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.

Soybean prices may continue to be quite volatile as the growing season wraps up, but current futures prices appear to offer attractive pricing opportunities, says Extension’s Darrel Good. He says USDA sees the 2007-08 marketing year average farm price in a range of $7.75-$8.25, compared to the $6.35 average for the year ending on August 31. Read his newsletter.

The soybean market is currently offering about 90¢ return on 9-months storage of the 2007 crop says Darrel Good. At 8%, the interest cost for 9 months storage is near 50¢, leaving a 40¢ return to cover physical storage costs. As the new crop is priced, the market is encouraging that it be stored and priced for later delivery – selling futures, using a hedged-to-arrive contract, or a cash contract if the deferred basis bids are strong.

Soybean supplies could be short, says Iowa State economist Bob Wisner. Even with a 60 mil. bu. decline in 2007-08 exports, the projected US August 31, 2008 soybean carryover stocks drop by 59% from this year. Indicated ’07-’08 exports are down 6.4% or 70 mil. bu. from last year. The projections show carryover stocks at an adequate 4.3 weeks supply, but with very little reserve supply in case of 2008 weather problems.

Both Wisner and Good say the market is encouraging South American soybean acres, but Wisner says “USDA’s July 12 World Supply-Demand report implies that as mid-July approached, 2008 futures were not yet high enough to generate a large increase in Brazilian and Argentine plantings this fall.” Due to currency relationships between the US and Brazil, input costs are high, market prices are low, and profit margins are weak.

The corn market’s weak new crop basis and large futures carry suggests to IL Outlook Specialist Darrel Good that pricing for delivery late in 2007-08 marketing year offers the opportunity for very good storage returns. He says the July 17 harvest bid in central IL was $.76 under July 2008 futures. If the basis improves to a typical level of 15¢ under July by June of 2008, the market is offering a storage return of 61¢ per bushel. At 8% interest, the cost of holding $3.00 corn for 8 months is only 16¢. Compare your prices.

The growing demand for corn by ethanol plants will continue to diminish stocks, unless 2008 corn acreage increases, says Iowa State’s Bob Wisner. He says this year’s extreme increase in corn acreage came from a very sharp decrease in soybean and cotton acreage, and Dakota spring wheat acres. “Early indications are that the soybean, cotton and possibly other markets will become more competitive for acreage in 2008, thus making it very difficult for corn to attract another large increase in acreage next year.”

Premium grain prices are attractive to landowners who will want higher cash rents. But Extension Specialist Gary Schnitkey says the coming year will also bring higher input cost, lower government payments, and volatile commodity prices that will not provide guaranteed revenue for you to pay higher rent. Read his newsletter warning about cash rent.

Corn prices have been increasing in the Plains states relative to Iowa, says livestock economist John Lawrence. During 2001-2005 Iowa corn was 9¢ to 44¢ per bu. less than other regions. Iowa’s price continues to decline relative to Chicago while other regions, with the exception of Omaha, have increased in the last ten years. In the last 17 months, Iowa’s price has declined while the other regions increased, and some significantly. See his basis graphs.

DDGS use is up in IA says Lawrence, but the supply is growing faster than demand, so the price is falling. He says a ton of DDGS has declined from about 50 times the price of corn to around 30 times the price of corn, basis Chicago. Lawrence says the market is still maturing and prices will vary as more plants add to the supply or changes in processing cause the relative feed value and/or inclusion rates to influence demand for DDGS.

Prices for ethanol co-products vary widely. In the past 6 months, wet DGS prices in NE are 20% higher than IA, and IL wet DGS is 10% cheaper than IA, likely reflecting local supply and demand for wet co-products. However, dry DGS is higher priced in IL and not quoted in NE. Dry DGS can be shipped great distances and prices are influenced by freight rates, potentially increasing local DGS prices relative to IA even further.

Pork production continues to evolve through networking says Missouri’s Glenn Grimes. 25% jointly purchased inputs. 14% were jointly milling feed, compared to very few in 2003. Nearly 33% were networking to market. Feeder-or-weaned-pig-production networking grew substantially between 2003 and 2006 and amounted to 26% in 2006. Networking for genetic access grew very little from 2003 to 2006 and amounted to 12% in 2006. Information sharing is at 22%.

Numbers of soybean aphids are declining in some states, increasing in others. IL entomologists say soybean aphid densities can double in 2 to 4 days, depending on temperatures. If natural enemies are not abundant and temperatures remain cooler, we could still encounter economically threatening levels of soybean aphids in 2007.

Soybean rust remains in Gulf Coast states, but Cornbelt sentinel plots have many other varieties of fungus. Visit: http://www.ipm.uiuc.edu/bulletin/article.php?id=812 .
1) Septoria brown spot is in the lower canopy, but yield loss will be minimal.
2) Frogeye leaf spot may require a fungicide at R3, but yield benefit is not a certainty.
3) Downy mildew is only controlled by planting resistant varieties and crop rotation.
4) Bacterial blight is in the upper canopy. There is no fungicide control nor yield concern.

Recent Cornbelt storms have caused lodging in some cornfields. Research says lodging did not affect silking, but does increase the number of barren plants. Ears per plant are reduced. Researchers speculate that kernels per ear and seed weight were likely affected. Lodging not only affects yield components but also disrupts the entire plant orientation. Reorienting the canopy to better intercept light comes at a high energy cost to the plant.

Most Midwest corn fields are pollinating and have good moisture says Extension Crop Specialist Emerson Nafziger. Ten days after pollination multiply kernel rows, by the average number of kernels in the row, by number of ears in 1/1000 of an acre. Nafziger says 14-18 million kernels per acre is a good yield. He says you want enough kernels so that yield is limited by the extent to which kernels can fill, rather than by kernels' reaching their maximum size, as can happen when kernel counts are low.

To protect your crop, Nafziger says every trip to the field from now to drydown should include an effort to see how the health and color of leaves and canopy (number, size, and arrangement of leaves) are holding up. Assess individual leaves for color, indicating nutrient status, and for the presence of diseases that can limit effective leaf area.

Take note of the weather for the rest of the summer. Nafziger says lack of water (associated with high sunlight) is more often limiting to yield than lack of sunlight. Still, on a daily basis, how much grainfill takes place is tied to the amount of sunlight that day. Read Nafziger’s newsletter.

The lack of moisture in OH is causing many corn growers to value their crop for silage instead of grain production. With negligible rain since May much of the corn shed its pollen before silks appeared. Crop specialists are also warning of spider mite problems in soybeans and the increasing potential for soybean aphids to also dehydrate soybeans.

OH and IN producers in drought areas really need a rain to cure spider mite problems say Purdue specialists. “Obviously the best plant stress reliever under dry conditions is rain. Significant rain doesn’t control spider mites but helps the soybean plant become more vigorous and healthy, which in turn makes the “juices” of the plant less nutritious to the mites, and makes mites less likely to reproduce as quickly.”

No matter the weather, OH crops are hurt says NWS hydrologist Jim Noel. Corn and wheat are most impacted by El Nino and La Nina events. 92% of the time when a La Nina occurs, corn crop yields are below normal by 13% below trend line. For El Nino events, 67% of the time corn crop yields are below normal by 13% below trend line.

Have you booked diesel fuel for the fall? Kansas St. economist Kevin Dhuyvetter says based on futures prices, Sept. is 4% under last year, but prices for Oct. through December will be 9-10% above last year.

The dubious honor of the week award goes to Cuming County, NE. A soil sample was taken there and sent to the University of NE to test for Soybean Cyst Nematode. SCN had never been found there before 1998. The 4 ounces of soil contained 136,000 eggs, which was declared a new state record. No one has come forward to claim the trophy.