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.

USDA’s September Crop Report will be out on Wednesday, refining the August corn estimate of 13.053 bil. bu, and massaging the soybean estimate of 2.625 bil. bu. Private market analysts FC Stone estimated the US corn crop at 13.062 bil. bu. and Informa Economics estimated corn at 13.323 bil. bu. Informa's soybean estimate is 2.664 bil. bu.

Crop estimates at or near August would be bearish for the market says Bob Wisner at Iowa State and would suggest downside risk into the harvest season. Wisner says cash prices have even more downside risk as storage will become an issue as elevators run out of storage space and lines of trucks are backed up waiting to unload Iowa’s wet corn.

Cash prices for beans averaged $7.50 to $8 during Aug., which was 42% more than a year earlier, thanks to soybean oil and bio-diesel production, says Extension Outlook Specialist Darrel Good. But, ironically, it is the record demand for soybean meal that has increased the soybean crush rate, and that has created record surpluses of soy oil stocks.

Soy oil use is growing, says Good, because of bio-diesel production. Bio-diesel demand took 19% of soybean oil in July, compared to 10% in Jan. With that demand he says the price of soybean oil is becoming linked to the price of bio-diesel, and that is linked to the price of diesel fuel. He says consumption of soybean oil will be heavily dependent on bio-diesel demand and subsidies provided to bio-diesel producers by US energy policy. Read more.

December wheat futures were recently trading at a 270% premium to December corn. And IA Extension’s Wisner says that is reminiscent of the 1970’s Russian wheat deal. Wheat prices have been climbing since last April, and are at record levels because:
1) Global stocks are at a record low level compared as a percent of expected use
2) Weather problems during the last growing seasons in Europe and Australia.
3) Recent Canadian reports indicating 2007 production was below levels of 2006
4) A wet harvest in Kansas that caused acreage abandonment and loss of 400 mil. bu.
5) Nervousness about the impending Australian harvest beginning in November.
6) The switch by India from being a wheat exporter to being a wheat importer.
7) The large wheat market that has developed in Iraq.

Will wheat acreage increase with prices? Iowa State’s Bob Wisner says that may depend on when soybeans are harvested. “Depending on the timing of the soybean harvest, farmers along the eastern edge of the Great Plains, as well as in the eastern Corn Belt and South will have a strong incentive to plant part of this year’s soybean acreage to winter wheat.” Read his newsletter.

“Wheatmeister” Mike Woolverton at Kansas State says after India imported wheat at $10.64/bu. and Russia banned wheat exports, “The real danger is that this panic will cause the wheat market to collapse on itself. The concern for wheat producers is that the Great Wheat Panic of 2007 will end before they have had a chance to lock in the highest wheat prices of their lifetimes. If a producer is going to plant wheat this fall and next fall, it would be good to lock in price on the amount covered by crop insurance sooner.” Read his newsletter.

With new wheat still above $6, are you considering more wheat acres next year? If so, brush up on agronomics:
1) Plant right after the Hessian fly-free date in your area (mid-Sept. to mid-Oct.).
2) A seeding rate of 30 to 35 seeds per sq. ft. is recommended, at 1 to 1.5 in. deep.
3) Wheat receives 10 lbs/A of N credit when following beans; 30 lbs after alfalfa.
4) Apply 20-40 lbs/A of N in the fall, and another 40 lbs of N in the spring.
5) Phosphorus and potassium should be applied based on current soil test and past yields.
6) Wheat in a C-S rotation increases corn yields 10-12 bu. & beans 5-6 bu. per acre.

How are you allocating additional income? IL Extension’s Paul Ellinger suggests:
1) Ensure you can cover the higher input costs and cash rent expected in 2008.
2) Build working capital by reducing debt, increasing liquid assets or both.
3) Reduce your debt level to less than one-half of your total asset values.
4) Establish retirement accounts that allow you to capture the time value of money.
5) If buying farmland, it may appreciate in value, but will not cash flow to service debt.

From a landowner’s perspective a cash rent lease has no risk, but the landowner should expect the lowest return on the agreement say Purdue economists. But they say a share lease has the greatest risk and the expected return should be higher. The Purdue experts say a flexible cash lease should provide a base payment level and a bonus in good years.

From a tenant’s perspective cash rents are the riskiest and may have a high payment in poor years. The share rent is the least risky, but also has the lowest expected return, say the Purdue ag economists. They say the flexible lease provides a situation where the base rent is not as high in poorer years, but there are higher rents in years with better income.

So what amount of rent is appropriate? The Purdue economists say 3 to 4% of current land value is a reasonable range. They say it can also be based on long term corn yields, and rent which is 95¢ to $1.10 per bu. is a reasonable range for the past 5-6 years of yields. They are looking at a 15% increase in the cost of production for the 2008 crop. They say communication is important and ideas from both sides should be on the table.

Unintended consequence. That may have happened with the development of Bt corn containing more proteins to control corn borers and rootworm. The extra protein feeds corn leaf aphids, which may be expanding along with the additional acreage of Bt corn. Another unintended consequence is more parasitic wasps which feed on the aphids.

Unexpected consequence. That is what is happening to PI88788, the source of SCN resistance to 90% of soybeans resistant to soybean cyst nematodes. But researchers have found that 82% of the SCN populations in IL were able to successfully attack PI 88788. Despite rotation of crops and types of SCN resistance, researchers say SCN populations densities remain at levels capable of causing significant yield loss in IL soybeans.

Another nematode, the lance nematode, was being found over the summer in IN, and had damaged both soybean and corn fields. It is transparent and feeds both inside and outside corn and soybean roots. Purdue specialists say it has caused extensive damage, and could be the reason for any unexplained damage in both corn and bean fields.

Charcoal rot is being frequently identified in soybeans, where there are dead spots, and stems have spots resembling charcoal dust. Since it also attacks corn, rotation will not prevent it, however it can be reduced with practices that reduce drought stress, avoiding high seeding rates, and using conservation tillage practices to conserve soil moisture.

To ease spring planting of continuous corn, some producers use a fall application of N to speed stalk deterioration. IL Extension agronomist Emerson Nafziger says that practice will not result in a yield increase, and some of the N will be lost if tillage does not quickly follow. But he says stalk breakdown is more of a function of microbial action, along with soil moisture, temperature, and contact with soil microbes than with N.

Pork prices will be affected by packing plant closures and labor issues this fall in the US and Canada, but Iowa State’s John Lawrence says plant capacity should not drop to levels seen in 1998 when pork prices fell to $10 as slaughter hog numbers backed up.

Other market factors could jeopardize fall pork prices, such as an increase in carcass weights expected through the end of the year. Pork exports have increased for 15 years, but are now declining from reduced Mexican purchases. Anticipated exports to China may have been worked into the market, and traders may “sell the fact” if it happens. And Lawrence says poultry production is rising, and pork must compete with its lower prices.

What is your weed control program? Purdue agronomists regularly survey farmers to determine what current practices are used for weed control. They have discovered:
1) 46% apply a burndown to a no-till soybean field 7-14 days prior to planting. While 19% squeezed in a burndown within 7 day s of planting, 9% did it the prior fall.
2) Of the farmers growing glyphosate resistant soybeans, 26% were using a residual pre-emergent herbicide, meaning 74% were using glyphosate as their only weed control.
3) Purdue weed specialists discovered a wide variety of practices for spraying giant ragweed and lambsquarters, many well outside the glyphosate label requirements.

Experiment with miscanthus until a local market is ready for it as a cellulosic ethanol feedstock. Sterile rhizomes are planted on 3 ft. centers, 4 in. deep in a fine soil bed, and allowed to spread, without producing seeds. It is efficient at capturing and retaining its own nitrogen, and eventually overwhelms weeds. It grows from April to the first killing frost, and reaches 12 ft. tall in a season, producing 15 tons of biomass per acre. Read more about Miscanthus.