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.

You can now exhale. Everyone holding their breath that permanent agricultural law was about to occur can relax. The Congress averted that twilight zone Wednesday with a 4 week extension of the 2002 Farm Bill. Congressional leaders are miffed that the ag and finance committees cannot come to agreement on financing a new Farm Bill, and finally agreed to the extension. Committee chairs say they will have an agreement by April 18. Permanent law would have meant parity prices and elimination of some USDA programs.

Steep rallies in the grain markets have faltered in the past week says IL Extension’s Darrel Good. December corn moved to a high of $5.85 fell 45¢ then recovered, and November beans reached a $14.73 high before declining over $1.50. July wheat declined after twice reaching the $12.50 mark, losing more than $2 in between. Read more of his newsletter.

Darrel Good notes the volatility is due to energy, currency, and financial markets, but corn and beans will soon be concerned with the March 31 USDA Prospective Plantings Report. “A decline in corn acreage and increase in soybean acreage is expected, but the market will have an opportunity to influence final planting decisions.” He said 2007 acreage was 3 mil. more for corn and 3.5 mil. less for beans than USDA had predicted.

Don’t forget the Stocks Report on the same day says Darrel. He said the December report indicated a surprisingly small inventory of corn, implying large feed demand. That caused USDA to raise its feed projection for the balance of the marketing year. Darrel says USDA will either validate that projection or admit overestimation of the 2007 crop.

High commodity prices and volatility are blamed by Kansas St. economist Mike Woolverton, who says, “Commodity exchange margin requirements have been stretching the financial resources of all agribusiness firms including grain traders and speculators. Hedge funds and other speculators have had difficulty coming up with cash when faced with margins calls. Rather than go to lenders, the speculators have raised money by cashing out of profitable commodity positions causing temporary price fluctuations.”

Woolverton notes that producers are being affected secondarily by the margin call issue. “These developments have had the effect of reducing cash forward contracting opportunities for grain and oilseed producers unless they are willing to use futures forward contracts, and put up the margin money themselves, or buy options. But it hasn’t had much effect on the bullish tendencies of the markets.” Read more of Woolverton’s market analysis.

USDA’s Supply/Demand Report made no changes this week for US corn, but raised the world supply because of better corn crops in Brazil, India, and several other countries, and also increased trade, consumption and ending stocks. USDA cut US soybean carryover to 140 mil. bu., pushing exports above 1 bil. bu. with strong sales to China. Global soybean and oilseed production was lowered, but Brazilian production was raised.

The USDA report this week raised soybean oil production estimates because of a higher extraction rate. Soy oil stocks and exports were raised, but overall domestic use was cut due to lower use for biodiesel. USDA said “The US Census Bureau has reported reduced biodiesel production from soybean oil for 6 consecutive months, and a declining share of total biodiesel production from soybean oil as soybean oil prices have climbed.”

USDA again raised exports and lowered the ending stocks for US wheat to 242 mil. bu. and tightened the average farm price to a range of $6.50 to $6.80. But global wheat production estimates were raised with better crops coming from Brazil, India, Australia, and the EU. Global trade numbers were raised, but global wheat stocks are now building. The USDA report is here.

A few more hours remain before the crop insurance deadline March 17. NE economist Paul Burgener suggests, “For producers interested in forward contracting corn, grain sorghum, and soybeans, the crop insurance decision is important this year. If you feel that prices may increase by more than the CRC limits on corn and soybeans, then an RA-HPO product may be best for you. The RA-HPO products tend to carry a little higher premium, but they will allow your coverage to remain in place if prices increase.”

Revenue crop insurance guarantees are $5.40 for corn and $13.36 for soybeans in the Cornbelt and that carries the higher premium. Nebraska’s Burgener says if you want the economy model, “Multi peril crop insurance (MPCI) is available on all of the major crops, but may leave you seriously short of coverage if bullish prices continue through harvest. Established prices for both corn ($4.75/bu) and soybean ($11.50/bu) are already well below the market. If these crops are significantly damaged this year, the return from this insurance will be significantly lower than the value of the crop.”

If feedlots have been losing money, can they expect to make it later in the summer? Utah State’s Dillon Feuz says, “When you factor in corn over $5 per bushel, it is easy to see why feedlots are losing over $100 per head on many current closeouts and have been losing money in 2008. How realistic are summer and fall live cattle contracts which are trading in the upper $90 range and even over $100/cwt on Oct and Dec Live Cattle? I can suggest that if you are buying feeder cattle to place against those fed cattle contracts, I would hedge in those contracts if you want to insure your price expectations are met.”

A light at the end of the pork tunnel? Thus far in 2008, hog slaughter has been up 11.7% compared to a year earlier. But pork economist Glenn Grimes at Missouri says, “This week's hog slaughter was up "only" 4.9% compared to the same week in 2007. Thus the string of double-digit increases in weekly hog slaughter is over, I hope.”

If you are buying feed, and concerned about costs, USDA’s latest Feed Outlook says, “Given the strong demand for corn, prices in 2007/08 are expected to average $1 per bushel higher than in 2006/07. The projected price range for 2007/08 is unchanged this month at $3.75-$4.25 per bushel, up from $3.04 per bushel in 2006/07.”

Do you use a fungicide or not? IL Crop Specialist Loretta Ortiz-Ribbing says 2007 fungicide applications were profitable 38% of the time, based on a $20/A cost for $3.50 corn. She says expect the same in 2008 because the economics are parallel. She says use hybrids that are disease resistant, and scout your fields before making a spray decision.

Weeds in your wheat? 1) Identify the specie and severity, since control is easiest when they are small. 2) Apply herbicide between the full-tiller and boot stage of the wheat, but not after that. 3) Legumes could be damaged by 2, 4-D esters and other herbicides. 4) Calculate the cost of the herbicide application versus increased yield and grain quality.

High soil organic matter means saving money on nitrogen for wheat. IL Extension agronomist Steve Ebelhar says, “This is due to the nitrogen released from organic matter, along with a lower probability of nitrogen losses from the soils with higher organic matter." He says cut the N rate by 40 lbs, for soils with 4%+ organic matter. Read more.

If you don’t think weeds adapt, Bob Hartzler at Iowa State says consider the winter annual Hawksbeard. It produces a heavy seed that drops straight down, and a light, wind-blown seed. He says French researchers found Hawksbeard weeds in urban settings were making more heavy seeds, because the lighter seeds did not survive because they landed on pavement. The heavier seeds fell to the soil which nurtured the original Hawksbeard.

Develop an effective drift management strategy before the spray season suggests Bob Hartzler, the Extension Weed Management Specialist at Iowa State University:
1) Equip your sprayers with appropriate spray nozzles
2) Effectively use spray drift retardants,
3) Adjust your sprayer setup: boom height, operating pressure and driving speed,
4) Identify drift sensitive locations: organic crops, vineyards, or concerned citizens,
5) Properly train personnel for operating the sprayers.

If your glyphosate bill has doubled, consider an alternative, such a pre-emergent control suggests Missouri’s Kevin Bradley, “Most pre-emergence soybean herbicides like Authority First, Boundary, Canopy, Dual II Magnum, Envive, IntRRo, Prefix, Prowl H2O, Sonic, Valor and Valor XLT will cost about the same or less than a glyphosate treatment.” He says yield loss is reduced, since early weed competition is eliminated.

Soybeans are bitter out of the field, but made into a breakfast cereal they will taste better and will keep you going until lunchtime. IL food scientist Soo-Yeun Lee says it meets the FDA’s high fiber and high protein thresholds, and will lower cholesterol and triglycerides, which bacon and eggs can’t do. And it comes with a cinnamon flavor!