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Friday, November 21, 2008

Extension Update


Extension Update is a weekly summary of news from Extension, government, and other attributable sources, focused on marketing, farm management, and other issues that are of interest to Midwestern farm owners and operators.

Lower oil prices equals lower ethanol prices equals lower corn prices. IL Extension’s Darrel Good says corn prices have a 90% correlation to ethanol prices, and ethanol has dropped from $2.82 per gal. in July to $1.57 last week. Corn prices are down as a result his newsletter says.

Lower hog prices equals lower corn prices also, says Darrel Good, who says that means a reduced demand for corn as livestock feed. Once $85 last summer, lean hog futures are now $62. He says despite lower corn costs, lower hog prices imply more liquidation. Similarly, cattle futures that were once $117 are now near $89 with feedlots emptying.

Compared to 2007, corn exports have turned inside out, says Good. The record 2.4 bil. bu. of exports last year resulted from two years of short crops and the low value of the US dollar which made exports attractive. He says feed supplies have increased, demand has weakened, the dollar has strengthened, and 2008-09 exports will be closer to 1.9 bil.

Will corn prices increase? Darrel Good says despite some optimism for higher prices, he says it is not clear where the market fundamentals will improve to push up prices, and he adds it will still take recovery in the financial and energy markets to achieve that.

“It is kind of a strange situation when you have to hope for an increase in the price of oil to hope for an increase in the price of corn,” says MI Extension’s Jim Hilker. “Given lower oil prices, I suspect it will take a drop in input prices, to make the 2009 corn crop profitable. We would expect to see at least the nitrogen prices to drop off sharply.” His focus is on net, not price. Read more.

Will corn and beans fight for 2009 acreage? That is a question that MSU’s Jim Hilker asks, “We will need 5-6 million more corn acres in 2009 versus 2008. Prospects on input prices will play a big role, in addition to output prices, but that is always the case. Perceived corn versus soybean yield potential may be the harder call to make. Corn yields relative to bean yields seem to be improving quicker, and seem to be less risky.”

Wheat did not have to bid as high to keep new crop acreage, says Hilker because of less demand. He says lack of market convergence remains an issue. “In the US soft red wheat sector we still have the disconnect between cash and futures. And while forced load out would tie the two back together, it is unclear how much futures would come down versus cash up, but at least we would have a price risk management tool again.”

The Nov bean contract expired Nov. 14 ranging from a low of $6.23 in mid-Jan. 2006 to a high of $16.31 on July 3, 2008. MN Extension’s Ed Usset says the $10+ spread may be the largest spread ever for soybeans between the life of contract high and low.

Beans have not lost as much value as corn, says Purdue economist Chris Hurt because beans have more “star power.” He says soybeans do not have as many negative fundamentals as does corn, although both are subject to the financial crisis and the value of the dollar. But he says soybeans are not hit as hard by declining crude oil prices.

Exports are helping the soybean market, says Hurt, which are 15% above year ago levels. And he says if the current pace holds, USDA may have to set a higher target. One of the positives is the fact that China is the top soybean customer and it is holding $2 trillion in foreign currency, enabling it to buy in an economy where cash is king.

Save $8-10 per acre by eliminating one field pass says NE Extension’s Gary Zoubek. He suggests forgetting about shredding stalks, since NE planter researchers found no advantage to removing corn stalk residue if the planter is weighted and downpressure springs are used to keep the proper planting depth. Read more.

If you buy the new Roundup Ready 2 Yield seed beans, you are buying a bag with a specific number of beans inside, not bags with a uniform weight. That is the industry trend, says MO Extension’s Bill Wiebold, who says you will get 140,000 beans, but not necessarily 50 lbs. of seed. Wiebold says a seed size of 2,800/lb. is about average, but seed size will vary by variety and will vary due to environmental conditions.

The constant number of seeds per bag will not be welcomed by those farmers who buy smaller seeds, believing they will be able to plant more acres with fewer bags of seed beans. Those farmers may resist the change, says MO agronomist Bill Wiebold. But he says knowing the number of seeds per bag allows more precise calibration of planters.

The size of seed beans is not as important as yield potential and pest resistance says Wiebold, who says seed size does not affect emergence percentage, seedling vigor, or yield potential. But he says smaller seeds have less reserves, and planting depth is more critical. Read more.

When soybean prices rose, did you feel more comfortable about applying fungicide to soybeans to prevent Asian rust? Or was the reason for more fungicide the fact that it has rained more in the past several years and ASR spores may have had a greater chance of survival? Iowa St. researchers believe the latter is the reason for more fungicide sprays.

Iowa State’s fungicide study found “that use of fungicide as a preventative measure can increase yields in a season when disease pressure is moderate or high. In such a season, many fungicide treatments yielded better and a few treatments increased yield over 10 bu.” Read more.

Foliar fungicide studies in Ohio had highly variable yields across several test plots, and treatments. Researchers recommend that foliar diseases in soybeans should be monitored at the R2 (full flower) stage to determine if fungicide applications may be profitable. They say if bean prices are close to application costs, then the application is warranted.

Oh, you didn’t know it is more rainy? That is the data collected by Iowa State weather guru Elwynn Taylor. Taylor says 100 years ago, it rained an average of 75 days per year, but that number increased to 100 days per year by the year 2000. Since 2004, Taylor says the number of rainy days in the Cornbelt has exceeded 120 days per year.

The days may be numbered for soybean aphids. OSU researchers have piggybacked on a 2004 IL discovery of a gene that makes aphids not want a certain soybean plant. The IL gene was called Rag1, but when it was placed in soybeans grown in Ohio, the aphids were not driven off. Apparently, the Ohio aphid family was genetically different, but gene Rag2 successfully causes the Ohio aphids to migrate to other plants or die in place.

Aphid populations in Ohio were low in 2008, predicted by a low population count late in 2007. But OSU entomologists express uncertainty about 2009 because their counts were high in the fall, yet the colonies overwintering on buckthorn are non-existent and they say they have not yet found a single egg for soybean aphids where expected.

This is the best time of year to walk your fields and collect soil samples to determine the seriousness of your Soybean Cyst Nematode problem. The colder soil temperatures means the SCN eggs are in the cyst and they are readily countable for analysis. Today:
1) Select a 10 acre plot to test, and walk a W or Z pattern collecting soil samples.
2) Sample the soil with a shovel or probe about 8 inches down in 20 locations.
3) Mix the samples and fill a one pint zip lock bag with a composite of the soil.
4) Call your local Extension office for instructions to submit the sample without delay.

European corn borers were unevenly distributed in 2008, say IL Extension specialists. NW IL which is usually a corn borer haven, had very few; and the southern third of the state had the most. Specialists suggest Bt corn use has been the main cause for declining populations, but heavy rainfalls are being thanked for increasing their 2008 mortality.

Net returns to crop-share landlords, to no surprise, have increased over the past 10 years, including dips in 2001 & 2002. However, IL Extension economist Dale Lattz says net returns for 2006 & 2007 have been significantly above previous years’ returns. His study of only IL farms warns, “Farmland with the highest net return per acre does not necessarily have the highest return on investment.” He says future returns on crop-share farms will largely depend on corn and soybean prices and trends in the cost of inputs.

Hog contracts based on the futures market have paid better than contracts keyed to the spot market say MO livestock economists Glenn Grimes and Ron Plain. For late Oct that represented $18.26 more per hog, and for early Nov. the difference was $31.40. They say on average, the futures market has offered a much better price since late 2007. Within the past month, they say 12-15% of producers use futures-based production contracts.

2008 alfalfa started late and ended late, and any regrowth after your last Sept. or Oct. cutting should be left in the field, without being grazed, says Iowa State agronomist Steve Barnhart. He offers a late season checklist to improve your alfalfa winter survival.

Posted by Stu Ellis on 11/21 at 01:48 AM | Permalink

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