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Friday, July 17, 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.

Abundant corn supplies. Helped by a larger estimate of corn production and larger stocks of corn, the market is satisfied there will be ample supplies of corn to meet demand says IL Marketing Specialist Darrel Good. He says the futures market expects an average price of $3.25 for new corn, compared to the latest USDA estimate of $3.35 to $4.15. Read more.

Abundant bean supplies. With more acreage, the market is expecting a 3.26 bil. bu. bean crop says Good, which has pushed the futures market projections for the new crop to just under $9 per bu. That compares to USDA’s $8.30 to $10.30 price range. He says old crop bean exports could still grow, pushing carryover to only 70 mil. bu. Good notes the market is not concerned and some rationing of the old crop may be required.

Abundant wheat supplies. With more acreage and a larger yield estimate, the new wheat crop seems to also have ample supplies. Good says the ending stocks should reach an 8 year high of 706 mil. bu. and good weather will bring further price weakness.

So what does that mean for marketing? Darrel Good says the low price of wheat, weak basis, and large futures carry suggests retaining some ownership in the new crop. Additionally, “December 2009 corn futures are well below the price guarantee for crop revenue products which discourages additional new crop sales. November 2009 soybean futures are about $.30 above the crop revenue insurance price guarantee.”

Late planted corn and beans are just getting out of the starting gate, in the words of Kansas State’s Mike Woolverton, who adds that normal first frost dates this year would stunt corn and soybean yields, especially in the Eastern Cornbelt where planting was delayed. Woolverton says, “Extremely tight ending stocks create the potential for the soybean price to explode in the last half of August.” Read more of his newsletter.

The July Supply-Demand report made your ACRE decision for you says Michigan State’s Jim Hilker. He says, “Most of the articles and programs you read and see are going at it backwards. What they should be doing is showing that the market makes the decision to signup, and your job is to figure out how to go about signing up correctly.” Read more of his newsletter.

In Hilker’s calculations, the futures market is predicting a $3.25 national average price, and his chart of low and average yields would result in a payment from the ACRE program. “Even if the state and your farm have an average yield, just the lower prices expected relative to the past two years will trigger ACRE payments of $68.48 per acre if prices do average $3.25 and you have a similar yield to the state yield. If your Olympic average ACRE yield is higher than 138, then you will have even higher payments.”

As a further predictor of prices, Hilker says the options market predicts a 55% chance that 2009-2010 prices will average below $3.25. “There is a 55% chance that to get $68 all you have to give up is $5-6 of direct payments. What I call the breakeven price is $3.65; this is the price where ACRE pays if we are below it and does not pay if we are above with average yields.” Hilker adds, “And $3.15 is at the 50-50 point; the market says there is a 50% chance that you will collect $82.28 or more if the national price is $3.15 or below. At around $2.95, about where new crop bids are, you are reaching maximum payments, and there is at this point a 40% chance that will happen.” Signup deadline is Aug. 14.

Hilker says the odds are even higher that wheat will be eligible for an ACRE payment compared to corn, but things can change. He says there is a 50-50 chance that beans will be eligible for an ACRE payment because current prices are just below the threshold.

Reports of spoiled corn are increasing as bins of 2008 corn are cleaned out. Some of the corn did not reach maturity when harvested and the issues are now resulting in closer grading of samples and increased discount schedules says IA State’s Charles Hurburgh.

Stored corn exceeding 15% moisture should be dried immediately, and moved if showing damage. If blended with #2 corn, Hurburgh said bad kernels can be detected in typical samples and closer scrutiny will be applied by poultry feeders and processors. He says it will take a year or more to move 2008 corn into the market limits of #2 corn.

Hurburgh says 2008 corn will be showing up in the market as 2009 corn is harvested, but he says it is better to move out the old stock and replace it with 2009 corn if you are waiting to price the 2008 crop. He says successful blending will be difficult to achieve because spoilage of the entire lot will quickly occur, creating problems for exporters.

A corn refresher is offered by IL crop specialist Loretta Ortiz-Ribbing for farmers whose vexing problems were addressed earlier this year by her colleagues:
1) If the environment retards corn growth and the plant is older than it appears, any spray application should be keyed on the most restrictive element of plant size or age.
2) If the environment has made corn plants appear to be nutrient deficient, remember that warmer and drier soils may enhance growth and plant appearances may improve.
3) If the weather has prevented either corn or bean planting, planting a cover crop is better than leaving a field fallow to enhance soil microbes and prepare for 2010 crops.

Soybean aphids are off to a slow start this year in the Cornbelt, but entomologists say there is still a long way to go in the growing season. In OH overall densities are low, but some fields are showing signs of infestations. In IA some fields are expected to reach economic thresholds for treatment within the week. Low densities are in IN, NE, & SD.

Corn rootworms are the focus of specialists at IL where roots are being examined for damage. Purdue specialists report low levels of injury, possibly due to the result of very wet soil conditions at the time of larval hatch this spring.

Western bean cutworms are being reported in larger numbers than previously in OH, along with increased numbers in IN. IL corn growers are being urged to begin scouting. If 8% of plants have an egg mass or young larvae, consider a rescue treatment.

Japanese beetles have been reported in various numbers in the Eastern Cornbelt and for the next several weeks, producers are encouraged to scout fields for silk clipping and defoliation of soybean leaves. Japanese beetles concentrate in border rows of both crops and rescue treatments applied to field margins may be sufficient in some cases.

Foliar corn disease and stalk rots could go hand in hand says IL crop specialist Carl Bradley, who says when the disease pressure is severe, the blighted leaves cannot produce enough sugars to fill the ear and then plant robs the stalk of nutrients and that allows other diseases to infect the stalk. He says foliar fungicides may help reduce potential stalk rot, but they will not directly control pathogens that attack corn stalk integrity. Read more of his newsletter.

Eyespot is becoming the fungus of the year in Iowa, because weather began cool and wet, and is a frequent problem in fields of continuous corn. The infected residue allows the fungal spores to move up the corn stalk in the new crop, with yield loss and stalk rot.

Gray leaf spot is become more prevalent in the Cornbelt this year, and much earlier than usual, giving it more time to create problems in corn fields. GLS likes warm and humid weather and can devastate yields if it spreads to leaves above the ear. IA State specialist Alison Robertson says the cornerstone of GLS and eyespot is using resistant seed. Also fungicides can help if applied to fields with disease pressure or hybrid susceptibility.

Dairymen participating in the CWT program will have tax consequences when their bids are accepted for sending their herd to slaughter. WI dairy specialist Phil Harris says there are both deductions and liabilities. Read more.
1) Producers paying the 10¢ per cwt assessment have a deductible expense and it should not be just netted out of milk income reported on Schedule F of IRS form 1040.
2) Slaughter prices received are expected to be less than the value of the cows as reported by USDA, so the first 90% of income is treated as income from the sale of the cows.
3) The final 10% received 12 months later should be treated as ordinary income subject to self employment tax, if it exceeds USDA’s agricultural prices value.

New USDA appointments include administrators of FSA and Risk Management agencies. Jonathan Coppess will be head of FSA, and comes from working on Senate agriculture issues, law school, and an Ohio farm. Bill Murphy will be RMA chief, following a three decade career in federal crop insurance program management.

New appointments in the Univ. of IL College of ACES include Interim Dean Bob Hauser, who replaces Bob Easter who was recently named Interim Provost. Hauser is replaced as Chair of the Ag Econ department by Paul Ellinger, whose appointment is permanent.

Posted by Stu Ellis on 07/17 at 06:17 AM | Permalink

Comments

Corn Silking August 1 in Illinois may see Frost Damage Corn Silking on August 1 in Illinois may see Frost Damage depending on the location is the state and relative maturity of the corn. -------------------------------- Projected ---------------- Relative ---- Plant Date -- Max ---------------- Maturity - for August 1 -- Loss of -- Percentile of Potential Yield Decline --------------- Of Corn ------ Silking ----- Potential------- 10% -- 25% -- 33% -- 50% Location ----- (Days) -----------------------Yield Freeport ---------- 95 --------- 6-02-09 ------ 20% ----------10%---- 0% ---0% ---- 0% --------------------100 -------- 5-31-09 ------ 26% --------- 17% --- 7% --- 6% --- 0% ------------------- 105 ------- 5-27-09 ------ 30% ---------- 22% -- 13% ---11% --8% Monmouth ---------- 95 -------- 6-08-09 ------ 0% ----------- 0% --- 0% --- 0% --- 0% ------------------- 100 ------- 6-07-09 ------ 0% ------------- 0% -- 0% --- 0% --- 0% ------------------- 105 ------- 6-04-09 ------ 4% ------------- 3% -- 0% --- 0% --- 0% ------------------ 110 -------- 6-02-09 ------ 17% ----------- 16% -- 12% -- 8% --- 4% Brownstown -------- 100 ------- 6-14-09 ------ 0% ------------- 0% --- 0% --- 0% --- 0% ------------------- 105 ------- 6-12-09 ------ 0% ------------- 0% --- 0% --- 0% --- 0% ------------------- 110 ------- 6-11-09 ------ 0% ------------- 0% --- 0% --- 0% --- 0% Other Plant Dates not Targeting August 1 Silking Freeport ----------- 95 ------- 5-26-09 ------ 14% ------------ 4% --- 0% --- 0% --- 0% -------------------- 95 ------- 6-23-09 ------- 25% ------------ 16% -- 5% --- 4% --- 0% ------------------- 100 ------- 5-17-09 ------ 12% ------------ 3% --- 0% ---- 0% --- 0% ------------------- 100 -------- 5-24-09 ------ 19% ------------ 10% -- 0% ---- 0% --- 0% ------------------- 105 -------- 5-13-09 ------ 18% ------------ 10% -- 0% ---- 0% --- 0% ------------------- 105 -------- 5-20-09 ------ 22% ------------ 13% -- 4% ---- 0% --- 0% Monmouth ----------- 95 -------- 6-29-09 ------ 15% ------------ 14% -- 10% --- 4% --- 0% -------------------- 100 ------- 6-21-09 ------ 6% -------------- 5% --- 1% --- 0% --- 0% -------------------- 100 ------- 6-28-09 ------ 20% ------------ 19% --- 15% -- 10% -- 6% -------------------- 105 ------- 6-11-09 ------ 8% ------------- 7% ---- 3% --- 0% --- 0% -------------------- 105 ------- 6-25-09 ------ 22% ------------ 21% --- 18% -- 13% -- 9% Brownstown --------- 100 ------- 7-05-09 ------ 16% ------------- 3% --- 0% ---- 0% -- 0% -------------------- 105 ------- 7-03-09 ------ 21% -------------- 9% -- 0% --- 0% --- 0% -------------------- 110 ------- 7-02-09 ------ 25% ------------- 15% -- 7% --- 4% --- 2% A 100 day corn planted May 31, 2009 around Freeport, IL is expected to be in full silk on August 1. Should that corn receive the historically lowest growing degree days to a 32 degree killing frost, the potential yield is expected to be reduced by 26%. About 10% (1 in 10) of the time, limited growing degree days and killing frost will reduce potential yield by 17% and about 25% (1 in 4) of the time weather conditions could possibly reduce production by 7%. Over half the time based on historic growing degree days that field will not be effected by frost even with this cool season. This paper "scratching" has generated a thought; “Feeders anyone?"

Posted by: Jackson B. Frost at July 22, 2009 3:03AM

Frost would be “bad” for some growers. The total impact on US Corn Yield would be small, less than 0.25 bushels per Acre; around 160 million bushels (if 6% of IL & 8% IN acres are effected (this percentage is too big because of southern part of the states will more than likely miss a yield impacting early freeze) and a 10% yield loss from frost on those acres is realized). Looks like the frost card may not provide much boost in prices, with current USDA estimates, unless The Dakotas, Nebraska, Northern Iowa and Southern Minnesota become involved with a very early event.

Posted by: Big Picture Annie at July 23, 2009 1:01PM

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