil temperature, and the potential for mineralization, leaching, and denitrification. Purdue’s Bob Nielsen says what that means is that higher yielding fields do not require higher nitrogen rates.
Goss’ bacterial wilt may be new to you, but it may also be in your cornfield. It has been confirmed in IA and IN fields of sweet corn, popcorn, and hybrid corn. Purdue specialists believe that early hailstorms, and recent rain and wind contributed to the infection and spread of the disease, which produces shiny, gray to tan lesions on leaves. Management of the disease includes incorporation of infected stalks and crop rotation. View a fact sheet.
Perfect growing conditions have increased soybean aphid populations. Mild temperatures and a lack of natural predators have allowed aphids to rapidly multiply in the northern part of the Cornbelt. IL Extension entomologist Kevin Steffey says there may be an economic benefit for an insecticide treatment on soybeans in R1-R5 stages. Steffey says spraying R-6 beans has questionable value, and he strongly urges scouting.
Droughty areas, particularly in the Eastern Cornbelt, have increasing populations of spider mites in soybeans. OSU agronomists express doubt that entire fields will be infested, but urge farmers to scout for the spider mites, particularly along field edges. Ensure the mites are alive and working before any money is wasted on insecticide.
Verify any soybean disease now, so future seed beans can be selected with genetic resistance. Sudden Death Syndrome, brown stem rot, and stem canker cause similar appearance of soybean leaves. BSR causes brown pith inside stems and roots. SDS leaves a brown discoloration but white pith. Stem canker makes brown stem lesions.
Pork exports in June were 113% more than June 2007, and MO livestock economists Glenn Grimes and Ron Plain say, “It is now obvious that one must be able to estimate pork exports to be able to predict hog prices with any precision. We now have weekly export data for beef, and we need the same information for the pork industry.” They say China and Hong Kong import the largest volume, but Japan imports the highest value.
The beef trade is turning around, say Grimes and Plain. Net beef imports as a percent of production have declined over 4% in the past year. They say if that rate continues, the US will become a net exporter of beef and veal sometime in 2009. That would restore the US status as a beef exporter, which was lost 5 years ago from Canada’s “mad cow.”
IN land values are up 13.5-15% over last year, with a 12-13.5% increase in cash rents recorded by Purdue ag economists. Top quality land is selling at $5,000 and poor land is at $3,400. Cash rent per bushel of long term corn yield is $1.06-$1.09, with the variation in how many bushels per acre the land will produce, ranging from 179 to 115 bu./A.
KS land values are not nearly as high, but range from $1,950 in the northeast corner to $670 in the southwest corner for non-irrigated cropland. The lesser valued land is renting for $33.50 per acre, with the higher valued land renting $76.50 per acre. Pasture values range from $340 to $1,300 per acre and rents range from $9.30 to $21.20 per acre.
What do you pay hired help? US hourly farm workers average $10.34, up 35¢ from 2007. Field workers are at $9.66, livestock workers are at $9.98, and neither includes benefits. IL, IN, & OH averaged $11; and MI, MN, & WI averaged $10.75. Workers on multiple operation farms averaged $10.21 in Cornbelt states of IL, IA, IN, MO, and OH.
Posted by Stu Ellis on August 22, 2008 12:17 AM to farmgate