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.

If you haven’t heard, Mike Johanns has resigned as Secretary of Agriculture to run for the Senate from Nebraska. He says farm equity is at $2 trillion, the debt to asset ratio is the lowest in 45 years, 2007 net cash income will be a record 86 billion, with average farm household income projected at $81,500 for the 2007 calendar year.

The Acting Secretary of Agriculture will be Chuck Conner, who has been Deputy Secretary under Johanns and has been the USDA lead on Farm Bill deliberations on Capitol Hill. He was raised on an IN farm, advised the White House on farm issues, headed up the Corn Refiners, and was former staff chief for the Senate Ag Committee.

What happens to a 13 bil. bu. corn crop? IL Extension’s Darrel Good says 12.79 bil. bu. will be consumed, helped by a 1.42 bil. bu. increase over 2006 crop consumption:
1) Ethanol will use 3.3 bil. bu. which is a 1.725 bil. bu. increase over last year.
2) Exporters will need 2.25 bil. bu., 130 mil more than ‘06, and the largest in 18 years.
3) Feed use will grow by 1.7%, helped by a 2% increase in livestock numbers.

Looking at the 2008/09 crop, Darrel Good says if an additional 1 bil. bu. of corn is needed for ethanol production, it may come from carryover which would negate the need for significant additional acres. Any increased acreage required by corn will have a substantial impact on soybean and wheat prices, says Marketing Specialist Good.

Marketing the current crop is your priority, and Darrel Good says price levels and basis will dictate your marketing and storage decisions. The weak basis tells you to store the crop, and the large carry in the market dictates the use of forward pricing. Read his newsletter.

The soybean market is just like the corn market, says Iowa State Specialist Bob Wisner. “The current weak basis and a very large carryover for both corn and soybeans (harvest delivery vs. summer delivery futures contracts) offer much above normal returns for storing on farm and forward contracted bids for spring or summer delivery.” He says forward contract bids for summer vary considerably, and may provide up to 70¢ benefit.

Bob Wisner is uncertain how high soybean prices will have to be between now and spring to encourage enough production to meet market demand. “Soybeans have moved up to new life-of-contract highs for NOV futures, with a substantially higher price being offered for 2008 delivery. With a near normal growing season in So. America, it would not be surprising to see soybeans reach a peak sometime between now and February.”

What will move the market in the near term? Iowa State’s Bob Wisner suggests:
1) A speedy harvest and good fall weather will weaken the basis.
2) Weekly corn and soybean export numbers will confirm overseas demand.
3) The Sept. 28 Grain Stocks Report will indicate recent feed use of grain.
4) The Oct. 12 Crop Report will further define kernel and bean size.

If your storage options are limited, Purdue’s Chris Hurt says the priority is on beans. He says both corn and bean prices will increase throughout the storage season; but he says corn may only increase 50-60¢. Hurt says beans have more return to storage and more upside market potential with Chinese purchases and Brazil production problems.

Purdue’s Chris Hurt says, "Whatever crops the world needs in 2008, the market place will bid very aggressively for those crops and direct the ways which farmers shift their crops.” He’s expecting an 8% increase soybean acres and a 4% decline in corn acreage.

Wheat fundamentals are bullish, but Kansas State’s Mike Woolverton says the market dropped because prices were higher than the fundamentals could support. He says acreage won’t expand much because, “The steep futures market inverse; September 07 to July 08, is telling producers to expect a significantly lower wheat price in July. Plus, strong soybean and corn prices will work against a large shift into wheat.”

Woolverton says the top of the market may be in for wheat. He says Great Plains planting is underway with good conditions; the So. Hemisphere producers are adding to the supply despite their drought; and when the No. Hemisphere crop comes out of dormancy next Feb. and if conditions are near normal, harvest prices will be lower.

Most Cornbelt combines are running, but in areas of excess rain the past several weeks; questions arise about when corn can be harvested. Iowa State agronomists say, “Hybrids will vary in rate of dry down. Drying rates of later maturing hybrids or late-planted corn are slower than earlier maturing hybrids or early-planted corn. This is partly because the corn matures when days are shorter in length and temperatures are usually cooler.”

Husk and ear characteristics will also affect dry down, such as fewer and thinner husk leaves; early husk leaf senescence; ears with tips that protrude beyond the husks; looser husk leaves; early ear drop from an upright position; thinner or more permeable pericarp. Purdue has more.

If your yields were cut by drought, MN Extension soil scientists urge caution in N application. They say there is a good chance that larger than normal amounts of residual soil nitrate-N may be available for use by the 2008 corn crop. And as always, avoid N application to soils above 50 degrees without the used of a nitrogen stabilizer.

Alfalfa producers should consider potassium applications after the final harvest to increase carbohydrates in the roots and create early spring vigor. OH agronomists suggest a 6 ton crop will remove 300 lbs per acre and it should be replaced. Use a soil test to also check if P levels are below 100 lbs. per acre. 1 ton removes 13 lbs. per acre.

Wheat producers who ignore the Hessian fly-free date to get good early growth before winter have also fed aphids that will damage the crop and spread barley yellow dwarf, say Purdue entomologists. An Indian summer spray is too late to prevent BYD, but entomologists say it will kill aphids if you want revenge or you can just wait for frost.

Winter annuals can create many agronomic problems, including SCN hosting, unless controlled. If that is on your checklist for the fall, ensure that you know what weed problems you have, then consult Purdue’s herbicide scorecard for winter annuals.

Your bottom line is the priority if you are considering adding to your precision ag toolbox, says Purdue Specialist Bruce Erickson. He says nitrogen sensor-based tools will become available, and since N and fuel costs are high, the expense of that technology will help the bottom line. Erickson said the same is true with automatic guidance systems, which can save fuel, inputs, and cost by reducing a 5% row overlap to only 2% overlap.

April and June live cattle started the week at over $99 and $95/cwt, respectively, and the three year average basis in Iowa has been a positive $1 to $4/cwt. Iowa State’s Shane Ellis says, “If corn can be purchased at $3.10 per bushel and 1200 lb. fed steers can be sold for $97/cwt next year, then the feedlot could pay up to $136/cwt for their 550 lb. calves right now.

Despite historically high calf prices and 9 years of profit for cow-calf producers, the US cow herd is not expanding. Economist Jim Mintert at Kansas State says high lease rates on pasture, high prices of forage, high prices of corn, as well as high fuel and utility costs have all combined to put more uncertainty into whether profitable prices will remain.

Hogs being farrowed under production contracts have declined, but hog numbers that are finished under production contracts have increased. MO Extension’s Glenn Grimes suggests the trend may be due to the cost of buildings. He says to make loans viable to construct buildings takes a longer payoff, and lenders want to see longer term contracts.

If high milk prices are causing consideration of dairy expansion, Purdue dairy specialist Mike Schutz says the issue of diminished forage supplies and high hay prices need to be addressed first. He also says milk handlers and retailers are forcing producers to avoid using BST with a threatened loss of premiums. He says current prices will not last, but Schutz says, “The strong demand seems poised to prevent a dramatic drop in prices.”

High milk prices cannot be blamed on ethanol, says Purdue’s Schutz, who says strong dairy prices are the result of strong global demand for protein products like whey powder and non-fat dry milk. He said that and the weak US dollar created world demand.

E. coli contamination which kills dozens of people and sickens tens of thousands may be attributed to European starlings. Ohio State researchers are tracking bird movements from farm to farm with radio transmitters and leg flags to assess responsibility for the spread of the bacteria which ends up in ground beef and milk. They were brought to the US in 1890 to populate New York’s Central Park with all of the birds from Shakespeare.