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.

More exports, less ethanol was the bottom line on USDA’s latest 2007 corn estimates, and Extension’s Darrel Good believes, “Increased feeding of co-product feed from ethanol production has been substituting for corn feeding recently, but the apparent feed and residual use of corn during the 2006-07 marketing year was surprisingly small.” He thinks the 2006 corn crop may have been underestimated and looks for a correction.

Darrel Good also says our projected 2 bil. bu. carryover may be enough, “Stocks at that level suggest that an increase in US corn acreage may not be needed in 2008. Some decline in corn prices following the large projection of year-ending stocks would not have been surprising, but prices actually increased. There may be some concern that the 2007 crop forecast could be lowered again in November.” Read his weekly newsletter.

The corn market will wrestle with supply and demand according to Bob Wisner at Iowa State. “With profit margins likely to turn negative for some plants, the depressed ethanol profit margins are likely to be a tempering influence on corn prices in the next six to nine months. But this winter and in early spring, extremely strong export demand for U.S. corn and concern about reduced corn acres in 2008 will likely be offsetting influences.”

Your marketing plan should be flexible enough to accommodate 3 Wisner warnings:
1) Weakness in ethanol margins that cause a slowdown in production plant expansion.
2) Increased 2008 world wheat production that will reduce corn exports next summer.
3) The potential for increased South American corn and soybean production in 2008.

The basis will continue to improve says Wisner. Spring and summer 2008 forward contracts for corn and beans are profitable for those who have on-farm storage available. Forward contracts will vary from elevator to elevator, but the basis being offered is considerably stronger than at harvest and Wisner says it will tighten more. “That creates an incentive to sell on contracts with the basis left open and to be locked in at a later time.” Read more.

Regarding the differences in returns to storage from on-farm and off-farm storage, Wisner estimated profits for 4 and 8 month storage, on $2.97 corn and $8.64 soybeans:
1) Potential profit to store corn 4 months on-farm is 7¢ versus a 10¢ loss off-farm.
2) Potential profit to store corn 8 months on-farm is 28¢ versus 4¢ for off-farm.
3) Potential profit to store beans 4 months on-farm is 17¢ versus 2¢ for off-farm.
4) Potential profit to store beans 8 months on-farm is 15¢ versus an 8¢ loss off-farm.

Wheat is in extremely short supply everywhere in the world according to Mike Woolverton at Kansas State. He says exports have been higher than expected, but cannot be sustained; and he believes the price may rise to ration the remaining US supply. He says current high prices are not buying much, because most old crop wheat has been sold. And he adds, “If wheat acreage expands around the world as expected and growing conditions are good, look for wheat price to move lower this winter and early spring.”

Change must occur, say MO Livestock economists Glenn Grimes and Ron Plain following USDA’s latest Hogs and Pigs Report. “One of the big questions about the current hog industry is how quick producers will react to red ink by reducing production. With the current structure of the hog industry, the response may be slow. If so and we do not get substantial demand growth in the next 2-3 years red ink may flow for some time.”

Agreeing with that is Purdue’s Chris Hurt, who says slaughter capacity is 428 thousand per day, and he says it’s an issue, “In the first two weeks of October, actual slaughter has run very close to that number assuming one-half day of capacity on Saturday’s. Slaughter for this short period has been a surprising 8% above year-earlier levels.” Read more.

With insufficient slaughter capacity, Hurt says prices this fall will average $43-47 on a live weight basis. “Absolute daily lows could move into the lower $40s. Late October or early November tend to be the time of the historic seasonal lows. Winter prices are expected to improve about $2 and to average in a range from $44 to $48. Spring and summer prices should be much better and are expected to average in the very low $50’s.”

But the big supply of pork will be met with a big demand. At Iowa State, economist Shane Ellis says, “Pork retail prices may reach a three year low as extra supplies come available. Consumption, in turn, is expected to reach a three year high. Competing meat prices, beef and poultry, are considerably higher than they were a year ago. So a sign of softening pork prices should draw the attention of consumers. His meat analysis and charts are in his bi-weekly newsletter.

Beef consumption will fade in 2008, says Iowa State’s Ellis. However, exports will be more important to the market, and they are up 25% from last year. The largest growth in beef exports has been in Japan and South Korea, climbing up from zero. Exports to Canada have increased 38% from last year, which is to be expected, with 21% more Canadian feeder cattle being finished here in the US. On the other hand Mexico, our largest beef customer, took in 12% fewer beef and sent us 19% fewer feeder cattle.

Comparing current beef exports to pre-BSE levels, livestock economist Jim Mintert at Kansas State says, “Year-to-date beef exports to all destinations were 46% below the same period in 2003. And shipments to Japan during January-August 2007 were still 83% below the same period in 2003. Longer term, beef exports are expected to continue to grow, but it is expected to take several more years before US exports match 2003’s.”

How do you compare to the average? University of MO and IA State questioned pork producers in 2006 and found: 54% self-prepare their feed and 35% of grain is raised on-farm. Livestock economist Glenn Grimes says responses to the grain question ranged from 2% to 79%, and with the higher corn price expected for the foreseeable future, it increases the competitiveness of the farms that produce most or all of their grain needs.

Corn without ears describes “tropical maize,” but you might be growing it in future years for the sugar content in its stalk and leaves. IL agronomists say it requires a long growing season, but the shorter season in the Cornbelt means the sugar is not converted to cellulose and could be more easily processed into ethanol than miscanthus or switchgrass. Agronomists say it requires less nitrogen, so cost of production is less.

Place your bets on aphid numbers in 2008. Ohio State entomologist Ron Hammond says there were plenty of eggs last spring, and 2007 was predicted to be a big year, but it wasn’t. He thinks the cold spring weather either killed them or destroyed their early food supply. He says there aren’t many preparing to overwinter, but he’s not making bets just yet. Aphid populations alternate high and low, year to year, says Hammond.

Green stem is an enigma but Ohio State agronomists have a theory on its cause. They say when a soybean stem loses pods early, leaves will stay green, but that is not the case on branches. The loss of the pod changes the flow of carbohydrates in the plant, and in maturing the soybean plant digests its leaves and stem to fill the pod. If the plant part is not needed, it will not be used, and will remain green while other plants mature normally. Their theory is plausible, and you can get details .

Should you forget about soybean rust? Purdue’s Greg Shaner says don’t write it off as a minor threat, just because the Cornbelt has escaped its potential damage. He says 2007 was one of the driest years ever for Southern states, and the third successive year of drought conditions, which have combined to suppress Asian rust problems. “If in some future year, southern states receive more rainfall in the spring and early summer, rust could develop quicker down there, and move into the Midwest earlier in the summer.” Read more.

Preserving your grain preserves your revenue, and you can help yourself by monitoring pests in your grain bin. Purdue entomologist Linda Mason suggests placing traps outside and inside a grain bin to detect a trend in potential pests. “Pheromone baited flight traps allow you to monitor moth populations, while grain probe traps monitor beetle populations. Make sure to examine trap data on a regular basis, it is not always the absolute number of insects you catch but the trend that is important. A steady increase in the population indicates a growing problem.” Read more of her grain protection advice.

You can’t tell the players without a program, and NE has the line-up on various bio-tech corn “events” so you know what crop pests are controlled and whether you need to plant a 20% refuge with a non-pest control hybrid, and simplified recommendations on refuges. It is located in the October 12 edition of Cropwatch. Study up, because next week there will be a test on: MON88017/Cry3Bb1 + Mon810, Cry1Ab .