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Friday, July 03, 2009

Cornbelt Update



 

Cornbelt 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.

Mark down these USDA estimates for comparison later in the year. These statistics are the essence of the Planted Acreage and Quarterly Grain Stocks reports from June 30:
1) 2009 corn acreage is 87.035 mil. with harvested acreage projected to be 80.107 mil.
2) 2009 soybean acreage is 77.483 mil. with 76.547 estimated for harvest.
3) Trend line corn yield is 153.4 bu. and trend line soybean yield is 42.6 bu.
4) On June 1, corn stocks were 4.266 bil. bu. and soybean stocks were 597 mil. bu.

IL ag economist Darrel Good says, “The June USDA reports point to a comfortable supply of corn, soybeans, and wheat for the 2009-10 marketing year. The focus in the corn and soybean markets will now turn to summer weather and yield prospects.” Read his newsletter.

Corn yield prospects are improving in IL, IN, & IA say IL economists Darrel Good and Scott Irwin and meteorologist Mike Tannura. Their yield model uses the amount of acres listed good to excellent and depending on various scenarios, they project the national corn yield between 133.3 and 170.2 bu, with a 154.1 bu. average for average weather. Read more.
1) IL corn yield ranges from 138.2 to 172.1 bu. ranging from poor to good weather.
2) IN corn yield ranges from 137.1 to 166.2 bu. ranging from poor to good weather.
3) IA corn yield ranges from 157.1 to 187.0 bu. ranging from poor to good weather.

Early prospects for soybean yields in IL, IN, & IA are difficult to project because of the lateness of planting says the IL group. Their calculations show soybean yields may be:
1) Below trendline in IL, but slightly above the 46.2 bu. three year average.
2) Near trendline in IN, and about the three year average yield of 47 bu.
3) Above trendline in IA, as well as above three year average yield of 49.5 bu.
4) They project a 42.2 bu. national yield on 76.6 mil. acres producing 3.231 bil. bu.
Read more.

Weather will play a major role in the markets says Chad Hart at IA State, given delays in crop development. He adds, “Any weather stress will translate into crop stress quickly and a rebound in crop prices…some have pointed out the similarities to 1983 and the potential for a recovery of La Nina, raising the possibility of a late summer drought.” Read more.

The wheat market fell along with corn and beans following the release of the acreage report because the NASS spring wheat estimate was 675,000 acres more than expected, says Mike Woolverton of KS State. But he says crop development is behind average and only 15% of the crop is headed out, compared to the typical 40% at this time of year.

The 11th Commandment for corn is, “Thou shall not hold unpriced grain in the bin after July 1,” says MN marketing specialist Ed Usset. “Unlike soybeans, your basis risk on unpriced corn held in storage is minimal – the spot market for corn and for new crop delivery are both trading at or near 55 cents under. Your risk in old crop unpriced corn is in the futures price. On 6/26, the Dec’09 corn contract closed at $4.04 per bushel. Since 1990, the December corn contract has traded lower in 2 of 3 years from the first week of July to the second week of October. Even with minimal basis risk, I’m paying attention to the 11th Commandment.” Read more of Ed Usset.

Usset also applies the 11th Commandment to soybeans, and says “The stocks situation in soybeans is tight, and the tightness is reflected in an inverted futures market. The old crop Jul’09 contract is trading at a $2 premium to the new crop Nov’09 contract. The nearby soybean basis in Southern Minnesota is about 55 cents under the Jul’09 contract – or $1.50 over the Nov’09 contract. In about 3 months, when soybean harvest is in full swing, the nearby basis will be about 50 cents under the Nov’09 contract.”

Biotech seed continued its growth into US planters. USDA reported stacked gene varieties comprised 46% of all corn, up from 40% last year. Single genes Bt corn remained at 17%, and herbicide resistant single gene corn declined in market share from 23% last year to 22%. All biotech varieties claim 85% of the US corn acreage, up from 80% for the 2008 corn crop. Herbicide resistant beans make up 91% of the crop.

Hog supplies are starting to decline, says IA State livestock economist Shane Ellis in his analysis of this week’s Hogs and Pigs Report. He says sow inventories are the second lowest on record and the breeding herd is down 2.7% from last June. Third quarter farrowing intentions are down more than 3%, and fourth quarter will drop over 2%. Total pig supplies have not dropped as much because litter sizes are 2.5% higher.

Hopes for improvement in the pork market have been dampened by the H1N1 virus, along with recession-weakened exports. Ellis says, “Eight months ago, there were opportunities to hedge a hog-to-corn margin that would have put a hog producer in the black, but such opportunities do not appear to be available in the near future.” Read more in this newsletter.

Although hog numbers may be declining, weights are still up according to MO livestock economist Glenn Grimes. He says, “Over the last 6 weeks, barrow and gilt carcass weights have averaged 2% higher than a year earlier. Hog slaughter in the second half of 2009 is expected to be down 3% or so. Due largely to fewer Canadian hogs coming south, the June 1 inventory of market hogs weighing less than 60 pounds was down 2.4% even though the March-May pig crop was only down 0.3%.”

Farm diesel fuel prices are 42% under 2008 price levels, according to KS State economist Kevin Dhuyvetter, who tracks fuel prices on the NYMEX Exchange. He says August should be 36% under last year and September about 31% lower. Harvest time prices may approach 2008 levels, only because that was the time oil prices dropped.

Farm operators will be pinched between low commodity revenue and high cash rental rates unless yields or prices or both rise before harvest, says MN farm business specialist David Bau. He says breakeven prices for 165 bushel corn and 48 bushel soybeans are not available, and he is strongly recommending a switch to flexible rental agreements. Read more.

Flexible rent agreements call for a base rent which could be keyed to a variety of indexes. And Bau says, “If you complete a flexible rental agreement with a base cash rent with added payments it will be considered a cash rental agreement with Farm Service Agency in the latest farm bill. But without this base rent you will be share cropping with your landlord who will deserve a portion of the government program payments.”

Many landowners have used the 1031 tax code provision for buying and selling farms and other property, and the middleman which temporarily holds the property in the like-kind exchange is important since he insulates against capital gains taxes. But a recent bankruptcy of a qualified intermediary threw 450 investors and their $420 million into a line of unsecured creditors, since their 1031 documents did not specify “escrow” account. Protect your investment and read more.

Despite the recession, sales of organic certified foods grew nearly 16% last year, with nearly one-third of families spending more on organic food this year compared to 2008. IL ag law specialist Bryan Endres believes the organic industry is poised to flourish based on US-Canadian agreements on June 17 allowing joint certification in each country, which will also allow products to more easily enter the European Union market.

Ponds, which held excess water, may cause disappointing yields for many farmers, who should take the opportunity to mark the pond and seek NRCS help in designing a good drainage system. First, ensure the pond is not going to be determined as a wetland, which will allow drainage work to proceed. IL Natural Resources Specialist Bob Frazee says a good system will drop the water table to 12 in. below the surface in 24 hours.

Soybean aphids have made it all the way to Nebraska where soybean farmers are being urged to scout because of recent optimum temperatures of 70’s to the mid 80’s. NE bug experts say soybeans are more vulnerable to aphids during early reproductive stages.

So how do you fight aphids? A step by step guide.
1) Scout 1-2 times per week, at first checking the tops of 20-30 plants, then downward.
2) During flower and podset, the economic threshold is 250 aphids on 80%+ of plants.
3) Check for natural enemies such as lady beetles which eat aphids voraciously.
4) If the majority of aphids have wings, they may soon leave the field.
5) A honeydew or sooty mold covering of beans means optimum treatment time is past.
6) If a field is treated, leave an untreated test strip as a refuge for beneficial insects.
7) For good treatment coverage, use high water volume (5 gal/A) and high pressure.
8) Pyrethroids have a long residual time, but chlorpyrifos fumes up under the canopy.
9) Alert nearby beekeepers if you spray aphids while soybeans are flowering.
10) Do not add an insecticide to glyphosate just to save a trip through the field.
11) If aphid populations are peaking along with threats of soybean rust, then a tank mix of a fungicide and an insecticide can be effective since both need high water pressure.

Purdue entomologist John Obermeyer is issuing an alert for Indiana farmers to beware of western bean cutworms in cornfields beginning in the next week. Adults are laying eggs, and when they hatch larvae enter the whorl of the corn plant then make their way to the ear and continue eating. Mold will typically form on the corn ear when they leave. Obermeyer says check 20 plants for egg masses and spray if 5-8% are infested. Learn more.

NE may have planted 600,000 more corn acres, but there are increasing fungal problems being reported there. NE agronomists are reporting increased cases of Goss’s bacterial wilt and say farmers “are at increased risk this year because of the abundance of bacterial inoculum that is expected to have overwintered from recent disease outbreaks.” They say rescue treatments for that and several other fungal problems are not available. Read more in the current issue of NE Cropwatch.

Do you use glyphosate or glyphosate? There are dozens of brands and generic herbicides that are glyphosate, and NE weed specialist Stevan Knezevic says they provided more than 90% weed control regardless of the rate, brand name or cost. But he says your challenge is the select the appropriate rate for your weeds, and avoid using it at the highest possible rate. Comparison shop, based on cost per amount of acid equivalent.

Foliar fertilizer has not worked in the past says IA State agronomist John Sawyer, who notes increased interest in applying nitrogen to corn leaves since soil applications have been stymied by the weather and rapid corn growth. He says corn leaves cannot handle 200 lbs of nitrogen per acre, nor substantial applications of phosphorus or potash either.

Foliar fertilizer has not been effective on soybeans either says Sawyer at IA State, when tried both early and late. In fact, leaf burn has diminished yield when used later in the growing season. Early season foliar application increased yields in 15% of trials, by an average of 1 bu. per acre. The most consistent results were from 3-18-18 at 3 gal/A.

Let your voice be heard if the White House “Rural Tour” rolls nearby seeking input from rural Americans about a variety of issues affecting farm families. The rural listening tour began July 1 in Wattsburg, PA with a discussion on rural broadband. Ag Secretary Tom Vilsack will be joined by other cabinet officers familiar with the issues.
1) July 16 at LaCrosse, WI to discuss rural economic development.
2) July 18 at Ringgold, VA to discuss new energy economy & related issues.
3) July 20 at St. John’s Parish, LA to discuss rural healthcare.
4) Aug. 12 at Bethel, AK to discuss rural infrastructure, climate, new energy.
5) Aug. 16 at Zanesville, OH to discuss green jobs and renewable energy.
6) Aug. 17 at Hamlet, NC to discuss rural education.
7) Sept. 28 at Scottsbluff, NE to discuss production agriculture
8) Sept. 30 at Las Cruces, NM to discuss rural infrastructure.
Details are sketchy, but read more.

Posted by Stu Ellis on 07/03 at 02:19 AM | Permalink

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