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Friday, April 24, 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.

If you have not noticed, USDA’s adjustments in its soybean use projections will have an impact on the ACRE program. Michigan St. marketing specialist Jim Hilker says the cut in carryout stocks to 165 mil. bu. and USDA’s raising of the average seasonal price to a $9.35 to $9.95 range were important, “This has ACRE implications, the higher the 2008-09 average weighted price, the higher the odds of ACRE paying off, other things equal.” Read his latest newsletter.

Hilker’s analysis of the soybean market includes the declining production in Argentina and Paraguay, leading to a world crop that is 165 mil. bu. smaller and fewer ending stocks. He says, “The disagreement between farmers and the government over several issues, such as an export tax and drought aid, has slowed the pace of exports.” And Hilker says since Argentina has threefold the stocks held by the US, our exports could change, and he adds, “Keep an eye on old crop soybean prices as we go through harvest, i.e., consider being ready to sell on a further rally if you are still holding 2008 soybeans.”

“In spite of poor world economic conditions, the USDA projects increased world use of wheat, corn and other feed grains over previous years,” says marketing specialist Melvin Brees at MO Extension. “The surprisingly strong demand along with reduced corn and wheat acreage intentions for 2009, dry conditions in the southern plains, the extent of freeze damage to wheat, planting delays for spring wheat, and wet Corn Belt conditions with possible planting delays make a case for higher price potential.”

“Managing risk is essential,” says Brees, because high price is hard to define, and farmers should plan to capture profits, rather than hold out for higher prices. Read more.
1) If the bean uptrend is broken, sell, or just below chart support at $9 Nov futures.
2) If the bean trend holds, watch for new crop prices near the Jan. highs of $10.50.
3) If Dec corn prices fall below support at $4, add to sales to protect a small margin.
4) If Dec corn moves above $4.40, delay any sales and raise the sale stop levels.

What marketing tools do you use? Brees says that is a hard question to answer:
1) With a normal growing season, new crop cash contracts offer profit margins.
2) Cash forward contracts will protect profits on crops sold at his suggested levels.
3) Futures hedges would accomplish the same, if you can afford the margins.
4) At-the-money options are expensive and would wipe out profit margins.
5) Lower out-of-the-money options are cheaper, but would not protect price levels.
6) Option spread strategies, such as fences and bear spreads, could be effective.
7) Any futures or option strategy should only be used if you are aware of the risk.

Ethanol plant closures continue, along with reductions in production. Iowa State’s Roger McEowen reports 37 of the 193 US ethanol plants are out of business, 23 of them built since 2005. He says that represents 19% of the plants and 18% of production capacity, totaling 2.2 bil. gal. Read more.

It may surprise you, but the stock market and the finished cattle market are nearly in lock-step with a 90% correlation, says Purdue livestock economist Chris Hurt. That is because both are driven by the general economy and macro economic conditions that reflect weak demand. Read more.

Chris Hurt says retail beef prices have not dropped along with producer prices, and that indicates producers are paying more, beef processing margins have increased, and retailer margins are even 13% more than they were early last year. He’s expecting finished cattle prices in the mid-$80 for the second quarter and a couple dollars higher this summer.

Cattle prices will increase over time, as the herd continues to shrink, exports improve, and the world economy grows. Purdue’s Chris Hurt says while beef has suffered, it has the potential to have one of the most dramatic positive responses when normalcy returns.

But the feeder cattle sector is expanding according to the latest USDA Cattle On Feed report. March fed cattle marketings were down 0.8% and placements were up 3.8%. But the April inventory was not down as much as it was in March, so Shane Ellis at Iowa State says the cattle feeding sector is rebuilding inventory. He says with moderating feed prices there are signs the fed cattle market may surpass $90/cwt, with higher futures.

“As seed prices increase, return to seed decreases. The best net returns occur with plant populations between 30,000 and 35,000 ppa,” say Iowa State agronomists. They note that not every seed germinates and 4-7% will fail to survive, so increasing seeding rates by 5% will ensure that proper plant population is achieved, but will sometimes vary. They say maximum grain yields occur between 34,500 and 37,000 per acre. Read more.

Emerging corn greeted with cold rain, melting snow, freezing rain, and any form of cold precipitation could show “imbibitional chilling injury,” say OSU agronomists. They said that was the case in 2005, but 2009 has been mild in comparison, and your corn is OK.

To assess potential freeze damage, check corn plants 5 days after freezing temperatures, if warmer temperatures have occurred. Look for new leaf tissue in the whorl, or look for the growing point just below the soil surface. If it is white, the prognosis is good.

If corn is germinating in cold, wet soil that is a prescription for seedling blights. Under normal conditions plants may continue to grow, but when other injuries occur, new roots cannot develop, and pythium or other fungi can kill corn seedlings that are stressed. Seed treatment and fungicide efficacy can be shortened, if saturated soil conditions persist.

In the sweep net, Extension bug folks are finding quite a few critters to watch:
1) There have been enough degree-days for alfalfa weevil in Cen. IL & IN, & So. IA.
2) Black cutworms will soon be feeding on weeds, awaiting corn seedlings.
3) Several varieties of aphids are in wheat, many of which transmit BYD disease.
4) Legions of armyworm moths are being found in KY & MO laying eggs, especially in thick stands of wheat, so prepare rescue treatments for thick stands before thin stands.

On the issue of alfalfa weevil, entomologists in the 3-I states are discussing them in their weekly newsletters. IN Extension specialists suggest scout fields in an M-shaped pattern, examining 10 stems in each of five areas of the field. Check the stems for problems:
1) Evidence of tip feeding by alfalfa weevil larvae; such as pinholes.
2) Maturity of the stem, i.e. pre-bud, bud and/or flowers;
3) Stem length and the average size of the weevil larvae.
4) Early season weevil problems can be treated with an insecticide with residual action.
5) Late season weevil problems should be addressed with short residual insecticides.

Ohio soybean growers are being warned about a potential aphid onslaught, based on 2008 collections of aphids in traps. OSU entomologists put an asterisk on the warning and said they did not find any colonies or eggs on the few buckthorn plants sampled.

Pay attention to what you are applying in the sprayer. Long days mean errors, and IL Extension’s Aaron Hager says some chemicals with similar names have very dissimilar formulations. He used the example of Balance Pro, which must be applied before corn emergence, and Balance Flexx, is applied after emergence. Consult his list of potential confusion chemicals.

Safety is first and last, says IA Extension’s Mark Hanna, even though wet, cold weather has delayed field work. He says if you feel rushed, you need to still beware of dangers:
1) Mechanically lock or block your planter or tillage equipment before getting under it.
2) Leather gloves prevent cuts and rubber gloves prevent chemical flesh burns.
3) Avoid planting fast to allow seed metering, depth control, and furrow closers to work.
4) While applying ammonia, use rubber gloves, unvented goggles, and water bottle.

Increases in soil compaction are being reported as farm and construction machinery get heavier. WI Extension’s Dick Wolkowski says that pressure impacts bulk density, porosity, aggregation, and drainage, but affects different soils in different ways. He says compaction creates a denser, less porous soil, slowing down gas exchange and keeping oxygen away from root systems. He says saturation only worsens the problem.

How do you address compacted soil? Wisconsin’s Wolkowski ways one suggestion is deep tillage, using a subsoiler with an L-shaped leg to lift the soil. He says the soil will loosen, but will not be restored to the point of having root and earthworm holes. The best advice is to avoid compaction in the first place, and stay off the soil or on one track. He says MN researchers have found compaction remaining from 1880’s covered wagons.

Deep patches of cornstalks may indicate the need for some soil conservation repair in the eyes of IL Extension’s John Church. He says waterways have deep gullies next to them, preventing water from entering the grassed area, and that is only going to worsen. He says check “small breaks in the sod, dead sod, small water channels, tillage damage to edges, flow restrictions, and other problems that could cause a waterway failure.”

With the soil full of moisture, warm temperatures will boost pasture growth, possibly ahead of livestock being able to keep it clipped and prevent seed head formation. MO forage specialist Rob Kallenbach says once a plant sets seeds, it stops growing leaves, and the secret to pasture management is to keep the forage in the vegetative stage. He says divide pastures into paddocks, and use some for hay harvest if you get behind.

Sudden Death Syndrome was prevalent in 2007 and rotated fields will be back in soybean production again this year. IA Extension’s X. B. Yang says soybean seedlings acquire SDS infection at the point of germination, and if the soil is cold and wet, they will be there longer and more likely to contact the SDS pathogens. Yang recommends later planting and says soybeans planted after May 15 rarely exhibit SDS symptoms.

Although it has caused insignificant damage, the “book” on soybean rust has yet to be written says KY Extension’s Don Hershman, and it “could be a big mistake” for farmers to believe that it will never be a serious problem. He says 20 years from now it might have been seen as “a flash in the pan,” but could also be seen as something that was a significant production factor a time or two during that 20-year period.

Soybean rust has successfully overwintered in Georgia, Alabama, and Louisiana for the first time since its arrival on US soil, says Don Hershman at the University of Kentucky. He says it can be found on low levels on kudzu, within warm, moist conditions it likes. He says the determining factor will be the weather conditions over the next two months. To keep apprised of soybean rust, watch the official website.

Posted by Stu Ellis on 04/24 at 01:10 AM | Permalink

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