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Friday, September 04, 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.

Export business will be a key indicator of new crop corn demand says IL marketing specialist Darrel Good. USDA is predicting 2.1 bil. bu. export trade, 337 mil. less than the 2007 crop, but 250 mil. more than the 2008 crop. So far 284 mil. bu. have been booked for export from new crop stocks, compared to 334 mil. at this time last year. Good says the difference is the lack of sales to Japan, which he says will be made up.

Export business will also be a key indicator of the soybean market says Darrel Good. USDA’s forecast is for1.265 bil. bu., and currently 477 mil. bu. have been booked for export, well above the 271 mil. sold at this time in the record setting pace last year. Read more.

Good believes the consumption of US corn and beans will reach a record level for the current marketing year, but he says prices will depend on how much users are willing to pay in the wake of global economic challenges. He says if a recovery does occur a modest increase in prices would be expected following the harvest of large crops.

Feed demand for corn is 5.3 bil. bu., but Iowa St. specialist Chad Hart says that includes a residual which captures crop loss beyond the field, and with the larger and later crop, he says USDA expects higher corn losses beyond the field. He says the true feed demand is still under pressure given current livestock economics, in which numbers are declining.

Large corn and soybean crops are forecast, but marketing specialist Chad Hart at Iowa St. says there are still significant weather concerns. He says only 18% of the corn is in the dent stage versus the five year average of 43% and pod setting for soybeans is behind as well, with delays in both crops increasing the concern for potential frost damage.

The grain market is pointing to an average $3.10 corn price and $9.60 for soybeans, says Hart, who adds that tight bean stocks have caused an inversion in the market with Sept. having a $1 premium over Nov. He says concerns about the weather, advance export strength, and Argentine farm strikes are helping support prices. Read more.

The corn price is languishing says Mike Woolverton at Kansas St., because of the crop size potential. He says last year’s long fall was beneficial to the crop, and this year’s has a greater yield potential of 12.8 bil. bu. if the first freeze holds off long enough.

Soybeans have the potential to kick-start the commodity complex says Woolverton, because global buyers bought up the supply. He says domestic crushers offered larger premiums over the summer and still complained about the tight supply. Woolverton says, “Every bean in every pod is needed this year. Anything that knocks the top off of the yield projection will cause soybean price to move up; perhaps sharply.”

Early grain sales have paid off for MN marketing specialist Ed Usset who was selling spring wheat for $8.71 or $3.50 higher than Sept. futures at harvest. His philosophy:
1) I do NOT make early sales because my “outlook” calls for lower prices by harvest.
2) I do NOT make early sales because of the value of the dollar, the size of the Canadian wheat crop or my general expectations concerning the economy, etc.
3) I do NOT make early sales because of advice from a market advisor or broker.
4) I make sales because I understand my own operation and my own cost of production, and these are sale prices that work for me.

Conflicting reports of land value trends confuse buyers say IL economists Bruce Sherrick and Paul Ellinger, who list some buffers that keep prices from falling. Read more.
1) Farmers with cash and recent high incomes are supporting local farmland markets.
2) It is not as costly to secure financing because of low interest rates.
3) Returns are less attractive on alternative investments.
4) Land markets seem to move slowly.
5) Long term institutional investors have increased interest in land holdings.
6) There are low debt levels on land, unlike the situation in the 1980’s.

Will cool temperatures impact grain fill in corn? That’s a good question says Purdue’s Bob Nielsen, “Unfortunately, the effects of such an unusually cool grain filling period on corn maturity dates and yield in the central Cornbelt are not well known, partly because the historical occurrence of such unusually cool grain filling periods is so infrequent.” But he says the plant slowly shuts down in cool temperatures, even without frost.

Corn fields with loss of leaf color, firing and premature loss of photosynthesis should not be a reason to change nitrogen management next year says IL crop specialist Emerson Nafziger. While there have been two successive years of those problems, those losses are unusual, and he says do not make large changes in rate, form, or timing. He says it should not happen next year, but consider ways to manage N to reduce loss potential.

Weeds may be maturing in many fields, ready to spread seed back into the soil at harvest time. IL weed specialist Aaron Hager says there are several herbicides that have a relative short time restriction between application and harvest and could be applied. Read more. However, he says given the current development stage of weeds, preharvest herbicides may not do much to limit weed seeds.

Fungal ear rots have enjoyed the weather, and may be prevalent in your field, but you need to identify which you have to determine how it should be handled at harvest time. Fusarium will produce fumonisin, aspergillus will produce aflatoxin, but diplodia should not be considered a serious problem unless it contributes to stalk rot and standability.

Ear rot fungi will develop while moisture is above 18%, whether in storage or in the field. Long term storage requires moisture below 14% if aspergillus is developing. Diplodia is not a big worry for storage says IL specialist Suzanne Bissonnette, in her newsletter.

If ear rots are present, it is important to harvest the field in a timely manner and to store the grain under the best possible conditions says Laura Sweets at Univ. of MO. Adjust harvest equipment for minimum kernel damage and maximum cleaning. Grain should be thoroughly cleaned to remove lightweight, damaged or broken and moldy kernels.

You probably have time to clean out bins and prepare them for new crop storage, and that will reduce the potential for problems with insects in grain. That includes cleaning the inside and outside of the bin along with all grain handling equipment and filling any holes or cracks. Treat the walls and floors with a residual insecticide. Read more.

A late harvest creates problems for fall fertilizer applications, and IL fertility specialist Fabian Fernandez suggests the possibility of a biennial P & K application before a corn crop, but he says either fall or spring applications can be made. He says a fall application may allow a loss of the nitrogen accompanying P in MAP and DAP. Read his newsletter.

One in five pounds of pork was exported in 2008, helping support pork prices, says livestock economist Shane Ellis at Iowa St., but this year pork exports have been down nearly 40% during the summer. He says that is part of the reason price forecasts suggest that the painfully low hog prices will continue into the fourth quarter of 2009. He says the solution is not to cut a half million sows, but more demand and lower feed costs.

“Our problem in the hog industry is not demand relative to the past but high costs of production because of ethanol,” say MO livestock economists Glenn Grimes and Ron Plain. “However, the only way to solve the problem is to reduce production because feed costs are going to stay high relative to history.” They say consumer demand is up 4%.

Farmer-lender mediation cases in Minnesota have tripled in the past year from 133 in 2008 to 433 in 2009. MN specialist Rob Holcomb says the steady increase in the number of farm loans in trouble is expected to increase because of low livestock prices and ripple effects of the general economy. The number of cases began to increase in January.

Production costs will be lower in 2010 believes Purdue economist Bruce Erickson. He says fall ammonia will be $400-$500 per ton, but K is still averaging over $600. He does not believe seed prices will rise in 2010 so budget $100 per acre for corn. And Erickson says lower prices are likely for herbicides, including glyphosate.

As we enter the hurricane season, IN climatologist Dev Niyogi says if any sweep into the Cornbelt, note the soil moisture ahead of the storm. He says, “If the ground is wet, the storm is likely to sustain, while dry conditions should calm the storm.”

Posted by Stu Ellis on 09/04 at 03:29 AM | Permalink

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