Farmgateblog.com - Where farm decision-makers start their day

« Back to main

Friday, August 21, 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.

“Big crops get bigger,” is the likely mindset of the grain market with USDA’s forecast of 12.761 bil. bu. of corn which is 4.6 bu. above the trend yield for 2009 corn, and IL marketing specialist Darrel Good says there is evidence that large yield forecasts in August are followed by larger forecasts in following months. Read his weekly newsletter.

However, the crop will be challenged with the severe hail damage in Iowa, dry weather in other growing areas, and the modest deterioration in crop conditions that peaked in late June at 72% good to excellent and have recently faded to 68% good to excellent. Based on those conditions, Good’s team forecast is now at 158.2 bu. national yield. But he says crop estimates may still grow and will put pressure on harvest prices.

USDA’s forecast of 3.199 bil. bu. of soybeans is not considered large by Darrel Good, and is a half bushel below the trend line yield. He says August weather has not been perfect and his crop weather model points to a 44.1 bu. national yield. But he says while the crop is at more risk to late season weather, there is still an opportunity for larger yield and production forecasts, which would likely cause more price weakness into harvest.

New crop corn carryover will be 12.6% of use, compared to the 14.3% for the old crop. Marketing specialist Jim Hilker at Mich. St. says he believes the futures market price average of $3.20 more than the USDA weighted price estimate of $3.50, unless the crop shrinks, the demand grows, and/or oil prices spike; with few marketing opportunities.

If new crop soybean carryover is only 6.8% of use, why is the USDA average price at only $9.40? Jim Hilker says part of the reason is a projected 15% increase in the size of the world soybean crop, and projected world ending stocks of beans up 25% from last year. That is the result of larger crops in the US, Brazil, and also in Argentina.

If you want to estimate your corn yields, there are some important rules to follow:
1) Count the number of harvestable ears in 1/1000 of an acre. (17.5 ft. for 30 in. rows)
2) On every 5th ear, count the number of kernel rows per ear and determine the average.
3) On each of those, count the number of good kernels per row and average.
4) Yield equals ear # times ave. row # times ave. kernel #, then divide by 90.
5) Repeat the process at four sites across the field, and average the results.

Any ACRE payments are 14 months away for the 2009 crops. But based on current price and yield trends, KS economist Art Barnaby has been estimating potential payments.
1) Wheat: MO-$41.02, IL-$47.55, SD-$30.40, MI-$39.12, WI-$35.89, MN-$26.59,
IN-$33.12, OH-$18.73, ND-$1.83, KS-$0, NE-$0.
2) Corn: WI-$76.70, ND-$53.10, MI-$59.94, IL-$74.60, MN-$57.22, IN-$53.62,
MO-$41.75, KS Dry-$26.84, KS IR-$51.85, NE IR-$49.90, IA-$36.51, OH-$23.02
3) Soybeans: ND-$13.47, IN-$13.93, IL-$11.43, MI-$2.66, MN-$1.44, Others-$0
4) Sorghum: IL-$41.85, MO-$40.33, KS-$24.56, NE-$21.44, SD-$0.

FAPRI has revised its price forecasts for commodities over the next few years as University of MO economists updated their 10 year economic baseline:
1) Recovery of meat and dairy prices depends on the economy and supply reduction.
2) Petroleum prices will be down with demand, taking down the demand for biofuels.
3) When the economy recovers, commodity demand and prices will rise with oil.
4) Oil prices are projected to average $61.31 in 2009/10 and $94 by 2015.
5) Omaha ethanol will climb from $1.65 in 2009 to $1.76 in 2011 and $2.09 in 2015.
6) Corn prices will average $3.47 this year and $3.98 by 2014.
7) Corn plantings will be 88.5 mil. acres in 2010 and 90.4 mil. acres in 2014.
8) Soybean plantings will be 77.9 mil. acres in 2010 and 78 mil. acres in 2014.
9) Soybean prices will be $9.44 in 2009, $9.12 in 2010, and $9.74 in 2014.
10) Fed cattle will be $85 in 2009, $93 in 2010, and $98 in 2011.
11) Feeder steers will be $103 in 2009, $115 in 2010, and $123 in 2011.
12) Hogs will average $57.59 in 2011, up from $42.82 in 2009.
13) The all-milk average of $12.47 in 2009 will be $16.37 by 2011.

Economists at University of Missouri’s Food and Ag Policy Research Institute have tried to quantify the impact of the Cap and Trade climate legislation on MO farms. Their preliminary study adds operating costs of $30,000 by 2050 on a 1,900 acre diversified farm, assuming fertilizer costs were exempted from rising until 2025.

Cutting a half million sows from the breeding herd is not the answer to pork profitability says John Lawrence at Iowa State. He says the pork industry needs more demand, lower feed costs, or lower supplies to be profitable. He suggests there are some short term solutions that might be better than cutting sows to reduce the pork supply.
1) Remove the incentive for heavy carcasses and run packing plants more efficiently.
2) Finishers must be willing to sell at lower weights pursuant to market signals.
3) Cull pigs should not be passed on to the next level for inefficient feeding.
4) Adjusting carcass weights and slaughter numbers will be faster than culling sows.

Pork profitability may key upon the relationship between fixed and feed costs. Iowa State’s Lawrence says fixed costs are now smaller than feed costs, so increasing pigs or pounds out the door is not as important as reducing feed costs per pig. “Fewer, but more efficient, pigs in the barn will increase profits compared to more pigs at less efficiency.”

A red flag alert is being issued by MO agronomists about saving wheat seed to plant the 2010 crop. They are concerned about the extent of fusarium head blight or scab that was severe in some fields in 2009, and are finding germination rates at only 50% to 60%. They say if infected seed is planted, it will infect the stand of the new crop.

You may have heard your state had record cold temperatures in July. That includes: IA, IL, IN, OH, PA, and WV. The entire eastern half of the nation was much below normal, except for FL, LA, & TX which were above normal and OK that was near normal. That comes from OSU meteorologist Jim Noel, who says expect an early September that has temperatures that are slightly below normal and rainfall that is at or below normal.

Hail damaged corn will not only cut quantity, but quality as well, say IA plant pathologists Alison Robertson and Gary Munkvold, who fear a risk of mycotoxin contamination in hail damaged corn, particularly from fusarium and aspergillus fungi. They say ear rots may lead to toxins, but not always; however inspect fields before harvest and delivery of the corn to avoid surprising dock or complete rejection. Read more.

If aspergillus mold affects your corn, and aflatoxin is produced, it will be rejected at levels above 20 parts per billion due to FDA regulations. MO specialist Allen Wrather says the mold can grow quickly in the field and in storage if the corn is at 18-20% moisture. He says to cut the risk, dry corn to 15% within 24 hours of harvest.

There will be fewer aflatoxin problems in Bt corn says Wrather, because they will be more resistant to ear worm damage in the kernel. He says Bt varieties do not resist ear worms, but there will be less feeding injury from ear worms.

White mold remains an issue in soybeans, where a cool wet summer has been the perfect environment. Fungicides are not an option, and the damage you see began a month ago within the soybean plant. For future management, IA specialists say consider no-till if rotating soybeans with corn, or use Contan after harvest to control it for 2010. Planting seed that is tolerant to white mold is a prime recommendation from them.

Ohio farmers are in a garden spot says OSU agronomist Jim Beuerline, due to good growing weather. Wheat yields averaged 71 bu., 1 bu. shy of the record. He says corn yields are estimated at 165 bu., which would break the record by 6 bu. One of the reasons is increasing final corn populations to over 30,000 on 34% of the acreage. And despite some white mold, soybean yields are expected at a record tying 47 bu.

Ensure your calendar is marked for the Farm Progress Show on Sept. 1, 2, & 3 at Decatur, IL. The Show site is at Exit 144 on I-72 on the northeast corner of the city. Access to the all-weather site and ease of parking are unsurpassed.

Cornbelt Update circulates in Brazil and Argentina, and a parallel newsletter published at: http://www.cropspotters.com this week carries several interesting articles, including:
1) Gov. Blairo Maggi says Mato Grosso can double food production without clearing land, but by switching pasture to cropland, since 8% is cropped and 25% is in pasture.
2) Brazilian biodiesel has increased its soy content from 3% to 4%, with production increasing from 322 mil. gal. in 2008 to nearly 500 mil. gal. in 2009.
3) Japanese investors are financing a 600 mi. ethanol pipeline from Brasilia to Sao Paulo.
4) Current prices: gas (25% ethanol) $5.37, ethanol $3.52, diesel (4% biodiesel) $4.12.

By the way, join the farm gate blog on Twitter http://twitter.com/stusAgNews

Posted by Stu Ellis on 08/21 at 01:21 AM | Permalink

Post a comment

*Name:

*Email:

Location:

URL:

SPAM? Leave this blank unless you are a spam-bot.

*Comment:

Remember my personal information

Notify me of follow-up comments?

*Required