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

« Back to main

Friday, March 13, 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.

The March 31 Prospective Plantings Report will confirm whether USDA’s estimate of fewer planted corn and soybean acres in the recent Outlook Conference was correct. IL Extension’s Darrel Good says the combination of 86 mil. corn and 77 mil. soybean acres appears low, given the 4.2 mil. acre cut in wheat and 2 mil. acre cut in cotton and rice.

Good says USDA believes planted acreage will decline as a result of lower returns, but farmers will have to confirm that in the survey now underway. He says the market will assess the intentions and decide if prices need to change to alter the intended acreage. He says unless acreage is reduced, there may be a potential surplus of one or more crops.

The Quarterly Stocks Report also will be released in two weeks, and Darrel Good says it will be more important for corn than for the bean market. Bean use is well known, and Good says March 1 stocks should be about 1.3 bil. bu. But he says conflicts between USDA and Census Bureau statistics on corn exports make the stocks estimates difficult to predict. He’s estimating 2nd quarter use at 2.6 bil. and March 1 stocks at 7.1 bil. bu. Read his newsletter.

USDA’s March Supply Demand Report forecast a 100 mil. bu. increase in corn demand by ethanol refiners, the result of improved profitability. Carryout dropped to 1.74 bil. bu. Export demand was lowered by 50 mil. bu. and feed demand held stead at 5.3 bil. bu. Corn exports are competing with other nations and feed quality wheat. USDA estimated the season average price at $4.10 from early season forward contracts.

USDA’s March Supply Demand Report forecast a 10 mil bu. drop in the soybean crush to 1.64 bil. which results from weaker demand for oil and meal. With bio-diesel facing low profitability, soy oil demand was reduced by 700 mil. lbs. Soybean exports remain strong, and export projections were raised to 1.185 bil. bu. thanks to Chinese demand. Carryout was dropped to 185 mil. and the season average price was reset to $9.35 per bu.

USDA’s March Supply Demand Report forecast higher carryover for the 2008 wheat crop putting stocks-to-use at 32%. While Kansas State’s Mike Woolverton says the report was bearish for wheat, USDA held the season price range steady at $6.70-$6.90. Woolverton says the global wheat crop grew with larger Australian yields.

Woolverton at Kansas State says the S/D report does not address any “demand destruction,” although exports are down. He says, “This is a more optimistic picture than we have been led to believe, given recent press coverage of bad economic news. If the stock market has indeed found its bottom, look for commodities to decouple from the decline in stock prices and attract more attention from traders in coming weeks.”

Commodity prices may be low now, but they will return to higher levels over the next 10 years say FAPRI economists at MO and IA St. Recovery is projected in 2010, helped by China, India, and Vietnam with 7-8% economic growth. They expect ethanol prices to fall because of lower crude oil prices, but bio-energy mandates ensure demand growth.

The FAPRI economists forecast soft wheat and corn prices into the 2009-10 marketing years, but eventually climb on increased demand. Weaker demand will also soften soybean prices, but world trade will grow by one-third in the coming decade helped by Chinese demand. Meat prices should be strong because of growing global demand.

Farmers considering the biotech endorsement for crop insurance, do not have to make that commitment by the March 16 crop insurance deadline. USDA’s deadline for the BE option is not until June 30th, which is the deadline for FSA planted acreage reporting. Anyone using the BE option must provide the agent with seed and planting records, says Stephen Johnson of IA St., who says hail and wind policies can be added after March 16.

Dryland farmers in the Western Cornbelt are being urged by Kansas St. economist Art Barnaby to obtain a minimum 70% CRC or RA-HPO insurance, or greater coverage for optional units. He’s recommending enterprise units for corn in a single county, which has a discounted premium and a higher USDA subsidy. Barnaby says an 80% coverage on enterprise units increases total guaranteed dollars and gains SURE disaster protection.

Barnaby says his reason for CRC or RA-HPO with the lowest premium cost is because they have no downside price limits, and the upside limit is 2 times the base price on all revenue products. Read more.

Don’t consider any shenanigans says Art Barnaby at Kansas St. if you are thinking about shorting fertilizer applications because your revenue crop insurance guarantee is more than your crop might gross. Barnaby says crop insurance policies require farmers to follow good farming practices, and an adjuster could deny a claim if it isn’t followed. Barnaby also says that will only serve to lower your APH for future years.

ACRE is strongly recommended by Mich. State ag economist Jim Hilker, instead of relying on Direct Payments, “ACRE is more like revenue insurance (although it is not a substitute for crop insurance), what are the odds there will be a payoff? My analysis at this point is that there is over a 50% chance that ACRE for corn will trigger at both the state and farm levels in 2009, and probably more than make up for the lost 20% of direct payments.” Read more of his Outlook.

While Hilker’s vantage point is the state of Michigan, he calculates that expected corn, soybean, and wheat prices would trigger payment from the ACRE program this year:
1) Corn: “It would only take a price a bit lower than the $3.60 estimate to trigger ACRE even with trend yields if the 2008-09 price remains at $3.90 or higher.”
2) Wheat: “If the $5.15 price forecast occurs, it would trigger ACRE for wheat with normal yields. The past two years’ average price is 22% higher.”
3) Soybeans: “The average of the 2007-08 and 2008-09 average annual weighted bean prices is $9.67. The $8.00 projection for 2009-10 is over 20% lower (compared to $9.67). Normal yields or less and we have another ACRE trigger.”

Farmers baffled by varying refuge requirements for BT corn with stacked traits may want to follow NE Extension recommendations, since rootworm BT is more restrictive than corn borer BT traits. Read the latest http://cropwatch.unl.edu/ ">newsletter.
1) Plant one common refuge, void of Bt traits, instead of planting 2 separate refuges.
2) Plant the refuge in the same field as the Bt traits to help meet distance requirements.
3) Know the minimum required refuge size for a particular geography and Bt trait.

If charcoal rot is one of your soybean headaches, you will want to see how Doug Jardine of Kansas St. recommends identification and management. He’s featured on a free web-based program available until the end of March, and provided by the Plant Management Network, which publishes agricultural resource materials, such as Jardine’s webcast.

Dairymen are urged to tune into a web-based seminar at 12 Noon on March 20 about Feeding Strategies with Current Milk Prices. IL Extension’s Mike Hutjens will focus on feed benchmarks, impact of nutrient reduction, by-product feeds, and monitoring cow performance. Free registration.

Dairy operations with silage need to observe optimum planting dates. MN agronomist Jeff Coulter says milk per ton of silage was within 1% of the maximum when corn was planted April 15 to May 17 in WI, and milk per acre was within 1% of the maximum when planting dates were April 21 and May 6. He says silage dry matter increases with higher plant population, but dry matter yield slows when populations exceed 35,000. Read his newsletter.

Canadian hogs entering the US have slowed say MO livestock economists Glenn Grimes and Ron Plain. In fact feeder pig imports are down over 36%, in part because there are 10% fewer hogs in Canada and the breeding herd is down 7%. They also say the US COOL labeling law makes it less attractive to import live animals instead of meat.

Cattle feeders have suffered huge losses this winter say Grimes and Plain, with many closeouts in the red by over $200/head. The result is feed lots slowing down their rate of marketing to force up prices, but that forced up slaughter weights by 29 lbs this week.

After measuring carbon in the soil of 7 eastern states, OSU agronomists say carbon storage is greatest in the top 8 inches of no-till fields; but if you measure stored carbon down to 12 inches, more will be found in plowed fields than in no-till. Survey leader Rattan Lal says carbon storage is best done based on soil type, rather than by tillage.

Farms are still on the wrong side of the digital divide. The 2007 Ag Census indicates 57% have Internet access, up from 50% in 2002. Of those that have access, 58% have a high-speed connection, which increases farmers’ efficiency in using the Internet.

Posted by Stu Ellis on 03/13 at 01:49 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