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.

The dollar is still working to benefit agricultural exports, says Iowa St. Outlook Specialist Bob Wisner. The decline in soybean sales to some nations indicates some rationing of demand may be starting to occur at current prices, but because the Chinese currency is linked in a narrow band with the US dollar, weakness in our currency has not been reflected back to consumers in that country. However, in Europe and other overseas markets, the weak dollar has offset part of the strength in bean prices.

Lock in your return to storage, says Michigan State’s Jim Hilker, not a guarantee of what the unpriced corn will bring. He says the futures markets will pay 16¢ to store corn from Dec. to Mar. and the nearby basis will give you some more. March to May will pay 10¢. May to July will pay 4¢ per month. On-farm storage costs are mostly lost interest, and off-farm storage costs are both lost interest and monthly elevator storage charges.

It is hard to tell what the market really wants to pay for storing soybeans using just the futures market, due to the basis not behaving, says Hilker at Michigan St.. The spreads between futures suggests it will pay 6¢ per month through March, not even enough to offset lost interest. However, if the basis returns to normal by March, returns could be good. To find out what you may be able to get, ask elevators to bid on Feb/Mar delivery.

Wheat futures are willing to pay about 6¢ per month to store your wheat until March, says Hilker, and then it is downhill from there. If you have not priced all your 2007 wheat to this point, consider pricing the remainder on rallies before March. Take a look at the July and/or September wheat charts; since they have not fallen like the old crop futures have. However, they may fall off when the markets think there are enough wheat acres.

Farm budgets are growing say MO ag economists at FAPRI. Their report is available.
1) In 5 years seed corn has gone from $75 to $120 per bag up to a $115 to $260 range.
2) N is $0.335/lb for anhydrous ammonia, but urea & ammonium nitrate are up 30%.
3) Phosphorous is up 40% to $0.38/lb and potash is up 25% to $0.28/lb.
4) Competition has limited price increases in crop chemicals.
5) Fuel prices should be budgeted at $2.70 for farm use and $2.90 for highway.
6) New machinery is 4-6% higher, but used machinery prices have climbed faster.

Based on these relative production costs and the projected corn-soybean price ratio of roughly 2.5, the Food and Agricultural Policy Research Institute says there is a strong signal favoring beans over corn. Corn has the edge over wheat and double-crop soybean. Seed, fertilizer and fuel/energy remain primary operating costs in the crop budgets.

Pork producers are bleeding like a stuck hog, and Purdue’s Chris Hurt says the trend will continue. Increased slaughter rates from underestimated hog and pig numbers are pushing prices down, and higher projected corn prices will push budgets further into the red. Read more.

The time is finally ripe for breeding herd cutbacks to occur in the first-half of 2008, says Chris Hurt. A 4% decline in 2008 may be required to bring the industry back to profitability into 2009. Reductions in the breeding herd may not begin to show up in the USDA inventory reports until June of 2008. This means that reductions in pork supplies will not occur until early in 2009. That requires some industry liquidation this winter.

2007 net farm income is forecast by USDA to be $87.5 bil., up $28 bil. from 2006 and $30 bil. over the 10 year average. It also tops the 2004 record of $85.9 bil. and is due to high commodity prices. USDA also says the $148.5 bil. crop value and the $140 bil. livestock value will be record highs. The demand for biofuels was the major contributor, and secondarily was the export demand, which was prompted by the value of the dollar.

Farm household income is forecast by USDA to be up 7.7% in 2007, to $83.622, but only 13% of the average farm operator household income was from farm sources. The household income recorded a 30% increase in farm income and a 5% increase in off-farm income between 2006 and 2007. USDA says only the largest 8% of farms, on average, with sales exceeding $250,000, will have farm income that exceeds off-farm income.

Profit margins at ethanol plants are skimpy says Iowa St. economist Bob Wisner, thanks to infrastructure problems which will “temper ethanol processing margins for at least the next 10 to 15 months.” He says the infrastructure for distribution has not kept up with the processing expansion. That and the fact that Midwestern demand for ethanol has been filled have combined to cause the downward trend in ethanol prices since last winter.

How is your crop of winter annuals? Soybean cyst nematode specialists at Purdue say, “We have evidence that the life cycles of winter weeds and SCN do overlap and the potential exists for SCN population increases on winter annual weed hosts, especially in fields with high densities of these weeds.” Researchers say with the warm fall and early harvest, your henbit and deadnettle crops emerged nicely, and are nurturing your SCN.

The overwinter growth of SCN depends substantially on the number of degree days while it has a host crop, such as henbit and purple deadnettle. They are not physically active when the soil temperature is below 50 degrees, and complete a life cycle within 750 degree days or one month at 75 degrees. Purdue researchers say SCN will survive on deadnettle roots even when its lifecycle is interrupted for 20 days at 32 degree soils.

100,000 soybean plants at harvest requires how many to be planted in the spring? IA State agronomists found plant mortality was 9.1% greater in 30 in. rows than in 15 in. rows over 4 seeding rates. Planting 125,000 seeds per acre give 108,000 plants in 15 in. rows and 96,000 plants in 30 in. rows. Planting more seed increased plants but not yield.

In order to reduce seeding rates and still achieve 100,000 plants per acre at harvest, equipment setting, residue management, planting depth, and planting speed are more important than anything else, says IA State’s Palle Pedersen. Seedbed conditions are a critical component as well. Plant early, but only when seedbed conditions are adequate.

Carbon sequestration may be a 10 to 20 year process, but Ohio St. agronomists say amounts add up much quicker by separating carbon into individual components: microbial carbon, active carbon, particulate organic matter, and extractable carbon. They measured each and found significant results with carbon storage in no-till fields.

The carbon sequestration process is hampered by soil compaction say the Ohio St. agronomists. Compaction reduces yields because of less root growth, and much of the carbon deep in the soil comes from decaying roots. They suggested soil compaction management by practicing controlled traffic, so carbon is sequestered more quickly.

When was your last soil pH test? The recommendation is every 4 years to determine your limestone needs. IL Extension’s Jim Morrison says a grain rotation needs a pH of 6.0 to 6.5, but 6.5 to 7.0 is needed if alfalfa and clover are in the rotation. Lime lowers the concentration of aluminum and manganese which are toxic to plants. As the acidity is reduced, Morrison says microbial activity rises, soil tilth and N-fixation are improved.

Corn borer Bt pollen apparently is toxic to some aquatic caterpillars, such as caddisflies say Purdue researchers. They are part of the food chain, but the entomologists are not concerned about the Bt product being withdrawn. They say large amounts of the pollen have to enter a stream at the same time, it has to remain intact, and has to become the preferred food of the water bugs which don’t currently care for it. The study continues.

Winter wheat emergence was at 89% this week, which is 4% behind normal says USDA. All of the expected acreage was emerged or nearly emerged in most states, except in AR, CA, MO, NC, and in the southern Great Plains, where emergence was at or below 92% complete. Progress was within 5 points of normal in all states, except OK and TX, where winter wheat emergence lagged 12 and 15 points, respectively.

Keith Collins will be missed as USDA’s Chief Economist. For the past 15 years in that position, Collins was a “tell it like it is” agricultural economist who avoided any political rhetoric within USDA. Yet, he had the respect of every Secretary he served and was a master at converting complex economics into everyday language. He retires in January, and will be replaced by Joe Glauber, formerly his primary deputy, who has been recently advising the US Trade Representative of the WTO impact on the US farm economy.

Another retirement will significantly impact Cornbelt agriculture beginning next week, and that is the departure of Dr. Bob Wisner from the staff at Iowa State University. Wisner has been an Extension marketing outlook specialist for the past 40 years. His specialties have been on risk management, ethanol economics, GMO economics, international grain markets, and is frequently quoted in this newsletter. Thanks Bob.