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.

$5-plus corn and going strong. Extension’s Darrel Good says strong crude oil prices are bullish for ethanol; expanding hog numbers are bullish for feed demand; a weak US dollar is bullish for export trade; and declining stocks indicate usage was 9% larger than 2007. But he says watch for developments that might suggest waning fundamentals.

$12-plus soybeans and going strong. Darrel Good says ending stocks next August will be a meager 175 mil. bu. complicated by a small So. American crop. One caution flag is the dramatic slowing of soy oil use for biodiesel production, says Good, which apparently hints at rationing from high soybean oil prices; but use will be 1 bil. lbs. over 2007.

Large crops will be needed in 2008 says Darrel Good, and the market cannot allow any sharp decline in acreage for any commodity. But he says growing season weather cannot be over emphasized, since a legitimate threat to average yields could send prices higher. Read his newsletter.

USDA will make its acreage estimate at the end of March. However, the market is anticipating 87 mil. planted acres of corn, compared to the 93.6 mil. in 2007. For soybeans, the market is expecting 70.8 mil. acres, compared to the 63.7 mil. in 2007. For wheat, the market has estimated 64.4 mil. acres, compared to the 60.4 mil. in 2007.

Adjust your marketing plan when making crop marketing decisions says Mike Woolverton at Kansas State. Factors include: domestic and global supply and demand balances, Southern Hemisphere crop harvests, the battle for acres, Great Plains wheat growing conditions, and profit margins of commodity buyers such as livestock feeders and ethanol producers. He says high prices choke off demand and stimulate competition.

"The energy bill signed into law will have greater impact on farm commodity prices than any farm bill being considered," says MO economist Pat Westhoff at FAPRI. “Mandates to use set levels of biofuels increase demand for corn and vegetable oil and affect market-driven prices more than current or proposed farm bills.” FAPRI analyzed the energy legislation, which could raise ethanol production 24% and bio-diesel 89%.

In one scenario by the MO food policy researchers, feed costs increased by an average of $750 million per year because of the energy bill, economist Westhoff said. "However, in another scenario the net change in feed costs was very small. The results depend on many factors, including how large the increases are in ethanol and biodiesel production." The report is available on the MU FAPRI Web site.

Fertilizer supplies are tight, and Kansas State agronomist Dale Leikam says it is currently difficult to buy nitrogen for either wheat or spring row crops, regardless of the posted price. He says the tight supply applies to UAN, urea, and anhydrous ammonia. He urges producers to keep in contact with suppliers or it may not be available.

Over 50% of nitrogen used in the US is imported and the amount increases annually says Kansas State’s Leikam. US facilities are closing for a variety of environmental and economic reasons, global demand is increasing, and more fertilizers are being imported from natural gas suppliers in the Middle East, South America, and former Soviet Union.

Nitrogen application rates need your attention, says Purdue agronomist Bob Nielsen. "We've found the nitrogen rate needed for maximum yield (or agronomic optimum) for corn following soybean rotation is about 173 pounds of nitrogen per acre, but if nitrogen costs 60 cents per pound and the grain price for corn is $4, then the economic optimum rate drops to only 147 pounds of nitrogen per acre," Nielsen said. "For corn following corn, agronomic and economic optimum nitrogen rates are about 30 pounds more.” Read his N summary.

Reliance on manure can be a good fertility option if managed, says Ohio State’s Jon Rausch. He says, “Swine manure applied as a sidedress to corn and injected into the soil could potentially generate nutrient value (nitrogen, potassium, phosphorus) of up to $136 per acre. By contrast, swine manure applied on the soil surface only results in a value of about $80 per acre due to nitrogen losses.” He says manure is an alternative to N at 60¢.

Low market prices in 2006, high costs in 2007, and significant red ink in 2008 have been challenging to pork producers. IL economist Dale Lattz reviewed hundreds of pork farm records and says the 2007 combination of high feed prices and low market prices indicates that producers will have operated at near breakeven levels for the past year. Read more.

It takes 15-16 months of red ink for pork producers to begin reducing production, say MO livestock economists Glenn Grimes and Ron Plain. And the losses began in October according to Iowa State data. Grimes and Plain say, “If producers respond as quickly to losses as they have in the past, pork production will likely drop below year earlier levels in the first quarter of 2009.” Read more.

Grimes and Plain say hog producers currently have a good financial foundation. Hog production has been profitable for a record high of 35 consecutive months, ending in December 2006. If you eliminate the 60¢ per head loss last January, and add in the next 9 months, hogs have been profitable for 43 out of the past 44 consecutive months.

Because of dry weather in the southeastern US during 2007, the cattle herd on Jan. 1 is expected to be down a little from a year earlier, say Glenn Grimes and Ron Plain at MO Extension. They point to a 6.3% increase in cow slaughter for the first 51 weeks of 2007.

Demand growth for fed cattle through 2007 was up 3.5% through November and beef demand at the consumer level was up 0.9%. If demand growth for both live fed cattle and beef can be continued through 2008, fed prices will probably equal or exceed the 2007 price. But Grimes and Plain say their ability to predict demand action is very low.

Are you planting more corn or more soybean acres, or do you know yet. Work out a crop budget on a spreadsheet or notebook paper. If using the latter, follow the idea of SD Extension specialist Burton Pflueger, “The typical partial budget usually consists of a seven-point plan. The seven components are additional costs, reduced returns, reduced costs, additional returns, totals of the first two and the second two, and a net difference.”

The optimum soybean population is about 125,000 plants per acre to maximize yield says IL agronomist Eric Adee whose 10 years of research at several locations tested populations from 31 to 235,000, with yields of 35 to 78 bu. He says 125,000 population gave the highest yields, and with 90% survival the optimum number of plants varied from 100 to 109,000. Adee says soybeans are able to flex with conditions they encounter. Read his report.

If you have wheat or alfalfa, you’ll prefer snow over ice. An ice blanket locks out exchange of oxygen and carbon dioxide, and causes tissue decline. Mechanical ice removal with a disk or chemical ice removal with fertilizer is not enough to help save an alfalfa crop. Snow cover insulates plants, but persistent protection can stress them.

Snow mold on wheat results from fungi living in the soil and taking advantage of a snow blanket to coat the wheat plants with a slimy fungal growth. The plant will die if the crown of the wheat plant is infected, but they can recover if not substantially infected. Protect alfalfa by avoiding planting in high-risk areas, choosing hardy seed and adapted cultivars. Invite a snow blanket by planting alfalfa with alternate strips of grass.

As strong milk prices head lower, Nov. milk production in the 23 dairy states was up 3.8% from 2007. Iowa State economists say cow numbers were up 101,000, and milk per cow was up 40 lbs. They add, “Strong milk prices, even in the face of much higher feed costs, have encouraged dairy producers to keep cows and build herd numbers.”

Does your farm have an operator transition in its future? If so, a series of fact sheets from Ohio State Extension should come in handy. Issues include asset transfer, timetables, future generations, plans for retirement and estates, goals and objectives, and conducting family meetings. Get the fact sheets.

Grandpa burned corn for heat when it was 10¢ per bushel, but would you burn $4.50 corn? That depends on the price of alternate fuels. IL Extension Specialist Bob Frazee says when comparing the heat produced per mil. BTU from various energy sources, corn at $4.50/bushel would provide a considerably cheaper source of heat than propane, fuel oil, and electricity, but would be slightly more than the cost of natural gas. Review a new MN Extension fact sheet.