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June 30, 2009
Are You In Control Of Weeds, Or Are They Controlling You?
Weeds! Until someone invents a purpose for them, we still have to fight them. If not, your beans will be starved for nutrients and moisture and have a dismal future. With plenty of rainfall this spring, the weed crop has taken over many fields and wet soils have delayed timely efforts to control them.
If the weather breaks, or if you are farming in the perfect world, Ohio State University weed specialist Mark Loux says once you have applied a post emergent herbicide, wait about 10 days, and scout your fields. In his latest newsletter Loux says at that time you will be able to determine what weeds were controlled, and which ones were either not controlled or will need a second herbicide application. He says do not always wait three weeks after the first application, because the weeds that escaped the first dose will be harder to control with a second dose.
Loux says the decision to make a second application is usually done with the help of a windshield and a speedometer reading 50 miles per hour, because that is when the weeds can be seen watching you above the canopy. Loux says the general belief is that many weeds which escaped an initial herbicide application can be controlled when a second is sprayed three weeks after the first. This allows enough time for recovery and limited regrowth. While some farmers think weeds will remain hidden below the canopy, Loux says that has not been a problem for researchers, whose spray droplets have found the weeds when small sizes make them easier to control. Consider also the timing, since new weeds are not likely to emerge after early July.
Your first application probably caught weeds that were reasonably small and had a fatal impact on them. Loux says the exception to the herbicide application three weeks later is when there was little or no impact the first time through the field because of resistance, and if that is the case, respray immediately. An early scouting after an initial application will indicate if the desired impact was achieved. He says research with glyphosate on giant ragweed has shown some to have resistance, and if that is your problem, an immediate respray with an alternative herbicide is warranted before they get too far out of control. If ragweed has been impacted by the glyphosate, but is still growing, a second application with glyphosate three weeks later will reach newly grown plant tissues.
Loux says a second application of the same herbicide will not always control weeds that escaped the first application. For ragweed with glyphosate resistance, he says an alternative may be required, such as FirstRate, Classic, Flexstar, or Cobra/Phoenix (although FirstRate or Classic can be used only if the population is known to still be sensitive to ALS inhibitors). He also says an oil-based adjuvant may be required to optimize the activity, since the surfactant in the glyphosate may be ineffective. Use the highest glyphosate rate possible or tank mix it with an alternative if in doubt about its effectiveness.
When glyphosate is tank mixed with an alternative, either in the first or second application, choose the alternative based on its potential impact on the weeds you have seen on your initial scouting of the field. Keep in mind that tank mixing glyphosate and a second herbicide may cause some minor leaf burn on soybeans, but there is little potential for yield loss. The greatest potential for yield loss will occur with late planted soybeans which could not grow out of the injury due to an extended dry period following the herbicide application.
Summary:
Following an initial post emergent herbicide application on soybeans, scout for its impact on weeds ten days later. That will guide your decisions on what to apply at a three week timetable following the first application. The second application may require the use of an alternative herbicide or a tank mix with glyposate and a crop oil adjuvant, if there are resistant weeds to an initial spray of just glyphosate.
Posted by Stu Ellis at 2:37 AM | Comments (0) | Permalink
June 29, 2009
Will You Face Credit Challenges Going Into 2010?
Several times per week federal banking officials close a bank at the end of the day and it reopens as a new branch of a larger bank the next morning. Deposits are still there, so are the employees, but the change indicates the banking industry remains fragile for some banks. Fortunately, banks with largely agricultural clientele remain in good shape, but for how long is uncertain. What the Federal Reserve does report is that agricultural banks are taking measures to strengthen their own financial foundation, and that has an impact on farmers.
The latest issue of The Main Street Economist which is published by the Federal Reserve Bank at Kansas City, reports that agricultural credit standards are tightening, and agricultural borrowers are becoming concerned about their access to credit at the same time agricultural bankers are becoming concerned about the creditworthiness of their borrowers. The reason is the weakening agricultural economy.
In the wake of the global economic meltdown, US agricultural banks remained generally strong, but their profitability has been trimmed while still outperforming banks in the general commercial sector. Comparatively, returns on equity at agricultural banks had declined to 7.6% by September of 2008 while returns for all commercial banks were down to 2.86%. The decline in ag bank returns was due to lower interest rates, since the average rate on operating loans was 9% in 2006 and it was down to 7% in the last quarter of 2008. Correspondingly, the cost of capital for banks to borrow from other banks increased. At the same time, loan delinquencies have increased from 1.08% in the first quarter of 2008 to 1.23% in the third quarter, with delinquencies and write-offs rising faster than at small commercial banks.
In this lending environment, agricultural banks have tightened their lending standards to preserve their capital and manage their risk. However, 84% of the banks in the Kansas City Fed District report having the same amount or more money to lend in the first quarter of 2009 as they did in 2008. But while funds were available to lend, the bankers reported raising collateral requirements on operating loans by as much as 20%. However the change did not restrict loan activity, since farm debt levels rose at the same time, meaning that farmers were able to meet the increased collateral requirements and obtain borrowed capital. But while issuing loans, the average risk rating on farming lending increased and loan quality, particularly those associated with livestock operations, deteriorated. There have been more loan renewals and extensions, indicating that farming operations were unable to completely repay the loan in the prescribed time. One reason may have been the shorter time period banks allowed for loans to be repaid.
The Federal Reserve says banks are at risk themselves by having insufficient funds to loan from their own operations. Specifically, bank deposits are growing slowly because of low interest rates being offered and that reduces the amount of money that can be loaned for farm operating and land loans. With more job losses, many savings accounts are being depleted and that also limits funds. Banks also have the option to issue commercial paper, but with lower equity values at banks, there is a declining interest in loaning money to banks.
During 2009 the creditworthiness of agricultural borrowers is expected to decline with narrower profit margins for crop operations and elusive profit margins for livestock operations. The Kansas City Fed says loan defaults are low at this time, but delinquency rates, loan write-offs, and risk ratings are rising. At the same time, land values are softening because of lower income and that means collateral values will shrink when the lending season begins anew.
Summary:
At the outset of global economic crisis, agriculture seemed to be insulated following two strong years of commodity prices and rising land values. With declining prices, rising costs, and softer land values, the financial stability of the farm economy is weaker, and banks serving agricultural clientele are responding by tightening the availability of credit. Borrowers have to post more collateral, and loans are being written for shorter periods of time. Meanwhile, banks are having more trouble obtaining money to loan.
Posted by Stu Ellis at 12:43 AM | Comments (0) | Permalink
June 26, 2009
Cornbelt Update
Cornbelt 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.
Buckle your seatbelt and mark your calendar for June 30 when USDA will release its best estimation of how many acres of corn and soybeans have been really planted. But in the words of Illinois Marketing Specialist Darrel Good, “The June estimates this year may contain more than the usual amount of producer intentions since considerable unplanted acreage still remains in the wettest areas of the eastern Cornbelt.”
Darrel Good says the USDA estimation in past years has changed over time. “For corn, actual planted acreage in the previous 5 years has varied by as little as 40,000 acres to as much as 1.35 mil. acres from the June estimate. For soybeans the difference has ranged from 400,000 to 1.185 mil. acres.” The June 30 report will be released at 7:30 am CDT.
Purdue economist Chris Hurt is concerned about a large loss of corn acres in the eastern Cornbelt. He says 1.5 mil. unplanted acres and a 152 bu. yield provide only 11.6 bil. bu. of corn and that would push Aug. 2010 stocks down to 800 mil. bu. Hurt says that scenario would put Dec futures in the range of $4.60 to $4.80 per bu.
Corn demand remains an uncertainty to Hurt who notes large financial losses in pork and dairy have trimmed herds. He says ethanol demand should increase, not only with the higher target from fuel mandate, but EPA raising the ethanol content above 10%. Read more.
$14 soybeans are still a possibility, believes Purdue’s Chris Hurt. He says the current carryover on Aug. 31 will be a 15 day supply, and new beans will not be yet available. He also says only 7 mil. more bu. have to be sold to overseas buyers in the next 11 weeks to meet USDA’s export projections. Hurt is anticipating beans will retest the $13 high, and if reached, he says $14 becomes more likely. The triggers for such a move include the June 30 stocks report, export sales, and late beans aggravated by summer weather. Read more.
What is your soybean pricing strategy? Hurt says one sales point is if July futures retest $13, then any weather concerns. But for an overall strategy “one might consider pricing more beans in the early part of the marketing year because South American acreage will rise and a return to normal yields there could result in lower priced beans in the last-half of the marketing year from March to September 2009.”
Also on Tuesday, USDA will be issuing its Quarterly Grain Stocks report for the third quarter of the year. Darrel Good’s numbers point to USDA overestimating feed use and underestimating processing use, but total corn use appearing reasonable. He also says the soybean crush might be underestimated and stocks could be smaller than expected. Read his newsletter.
The ACRE sign-up deadline is Aug. 14 and Purdue’s Chris Hurt believes the odds now favor positive returns to elect ACRE. He says there is still some time to make that evaluation as USDA will release its estimates on 2009 state yields and US average price on Aug. 12. Hurt says both of those forecasts are important in the formula to determine whether ACRE payments will be made for the 2009 corn crop.
Corn is growing loudly with the help of ample moisture and heat across the Cornbelt, and in some cases, it is growing faster than herbicides can be applied, which could turn out to be a problem. IL weed specialist Aaron Hager says atrazine should not be applied to corn over 12” and glyphosate to corn over 30” tall. Hager says other post-emergent herbicide labels have maturity or corn height restrictions to protect against injury to the corn. Find those here.
Corn lesson #1. After July 1 average summer temperatures will provide 1,900 growing degree days across the northern Cornbelt, 2,100 GDD across the central Cornbelt, and 2,450 GDD across the southern Cornbelt says IL agronomist Emerson Nafziger. Read his latest corn newsletter.
Corn lesson #2. Daytime temperatures have been in the 90ºF range, but remember corn is a tropical plant and its photosynthetic rate will remain steady as long as there is enough water. The photosynthetic rate will not taper off until the temperature approaches 100 ºF.
Corn lesson #3. Heat and moisture have contributed to the corn growth rate, and rapid stem growth is putting out leaves quicker than the typical 50 GDD rate implies. Late planted corn may end up with typical height, but likely smaller stalk diameters.
Corn lesson #4. Current corn growth rates point to lower plant dry weight, lighter weight leaves and perhaps less surface area, and perhaps one to two fewer leaves. That means an incomplete canopy during and after pollination, and possibly lower yields.
Corn lesson #5. A good canopy color in high temperatures means a good N supply, with good root development. Normal temperatures, sufficient sunlight, and a continuation of a good green color indicate good leaf function going into the pollination period.
Hail can make corn look bad, but the serious damage occurs after the 6-leaf stage when the growing point is up and out of the ground, says Roger Elmore at Iowa State, who adds that hail adjusters use different growth stages than corn researchers. Elmore says the V6 or 6 leaf stage is equivalent to the 7 leaf stage used by the hail industry.
Patience is needed in letting corn recover from hail, and it takes 3-5 days after a hail storm to obtain an accurate damage appraisal. Cut the corn plant stem lengthwise and if it has a healthy growing point it will survive. Elmore says a reduction in leaf area less than 50% will not reduce yield if the damage occurs before the V13 stage of growth. Read more.
What if your nitrogen applicator is shorter than your corn? With rapid growth, many cornfields may be beyond conventional application. IL fertility specialist Fabian Fernandez says the best application time is prior to the V8 stage because that begins the heaviest N uptake by the corn plant. Read more.
Nitrogen is best sidedressed by injection or dribbling to avoid volatilization and prevent foliar damage. Urea needs rain in 3-4 days to avoid loss. Dry formulations can be broadcast over the top, but Fernandez says the plant will display small lesions where the N has burned the tissue in the whorl or on leaves, but rarely results in any yield reduction.
Are foliar fungicides of value if there is no evidence of disease? WI researchers say in the trials where disease severity has been at least 5% on the ear leaf, the response has been higher; but they say problems are usually less than 5%. With fungicides and applicator costs about $25-30/A and the lack of consistent research results from using foliar fungicides, foliar fungicides should not be used on corn unless the hybrid was susceptible. Read the research.
If your soils are wet, phytophthora spores may be swimming through your soil to reach soybean plants. That means phytophthora may be more common this year in fields where soybeans do not have resistance to the root and stem rot fungus. IL plant pathologist Carl Bradley says there is no rescue treatment, but be sure to select resistant seed next year:
1) Race resistance prevents outbreaks, but only to the phytophthora races in your field.
2) Field tolerance defends against all races, but does not provide complete control.
3) Mefenoxam and metalaxyl fungicides will provide partial growing season control.
Corn rootworm larvae should be feasting lavishly on corn that was either non transgenic, or untreated with insecticides. But Purdue entomologists also say that some insecticide efficacy is in question. They recommend digging rootballs, break through the soil and look for quarter to half inch long slender larvae, along with root pruning. They say that two larvae per plant signals the need for a rescue cultivation application.
A rescue cultivation application directs the insecticide toward the base of the plant and mounds up the soil around the plant to incorporate the insecticide and promote the establishment of brace roots, since the corn plant’s standability may be compromised. They say application of an insecticide atop the soil in a no-till field will not be of value unless it is watered in by irrigation or a rain of one-half inch or more.
If you are planting single crop soybeans by the double-crop soybean calendar, IL agronomist Vince Davis recommends finding the field with the best planting conditions.
1) Use a full to mid-season variety, since heat and night length will promote flowering.
2) Plant in 7-10 in. rows with a no-till drill to get the highest yields when planted late.
3) Plant at a rate that will target a final stand of 150,000 to 200,000 plants per acre.
4) Schedule timely rains, and hold off any killing frost until as late as possible.
PI567102B. Remember that genetic code number because it may soon be a key to your survival from Asian soybean rust. Soybean researchers report the genes came from a Paraguayan soybean variety that had resistance to soybean rust in the US research labs. They have also identified several soybean cultivars that are “less rusting” and “slow rusting” which may also work their way into commercial soybean varieties. Read more.
Avoiding problems with spray drift may boil down to a trio of precautions:
1) Spray drift increases by 700% 90 ft. downwind when wind speeds double.
2) Spray drift increases 350% 90 ft. downwind when the boom is raised from 18 to 36 in.
3) When the distance downwind is doubled, spray drift decreases five-fold.
File away for future reference a report from an Ohio State University entomologist that lady beetle populations are declining, with some varieties considered rare. The species diminishing do not include the Asian multi-colored lady beetles that are voracious predators of soybean aphids. However, if one specie goes down, what about the others?
Acidic spots can develop in fields with otherwise good pH readings because of issues with the underlying subsoil. Plants growing in spots with a low pH might indicate they were low in phosphorus and magnesium, but high in iron and aluminum. Soils with a pH under 5.5 make aluminum and manganese more available, which become toxic to root systems, and that prevents phosphorus uptake by the plant. Microbial activity is reduced and that causes nitrogen issues. It can all be solved with strategic lime applications.
The June Hogs & Pigs Report to be released later today must show massive cutbacks to provide any financial relief says Michigan St. economist Jim Hilker, “The USDA showed another 1.8% drop in pork production in 2010, I suspect the cut will be larger, but we might not see it until the September Quarterly Hogs and Pigs Report. The June numbers were collected around June 1, and we have seen a $10.00 drop /cwt since then.”
Hurting the price of pork is the reduction in exports, say MO economists Glenn Grimes and Ron Plain. They say April exports were 21% below April of 2008, and exports were down 11% for the first 4 months of the year compared last year. Exports still contribute $32.51 to the value of every hog slaughtered, even though that is less than in 2008.
Grimes and Plain say don’t blame demand for low pork prices. May hog slaughter was the same as May of 2008, but weight has added 2% to the supply of pork, “When one considers we have had seven to eight percent more pork recently this year domestically than last year, it indicates our problem as to prices has been supply and not demand.”
Employee turnover costs $2,000 when someone is replaced and a 25% turnover rate is not out of the question for farming operations. But there are ways to reduce that, offered by Ohio St.
1) Take time to hire better qualified employees, you get what you pay for.
2) Establish a training protocol for news employees, manuals and job descriptions.
3) Hold regular meetings to discuss farm issues, goals, and operational strategies.
4) Several farmers could share one or more employees or seasonal labor.
5) Conduct exit interviews to determine why employees seek work elsewhere.
Create incentive and reward programs that cost very little, but show appreciation to employees. A basic “thanks” for a job well done goes a long ways. So do: home cooked meals, extra time off, use of fuel or farm commodities, and training seminars. Staff members will also appreciate being asked for their advice about equipment, safety, personnel conflicts, and unreasonable farm policies or work rules.
Posted by Stu Ellis at 1:31 AM | Comments (0) | Permalink
June 25, 2009
Soybean Aphids: Have You Found Any Yet?
Most soybeans in the Cornbelt have been planted and have emerged, but the early soybeans that have blooms may also have minute visitors that seem to be problematic in odd-numbered years. Since this is 2009, it must be time for soybean aphids, and if you raising soybeans across the northern part of the Cornbelt, they may have made themselves right at home in your fields. So what do you do now?
Soybean aphids currently are being found on very young soybeans in Iowa, South Dakota, Wisconsin, Michigan, and Ohio, as well as in southern Canada. They may well be infesting fields in the northern tiers of Indiana and Illinois, as well as in the southern part of Minnesota, where they have been found in years past.
PLEASE NOTE: THIS DOES NOT MEAN YOU SHOULD START SPRAYING!
Thank you, now that your attention has returned to the page, we can focus on the problem and discuss steps for assessment and potential response.
Iowa State entomologist Erin Hodgson writes in the current issue of the Integrated Crop Management News that a colleague who has monitored early season activities of soybean aphids found that 70% of the soybeans in his northern Iowa research plots were infested with an average of 5.5 aphids per plant earlier in the week. The noteworthy aspect is the unusually early timing of their arrival, and the difficulty that entomologists are going to have in predicting the extent of the infestation and making response recommendations to soybean growers.
Your first line of defense are the multi-colored Asian lady beetles, and other insects that prey on soybean aphids. Hodgson says they are very good at finding aphids in low densities, which currently is the case. If you find a few aphids here and there during your soybean scouting, your immediate response to spray is the wrong response, since it will also destroy the beneficial insects that just may keep your problem under control without undue expense.
Your second line of defense is the heat and humidity, since that fosters growth of a particular fungus that infests aphids. Hodgson says the daytime humidity is right, but evenings are not cool enough for the fungus to produce spores and spread.
Your third line of defense is the possibility that aphid populations will rapidly increase and when they do, they grow wings and fly away, with the populations rapidly diminishing. While this is a strange event, it may mean the aphids may not reach proportions that will create yield damage.
Remember that the economic threshold is 250 soybean aphids per plant, and when that trigger point is reached it signals the time to arrange for a rescue spray. That population may not devastate soybean fields, but finding that many aphids per plant buys you enough time to spray as the aphid population rises to the real point of economic damage.
Hodgson says aphids do not do well in hot, dry conditions, which is one reason their impact area is generally across the northern part of the Cornbelt. He says daily temperature and humidity have to be optimal for aphid reproduction. He also says, “Fields that are sprayed before bloom may require a second insecticide application if aphids rebound or if the field is reinfested. It is important to keep scouting for aphids through seed set even if treated with an insecticide earlier that season.”
If you are scouting soybeans for aphids, Hodgson recommends scouting every field on a regular basis so you can get a good record of how fast the aphid populations are increasing. He says take a close look at 20 to 50 plants. If aphid numbers are minimal and not increasing, then you may be able to save money and increase your profitability.
Entomologist Tracy Baute of the Ontario Ministry of Agriculture suggests the more advanced a soybean field is in the growth stage, the more likely aphids have found them. But says aphids will be on the newest trifoliates starting to emerge.
Summary:
Soybeans in the northern part of the Cornbelt may be the target of soybean aphids, since notable aphid populations have appeared unusually early in the growing season. Entomologists are quick to recommend against immediately spraying them in fear of also killing predatory insects that could control the aphid population without the need for spray. Aphid populations can also be kept in check by fungus, as well as high temperatures.
Posted by Stu Ellis at 12:16 AM | Comments (0) | Permalink
June 24, 2009
Are You Doing Everything Possible to Prevent Glyphosate And Other Herbicide Resistance In Your Weed Crop?
Slowly they change. Ever so slowly. Year by year. Field by field. Weed by weed. Until suddenly your herbicide is nothing more than a warm summer mist that refreshes the weeds you wanted to kill. You’ve read magazine article about weeds becoming resistant to one or more herbicides, and now you have found it to be true on your farm. Short of sharpening Dad’s weed hook, what should be done?
Whether weed resistance is reality or a cold sweat nightmare for you, there is a variety of Best Management Practices (BMP) that can be adopted to delay the inevitable or totally avert the possibility of your farm being the talk of the neighborhood. Those BMP’s were identified by ag economists George Frisvold of the University of Arizona, Terrance Hurley of the University of Minnesota, and Paul Mitchell of the University of Wisconsin, who looked at corn, soybean, and cotton production practices that might provide a key to successful weed control. Their research involved a survey of 1,205 producers, who used a total of 10 different weed control practices. Those practices were:
1. Scouting fields before herbicide applications
2. Scouting fields after herbicide applications
3. Start with a clean field, using either a burndown herbicide application or tillage
4. Controlling weeds early when they are relatively small
5. Controlling weed escapes and preventing weeds from setting seeds
6. Cleaning equipment before moving from field to field to minimize spread of weed seed
7. Using new commercial seed as free from weed seed as possible
8. Using multiple herbicides with different modes of action
9. Using tillage to supplement herbicide applications
10. Using the recommended application rate from the herbicide label
This list should be nothing new to most farmers, who have used most or all of the practices at various times. The critical issue is the fact that over 80% of corn and cotton acres and over 90% of soybean acres are planted to varieties that are resistant to glyphosate, and the evolution of weeds that are also resistant to glyphosate are threatening the sustainability of the transgenic technology. Farmers are urged to adopt a variety of practices to prevent resistance, but what is really happening?
To determine common practices, four hundred growers of each of the three commodities were surveyed, and questions were asked of those with more than 250 acres of the specific crop. The researchers found that 6 of the BMP’s were always practiced by at least 71% of farmers, but three were never practiced by a significant number of farmers. Those three were 1) cleaning equipment between fields, 2) rotating herbicide mode of action, and 3) using supplemental tillage. It should be noted that 49% of corn growers used multiple herbicides with different modes of action either often or always.
At least 90% of producers adopted five or more of the various practices. The economists also found that the number of BMP’s that were adopted:
• increased with a grower’s level of education
• increased for growers with expected yields greater than the county average yield
• was lower in counties with more variable yields
• was lower in crop reporting districts reporting more resistance problems.
The economists suggest, “These results suggest that yield risk is an important factor discouraging BMP adoption and that there may be some form of “good manager” effect at work, where growers with higher yields (or at least higher expected yields) than their neighbors tend to adopt more BMPs more frequently.”
Summary:
The growth in the number of weed species and population groups that are becoming resistant to one or more herbicides is a function of the weed control practices that are used by corn, soybean, and cotton farmers who plant 80% to 90% of their crops with varieties that are glyphosate resistant. However, among 10 clearly defined weed management practices, six of them have been thoroughly adopted by more than 70% of farmers, yet three of the practices have very minimal rates of adoption. Those with lower rates of adoption could be promoted by educators to increase the number of practices that are used to slow the growing weed resistance to various herbicides.
Posted by Stu Ellis at 12:23 AM | Comments (0) | Permalink
June 23, 2009
Why Is The Market Dropping? I Am Not Even Done Planting!
The uptrends in corn and soybean prices have been broken, causing many farmers to wonder if the market is satisfied with the potential for the new crop. The calendar says it is still June, and USDA says only 70% of the corn is good to excellent and 9% of the soybeans have yet to be planted. If that perspective is “good enough,” how should an uncertain crop be marketed?
We are a week away from the June 30th USDA Planted Acreage report, and University of Illinois Marketing Specialist Darrel Good says, “The June estimates this year may contain more than the usual amount of producer intentions since considerable unplanted acreage still remains in the wettest areas of the eastern Cornbelt.” In fact, Illinois is only 79% complete in soybean planting, Missouri is 75% finished, Kentucky is 74% done, and Tennessee is 69% complete. USDA says Indiana is up to 90% planted, and Ohio is apparently finished, but 5% of the beans have not yet emerged, as indicated in the June 21st weekly crop and weather report.
Since the June 2nd high, the December corn contract has lost nearly 70 cents over the past 14 trading periods. Additionally, the November soybean contract has lost more than $1 in the past seven trading periods. Good says, “With the most critical part of the growing season yet to come, the recent sharp price declines suggest the market does not have significant concerns about yields at this time.”
If thousands of planters still have seed in the boxes, and the July calendar begins next week, what is the market concerned about, and how does someone manage their price risk? University of Missouri Marketing Specialist Melvin Brees suggests the market will take some direction from the June 30 Acreage report, and there may be less corn than the 85 million acres projected in the March Planting Intentions report. He says the stronger energy market and tighter world supplies will create demand, but slower feed use and herd liquidation could soften the demand a bit. Brees does see some current sales opportunities:
1) New crop prices have been near the highs for the calendar year, and while not at the point of the 2008 prices, they represent a significant recovery from spring lows. They would even be considered historic highs, were it not for the 2008 high prices.
2) New crop prices are in the upper part of the USDA price range, which tops at $4.70 for corn and $11 for beans.
3) There may be upside potential, but recent bullish news was discounted by the market, and there is uncertainty how the market will react to the Acreage report next week.
4) There is downside risk, since prices were much lower earlier in the year and there have been significant price declines in the past few days.
5) Seasonal prices often turn lower after peaking in June or July, and that trend may have begun with the recent market weakness.
6) Fall cash bids reflect average harvest basis, indicating that basis weakness could develop when harvest begins.
7) Prices currently offer a favorable return, where crops are in good condition and not damaged or delayed in maturity.
Brees says there are also some current signals in the market that are negative. Those include the failure to reach new highs, a break in the uptrend, the carry in the corn market and the inverted bean market, plus the higher dollar and the poor general economy. As a result, Brees says there are a number of market signals that suggest making or adding to sales.
Summary:
Recent weakness in the corn and soybean markets point to a possible change of price direction for corn and soybeans, which may push many farmers to sell a portion of the new crop and protect their price risk. This is happening despite the fact the corn crop is widely variable and many soybeans have yet to be planted. But the market may be satisfied with the way the crop is progressing due to the weaker demand compared to the past two years.
Posted by Stu Ellis at 1:37 AM | Comments (2) | Permalink
June 22, 2009
Supplemental Nitrogen: How Do You Avoid Wasting Money Where It Is Not Needed?
Across the Eastern Cornbelt about all of the corn that is going to be planted has been planted. Corn specialists, such as Bob Nielsen at Purdue, are recommending that corn planters be parked because of the doubt that exists for the economic and agronomic viability of any unplanted corn. But even though getting corn planted has been a major challenge for thousands of farmers, what about the issue of nitrogen?
The late harvest of 2008 caused many farmers to run out of time before they could get any fall plow down nitrogen on their 2009 cornfields, then came the wet spring this year that prevented spring nitrogen application for many farmers. In the meantime, the value of the nitrogen was lost to millions of acres of corn because it dissipated while corn planters were kept out of the field by incessant rain. So, what is the solution? MO Extension agronomist Peter Scharf says the solution is sensor-guided sidedressing. In a nutshell, nitrogen is applied between corn rows with the appropriate volume determined by a tractor mounted sensor which determines the color of the corn leaves. If an area of the field has sufficient nitrogen the leaves will be a deeper green and the controller reduces the volume flowing to the applicator. A corn grower will save money by not applying nitrogen where there is a sufficient amount.
Scharf says University of Missouri experiments last year found that corn that was side dressed with nitrogen out yielded that with pre-plant nitrogen application by 44 bu. per acre. And he says with the warm soils and continuous rainfall, much of the pre-plant nitrogen for the 2009 corn crop may have leached out. With soil and ponding variations in a given field, Scharf says the nitrogen available to the new crop could be widely variable and late planted corn may not be capable of rapid uptake until July, with additional losses of nitrogen expected.
Scharf reports on field trials in a variety of areas with different types of nitrogen used, but noting great variations in corn color attributed to nitrogen availability. He says cooperators are impressed to see the flow of nitrogen reduced when the sensors tell the controller that sufficient nitrogen exists, and the flow increased when the applicator moves into an area where the corn is more yellow than dark green. Scharf says the process is not good for adding just 30 additional pounds per acre, but is very good at determining whether the area of the field needs “a little, a medium amount or a lot.”
One issue that Scharf says needs to be addressed is the need for high variations in pressure, both for liquid nitrogen and anhydrous ammonia. But he says new nozzle technology has allowed a four-fold pressure increase. Without that, your equipment may only allow a doubling of the pressure between the bottom and top rates of application. He says changing the rate for a dry application only requires speeding up the delivery belt and spinners.
The optimum rate of nitrogen application is based on green reference points in the corn, but those can be highly variable themselves. Scharf says one problem occurred in the sensors detecting a specific need late one day in a field and a different need for nitrogen the next morning, although there was little difference in the corn. He says that problem could have been solved with a recalibration of the equipment the second day, which would have accounted for the heavy dew that threw off the sensors from where they should have been. He says the problem can be resolved with frequent recalibrations.
Scharf says a constant field standard can be set with a heavy application of nitrogen across the direction of the rows before the field is planted. At that point the equipment has a top end to for constant recalibration every time the equipment passes over the strip.
Another issue is how many of the sensors are needed, which can be a significant cost. Scharf says he believes three reaches the point of diminishing returns, although some suppliers sell them in packages of four and six. His newsletter article addresses several different suppliers of the technology and his viewpoints on their values.
Summary:
Delayed corn planting also allowed preplant forms of nitrogen to dissipate, leaving some fields with wide variations in their need for supplemental nitrogen applications. One potential solution is tractor-mounted sensors which detected the greenness of the corn which reveals whether it has sufficient nitrogen or needs additional side-dress application. Such a process may require a capital outlay for the sensors and the controller, however may result in significant savings in not having to apply nitrogen where sufficient supplies already exist.
Posted by Stu Ellis at 12:44 AM | Comments (0) | Permalink
June 19, 2009
Cornbelt Update
Cornbelt 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.
Soybean demand remains strong and there are indications that price rationing has been occurring, says IL marketing specialist Darrel Good. In his weekly newsletter, Good says July futures seem to have peaked at $12.90, and have softened along with the basis, which leads him to believe sufficient rationing of old crop soybeans has occurred. Read his newsletter.
Darrel Good says export business is above the pace to reach the 1.25 bil. bu. that USDA has projected for the year. Additionally, the domestic crush is slightly stronger than expected. USDA recently forecast a 110 mil. bu. carryout at the end of the marketing year in August, which is a 3.6% stocks-to-use ratio, however, Good believes that despite the high demand, stocks will probably not drop below the typical pipeline supply.
The corn market has also weakened slightly, but basis levels have remained steady, and the market is apparently comfortable that the new crop will provide sufficient supplies for the 2010 marketing year. Darrel Good believes the recent decline in prices may be linked to financial and other outside markets. However, he says, “All of the ingredients for volatile corn and soybean prices appear to be in place,” creating market uncertainty.
Jim Hilker at Mich. State expects harvest prices around $4, given the USDA’s current supply-demand projections and $65-70/barrel of oil. “At $4.25 and normal state and your farm yields we would not sign up for ACRE, but could prices be $3.50, the August report will let us know, so let's be ready.” Read more.
Hilker’s recommendation for the ACRE farm program is to fill out the paperwork now, wait for the August 12 Crop Report to indicate the potential supply and fall prices, then file paperwork by the August 14 deadline. “You will have a good idea of the state yields, your yields, and the US price with high odds after the report. That is all the information you need to make the decision. But you need to have everything in place.”
Wheat prices have softened, and Hilker’s rearview mirror says, “Using hindsight, it appears the time to have priced some 2009 wheat was early June. If we get near the previous highs during harvest, certainly consider pricing much of your wheat. It is very unclear to me that there will be any returns to storage, the futures certainly do not suggest any, and the basis is still very unreliable.” He says other crops may pay returns to storage.
Corn or beans? In addition to reduced corn yield, OH agronomist Peter Tomison says there are other considerations when debating whether to switch corn ground to beans:
1) Higher grain moisture that may require artificial drying.
2) Lower test weights that may result in significant dockage.
3) Greater stalk lodging and stalk rots that may slow harvest and reduce yield.
4) Increased injury from silk clipping by corn rootworm beetles and Japanese beetles.
5) Greater injury from foliar diseases, such as gray leaf spot.
6) Less effective nitrogen uptake if the weather turns dry after planting.
Purdue corn king Bob Nielsen recommends just parking your corn planter. After thunderstorms crossed through the Eastern Cornbelt on Thursday too many fields will be too wet to plant and “the agronomic viability of planting corn through the rest of this month in central and northern Indiana is essentially non-existent.” And his comments could reasonably apply to similar latitudes in neighboring states as well.
Nielsen joins other agronomists in saying maturity will be delayed too much. “Even early-maturity hybrids planted this late incur substantial risk of stressful weather conditions during flowering and grain filling prior to physiological maturity. Pollination that occurs in early to mid-August can easily experience some of the hottest and driest periods of the growing season.” Nielsen says plant stress will increase the potential for stalk rot as carbohydrates move from the stalk to the ears, with later risk of lodging.
With nitrogen dissipating in the soil, IL crop production specialist Emerson Nafziger says the switch from corn to beans is more justified on the basis of economics, “The expenditure to apply N has diminished, and even though it's not pleasant to write off such an expense, it is likely that the value of yield loss from delayed corn planting will exceed the value of the N left in most fields, making the switch to another crop more logical.”
Desperation alternative #1. Sorghum can be planted in late June to July, but needs good late summer weather fill grain, and that process can stop if September is cool. It attracts different insects, and sometimes weed control can be a challenge.
Desperation alternative #2. Buckwheat will produce seed even if planted in mid-July and will set seed until frost. Since it is a cool season crop, it will suffer in a hot dry summer. Contrary to some reports, buckwheat does not fix N and is not a soil builder.
Desperation alternative #3. Sorghum-sudan grass may be an alternative if there is a market for forage. While it is a warm season forage and can be planted late, it does not produce high quality forage. And late planting can compromise its quality.
Desperation alternative #4. If there is a forage market, corn can be planted as a forage crop and may even produce some grain, which would increase its feed value. It may have a similar yield to other forage crops without grain production. Late corn may escape corn rootworm, so the use of conventional, non-Bt seed may allow seed costs to drop.
Desperation alternative #5. Extension crop specialist Emerson Nafziger says anecdotal reports indicate that prevented planting payments from crop insurance may exceed the expected profit from a cash crop that might be planted this late in the growing season. Read Nafziger’s planting options.
The double-crop calendar will be used by many soybean growers says IL crop specialist Emerson Nafziger, “Full-season" soybeans will have little or no head start on double-crop soybeans in many areas this year. In fact, wheat dries out the soil as long as the wheat plants are still green, so fields following wheat harvest may in some cases be ready to plant sooner than those planned for a "full-season" (soybean) crop.”
What insects are attacking Cornbelt crops? Extension entomologists report:
1) Soybean aphids are near the MSU campus, northern IN, southern MN, & NW Ohio.
2) Sporadic infestations include: white grubs, wireworms, black cutworms, bean leaf beetles, potato leafhoppers in alfalfa, and armyworms in wheat fields.
3) Unusually high populations of corn borers are in NE and IA.
4) Corn rootworms are well into their hatch in central and northern IL.
Regarding soybean aphids in Ohio, Extension entomologist Ron Hammond expected to find high populations in odd-numbered years, “But what is unusual this year is the large number of aphids being found so early in the season. The situation could be that many soybean fields were planted late this year due to persistent wet weather, so early planted fields are receiving the brunt of aphid colonization.” He says scout early soybeans.
Late beans may be lucky! Late-planted soybeans have a lower disease risk than early-planted soybeans in nearly all diseases with the exception of soybean rust. "Late planting in soybeans really doesn't affect the disease situation much. In fact, it probably actually helps it," says Don Hershman, UK Extension plant pathologist. "Usually the only disease where there could be an increased risk is with soybean rust." Read more.
Asian soybean rust has been found in 21 counties in LA, AL, GA, & FL along with Mexico. IL plant pathologist Carl Bradley says when you consider the later planting of some Midwestern soybean fields, the risk of soybean rust may be slightly elevated. Rust has not been a yield problem the past several years because beans are mature by the time it has arrived in the Midwest. For updates, rely on the rust website.
Your first herbicide application may not have performed well, say Purdue weed specialists who say the cool, wet conditions may have interfered with translocation of the herbicide throughout the weed. That means a field check may find that a second herbicide application could be necessary. The specialists also warn that warmer temperatures will enhance weed growth and some could overtake young soybeans.
Should you use a PSNT test to analyze whether to apply nitrogen to corn, where you are concerned that spring weather conditions and Father Time may have diminished the N availability? The Pre-Sidedress Nitrate Test is a tool to help decide. However, WI soil scientist Carrie Laboski says when temperatures are cooler than normal by 1ºF or more, the PSNT test underpredicted the N credits that were due to manure and legumes by 59%. So, a cool PSNT test called for more N than was needed about 60% of the time.
Puny, discolored corn may outgrow its appearance when the soil warms up and dries out and root development is enhanced, says MSU soil scientist Darryl Warncke. Those symptoms include purple corn that appears to have a phosphorous deficiency, yellow striped leaves that appear to be a sulfur deficiency, and yellowish mottling that appears to be a magnesium deficiency. He says slow root growth interfered with nutrient uptake.
Are you applying 28% N in your UAN or only 20%? If you stored it over the winter, a cold spell of 0ºF may have caused the urea and ammonium nitrate to come out of solution and settle as crystals in the bottom of the tank. The N is not lost, but may need a pump to circulate the N back into a 28% solution, and the warmer the temperature, the better.
In the rush to apply anhydrous ammonia, Purdue safety specialist Bill Field says too many chances and shortcuts are taken, but be sure to not forget your safety checklist:
1) Ensure you have enough water to flush ammonia burns for 15 minutes.
2) Check integrity of hitches, because when they break, hoses snap and flail.
3) Goggles will save your sight and rubber gloves will protect your hands.
4) Your cell phone battery should be charged, so you can call for help if burned.
If your crops are burned, some of the blame may be attributed to sprayer tank residue. Kristine Schaefer at Iowa State says water may not always rinse out the residue and crops can be injured when the chemicals return to solution. Those include: Dicamba, 2,4-D, Status, NorthStar, Callisto, Impact, and Laudis. She says glyphosate and glufosinate are good tank cleaners and can rejuvenate older chemicals unexpectedly in the sprayer lines.
If your corn looks goofy, was Lumax part of your herbicide strategy? Purdue weed specialists say the weather and the chemistry may have collided and they have noticed corn injury in the form of bleaching of leaves and the inability of the corn leaves to unfurl. Testing at Purdue indicated potential problems when soils were cool and wet. Read more.
Is it too early for corn earworms and corn borers? No, says IL crop specialist Mike Roegge who has found both of them, despite the calendar. He says high populations can cause economic damage to young corn plants, and scouting should be a priority. Use this treatment decision aid.
Genetically-modified crops have benefited the environment, says IL entomologist Mike Gray, quoting a new study.
1) Since 1996 global farm income improved $21.8 bil. from beans & $7.2 bil. from corn.
2) In 2007, 12 mil. farmers used GMO technology, 90% of them in developing countries.
3) Pesticide use has dropped 8.8% (359 mil. KG of active ingredient) since 1996.
4) Herbicide and insecticide use has dropped a total of 17.2% since 1996.
5) Because of less pesticide use, 2007 tractor fuel savings totaled about 100 mil. gal.
Cow slaughter is up 1.7% for the year; but most of that is dairy cattle, and MO livestock economists say that is not enough, “This data indicates cow-calf producers have slowed or possibly even stopped the decline in the beef cow herd. With only about a 2% cut in the cow herd on Jan. 1, the odds are low that the herd has been reduced enough to get the beef supply in line with demand that will be profitable for producers with $4 corn.”
On the weather map, OSU meteorologist Jim Noel expects normal temperatures and precipitation for the summer. He says normal heat in July and September and a warmer than normal August. Rainfall is expected to be normal in July and September and drier in August. His early prediction is for an El Nino to turn fall and winter into warmer and drier than normal, which is a pattern change from the high moisture in 2008 and 2009.
Posted by Stu Ellis at 12:23 AM | Comments (0) | Permalink
June 18, 2009
Making Crop Management Decisions After A Severe Storm
Your corn is up and doing well, good to excellent, you think. But suddenly one of those increasingly frequent storms sweeps through the county and combination of heavy rain, high winds, and hail leave your crop shredded, down, temporarily submerged, and in fair to poor condition at best. Here it is June 18, and what do you do now?
Those types of severe storms washed through Nebraska and Iowa, and the University of Nebraska offers a series of factors in the June 12th issue of Crop Watch to consider the next step.
• Severe flooding may have created gullies in fields which will have to be smoothed before replanting, if that is the choice. Sweep tillage may keep residue in place, but requirements for moving soil will destroy the residue and leave the soil susceptible to more erosion.
• While hail damage to corn may look bad, its seriousness depends on the maturity of the plant. The degree of potential injury increases as the plant approaches silking, then after that stage the potential for injury gradually declines.
1. Up to the 5 leaf stage the growing point of the corn is below the soil, and the early loss of 5 leaves will mean little to the 19 to 21 leaves that will share the burden of producing an ear.
2. Hail damage from the V8 to V11 stage will affect row numbers, but kernels per row will not be determined until V17.
3. From the tassel stage to maturity, no more leaves will develop and the tassel will not be replaced. The 6 to 8 leaves above the ear are the most important for its development.
• When considering replanting due to poor stands, corn planted in early June will have a 50% yield loss compared to typical timing. It may be better to keep an existing stand with a 50% stand loss than consider replanting.
• If the corn is herbicide tolerant, that will help manage weed competition in a reduced stand. With delayed plant growth, insect problems can increase in non-Bt hybrids. And hail damaged corn is also more susceptible to diseases.
• If the damaged crop was glyphosate tolerant, beware of potential problems with volunteer corn in a new crop. Conventional corn can be easily controlled if the field is replanted to glyphosate tolerant soybeans.
• Both soybeans and sorghum can be planted later than corn without the yield loss, but check your previously applied herbicide labels to ensure against unanticipated problems.
• If corn is replanted, destroy the damaged stand so it does not steal water and nutrients from the new corn. Tillage is preferable over mowing, which will not kill the old crop. Chemical control may be the best option, but glyphosate tolerant corn will be a problem.
1. Select Max is effective but very slow acting, and will require a 6 day interval before replanting.
2. Glufosinate or paraquat will not delay planting, but effectiveness is questionable.
• Replant options may be restricted if a pre-emergent herbicide has been used.
1. Corn can be replanted, and a shorter season hybrid may be the best choice.
2. Soybeans can be planted, unless atrazine is in the field.
3. Sorghum provides more flexibility, and is adaptable to common corn herbicides.
4. Consult the table for replanting intervals if common herbicides are used.
• If soybeans were damaged and replanting is planned, the expected yield loss from the replanted soybeans must be compared to the anticipated yield loss from the original beans. Replanting requires additional cash for inputs and there will be a yield penalty.
• Leaving a poor stand of soybeans may require added costs for weed control.
• A general guideline is to leave a field alone if plant populations are greater than 50,000 plants per acre, the stand is uniform, and the field can be kept weed free.
• Emerged soybeans will recover unless the plant is destroyed below the first node, where buds can produce new leafing branches.
• If soybeans must be replanted:
1. Narrow row spacing and higher seeding rates will more quickly close the canopy and suppress weeds.
2. Early maturing beans will flower early but not grow very tall. Taller plants should be planted to maximize yield potential.
3. Do not plant early varieties that have not been adapted to your zone.
Summary:
Mid-season storms can create nightmarish management decisions regarding replanting, since the decision has to involve alternative crops, field preparations, weed control challenges, and how to destroy the damaged crop. If decisions are made to replant, many fields may have to be treated differently than the original crop due to the lateness in the season.
Posted by Stu Ellis at 12:31 AM | Comments (0) | Permalink
June 17, 2009
Water Is Standing In Many Cornbelt Fields.
It is mid-June and throughout the Cornbelt corn is waist to shoulder high with early planted fields beginning to reveal tassels. Soybeans are all ankle to knee high and early planted beans are beginning to bloom. In a typical year those all might be true, but 2009 is not typical and those descriptions of corn and soybean fields are little more than pipedreams in many regions. A complete assessment will be an important element in many marketing plans.
USDA’s Weekly Crop Progress Report indicates the Cornbelt is not short of water this spring. In fact, surplus water has hampered crop development in some regions of the Eastern Cornbelt.
ILLINOIS: Continued cool, wet weather permitted only 3 days of field work. Most of the precipitation was received early in the week, which allowed producers the opportunity to start wrapping up corn planting, with soybeans not that far behind. Some fields are uneven and turning yellow due to the excess rainfall. The average height of corn is 10 inches, compared to 11 inches in 2008 and 25 inches for the five-year average. Only half of the soybeans have emerged, compared to the five year average of 86%. Topsoil moisture is 40% surplus and 59% adequate.
INDIANA: Farmers were making good progress with field work until more rain fell across the state mid-week. Heavy rain showers left standing water in many crop fields around the state, which puts farmers further behind with planting, spraying, and side dressing corn with nitrogen. Producers in some central and southern areas have now begun taking prevented planting payments on some acreage that was intended to be corn or are switching to soybeans. Only 3 days were suitable for fieldwork last week, in part because the topsoil moisture is 39% in surplus. 16% of the soybeans have not yet been planted, compared to a 7% average for this time of year.
IOWA: Even with flooding problems in the Southeast, most of the State’s corn and soybean fields made good progress. 100% of the corn has been planted and 99% is emerged with 78% in good to excellent condition. Soybeans are 97% planted and 92% emerged, with 75% in good to excellent condition. Iowa again received widespread rainfall along with cooler temperatures last week. While Northwest producers rejoiced, the Southeast is again under flood watch as rain continued to saturate the region. Currently 74% of the topsoil has adequate moisture and 24% is in surplus.
KANSAS: 80% of the wheat is turning color, slightly behind the 87% average, and 9% is ripe, well behind the 41% average. 24% has light insect infestation and 36% has light disease infestation. 49% of the sorghum has emerged, which is about average. The topsoil moisture is 77% adequate and 12% in surplus.
MICHIGAN: The average corn height is 6 in. Although added moisture expected to improve emergence where conditions less than ideal for planting; additional rainfall kept farmers out of fields. Crop development continued to be delayed by cooler than normal temperatures. Growers continued to hope for warmer temperatures to spur crop development. Growers spraying and side-dressing crops as weather permitted. Soybean planting nearly complete. Nitrogen side-dressing of corn occurred. Topsoil is 80% adequate and 15% in surplus.
MINNESOTA: Corn averages 9 in. in height, compared to the 11 in. average; and soybeans are 3in. tall, compared to the 4 in. average. Crop growth and development was slowed by a cool, damp start to the week; however, more seasonal weather returned by week's end. Producers generally reported a need for warmer weather. The number of growing degree days, since May
4th, was below normal for all reporting stations. The percentage of small grains and row crops rated good to excellent was generally unchanged compared to last week despite rain falling across much of the state. Only 4 days were suitable for field work, with 60% of the topsoil having adequate moisture and 6% in surplus.
MISSOURI: Wet weather continues with an average of 2 in. of rain across the state and 39% of the topsoil having surplus moisture, with 60% in the adequate category. 93% of spring tillage is complete, compared to 96% of normal.
NEBRASKA: Corn is rated 82% in good to excellent condition, and soybeans are 80% good to excellent. 96% of the sorghum has been planted and 73% has emerged. Winter wheat is 74% good to excellent and 93% has headed. The wet week only allowed 2 days of field work, but only 5% of soils have surplus moisture, with 81% listed adequate. Flooding, hail and severe storms in parts of Nebraska have resulted in crop damage. Winter wheat harvest is likely to start at the end of the month in the Southeast and by mid July in the Panhandle.
NORTH DAKOTA: Mostly below normal precipitation last week allowed producers to finish a majority of their seeding. As seeding neared completion, spraying crops was the most widely reported activity in fields across the state. Nearly 6 days were suitable for field work and only 15% of the topsoil has surplus moisture. 91% of the Durum crop has emerged, about on average, but only 10% of the spring wheat has jointed, well below the 51% average. The barley crop is also behind in development.
OHIO: 97% of the corn has emerged and is rated 77% in good to excellent condition. 97% of the soybeans have been planted, about on average, and 74% are in good to excellent condition. Only 4 days were suitable for field work because of continuing moisture, which has left 24% of the topsoil with surplus water. 74% of the winter wheat is in good to excellent condition and 25% is turning color, slightly behind the 40% average for this time of year.
SOUTH DAKOTA: The average height of corn is 6 in. slightly behind the 9 in. average for this time of year and 51% has been sprayed or cultivated at least once. 54% of the sorghum has emerged, ahead of the average. 93% of the winter wheat is in the boot stage, about average; and 58% of the spring wheat is in the boot state, slightly below average. Cool temperatures and moisture were the weather theme for the past week, with most of the state receiving a nice shower throughout the week. 3 days were suitable for fieldwork, and only 6% of the topsoil has surplus moisture.
WISCONSIN: 14% of the corn has not yet emerged, but the 86% that has is about 7 in. tall. 96% of the soybeans have been planted and 80% have emerged. Some timely rains fell across the state but temperatures remained cool. Growers were anticipating sunshine and warmer temperatures to help kick-start the growth of many of their crops. 76% of the topsoil has adequate moisture and only 9% is in surplus.
Summary:
The Cornbelt has plenty of moisture. Nearly every state reported significant percentages of topsoil with surplus moisture, however farmers that were able to get planted early have seen good crop development with very little stress. Significant areas in the Eastern Cornbelt remain unplanted, and crop conditions reflect stress.
Posted by Stu Ellis at 12:29 AM | Comments (0) | Permalink
June 16, 2009
A Marketing Plan That Does Not Require "Seat Of The Pants" Implementation.
How is your marketing plan shaping up? Is it giving you an award-winning performance? Or is it performing somewhere between a Wall Street stock portfolio and the elementary school beginner’s band? Marketing plans are documents than need to be regularly consulted, but also require preventative maintenance, just like your new combine. They need to be fine tuned periodically and implemented religiously, not just left covering up a corner of your desk with last year’s calendar. Yes, it is time for that semi-annual sermon on marketing plans.
Now that the guilt of not having, not updating, not implementing a marketing plan has been thrown at your feet, let’s not dwell on the problem, but let’s fix it. And our fixer is Ed Usset, University of Minnesota grain marketing specialist, who has addressed corn, beans, and wheat in the past several days.
Corn
His 2009 pre-harvest sales began last August (2008) with a $6.45 sale. With a recent sale of DEC ’09 corn at $4.58 he is now 75% priced at an average just above $5, which implies a cash price of $4.50-$4.60 at harvest. Happy with that being above his minimum price of $3.95, Usset is now focused on pre-harvest sales for his 2010 crop. (No, it is not in the bin or even planted, but he’s not selling any 2011 or 2012 yet either.)
The first step is cost of production, and fall fertilizer prices are available, and cash rent can be calculated. He is assuming yields will fall near a four year average, and expects that production costs will be $3.60 to $3.70 per bushel. Adding a $20 government payment and deducting a $40 labor and management charge, he’s forecasting a $3.65 minimum pricing objective. His 40¢ harvest basis would give him a $4.05 cash price per bushel and with DEC ’10 futures near the $4.55 level, a sale locks in a 50¢ profit. And he says while you are forward contracting corn, lock in your fertilizer price as well. Usset says price is not a factor, just the estimated margin over input costs.
Soybeans
Usset has also just completed the pre-harvest phase of his soybean sales and has 75% of his crop priced with a weighted average of $11.18 per bushel, still hoping he can price the remaining 25% at a higher price. And he has switched his focus to 2010 soybeans, which are near the $10 mark for NOV ’10. With a 70¢ basis for harvest delivery, he’s starting to price cash beans above $9.30. His estimated cost of production is $8.35 per bushel, which gives him a nearly $1 margin, well above historical records.
Usset urges farmers not to look at the 2007 and 2008 prices and expect them to appear, but look at the margins today’s prices offer and take advantage of them. He’s also quick to recommend against pricing beyond next year because of uncertainties in input prices and even rotational demands. So he has already sold 20% of his 2010 soybean crop, booking an early premium price for beans that will not be planted for another year.
Wheat
Again, Usset is not concerned with the prices offered by the market, but the potential margins he would receive with pre-harvest sales. “As good as those implied margins are in corn and soybeans, they are even better in the world of spring wheat.” Using an average production cost for spring wheat of $4.94 on cash rented ground; Usset is computing a $14 per acre government payment into the equation, along with a $23 charge for labor and management. Using declining costs for fertilizer, he believes 2010 production costs will not be any higher than those for 2009 wheat. With a $5 production cost, he is happy with SEPT ’10 wheat trading at $7.50 per bushel, which would give a $7.10 to $7.20 cash price, which is $2 over production costs.
Summary:
With 2009 corn and soybeans beginning their growing season, and some fields yet to be planted, it may be time to consider marketing the 2010 crop. If costs of production can be computed, and most of those can be estimated within a few percent, many farmers would be well served to compare those production costs to prices offered by the market. Using typical basis levels check the potential margins that cash prices would offer. Unless you are going out of business, pricing a portion of the 2010 crop may offer some early profit opportunity.
Posted by Stu Ellis at 12:58 AM | Comments (1) | Permalink
June 15, 2009
Livestock Feeds Will Not Be At Bargain Basement Prices This Year.
Livestock producers trying to get as close to breaking even as possible have received a setback with the latest analysis on feed grain supplies and prices. Production will be lower because of planting delays that will retard yields, and subsequent prices will be higher because of demand. Additionally, the protein meal market continues to rise because world supplies are down and Chinese demand for US bean meal is up. So profitability in livestock production may not be rooted in feed costs for some time to come.
USDA’s June Feed Outlook followed the latest USDA grain supply and demand report, which pointed to a lower national corn yield because of planting delays in the Eastern Cornbelt and that pushed corn production under the 12 billion bushel mark, well short of expected demand for the year. Since the shortfall has to come from unused old crop corn, the reduced surplus means higher prices can be expected.
At the same time feed grain production is declining, so is demand from the livestock sector. USDA says the demand for the four feed grains plus wheat has declined about two and a half million tons from last month, based on lower projections for red meat and poultry production and lower residual use from the lower corn yield. The USDA economists believe higher forecast feed prices will reduce prospects for pork and broiler production. Grain consuming animal units are project at 91.1 million, down slightly from May, and feed use per animal is also down slightly from last month.
Domestic corn production is about 97% planted compared to intended acres, but many unplanted acres will either switch to soybeans or to short season corn that will have a smaller yield capacity. With the wide variation in crop maturity across the Cornbelt, expect wide variations in harvested yields. Through September 1, USDA is projecting average corn prices at $4.10 to $4.30 per bushel, with the new crop ranging in price from $3.90 to $4.70 per bushel. An estimated 19% of old crop corn remains unpriced by corn growers.
When USDA raised the expected price for new crop corn, it also raised the price projection for new crop sorghum to a range of $3.30 to $4.00 per bushel, with the old crop remaining in the $3.20 to $3.40 range. An estimated 18% of the old crop sorghum is still available from producers. Barley prices are well below levels of last year because of export weakness, and are in the range of $3.85 to $4.55 per bushel. However, livestock feeders are competing with the malting industry, but the overall supply is growing, as is the supply for distillers’ grains where feed demand is also increasing. Oat prices remain steady from last month in the range of $2.30 to $3.10 per bushel.
US livestock producers also know they compete with the global market for feed grains, and internationally, feed grain production abroad is up slightly. Overall, a decline in US corn production and a lower foreign barley crop are pulling down the totals for global feed grain production. With the supply cut, stocks will be down, and that forces up the volume of US corn being exported.
US livestock producers looking to buy soybean and other protein meals will find a tighter market and a 3 decade low in US soybean supplies at the end of August which is a 3.6% stocks to use ratio. That is the essence of USDA’s latest Oilseeds Outlook and is underpinning the old crop price range of $8.45 to $10.45 and has raised the farmgate range of the new crop to $9 to $11 per bushel. And the carryover in August of 2010 is not expected to be much larger because of continuing world demand by China. Whether the new US soybean crop will have a reduced yield because of delayed planting is an uncertainty. Most of the Eastern Cornbelt is catching up on its planting, and soybeans may be planted with a reasonable chance of maturity. USDA’s Supply and Demand Report did not forecast a reduced yield or production for soybeans, but used the acreage number from the March Planting Intentions report.
The business for domestic soybean crushers has picked up with global demand for meal and oil. Estimates have been raised for soybean meal exports. USDA says, “Soybean meal values in central Illinois, which averaged $292 per short ton in March, surged to $380 in May. The higher price outlook prompted a $15 increase in the season-average price forecast to $320 per ton. Soybean meal prices should ease somewhat in 2009/10, but the June forecast was raised to $275-$335 per ton, versus $260-$320 last month.”
Summary:
US livestock producers needing feed will probably find their needs, but at a higher cost than in recent months. Both feed grains and protein meals are climbing in price, putting a further pinch on profitability, when the latest USDA estimates for crop production and prices are evaluated. US corn production will be down because of planting delays, and higher corn prices will also push sorghum higher. The US soybean crop is still being planted, but global demand because of low production in Argentina and high demand in China will draw US soybean supplies to minimum levels both this year and likely next. Soybean prices are climbing as a result, pushing soybean meal prices higher as well.
Posted by Stu Ellis at 12:50 AM | Comments (0) | Permalink
June 12, 2009
Cornbelt Update
Cornbelt 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.
USDA cut the soybean carryout to 110 mil. bu. at the end of August, but IL ag economist Darrel Good says price rationing will ensure a pipeline supply. “Prices will stay high or continue to rise until there is convincing evidence that consumption has slowed sufficiently to maintain at least a pipeline supply of old crop soybeans.” He says move old crop beans once the market is satisfied that sufficient rationing has occurred.
We will have enough beans, but Good says China has taken 629 mil. bu. so far and that is 188 mil. more than last year. Total soybean exports are projected to be 1.250 bil. thanks to the droughty Argentine harvest and the slack demand by the domestic crush. But USDA says the crush is picking up and may surpass 2008 stats by 5 mil. bu. Read his newsletter.
Darrel Good wonders if consumption is beginning to slow, saying there is evidence:
1) The pace of exports has dropped for two weeks and sales have been cancelled.
2) Higher prices for DDGS indicate livestock feeders are buying it instead of bean meal.
3) Exports of meal and oil are slightly above the pace projected by USDA.
USDA’s language in the June Supply-Demand report caught the eye of Kansas State’s Mike Woolverton, because the acreage estimates were “highly tentative.” He says USDA used the Planting Intentions report acreage, which will change. “That will certainly raise the level of interest in USDA’s June 30th Acreage report to an all time high. The USDA June domestic corn production projection may turn out to be a best case scenario.”
Woolverton says if planted corn acreage falls by a million acres or more in the June 30th report, carryover would fall below 1 bil. bu. And he adds, “If summer weather phenomena lowers national average yield even more, as some now predict, the corn supply/demand fundamentals will become very tight for this marketing year; and next, unless corn acreage expands dramatically next spring.”
Woolverton is concerned about the 110 mil. bu. soybean carryover this year and USDA’s projected 210 mil. bu. carryover next year, which he says is a 23 day supply. He says higher acreage of 79 million, but lower yield by 39.6 bu., which was last year’s national average, would result in a 100 mil. bu. cut in production and 22 day supply. Read more.
Biofuel demand has also started to rebound with higher fuel prices, says IA Extension’s Chad Hart. “Since the first of the year, corn and ethanol prices are up about 5%, soybean prices are up over 20% and gasoline prices are up over 70%. Gasoline prices have increased enough to overtake ethanol prices and the economics of blending again favor ethanol.” He expects more breathing room for ethanol prices and increased margins.
Your ACRE decision needs to be made by Aug. 14, says OSU economist Carl Zulauf. "Market events can happen between now and August to substantively impact the ACRE decision for corn and soybean producers and landlords. We could see a major increase in crop revenue, possibly due to higher prices resulting from a drought that would clearly reduce the incentive to participate in ACRE. On the other hand, we could see a big decrease in revenue between now and August that would clearly increase the incentive to participate in ACRE." He says prepare paperwork now, and file it just before Aug. 14.
Expect more hoop jumping for farmers needing credit says IL ag economist Bruce Sherrick, “In the end, there will likely be increased public disclosure and improved informational systems supporting loans and other forms of capital transfer, and there will be likely be improved risk-pricing (more responsive loan rates to borrower risk), but there is not likely to be a fundamental rationing of credit in agriculture as there may be in some other worse-hit sectors.” Sherrick says we are not revisiting the 1980’s at this time.
Agriculture entered “the crisis” in good shape, says Sherrick, “Compared to most other sectors, agriculture has exceptionally low leverage. USDA data indicate that the overall ag debt-to-asset ratio was only 9.1% as of 2008. Further, 2008 was a year of record agricultural income, following several other years of relatively high income levels. Further buffering the impacts, land values represent over 85% of the assets in the sector.”
Prices for diesel fuel are 52% less than year ago levels according to Kansas State’s Kevin Dhuyvetter, based on NYMEX futures prices. And he says that will be about the price differential through the balance of the summer. Harvest season will see diesel prices 40% under late 2008 prices, but December prices will be 13% over 2008.
How late can corn be planted? IL crop specialist Emerson Nafziger says, “Based on accumulated data, corn yield approaches 50% of its maximum yield when planting is delayed to June 15-20. But past data are so variable that such predictions are likely to be inaccurate for any given year. Most fields with stands above 20,000 to 25,000 should probably be kept now, given the severe penalty for planting so late.” Read about seedling losses in his latest newsletter. .
Corn rootworms began hatching in the Central Cornbelt about June 1, and will soon be at the 50% point, based on degree-day accumulations. For the balance of June, IL bug specialist Mike Gray says damage to late planted corn may be more severe, due to the overall smaller root system exposed to corn rootworm feeding. Scout your fields.
European corn borers may have a challenge surviving their first generation, due to delays in corn planting, says IL entomologist Mike Gray, and he says the prevalence of Bt fields will help drive survivors down even further. Gray says Bt refuges could be vulnerable to significant infestations, so scout them for decisions on spraying.
Soybean aphids have appeared in Michigan, but the intensity of the population is not yet determined, nor the density of their primary predators, the seven spotted lady beetle and the multicolored Asian lady beetle. Canadian researchers have found that adult seven spotted lady beetles consumed between 166 and 277 soybean aphids per day. The multicolored Asian lady beetles ate between 73 and 244 aphids per day. Hungry devils!
Wet soils prevented some cornfields from pre-emergent weed control, so the post-emergent herbicides will have to be the weapons of choice for many farmers. However, each has a restriction on the maximum stage and size of corn that it can be used. IL weed specialist Aaron Hager has that list.
Do you need more nitrogen? IL fertility specialist Fabian Fernandez says that depends on soil types, amount of rainfall, and when the rains came in relation to the time that N was applied. He suggests a test strip through the field with a higher rate of nitrogen, then compare. If the higher rate strip looks better, then more nitrogen in the field is needed.
Nitrogen #1. In silt-loam or fine-textured fields with poor drainage, if you had excessive rain, ponding killed the corn, about 2 weeks after applying UAN or 4 or more weeks after applying anhydrous ammonia, you might consider applying 50 to 100 pounds of N per acre for the new corn crop. This situation occurs most often in low areas of a field.
Nitrogen #2. In sandy or light-textured soils, if 7-8 inches of rain soaked in without run-off, 2 weeks after applying UAN or 4 weeks after applying anhydrous ammonia, it is likely that a substantial part of that nitrogen was leached out of the root zone. In this situation you might also consider applying between 50 and 100 pounds of N per acre.
Nitrogen #3. In silt-loam or fine-textured soils with poor drainage where a large rain event caused water to be ponded for 1 to 3 days and UAN was applied at least 2 weeks before or anhydrous ammonia at least 4 weeks before the time of waterlogged conditions, you might consider applying 30 to 50 pounds of N per acre.
Nitrogen #4. In fields where the chance of N loss is less than 30 pounds per acre, there is no need to worry about applying more. This would include fields where excess soil water was present for 1 to 3 days within a week after applying UAN or urea or where anhydrous ammonia was applied less than 3 weeks before soils were waterlogged. Where N loss potential is low in light-textured soils, where infiltrated rain was less than 4 in., and most of the applied nitrogen was not in nitrate form, then you may have enough.
Nitrogen #5. If UAN or urea was sidedressed in sandy soils followed by heavy rain, the amount of additional N needed will depend on rain totals. 7 to 8 in. of rain would leach the N out of the root zone. 4 to 7 in. would leach some out, and you might consider applying 30-50 lbs of N per acre. More N may not be needed for rainfall under 4 in.
Puny, sickly corn may not indicate a shortage of nutrients, says IL fertility specialist Fabian Fernandez, “It is not unusual for crops in fields or portions of fields to show nutrient deficiencies even though adequate fertility and proper nutrient management plans are followed for phosphorus and potassium.” He says many other factors could be at work in his newsletter.
Sickly, puny corn may also be a victim of nitrogen application. Iowa State agronomist John Sawyer says ammonia injury frequently occurs with shallow placed ammonia, ammonia application near planting time, urea placed near the seed, and dry soils.
Corn injury could result from some the additives that have been placed in tank mixed herbicides. Iowa State weed specialist Bob Hartzler says, “Symptoms associated with additives (surfactants, AMS, etc.) include chlorotic mottling or necrosis of leaves, and are likely to be short-lived with no negative impact on crop development.”
Quality concerns are being expressed about soft red winter wheat because wet weather fostered fusarium head blight, and that creates vomitoxin or DON. Wheat millers will be concerned and high dockage or refusals may greet unsuspecting wheat growers.
If fusarium infection is prevalent in your wheat field, keep in mind those kernels will be lighter in weight. By turning up the air in the combine, the lighter kernels will be blown into the field, and that may reduce the DON level when the wheat is tested at the elevator. High DON wheat can also be cleaned prior to delivery to make it more marketable.
The breeding herd will have to decline 5-10% to get pork supplies in line with demand to push prices up to the cost of production, say Glenn Grimes and Ron Plain at Missouri. They say demand is still down from the H1N1 virus blamed on swine and they add, “How long it will take to recover from this flu situation is not very predictable.”
Cold storage pork stats are unfriendly. IA Extension’s Shane Ellis says, “A year ago robust exports and strong domestic demand utilized a mountain of pork in cold storage. While this year’s volume of pork in cold storage has been less than a year ago, volumes have started to trend higher at the time that last year’s volumes started to decline.”
Shane Ellis says, “Cattle on feed numbers although lower than a year ago are slowly closing the margin of difference. Carcass weights are up from a year ago as feeders hold cattle longer to heavier weights. The tighter supplies of fed cattle will continue through the end of the year. From the latest range condition report it is unlikely that a drought occurrence will incur a mass placement of early wean calves.”
But those pasture conditions will impact the market, according to Ellis. “First, there will be plenty of feed for stockers, lightening the supply of feeder cattle available for feedlot placement. Last year feedlot placements were lighter when corn prices were reaching record highs. Second, with added grazing resources available there will be less pressure to cull cow herds. Although the number of beef cows will be lower, the number of dairy cows entering the slaughter supply is increasing with the dairy retraction.”
The process of crop scouting is methodical, says MO Extension’s Allen Wrather:
1) Determine the variety and the age of the plant.
2) Identify all the symptoms affecting the leaves, stems, roots and fruit.
3) Estimate the percentage of plants damaged in the affected part of the field.
4) Determine the distribution or pattern of the problem in the field.
5) Evaluate whether the crop and weeds in the field share similar symptoms.
6) Determine the history of the problem.
Posted by Stu Ellis at 12:02 AM | Comments (0) | Permalink
June 11, 2009
USDA Reports New Crop Prices May Edge Higher.
USDA’s June Supply and Demand Report generally fell within the expectations of the market, but those estimates did reflect tighter ending stocks and a supply scenario that would support higher prices. The market, however, has been more focused on external factors such as currency values and oil prices, and therefore commodity prices still await their turn in the spotlight for another day.
In the World Agricultural Supply Demand Report, the US projected corn crop was lowered to 11.935 billion bushels, a function of lower yields from planting delays in the Eastern Cornbelt. In fact the average yield was estimated at 153.4 bushels per acre, down 2 bushels per acre. US production fell 155 million bushels from the May estimate. USDA economists reduced feed demand by 100 million bushels in the coming year based on estimates for reduced red meat production. Ethanol will consume 4.1 billion bushels and exports will need 1.9 billion, both of which were held steady from May. The total demand was estimated at 12.5 billion bushels, 525 million above production, which would lower ending stocks to 1.09 billion bushels. The reduced carryover caused USDA to add 20¢ to the top and bottom of the price range, which now is estimated at $3.90 to $4.70 for the coming marketing year.
Globally, coarse grain supplies are forecast to drop by 8.1 million tons, and lower US corn production is half of that decline. Brazil and Russia will produce less corn in the coming year, and global coarse grain ending stocks will drop by 6.3 million tons.
USDA kept its 3.195 billion bushel projection for US soybeans for the new crop. However, the torrid export business for the current year is expected to reach 1.250 billion bushels, and that will lower old crop ending stocks to 110 million bushels. With fewer soybeans on hand at the start of the 2009-2010 marketing year, the carryout at the end of that year is also projected to be at a relatively low level of 210 million bushels. USDA projected a 1.675 billion bushel crush and a 1.260 billion bushel export business. The season average price for the new crop was raised to a $9 to $11 range. In addition to changes in the soybean balance sheet, USDA shifted some soybean oil away from biodiesel production and into the export column for this year and next. That was a result of lower soybean oil exports anticipated from Brazil. In fact, Brazil is using more of its own soybean oil for biodiesel production.
The story in soybeans is one of the global market being served by the US. The Argentine drought cut its production to the point that it will only export 5.4 million tons, the least in 9 years. And China’s increased purchased of US beans are the reason for the export demand and the strong price. Global production of oilseeds will be down marginally in the coming year. Argentine soybean production for the current year is down 2 million tons to 32 million due to droughty yields.
US wheat production is down slightly by 10 million bushels compared to the May estimate, most of which is soft red winter wheat. Total US wheat production is projected to be 2.016 billion bushels, well under the 2.500 billion bushels of last year, and slightly under the 2007-2008 crop. However, ending stocks will rise slightly because of reduced consumption. The average farmgate price is estimated 20¢ higher than May at $4.90 to $5.90 per bushel.
Globally, wheat production will decline this year because of lower yields from dry soils in many production areas. However, economists are expecting lower overall consumption of wheat in the coming year, with ending stocks showing a slight increase.
Summary:
USDA’s latest estimate for US and global grain production shows prices for new crop grains edging slightly higher. Corn prices will rise because of reduced US production from planting delays and strong export demand from reduced South American production. Argentine soybean production is down, and Chinese imports are up, keeping good US export business and stronger prices. US wheat production is down slightly as is most of the world production, consequently prices might edge higher for the new crop.
Posted by Stu Ellis at 12:06 AM | Comments (0) | Permalink
June 10, 2009
Your Corn Is Making Money, Today.
Some late planted corn in Central Illinois is just emerging from previously saturated soils, while some early planted corn in Iowa may soon be tasseled. Throughout the Cornbelt, the rest of the corn is somewhere in between, and that is when money is being made.
Early in its life corn may look poor, with bad color, uneven stands, and slow growth in cool soil and air temperatures. But then the outlook changes, in what Purdue agronomist Bob Nielsen compares it to a transformation from an ugly duckling to a beautiful swan. His reminder refreshes everyone’s memory about the growth stages of the corn plant, “Almost overnight, the crop has taken off like a rocket. The color of the leaves turns a dark, almost-blue green and they develop a distinct shine.”
Nielsen says in the first five weeks of the corn plant’s growth, it is creating all of its leaves within the plant and developing nodal roots while leaves are expanding visibly from the V2 to V6 stages. Nodal root development is important, says Nielsen, “Damage or stress to the first few sets of developing nodal roots during the time period V1 to V5 can severely stunt or delay a corn plant’s development. Damage to the first few sets of nodal roots forces the young seedling to continue its dependence on kernel reserves longer than is optimum.”
When your corn reaches the 5 to 6 leaf stage, the growing point in the top of the stalk turns into the final leaf, and the plant switches from a vegetative stage to a reproductive stage with the internal formation of the ears and the tassel. At that point, ear size is determined. Nielsen says,” Severe plant stress during ear formation may limit the potential ear size, and thus grain yield potential, before pollination has even occurred. Optimum growing conditions set the stage for maximum ear size potential and exceptional grain yields at harvest time.”
When the plant reaches the 5th or 6th visible leaf collar, internally it is creating ear shoots at each of 8 to 10 stalk nodes. Each of those are only a fraction of an inch long, but are identifiable, and are the longest at the lower nodes. When the corn plant begins internal development of the tassel, Nielsen says the uppermost ear shoots are given priority for development and they are the ones that become ears. “Development of the upper ears is favored over the lower ones partly because of hormonal “checks and balances” and partly because of the proximity of the upper ear to the actively photosynthesizing leaves of the upper canopy.”
If your corn is in the 5 to 6 leaf stage, Nielsen says kernel rows are being determined from the base to the tip and that process will be completed by the V8 stage. He says 750 to 1,000 potential kernels develop on each ear shoot, but only 400 to 600 will be harvestable. Nielsen calculates, “For a 16-row ear, one kernel per row is equal to about five bushels per acre (for average populations).” And he says the weather does not have much to do with the number of rows, “Row number is determined strongly by plant genetics and less so by environment. This means that row number for any given hybrid will be quite similar from year to year, regardless of growing conditions.” Exceptions are hail damage, prior to the V8 growth stage, as well as some herbicide injury. However, Nielsen says kernel number in the row is strongly affected by environmental stress, and good growing conditions encourage higher numbers.
Environmental stress prior to the V5 stage will likely not have an impact on yield, unless the plant is weakened. However, severe stress from V5 (knee-high) to V12 (shoulder-high) will interfere with kernel rows and row length. Nielsen says, “While such early stress can be important, recognize that severe stress that occurs shortly before to shortly after pollination has a far greater potential to reduce yield per day of stress.”
Summary:
Throughout the Cornbelt, the number of kernel rows and potential number of kernels are being determined now in corn plants. Ear size is a function of genetics for number of rows, and environment for number of kernels that are eventually harvested. While environmental stress can weaken a plant before the V5 or knee high stage, it is more important to kernel development after that point and prior to the V12 or shoulder high stage.
Posted by Stu Ellis at 12:31 AM | Comments (0) | Permalink
June 9, 2009
Will Politics And Social Agendas Phase Out US Livestock Production?
How would you react to non-farm folks imposing rules on your livestock production? It is one thing if those rule makers were from your own state, but what if they did not even live in your state, much less have no economic interest in livestock production? That is what has happened in some western states, and may well happen soon in Ohio and in the not-to-distant future in other Cornbelt states.
Methods of livestock production, honed over the years by enterprising farmers and university researchers, have become controversial with the help of the Humane Society of the United States which has turned to the political route to pursue its agenda. Noted Ohio State University economist Luther Tweeten says the HSUS plans a referendum in 2010 that will impact the Ohio laying hen industry and its 27 million birds. In the June issue of the OSU Ag Manager newsletterTweeten says Ohio agriculture has a major stake in the outcome of the HSUS effort.
The threat of a referendum, if Ohio agriculture does not cooperate with HSUS plans to change livestock production, is backed up by forced changes that occurred with Proposition 2 in California. That new law makes it a misdemeanor for anyone to confine livestock in ways that are typical of 21st Century production.
Tweeten says it is important to recognize that nearly everyone supports humane treatment of animals, but at issue is what constitutes humane treatment. He says the HSUS proponents believe legislation will enhance animal welfare, provide healthier food because animals will contract fewer diseases and will reduce soil, water, and air pollution. On the other hand, confinement philosophies are associated with protection of animals from temperature extremes, predators, soil-borne diseases and parasites. He believes the general public has looked to science-based research to narrow the differences, but only with partial satisfaction.
The Ohio economist says market forces have dictated animal production practices, forcing producers to ensure animals are well treated. And he says, “Socially acceptable production practices for animal welfare ultimately rest on the public's values and attitudes and not just on science. Such values range from indifferent observers to animal rightists who object to animal confinement and would end use of animals as sources of food, clothing (leather), fiber, draft-power, or companionship (pets).” To satisfy consumers with those preferences, Tweeten proposes, “to label animal products by production practices. Preferred animal welfare practices may be more costly to producers, but consumers can “vote” their preferences with dollars in the market.”
Tweeten says the proposal pending in Ohio is similar to what was approved by voters in California, where economists calculated that, “variable costs of production [for eggs in California ] would rise by at least 20 percent and perhaps substantially more. Underlying these higher costs per dozen eggs are higher feed use per bird, higher cost per pullet, lower average productive life of a hen, higher mortality rates, fewer eggs of premium size or acceptable marketability, fewer birds per facility, and higher labor costs.” He says Ohio poultry producers would no longer be competitive with the 24 million laying hens in Indiana and the 21 million laying hens in Pennsylvania. And he says California economists believe the poultry industry in that state will disappear during the six year phase-in of the new rules.
Tweeten says the losers in the process will be a loss of nearly 8,000 jobs associated with poultry production, along with a diminished demand for corn and soybeans, since poultry consumes 22% of the Ohio production. He doubts Ohio consumers would face higher prices for eggs, since supplies would come from neighboring states. However, he expects the Humane Society to pursue national legislation to impose regulations on all US livestock producers, resulting in consumers obtaining replacement livestock products from Mexico, Canada, and other countries where current production practices are often inferior to US standards.
Summary:
Political initiatives may change many US livestock production practices, rather than the marketplace or science-based research. Those efforts may cause massive changes in the livestock industry, including how livestock is produced, or even result in a phase-out of US production and transfer to foreign nations.
Posted by Stu Ellis at 12:01 AM | Comments (4) | Permalink
June 8, 2009
How Will Delayed Planting Hurt State Yields In IL & IN And National Corn Production?
If USDA’s forecast for corn production is based on planted acreage and a trend line yield, could there be a better production forecast that considers the late planting in Illinois and Indiana? After all, 30% of the corn crop has been planted, or has yet to be planted, after May 20, and that raises significant concerns about the size of the 2009 US corn crop. And if you are making a decision about ACRE, that state yield will be an important statistic!
USDA’s May 12th forecast was for a 12.09 billion bushel crop, based on a 155.4 bushel per acre average yield. Since that forecast was made, corn planted has been delayed in IL, IN, ND, and KY, while normal progress has been reported in MN, IA, and NE. Using actual April weather to project the yields, and factor in the planting delays, University of Illinois economists Scott Irwin and Darrel Good and meteorologist Mike Tannura believe sufficient evidence has been accumulated to make a more accurate prediction of the new crop’s real potential. Their analysis is based on a crop weather model that estimates the impact of technology (trend), state average monthly weather variables, and portion of the crop planted late on state average yield.
The Illinois group bases its rationale on the fact that typical spring planting is two weeks earlier now than it was 40 years ago. Additionally, corn yields now decline at a more accelerated rate after early May than they did 40 years ago. This is somewhat difficult to calculate because of the growing variability in weather from season to season and the fact that some corn is planted in a timely manner and some is not.
When is late planting really considered to be late? One answer is the changing yield penalty, another compares the actual date with the optimum date, and a third is factored into crop weather models. Looking at the late planting variable for each state for a nearly 50 year period, the Illinois group found the lack of any specific trend, and in most years corn is planted on time. But when it is late, there are some serious delays, such as this year for Illinois and Indiana. 62% of the Illinois corn crop this year was planted after May 20, and the percentage is 63% for Indiana. In Iowa, only 7% was planted after May 20th this year, which is less than average.
The Illinois group revised its weather model, which cuts the Illinois yield by .29 bushels per day past May 20, 0.18 bushels in Indiana, and 0.38 bushels in Iowa. They say April rainfall is a significant yield factor in all three states, possibly because of its impact on subsoil moisture. For their weather model, they find that poor weather reduces yields more than good weather improves yields. Their calculations for 2009 is based on estimates made for the past 49 years, and forecast 166.3 bushels per acre for Illinois, 156.8 bushels for Indiana, and 167.9 bushels for Iowa. All three of the estimates used actual precipitation between September 2008 and April 2009, but reflect different weather scenarios for the balance of the growing season.
1) For Illinois, the yield could vary from 133.8 to 171.6 depending on weather.
2) For Indiana, the yield could vary from 131.8 to 164.2 depending on weather.
3) For Iowa, the yield could vary from 157.1 to 187.0 depending on weather.
Nationally, the yield could vary from 130.7 to 161.3, depending on weather, putting production anywhere from 9.950 billion bushels to 12.272 billion bushels.
Based on planting progress, the Illinois group says Illinois and Indiana yields will be below trend yield and the average of the past two years, and above trend yield and the average of the past two years in Iowa. Since those three states represent 40% of the US corn production, they project a 148.6 bushel per acre national yield. However, they calculate that if half of the unplanted acreage in Illinois and Indiana switch to soybeans, then the US harvested acreage would fall to 76.1 million acres. Further, they say average summer weather would produce an 11.3 billion bushel crop, well below earlier estimates.
How far off could they be? Their basic weather model last year predicted a 12 billion bushel corn crop that turned out to be 12.1 billion, and a 3.1 billion bushel soybean crop that turned out to be 2.9 billion. And refinements have been made for this year.
Summary:
Delayed planting in Illinois and Indiana could contribute to a significant shortfall in US corn production, even with average weather for the balance of the growing season. The impact of delayed planting, plus the potential to switch unplanted corn acres to soybeans at this late date, may push national corn production down to 11.3 billion bushels. The estimate is based on lower projected state average yields for Illinois and Indiana, as a result of weather models.
Posted by Stu Ellis at 12:47 AM | Comments (1) | Permalink
June 5, 2009
Cornbelt Update
Cornbelt 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.
Delayed planting in IL, IN & OH may push the national corn yield potential down to 152 bu. estimates Purdue marketing specialist Chris Hurt, who says acreages shifts from corn to beans won’t help either. He says the low production means usage cuts by the ethanol and livestock industries which are already in negative margin territory.
But Hurt says the kicker will be the impact on the ethanol industry because the Renewable Fuels Standard requires 12 bil. gal. in 2010 and that means 350 to 400 mil. bu. more corn will have to be produced this year. If that is a hardship, Hurt says the EPA administrator can reduce the requirement, which softens the corn market. Read more.
The soybean market is being fueled by the short supply in Argentina and the long demand in China, according to Purdue’s Chris Hurt. He says US exports could rise 60 to 80 mil. bu. above USDA’s projection of 1.24 bil. bu., pushing carryout below 100 mil. bu. representing only a 12 day supply; and he says that may lead to $14 soybeans. Read more.
New crop soybean prices will be a function of 2009 acreage, more than anything else says Hurt. He says, “If July futures do move to $14, this might only increase November new crop futures by 40¢ to 60¢ per bu. and approach the $11 per bu. mark.
Use a spread to market beans, says Hurt, “Consider pricing new crop futures by selling old crop futures months like the July, August, or September. This is an old crop/new crop spread which is full of risks. Those risks can be lowered sharply by selling the August or September futures rather than the July futures. Generally by late July or early August the old crop shortage situation will be resolved and August and September prices may decline more than the November futures.” He adds, be sure of what you are doing.
If you don’t store soft red wheat, and only 1 in 4 bushels is stored, you may want to rethink that marketing strategy this year. New crop prices are $1.30 higher than in April because the crop size is 68% of last year. IL Extension’s Darrel Good says the harvest delivery basis is 96¢ under July, compared to $1.76 at this time last year. He expects further price strengthening on a deteriorating winter wheat crop and corn crop concerns. Read more.
Wheat has been a problem for the futures market because of the lack of convergence of cash and futures. Good says corrective efforts have resulted in a 50¢ premium for Dec futures, and a 64¢ premium for Mar 2010 futures. And he says a stronger basis will be another benefit for wheat producers who store this year, instead of harvest sales.
Replanting beans? Tough decisions should be based on good data says IL agronomist Vince Davis. Read his newsletter here.
1) You are losing roughly ½ bu. of soybean yield potential per day of delay in June.
2) An evenly spaced seeding rate of 50,000 plants/A will produce 91% of expected yield.
3) 150,000 seeds planted June 1, with 50,000 plants/A has a 90% yield potential.
4) If the low stand is not uniform, one idea is to plant more seeds into an existing stand.
5) The thinner the stand, the more delayed the canopy, and the higher the weed pressure.
6) Buy more time for a thin stand with an extra application of post emergence herbicide.
It may have been entrapment, but Michigan State entomologists have found soybean aphids on early planted soybeans on the campus, reporting 5% of the plants were infested. The aphid population included both winged and non-winged individuals, some of which had arrived via a rainfall, but unseen in the prior week.
Weed competitiveness depends on your cropping system say NE researchers, who found narrow row beans reduce weed competition by 20-50% compared to wider rows, as well as when the weeds emerged relative to the growth stage of the crop. Competitiveness was defined as the amount of dry matter produced by the weeds.
Weed control #1. Post emergent herbicide applications on corn is recommended when weeds are 2-4 in., since grain yield loss will occur as weed competition increases beyond that height. Additionally, smaller weeds are easier to control than larger weeds.
Weed control #2. The prevalent use of glyphosate has diminished the use of tank mixes of broadleaf and grass herbicides, but IL Extension’s Aaron Hager says glyphosate resistance may bring the practice back into popularity. For glyphosate resistant corn, he recommends tank mixing growth regulator herbicides with glyphosate for waterhemp.
Weed control #3. Post emergent herbicides for corn that restrict application to corn maturity, should be applied against the most restrictive, whether that is height, leaves, or other factors. Hager says the same recommendation goes for tank mixed herbicides.
If you have wheat, it probably has a disease of some type, according to an Illinois wheat survey. It found 77 to 100% of wheat had leaf blotch, usually minor problems with leaf rust, 50-92% had glume blotch, and head scab was as low as 17% and high as 100%.
Don’t take an antibiotic if you have a virus, and if your wheat has a virus, don’t try to treat it with a fungicide. Just like the antibiotic, it won’t work, says OH Extension’s Pierce Paul. He’s seen wheat spindle streak mosaic and barley yellow dwarf virus in wheat fields, but he says next year, select wheat varieties that carry resistance.
It is too late this year to cure scabs and blotches in wheat, but next year choose a variety that is resistant to the diseases in your field this year. IL Pathologist Carl Bradley says planting wheat into excess surface corn stubble increases the chance for fusarium.
Crazytop in corn may be a common sight in parts of the Cornbelt this year, because conditions were good for downy mildew fungus which causes it. Infection can set in when young plants are in saturated soils for 24-48 hours between planting and the five leaf stage. Water accumulation in the whorl also is a contributing factor.
Wet soils in the eastern Cornbelt are contributing to early season corn and soybean diseases, stemming from soil borne pathogens that are attracted to plant roots, and cause a deterioration of the root system. OSU specialists recommend several routes to take:
1) Manage the drainage in the field, which are indicated by the replant frequency.
2) Use a seed treatment for both corn and beans that have several active ingredients.
3) Use a seed treatment when the crop has to be replanted.
4) Choose resistant varieties and hybrids, particularly for phytophthora in beans.
5) Plant when the soil is sufficiently dry and conditions favor the seed not the disease.
The active ingredient in Furadan 4F is being banned by the EPA after Aug. 13. The impact is Furadan 4F can be used this year, but not next year. Don’t stockpile it, since you cannot sell a crop that has been treated with Furadan after Jan. 1. If using Furadan 4F to protect Bt refuges, alternatives include granular application units on planters or purchase seed that has been treated with neonicotinoids such as Poncho or Cruiser.
Stalk borers should be on your scouting radar. If you find them on brome and ragweed they will soon migrate to corn. They will tunnel in unfurled leaves at ground level and wilt the upper leaves of corn, and YieldGard corn is not immune. When 8-9% of corn plants are infested at the 3-5 leaf stage with corn at $4, rescue treatment is warranted. Read more.
Wireworms are not always being stopped by Poncho 250, according to Iowa State entomologists. They have caused a stand loss in fields with the treatment and anyone using the product should scout for damage, and consider higher rates next year.
Bean leaf beetles are on the warning list of MO Extension, where numbers have exceeded economic thresholds on early planted beans without insecticides. Flea beetles were also spotted in corn fields where seed did not have insecticide treatments. Find management tips.
Growing season weather should be good, says meteorologist Jim Noel at Ohio State. He’s calling for the summer season to be close to normal rainfall and temperature, with limited heatwaves during the summer. He attributes that to sunspots, and the lack of La Nina and El Nino. But he’s expecting an El Nino to be in the forecast for the fall and winter, which means drier than normal with good fall harvest conditions.
Livestock producers will want to “bookmark” a reference point to obtain accurate information about a wide variety of animal diseases, including hoof and mouth disease, BSE or mad cow disease, anthrax, avian flu, Johne’s, and west nile virus. Links to authoritative sources are here.
Posted by Stu Ellis at 12:20 AM | Comments (0) | Permalink
June 4, 2009
Replant? Take Prevented Planting Payment? Punt? What Do I Do?
Some Cornbelt farmers have had smooth sailing this planting season. They planted into perfect seedbeds early, germination was perfect, and they have a good crop coming out of the first turn. And then, there is your crop, which just can’t out of the starting blocks. Some is not planted yet, but what is planted has germinated poorly, was drowned out, and is in dire need of replanting. And with questionable profitability from a mediocre crop, can you afford to replant? What are your options? We’re glad you asked!
Some of your initial decisions will be helped if you have crop insurance, and what type of crop insurance. Not all crop insurance policies will cover the costs of replanting and prevented planting, says University of Illinois Farm Management Specialist Gary Schnitkey. His recent newsletter quickly points out that GRP and GRIP insurance policies will not pay for replanting, prevented planting, or indemnify against late planting, but do require a crop to be growing to establish eligibility for an indemnity payment based on a yield under the county average.
However other policies, such as multi-peril, Crop Revenue Coverage, Income Protection, and Revenue Assurance do have those provisions. But even if you have one of those policies, talk to your crop insurance agent before doing anything or you may lose one or more benefits. Don’t just read the policy, call your agent.
The farm level policies will cover one replant and you will need receipts for expenses. However, don’t anticipate unlimited coverage. The revenue-based policies will provide up to $32.32 per acre for corn and $26.40 per acre for beans, and a minimum of 20 acres or 20% of the unit must be replanted.
When the final planting date has been reached (June 5 for much of the Cornbelt), and your field remains unplanted, you can take a prevented planting payment that is 60% of the final guarantee. 25 days beyond the final planting date another crop can be planted but the prevented planting payment will shrink to 35% of the final guarantee of the first crop.
Although planting the second crop, probably soybeans, may seem like a reasonable alternative, there is a downside to planting that second crop. By leaving the field unplanted, it will not be included in any future calculation for your Average Production History (APH) yield. However, if you plant a second crop, your APH for the year will have a 60% crop yield as the data for the year.
After the final planting date, you have the option to plant, but your coverage is reduced by 1% per day up to the 25th day, and at that point the guarantee drops to 60% of the guarantee.
Your choices probably fall into the following categories:
1) If your corn crop has not been planted, you will either plant corn when you can, or take a prevented planting payment of 60% of the guarantee, or plant beans and take 35% of the guarantee. Read more. If you want help with the calculations, use the decision aid in this newsletter.
2) If your stand of corn is poor, you will either let it mature, replant it, or consider it a failed crop and plant soybeans or another crop. Read more.
Summary:
Replant decisions can be quite costly, both in expense of doing so, and revenue lost if not doing so. Prevented planting decisions will be guided by crop insurance regulations, but may not always be easily made because of the potential to lose APH yield average. Many decisions will not come easy because of the potential for lost inputs, such as nitrogen, however, decision aids are available to assist in making a financially sound decision on how to proceed with a challenging spring planting season.
Posted by Stu Ellis at 12:56 AM | Comments (0) | Permalink
June 3, 2009
Does Your Marketing Plan Include Foreign Currency Relationships With The US Dollar?
Corn prices have been climbing for the past six weeks, and one of the reasons is increased export trade, resulting from the declining value of the dollar. As farmers recognized in 2008, a weaker dollar ignites exports, and the world could not buy enough of our grain. What was seen last year with the strong export trade, and the mini version in the past several weeks, is an example of the impact of the value of the dollar on agriculture. Farmers need to watch the foreign exchange markets just as they do the grain markets.
The agricultural importance of foreign exchange rates is explained in an article in Choices Magazine, written by USDA economists William Liefert and Mathew Shane. They outline both direct and indirect effects of the global recession on US agriculture, saying the direct effect will not be strong, but consumer spending on food will be down slightly, and largely a cutback on restaurant purchases rather than grocery store purchases. Another direct effect will be tighter credit, but again most rural banks are insulated from the Wall Street woes.
The indirect effects of the recession are traceable to overseas markets and their economies, which is where the US dollar will be the link from those consumers to US commodity values. The USDA economists note that large importers of US goods have been affected, along with the exchange rate relationship between their currency and the dollar. With the decline in the world Gross Domestic Product (GDP), the economists say foreign consumers will reduce their food demand, and particularly imported food. Among those will be importers of large volumes of US food products, including China, Taiwan, Mexico, Egypt, and Russia.
Some of those nations, China in particular, have been on the flip side of the economic fence with the US. While the US has been under saving and over consuming, they have been over saving and under consuming, all of which has contributed to the trade imbalance that aggravates the seriousness of the economic crisis. The USDA economists believe, “The main way to correct this problem would be with a realignment of exchange rates, in particular for the currencies of the trade surplus countries to appreciate against the dollar. This would raise prices of their exports in the United States and lower prices of U.S. exports in their countries. U.S. imports and consumption would fall and exports to the trade surplus countries rise, while trade surplus country exports would drop and their imports and consumption rise. The U.S. trade deficit would shrink.”
After the economic crisis began, the US dollar appreciated in value drawing foreign investors to the US to help fund some of the government stimulus programs. While that happened, ag exports fell since the cost to foreign buyers was more than they wanted to pay. That is particularly true when the dollar is adversely priced in comparison to other exporting countries, such as Canada, Australia, and Brazil. In the short run, appreciation of the dollar will be unfavorable to agriculture. In the long run, any appreciation will be unfavorable, but any depreciation will be favorable.
Since China is one of the largest trading partners with the US, buying soybeans, pork and many lesser commodities, consider the relationship between the dollar and the Chinese yuan. If the dollar appreciates, China will reinvest its dollars back into the US and keep the trade imbalance high and the dollar strong. But the trade surplus would not be corrected and the US economy would suffer further.
If the dollar depreciates against the Chinese yuan and the currencies of other countries with a trade surplus with the US, then their investment would be reduced in the US, and agriculture would benefit from increased world growth and a lower valued dollar. The USDA economists say another commodity price increase such as seen in 2007 and 2008 would hurt world consumers, but the impact would depend on the strength of the US dollar, “The difference between the dollar depreciation and appreciation scenarios is that the latter would carry the risk of another world economic crisis, triggered by flight from the dollar. A second crisis would again temporarily reverse any previous rise in world energy and agricultural prices.”
Summary:
The current global economic crisis has hurt agriculture the worst in its export business, making exports all the more sensitive to the exchange values with foreign currencies. As a result, farmers looking for information to factor into their marketing plan may want to track currency values, particularly between the dollar and the currencies of many of the larger customers of US farm products. If the value of the dollar falls against those currencies, there is a greater chance for increased purchases of US commodities.
Posted by Stu Ellis at 12:43 AM | Comments (1) | Permalink
June 2, 2009
Is The Farm Economy Out Of The Economic Woods, Or Just Now Entering?
Cornbelt farmers have their fingers crossed. Crop inputs have been purchased, some at painful prices. Corn prices are holding their own because of planting delays. Beans are going up because of several market fundamentals. But there are miles of farmland that remain too wet to plant with uncertainties about what, if any, crop will be planted. But since the financial failures in the rest of the US economy have whip-sawed agriculture, many farmers have learned their market and the rest of the economy are too close for comfort.
“The agriculture sector is not an economic island.” That is what Iowa State economist Neil Harl told Congress recently, and is telling farmers in the June issue of the Ag Decision Maker newsletter. But he says the bulk of the world’s economic troubles have sped past agriculture. However, Harl says the longer the recession lasts, the more likely there will be devastating issues for farmers, including diminished credit availability for production, land purchases, and trade.
Harl says the high commodity prices of 2007 and 2008 allowed agriculture to build a financial foundation and gain insulation from the global financial meltdown. But he says falling prices, the lack of profitability in the ethanol industry, and reduced demand for US commodities abroad have been felt in rural America.
The first of Harl’s Danger Signals is found in the commodity market. He said the high grain prices of last year were capitalized into farmland purchases and cash rent leases, only to have prices decline with reduced income per acre. He believes commodity funds played a role in the up and down movement of oil, but their involvement in the up and down move of grain prices “is less well accepted.” Harl notes the initial declining trend in land values, but does not expect a repeat of the 1980’s.
A second Harl danger signal is the economic fortune of the ethanol industry. He says the demand for ethanol pushed corn prices higher, along with beans and wheat which had to compete for acres, but since the fall of oil prices, more than 20 ethanol plants are in bankruptcy court, with 30% of the capacity in park. Harl contends the future of the industry depends on US energy policies, the price of corn, and emerging technology. He says ethanol will be in the spotlight for several years, and then become one of several alternative energy sources, but must remain economically competitive with or without federal subsidies.
While farmers are experts at production, Harl’s third danger signal is the demand side of the equation, which has also experienced a meltdown. Globally, incomes were growing, particularly in developing countries where increased income is used for more and better foods. But the global recession dampened that demand dramatically, and Harl says only China has been a buyer of US commodities, which he predicts will also fade as Chinese unemployment rises.
The fourth danger signal to Harl is tighter credit, not just for the general populace, but for agriculture as balance sheets weaken. He says the number of non-performing loans has dramatically increased in rural areas, making rural banks unprofitable. Although that is not reflective of the current agricultural economy, Neil Harl says lower commodity prices and higher costs of production will cause farmers to become problems for lenders in the future.
Harl believes agricultural profitability and financial strength will be heavily dependent on the direction of the world economy. Deterioration in financial systems will contribute to a decline in the agricultural economy, because of how the economy considers debt. He says the downshifting economy that began late in 2007 resulted from a shift in the way consumers think about debt, corporate strategies to curtail debt, and governments living beyond their means. After the bubble burst, Harl says there has been a more cautious use of debt and that will affect the general economy in the near future.
Summary:
Agriculture has been somewhat insulated from the economic downturn, but it may only be a matter of time before that changes. There is a danger to the farm economy that results from a cost-price squeeze, lack of profitability in the ethanol industry, a global decline in demand for US foods, and growing restrictions on credit. The farm economy will possibly feel more of a pinch from the global recession, unless it quickly turns around, and then there may be some delays before agriculture regains its growth trend.
Posted by Stu Ellis at 12:37 AM | Comments (0) | Permalink
June 1, 2009
If Federal Ethanol Policy Is Threatened, How Serious Would It Be?
If you are playing the game Jeopardy! and the answer is “ethanol,” you might be tempted to respond, “What bio-fuel carries the most controversy?” Regardless of the turn that ethanol supporters make, there is always some roadblock to surmount. As Congress is faced with energy policy, food prices, and many other issues that ethanol touches, what are the economic impacts if any change is made from the status quo? Some are significant.
Several Members of Congress recently asked the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri for help in evaluating nearly a dozen alternatives that have been proposed as a result of oil, ethanol, and corn prices in 2007 and 2008. Along with the high corn prices, there was a considerable pain for the livestock producer, and some ethanol critics began asking why the subsidies and protective tariffs continued while prices were high. The FAPRI report examined a wide range of alternatives suggested by the Members of Congress, as well as from livestock groups. Among the proposals were:
1) Allowing the 45¢ blenders tax credit to expire next year.
2) Vary the credit like a countercyclical payment when corn prices go up and down.
3) Allow the 54¢ tariff on imported ethanol to expire next year.
4) Vary the tariff like a countercyclical payment when corn prices go up and down.
5) Allow the 10% ethanol blend to rise to 15%.
6) Provide a countercyclical payment to ethanol plants when corn prices rise and fall.
7) Slow down the Renewable Fuels Standard’s requirement for ethanol production.
8) Divert distillers’ grains to the energy industry as a feedstock at power plants.
9) Modify the Renewable Fuels Standard to reduce ethanol requirements when corn prices are high.
10) Eliminate the Renewable Fuels Standard for corn ethanol and keep it for cellulosic ethanol.
11) Totally eliminate the Renewable Fuels Standard, ethanol tariffs, and blenders’ credits.
The FAPRI economists developed 500 different scenarios, based on levels of corn production, market prices, oil prices, acreage, and others to determine how farmers would respond, the impact on other commodities, the impact on livestock feed, farm income, and CCC outlays for farm program benefits, as well as the cost to consumers.
Each of the scenarios had their own results, but assembling a trend, the FAPRI economists drew some basic conclusions:
1) If Congress allows either the blenders’ credit or ethanol tariff to expire next year, there will be less ethanol produced and corn prices will decline marginally over the period of 2011 to 2018.
2) Any downward change in the Renewable Fuels Standard curtails ethanol production and reduces corn prices. An elimination of the federal policy would depress corn prices nearly 5%.
3) The removal of one ethanol support policy has marginal impact, but the elimination of all three policies would curtail ethanol production by 5.5 billion gallons and would cause corn prices to fall by more than 13%.
4) When corn prices are high, any moderation or modification of the biofuels policies will reduce ethanol production and slightly reduces corn prices.
5) If the ethanol blend is raised from 10% to 15%, there is only a modest increase in ethanol use and a 1% increase in corn prices.
6) Whatever changes are made to ethanol policies, other market fundamentals such as weather and oil prices will raise or lower their importance.
Summary:
Congressional policies affecting ethanol can be changed at anytime, and any change would probably be reduction in a policy that supports ethanol production and price and is beneficial to the price of corn. Such changes may be the result of higher ethanol prices or a negative impact on livestock feed availability and price. Policy changes that cause a reduction in ethanol production or corn prices may be a temptation to Congressmen should ethanol prices rise to the point that either consumers complain or anti-ethanol forces raise questions about ethanol supports in times of high prices.
Posted by Stu Ellis at 12:24 AM | Comments (0) | Permalink
