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Friday, December 05, 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.

US beans are more in demand overseas than here at home. With 3 months into the marketing year, IL Extension’s Darrel Good says export inspections have totaled 352 million bushels, but the domestic crush is only at 275 million 2 months into the year. Read his newsletter.

Darrel Good says Chinese bean imports are 45% ahead of last year, and while the total has exceeded last year’s export pace, he says it may not be a good indicator of what to expect for the rest of the year. Good says the pace of Chinese buying, South American production, and the world economy will all play into the total 2008-09 export demand.

2009 soybean acres will become the focus after the first of the year, and Good says a small reduction in acreage may be warranted, based on demand and the trend yield. Good says prices have been more of a function of soy oil than soy meal, but the current market dynamics are due to the general economy and falling crude oil prices.

But look at corn and bean prices versus the crude oil price, says Chad Hart at Iowa St., since oil has dropped 50% since Labor Day, but corn has fallen only 39% and soybeans only 32%. Hart says that is because the Renewable Fuels Standard is giving support to both corn and soybean oil, which are needed for the federal biofuel mandate.

Chad Hart says today’s market dynamics will be with us in 2009, and the general economy will be a major driving factor. Stocks will be tight with little room for crop shortfalls. The biofuel industry will expand, the livestock industry will contract, and energy sector volatility will ripple across grain prices, input costs, and land values.

A similar conclusion comes from MN marketing specialist Ed Usset. He says the demand for corn increased production and decreased acreage for beans and wheat, “Despite poor processing margins, ethanol production continues to expand because the construction of new plants began in better times. Don’t expect the pressure for more corn acres (and fewer acres for other crops) to ease.” Read more.

Diesel fuel which averaged $3.68 per gallon during 2008, should average $1.97 per gallon during 2009, calculates Kansas St. economist Kevin Duhyvetter. His recap of NYMEX futures indicates a 46% drop in diesel fuel and 50% drop in crude oil into ’09. His pleasant surprise numbers.

Fertilizer prices have not dropped as fast. Price data maintained by Ohio St. ag economists indicate their latest average for anhydrous ammonia was $1186 per ton, which was up 15% from 3 months earlier, but down from a high of $1212. Potash was $864, which was up 10% from 3 months earlier, and down from a high of $915 per ton.

Tax help #1: A big benefit is being able to write off the first $250,000 in depreciation of assets bought in 2008 says NE tax specialist Tina Barrett. She says that includes tractors, combines, most farm equipment and breeding livestock, but not machine sheds.

Tax help #2: Barrett says the ability to average income over a less sumptuous year will be another benefit to help reduce tax liability. And if you sold assets, qualifying for capital gains, the capital gains tax is zero for the current year.

Tax help #3: Barrett says the IRS has finally clarified its rules, and individuals receiving social security payments will not have to pay self employment taxes on their CRP payments, if they are not actively farming. Anyone who is farming, and receiving CRP payments, and not receiving social security, will have to pay self-employment tax on it.

Tax help #4: Purdue tax specialist George Patrick says cash basis farmers may want to sell commodities this year, and defer income to 2009, but that requires a contract with the elevator that says the farmer has no right to the payment until a specific date next year.

Red meat and poultry production are declining says John Lawrence at Iowa St. While the smaller supply is partially offset by reduced exports, higher imports, and lower energy costs, he says in the end, higher retail prices are anticipated. His newsletter is here.

Late Oct. and early Nov. brought hog slaughter numbers that were below year earlier levels says John Lawrence, meaning the inventory cutback began earlier than had been anticipated. He says the decline should last at least through the first 3 quarters of 2009.

Country of Origin Labeling is impacting Smithfield hogs, says Lawrence, which will have to be US born. Lawrence says Smithfield’s Farmland and Morrell plants will have to bid higher for US-born hogs, and Canadian hogs will have to find a new buyer. He says Canadian hogs will either be discounted or slaughtered only on certain days.

Beef prices may be higher says Lawrence at Iowa St., because supplies are expected to record a year over year decline for the first 2 quarters of 2009. He says heavier placements mean reduced second quarter marketings, and higher in the third quarter. Despite a lower supply, the poor economy means fewer restaurant steaks being sold.

Black ink! Kansas St. livestock economist Darrel Mark says the 50% drop in corn prices make it possible to put cattle on feed with a positive breakeven. While stars must all line up economically, he pencils out $65 per head with a 650 lb. steer and $20 per head profit with an 850 lb. steer. Review his calculations.

Darrel Mark says the Nov. Cattle on Feed data indicated heavy yearlings were more profitable and lightweight calves should be backgrounded and finished as yearlings. But he says the drop in corn prices has boosted the incentive to put calves on feed earlier.

Sharpen your pencil, and save on crop budgets with generic herbicides, say NE weed specialists. The active ingredients are the same, but the inactive ingredients are different, and could affect performance. They report Roundup WeatherMax sold for $93/gal. while generic glyphosate with a surfactant sold for $42/gal. Even with a lower rate of 22 oz rather than 32 oz per acre, the Roundup WeatherMax is $16/acre compared to $10.50/acre for generic glyphosate. The generic product can create a $5.50/acre savings.

Weed specialists at NE found few differences among glyphosate brands, but say some differences may be evident with difficult to control weeds and in dry conditions. They say, “Herbicide rate, environmental factors and costs will play a larger role than brand name in product selection.” Some brands had differences within a given rate.

Weed specialists at Iowa State found few differences with generic metolachlor in a comparable study. “If the differences in inactive ingredients are considered, the generic products will work fine,” according to weed specialist Bob Hartzler.

Waterhemp is becoming more resistant to herbicides that are in the PPO inhibitor category, and IL Extension agronomist Matt Montgomery suggests that if waterhemp has survived both a glyphosate spray and a PPO inhibitor application, then use whatever means necessary to eliminate the weeds, such as cultivation or a weed hook.

Are you converting CRP to cropland? MO agronomist Travis Harper says that requires extensive planning to overcome some of the problems that will appear:
1) CRP is prone to erosion, and erosion rates will return when tillage returns.
2) If no-till is not possible, leave waterways and field borders undisturbed.
3) A thick mat of vegetation has developed and will hold moisture & diseases.
4) Most of the plants in CRP are perennials, and will re-grow after tillage.
5) CRP provided a home for field mice and voles which will eat seed corn.
6) CRP vegetation can be controlled with herbicide, burning, & mowing.

Soybean rust was not an issue this year, but why not? Darren Mueller at Iowa St. says when spring became summer in the South, all of its overwintering locations petered out. He says the crop was harvested in Mexico and it did not build up as it did in 2007. So the hurricanes came north to the Cornbelt empty-handed as far as soybean rust is concerned.

Do traits mean higher corn yields? Not always, say OSU agronomists, who analyzed their variety plots. Seven of the top 10 yielding hybrids were triple or quad stacks, and one was a single trait. Two of the top 10 were conventional non-transgenic hybrids. Among the bottom ten yielding hybrids, eight of them have triple stacked traits.

Mark your calendar (#1) for a Midwestern tillage seminar focused on multiple topics, including soil effects of long term strip and no-till, controlled traffic, managing weed resistance in strip and no-till systems, along with carbon sequestration. It will be 1/29 at Kishwaukee College at Malta, IL. Details.

Mark your calendar (#2) if meat goats are in your future. Midwestern meat goat associations and several universities are coordinating a program to test bucks for feed conversion over the course of an 84 day test at Western IL University beginning next July 18. For details, send an e-mail inquiry to: WIU-bucktest@attglobal.net .

Posted by Stu Ellis on 12/05 at 01:44 AM | Permalink

Comments

Is the OSU traited corn yield study publicly available? Scott: Find the results at: http://www.oardc.ohio-state.edu/corntrials/. ~Stu

Posted by: Scott at December 5, 2008 5:05AM

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