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Friday, February 06, 2009

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.

Ethanol throttled the 2007& 2008 corn market, now it put on the brakes. Marketing specialist Chad Hart at Iowa State says that is because of the shutdown in several ethanol plants. But the industry is still growing, and he says it should have exceeded 9 bil. gal. last year. He says the federal mandate is for 10.5 bil. gal. of ethanol this year. One industry leader recently estimated 2.7 bil. gal. of capacity is currently idled.

Corn exports will fall 661 mil. bu. behind the export levels of last year and beans will fall 61 mil. Iowa State’s Hart says the value of the dollar continues to be a problem for US exports. He says it will strengthen against most major currencies, except those of Japan and China, which are currently the top corn and bean export markets. Read more.

Argentina is suffering the worst drought in the past 50 years, estimates Mike Woolverton at Kansas St., who says its government has estimated production with a 50% loss, and curtailed all wheat exports. He says the drought has cut 43% of soybean production in Paraguay, and reduced soybean yields 10% in southern Brazil.

Woolverton says the Argentine drought and farmers’ strike should show up in USDA’s February 10 world supply and demand report. He says market speculators have begun building long positions as a result of the issues, and US farmers with stored crops may be major beneficiaries of the South American drought and political issues.

US soybeans will be helped, since this is the time of year that global buyers turn to South America for soybeans, but the supply will be short and price will have to ration the supply, says Woolverton, adding that will become a dynamic in the acreage decision this year, but a soft demand from the recession will prevent any wild price moves.

Focus on the demand, says Alan May at South Dakota State. “Consumption will continue. Demand has, and will likely continue to be, the key component in price direction. People still need food, livestock still need to be fed, and the ethanol industry will still need to buy corn to meet the demand for ethanol. The issue is the performance of demand in the months ahead and the corresponding production we will have in 2009.” He says prepare to make sales when the opportunity arises and control input costs. Read Alan May’s grain newsletters.

A weaker economy still wreaks havoc on fundamentals, says Mike Roberts at VA Tech.
1) Any corn strength is limited by bearish speculators. He’s pricing up to 30% new crop.
2) Funds are adding to net bull soybean positions. He’s pricing up to 40% of new crop.
3) Funds have reduced net bear wheat positions. He’s pricing up to 15% of the new crop.

If you are uncertain about ACRE, IL Extension’s Gary Schnitkey says the 30% cut in loan rates may be a moot point, since, “It is unlikely that prices will fall below national loan rates between now and the end of the Farm Bill in 2012. Hence, the chance of receiving LDPs is low under both the traditional and ACRE alternatives.”

If you are uncertain about ACRE, which will cut Counter-Cyclical payments by 20% for those signing up, Schnitkey says, “Trigger prices in 2009 are $2.35 for corn, $5.36 for soybeans, and $3.40 for wheat. The chances of receiving counter-cyclical payments are low because it is unlikely that commodity prices will average below trigger prices.”

If you are uncertain about ACRE, Schnitkey says, “ACRE will pay for corn in 32% of the years and average $17 per planted acre. For soybeans, ACRE will pay in 16% of the years and average $6.50 per planted acre. These average payments will vary across farms based on the farm's average yield relative to the state's average yield.” Read more.

The national cattle inventory is 1.6% under January of 2008, with beef cows down substantially, lighter heifer retention, but a slight rise in the dairy herd. The national herd is 31.7 million, the least since 1963, and with heifer retention down 2%, the herd will continue to decline into next year says Iowa State livestock economist Shane Ellis.

Shane Ellis says cattle feeders have started to push back on prices they are willing to pay to regain profitability. “Compounded by lower feeder cattle prices, there will continue to incentive for producers to reducer their herds to exit the business.” Read his newsletter.

Cattle numbers are down, yes, but Purdue’s Chris Hurt says be patient on prices. “The USDA (Cattle on Feed) report will increase cattle prices in the short-run, but more central to a price turn around will be the perceived progress of the general economy. On that front, consumers are not likely to feel better about their budgets for several more months as unemployment continues to rise into the spring and summer.”

Hurt does not give much hope for a rapid recovery. “The improvement in the economy is still months away, and may well be late 2009 and 2010. This leaves the possibility that finished cattle prices only return to the mid-to higher $80s this spring with mid-$80s this summer. If so, prices might not move back above $90 until very late in 2009 and early 2010. Read more.

Consumer demand for meat is weak, according to MO livestock economists Glenn Grimes and Ron Plain. They say 2008 pork demand was down 3.5%, beef demand was down 4.1% compared to 2007. Export-driven live hog demand is up 6%. They say consumer demand will remain weak in 2009, but fewer chicken supplies will help pork.

Your New (crop) Year’s resolution may need to be better weed control. IL Extension crop specialist Jim Morrison says herbicide resistant weeds need special attention:
1) Regular field scouting can identify stands of weeds that just won’t go away.
2) Rotate herbicides, which work on different parts of weeds (site of action.)
3) Combine mechanical weed control with herbicide applications.
4) Clean tillage and harvest equipment regularly to prevent weed transfers.

Weeds rob your nitrogen say Michigan St. specialists, who add that a 95% control can be achieved when weeds are 9 in. tall, but corn yields are cut by 25 bu. per acre. They say there is no yield loss when weeds are 4 in., but 12 in. weeds produce a 9% yield loss. In terms of nitrogen, the Maximum Return to Nitrogen (MRTN) rate was 96 lbs per acre when weeds were controlled at 4 inches, compared with an MRTN rate of 200 lbs per acre when weeds were controlled at 12 inches. Bigger weeds absorb more nitrogen.

Your combine is too efficient and may not be leaving enough corn on the ground to sustain the cattle you turned out on the cornstalks. NE forage specialist Bruce Anderson says 4% of the corn was left in the field 10-15 years ago, but today it is about 1 lb. less grain per acre for every bushel harvested. He says cattle already need extra protein.

OH corn yields were 5 bu. under trendline, but OSU agronomist Peter Thomison says they could have been worse. He says the wet spring and protracted dry spell hurt the crop, but he says if August had been blistering hot, which it was not, then corn yields would have been comparable to 2002 when the state average yield was a paltry 89 bu. Thomison also says Hurricane Ike clobbered corn stalks, causing widespread lodging.

Does stacked trait corn yield better than non-GMO corn? Not really say Ohio St. agronomists, who note that 2/3 of the state last year was planted to transgenic corn and it is getting harder to get non-GMO corn. They say some farmers believe stacked traits are matched with high yield hybrids, but the agronomists say different genetic backgrounds respond differently to genes and there is no research indicating the stacking traits increase yield. Read their current C.O.R.N. newsletter.

Your thoughts about the pros and cons of 2,4-D are being solicited by the US EPA which has been asked by the National Resources Defense Council to cancel the 2,4-D registration based on the fact the EPA cannot prove it does not harm anyone and human health effects were not all considered. Information about submitting comments is here.

“Question everything,” say Michigan State fertility specialists in their latest newsletter, including the way you fertilize crops. They are strongly advocating soil tests, given the current prices. And they say if you take your own soil test, consider the soil compaction, and question if it may be limiting the crops ability to absorb water and nutrients.

“The number of farms hit bottom, and is increasing slightly,” says Greg Preston who heads up the NASS office in IN. He was describing the 2007 Ag Census released by USDA, which indicated the turnaround of a 60 year trend. With the ever-increasing age of farmers, Purdue’s Kevin McNamara expects more land transitions in the future, including sales to other farmers, subdivisions of farms, and housing developments.

Posted by Stu Ellis on 02/06 at 01:45 AM | Permalink


“Do-Gooders” Gone Bad or Corporate Puppets? Natural Resources Defense Council (NRDC), according to Wikipedia, is a New York City based non-profit environmental advocacy group with a staff of more than 300 scientists, attorneys and other specialists. (Wow with a staff that big one would need to cause a lot of noise to keep the funding coming.) They have 1.2 million members and online activists nationwide. They lobby Congress and other public officials for the promotion of conservation and environmental issues. Food Quality Protection Act of 1996 passed with a key roll being played by NRDC according to their website. The Act’s objective were (again from their website 1) Set toxic chemical levels based upon children instead of adults 2) Have EPA set limits of Pesticide Levels of all sources of Exposure 3) Have EPA go back and reexamine pesticides to make sure they meet the new safety standards, no more “Grandfathering”. The third part of the act is where it appears they are going after 2-4 D. Atrazine has been a target of this act for some time. NRDC claims they have filed four lawsuits against the EPA on this issue. Their website also claims 60 – 70 million pounds of atrazine are annually applied on fields, golf courses and lawns. (Last time it was applied on blue grass here, it did a nice job . . . of killing the grass!) They go on to say; ‘Atrazine should be banned and that three quarters of the volume applied was not needed (probably that applied to the golf courses and lawns).’ They insist the problem of overuse is all about the bottom line of very large corporation which own most of American farming today. (Yeah we (corporations?) apply with reckless abandon for the bottom line and do not worry about the cost of the product.) Agriculture (as we become a smaller percentage of the population, more specialized and fragmented) is going to be at disadvantage to well fund and supported groups; no matter how misguided they are. The disconnect between city and farm is very real. WE have lost OUR (two sided) connection. It has been report, “The head of EPA will be one appointment that agriculture will have to watch.” That observation seems to be very real. The other possibility is there is a company that is going to be releasing and new board leaf weed killer for corn. They need to remove the low cost options (2-4 D and atrazine) from the market to increase market penetration. NRDC is part of their marketing plan. May be it is time that contribution to nonprofit organizations that lobby Congress/Government be disclosed and limited like political contributions. PS Mr. Ellis: We were hoping to see the elimination of asian soybean rust from North America with the cold blast into the south. Any chance of that? Regarding the last inquiry, I have not yet seen any analysis, but will investigate and report back to you. ~Stu

Posted by: Freeport,IL at February 6, 2009 1:01PM

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