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.

Production factors are driving the market says Extension Specialist Darrel Good:
1) Only 45% of US winter wheat is reported by USDA in good to excellent condition.
2) Dry soil in India and frost problems in Argentina are threatening wheat crops.
3) Increases in Brazil’s soybean crop will be insufficient to cover the US shortfall.
4) Sufficient 2008 US soybean production may be threatened by high corn prices.

Consumption factors are driving the market says IL Extension’s Darrel Good:
1) Corn and bean demand is up from increased cattle, hog, and broiler production.
2) Continued high oil prices will positively impact ethanol and soy diesel demand.
3) China’s potential demand for US beans, soybean oil, and possibly corn is growing.

But volatility will continue in the market says Good. “Sustained weakness in corn, soybean, and wheat prices is not expected in the near term as supplies remain tight and demand is firm. Tight world stocks will continue to magnify the impact of production uncertainty into the foreseeable future. Volatility in energy and currency markets will also add to the volatility of crop prices. Risk has increased significantly.” Read more.

Outlook Specialist Bob Wisner agrees with Good about the volatility. He also suggests it may take an $11 soybean price to achieve a 5.5% to 6.5% increase in US soybean acreage next year, and a 6% to 8% increase in South American soybean acres. The price volatility will occur until the size of the South American crop is known, says Wisner.

Soybean prices for the 2008 crop may mirror corn prices for the 2007 crop, according to Wisner. “If so, farmers and soybean users should expect the soybean market to follow a pattern similar to that of corn last winter and spring. Prices rose sharply into January and then drifted lower as private surveys showed sharply higher plantings were likely.”

Corn exports are an enigma to Wisner. He says cumulative shipments and unshipped sales are up 35% from 2006. But he says Cumulative export inspections through Nov 8 were up only 5.7% from 2006 and have lagged behind sales. He believes the 71% jump in wheat exports over last year may have held down corn shipments by congesting ports. Read his newsletter.

How do you manage volatility? Alan May at South Dakota State says, “Establishing a marketing plan for old and new crop corn that incorporates breakeven in production costs and profit is critical. The corn market will likely be highly volatile, but it is a market that is still providing very sound opportunities for pricing 2007 and 2008 corn.”

Hog prices have been falling as slaughter rates climb says Extension’s Shane Ellis at Iowa State. Slaughter has been up 5% and will soon climb to 10% over last year, but hog prices are down nearly 15% as a result. While the fourth quarter usually sees a 12% drop in hog prices, the average hog prices this year are 20% lower since early September.

Hog slaughter rates will return to normal, says Ellis, but have been unexpectedly high:
1) The Sept. Hog & Pig Report indicated inventories were up 3% from 2006.
2) There were greater numbers of heavier weight market hogs within weight classes.
3) Canadian hogs coming into the US have increased 7% since the first of Sept.

More cattle, and heavier cattle, are entering feedlots according to USDA’s estimates. Placements were 13.6% higher than Oct. 2006, and placements of cattle weighing over 800 lbs were up 23.1% from 2006. Nebraska’s Darrell Mark says the trend toward more cattle in IA, NE, and SD continues, but the October Cattle on Feed report indicated that more cattle were placed in feedlots in TX, OK, and KS, but were still steady with 2006.

Don’t spend too much on nitrogen if you are budgeting, and are concerned about corn production expense. The key to nitrogen application is no longer based on yield, but “a maximum return to nitrogen” and is calculated from nitrogen costs at corn prices. Find the calculator.

The increasing concern by Extension specialists about the failure of SCN resistant varieties of soybeans is resulting in more recommendations for soil testing. Since most resistant varieties get their genetics from PI88788, but 10% of SCN have been able to reproduce on it, they suggest collecting soil samples before the soil freezes and testing them for SCN.

Why does your Bt hybrid yield better? KY agronomists Ric Bessin and Chad Lee say the breeding methods used to add a gene into a hybrid involves backcrossing an experimental line with the gene of interest into one or both of the inbred parents used to make a hybrid. The number of times it is backcrossed determines the degree which it is genetically similar. The differences in yield are not due to the Bt trait, but instead due to the agronomic characteristics of the inbred parents and the whole genetic package it has.

Round bales stored outside can lose up to 30% of their nutrient value if unprotected. At Iowa State Stephen Barnhart says most of the loss of dry matter and nutrient quality comes at the bottom of the bale where it is constantly in contact with the moist ground. He says storing bales on pallets, tires, or crushed rock can reduce nutrient loss.

Hay value can also be lost with improper feeding. Barnhart estimates 50% of the hay value is lost from either storage or feeding. He suggests feeding small amounts at a time to reduce what is trampled, plus the use of a rack or hay ring. Unrolling a bale wastes 40% or more from trampling. Feed hay stored outside before feeding protected hay.

US hay acreage may increase in 2008 says the Livestock Marketing Information Center; but competition from other crops, especially in irrigated areas, will remain intense. National average hay prices are expected to remain well above 2006 for the balance of the 2007-08 crop-marketing year. Hay prices will remain very high next crop year (2008-09) and may average over $100.00 per ton in 2008-09 for the third consecutive year.

To till or not to till. That is the question which frequently results in the wrong answer, says Iowa State agronomists, who are concerned about the impact on wet soils, as well as the added cost of tillage because the soil was wet. They say moisture below the surface will not be tapped off by plant roots, and soil will not fracture the way you believe it will.

Wind and water erosion can be increased when corn stover is removed according to a NE Extension team. They say on soils of low erodibility, 2 to 3 tons of stover per acre should maintain soil organic matter and protect against erosion; but little if any should be harvested if the soil is highly erodible. A ground cover of 30% to 60% is estimated to reduce wind erosion by 70% and 90% respectively, when compared to bare soil. Those facts are included in a Nov. 16 report on corn stover harvest.

Ohio and Michigan are the only major soybean producing states east of the Mississippi River to remain free of Asian rust. Even rust was recently found on soybeans in the Canadian province of Ontario, approximately equal to Chicago in latitude. USDA’s rust website: www.sbrusa.net reports it was found in 285 counties in 19 states since January.

Farm techies may benefit from a variety of websites and electronic services which can improve management abilities, says Ohio State Extension’s Andy Kleinschmidt, who’s newsletter is here.
1) Call the phone number at Jott.com and it sends an e-mail message.
2) Manage all of your passwords with the free service of passlett.com.
3) Extensive yield records and GPS maps can be backed up on line at box.net.
4) A free tool to keep your computer virus free is available at: free.grisoft.com.

Let’s explore the concept of paying farmers for protecting the environment, says a new United Nations Food and Agriculture Organization report, written by IL ag economist Gerald Nelson. He says farmer incentives could assist in addressing issues such as climate change or water purification:
1) A payment could be made to get farmers to change their current production practice.
2) They can change the way they use the land to provide more environmental services.
3) They can choose not to make a change that is motivated by market forces.

Hair sheep and meat goats may be your next profit center, suggests IL sheep specialist Richard Cobb. He says the demand for hair sheep comes from the growing ethnic demand for lighter weight lambs, plus the lack of shearing, they are easy keepers, and prolific breeders. He says meat goat production has expanded from ethnic demand also. Read his analysis.