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.

Compared to October when investors sold commodities to raise cash, fundamentals in the grain markets seemed to have regained control. That’s the thinking of Darrel Good, IL Extension Specialist, who says corn and bean prices are now influenced by financial, energy, and currency markets, as well as export business. Read his latest newsletter here.

Good says soybean exports have been 14% larger than year ago levels, with the help of a 16% increase in business with China. However, the bloom may fade since Chinese purchases are expected to be less than last year, and US soybean exports are expected to be 12% less than last year, by the time the year ends. While corn exports have been weak, prices have responded to USDA’s reduction in 2008 corn production estimates.

Monday Nov. 10 is the date for the next USDA crop production report, which Darrel Good says will refine yield estimates. Based on the last crop condition report, Good says beans should average 42.7 bu. ave., 3 bu. more than the USDA Oct. estimate. He says the last rating for corn indicates a 154.4 bu., compared to USDA’s 153.9 bu. estimate.

If USDA’s crop estimates grow, Good expects a slow recovery in grain prices. But, a lower production estimate would support prices somewhat. He says to get a stronger recovery, then financial and energy fundamentals will have to create additional demand.

Regarding energy fundamentals, Iowa State’s Chad Hart says the ethanol industry is still growing, but the pace has slowed. While lower corn prices mean lower production costs for ethanol plants, plants are also impacted by lower ethanol prices because the motoring public is driving fewer miles, has more fuel efficient cars, and needs less fuel.

Chad Hart says ethanol will need 4 bil. bu. of corn, and livestock feeders will need 5.3 bil. bu., which is up 100 mil. bu. from September. He says the reason for the increased demand is due to the erosion of corn prices, and that reversed USDA’s demand estimates. Read more here.

Fear not, agriculture is not facing a return to the tough times of the 1980’s, say Purdue economists Mike Boehlje and Chris Hurt. That is when high prices in the 1970’s quickly changed to a recession and a myriad of farm failures. They say the difference is the current very low interest rates, along with very low debt being carried by farmers. Read more here.

The Purdue economists make a number of comparisons of now and the 80’s economy:
1) In the 80’s farmers had $22 of debt for each $100 in assets, and today debt is $9.
2) Before the 80’s farm income averaged $51.8 bil. per year, now it is $63 bil. per year.

But what about tomorrow? The Purdue economists say even with lower incomes, fewer debt servicing and loan default problems are expected. That means fewer forced sales of farmland, but the first stage of a downward adjustment is no sales, and they say that is happening now. But they say, “The prospects of forced farm asset sales compounding the asset depreciation problem are much less likely now.” (Compared to the 1980’s)

If farm input suppliers are asking for pre-payment before supplies are ordered and delivered, Penn State Extension specialist John Berry suggests farmers consider the risk:
1) Spread risk by buying inputs in increments, so if prices decline you can take advantage
2) Be certain of the solvency of the company with whom you are doing business.

Calling the 2008 growing season, “on-and-off, unevenly distributed poor conditions,” IL Extension specialist Emerson Nafziger is amazed at the 45 bu. bean and 177 corn yields, and says, “The only reasonable explanation for such yields is that the season was much extended, with maturity occurring weeks to a month or more later than average, and a great deal of grain filling after September 1, during the weeks before maturity.”

Nafziger admits, “The predictions I made in June about how crops would respond to late planting were completely inaccurate as a result of the unusual season.” And he says that is a dilemma because, “If such a season will never happen again, then including it in the database means less accuracy in future predictions of planting date effects.”

Corn kernels are different this year, according to Iowa State grain quality specialist Charles Hurburgh. They are wet, soft, and have more soft white starch. That means lower test weight, and reduced storability because of more opportunity for mold to invade the kernel. He says you will also find that it takes more energy to dry softer corn kernels. Read more here.

By taking 8 to 10 percentage points of moisture out of the corn, Hurburgh warns if you are drying it with heat the kernels will become brittle, more sensitive to breakage, and the amount of fines will increase. The breakage will occur when it is handled, from the dryer to the bin, and out of the bin to the elevator. He says avoid corn temperatures above 140F, and let it cool slowly in a bin, instead of in the dryer, increasing dryer capacity.

European corn borers may indeed become an endangered specie in Illinois if their numbers continue to decline. Extension entomologists report preliminary 2008 populations at 9.61 larvae per 100 corn plants, down from 13.4 larvae in 2007. About half of the counties were tested, and second generations borers were not found in 1/3 of them. Find the details of the survey here.