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Friday, August 07, 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.

One week is left before the 2009 sign-up deadline for ACRE, the Average Crop Revenue Election farm program. August 14 is the final day to enroll your farm, and signatures of operators and owners are all that is needed at this time. Your historical yield records data will be needed July 15 to qualify for any payments that might be earned from the 2009 crop. Find help here.

155 bu./A with the corn crop at 12.403 bil. bu. is the forecast of Michigan St. marketing specialist Jim Hilker when the August Crop Report is released August 12. He adds, “If the report varies much from expectations, you could see some significant price swings. If they shoot up, have some price targets in place, if they shoot down, I really hope you are signed up for the ACRE program.” Read more.

Hilker’s soybean forecast calls for a below trend yield of 42.2 bu./A and a total crop of 3.234 bi. bu. And he says that could drop, “given how last year’s late soybean crop did. But I also think we may find a few more soybean acres.” And he adds, “My pricing suggestion are the same as with corn, have pricing targets in place if the report is price positive, and consider waiting to price if the report is price negative.”

The futures market has again offered $10 for Nov beans, and MN marketing specialist Ed Usset reminds soybean growers that this is the third chance to sell $10 soybeans from the 2009 crop. He says, “We greeted the new year with prices above $10 for nearly a week. We enjoyed a second rally above the $10 mark in mid-May, an opportunity that stuck around for nearly 6 weeks. And now this week – back above the $10 mark. I’m a baseball fan and I can’t help but remind you that it’s three strikes and you’re out.”

The crop could expand says Iowa State’s Chad Hart, “The outlook indicates more seasonal weather will return in the fall. Currently, corn production is projected at over 12 bil. bu. and soybean production is targeted at nearly 3.3 bil. bu. But conditions have been improving over the summer, with the crop ratings both for the US exceeding last year.”

Hart says most of the long range forecasts point to a continuation of the relatively mild summer conditions, and “Given the improving crop conditions, there is significant anticipation that USDA will increase their yield projections in the August reports.” He says feed and ethanol demand is less than prior years, but export projections are high.”

Lower crop prices should spur a reversal in the weaker demand trend, according to Hart. He says the 25% decline in prices is providing buying opportunities for end users. While feed projections remain below 2008, the rate of decline has slowed for the livestock industry. And since the fall in ethanol prices has slowed, blending is more profitable. Hart adds that gasoline prices have climbed, but ethanol prices are stable. Read more.

Fibonacci numbers help identify sell signals in Dec corn says Iowa St. ag economist Stephen Johnson. He says between the June 8 high of $4.73 and the July 20 low of $3.15 there are important retracement points at $3.75, $3.94, and $4.13. Read his marketing letter.

Johnson says, “These different levels serve as good indicators of where the December 2009 corn chart may find technical resistance. Placing sell orders, buying puts or forward pricing when the market reaches these levels can help with market discipline.” He says the technical Fibonacci chart points can be used to show resistance and support levels.

Watch the weekly crop conditions, says Iowa St. meteorologist Elwynn Taylor to see if current corn crop conditions total above 50% for the good and excellent categories. Currently, it is at 68% for the 18 primary corn states. He says if the number remains above 50% at the end of August, there is a consistent record of yields above trend line.

Based on similar weather years Purdue agronomist Bob Nielsen thinks the corn crop may be doing reasonably well at this point, although “the fat lady has not yet sung.”
1) Late planting and uneven stands are not good, but the crop has escaped heat stress.
2) Moderate temperatures are favorable for kernel set and kernel weight development.
3) The crop needs to avoid drought stress into September and a frost into October.

Regarding the killing frost potential, Nielsen says premature leaf death results in yield losses because photosynthesis stops, and while the plant may be able to shift some of its carbohydrates to the ears, yield potential will still be lost. If the stalk survives, frost at the dough stage will cut yield by 36%. Frost at the full dent stage will cut yield by 31%. And Nielsen says if frost occurs at the half milkline stage it will cut yield by 7%.

Soybean yields depend on flowers, but IL agronomist Vince Davis says yields could go in two directions because of the weather. Davis’ newsletter says he wants to be optimistic that yields will be good. Read more.
1) Early canopy closure (not this year) means a longer time for pod set and pod fill.
2) Cool July weather was less stressful and fewer flowers and pods were aborted.

The days of waterhemp may be numbered due to a new genetic identification process at the University of Illinois which can help researchers determine which herbicides may be effective on populations in fields that are showing resistance. The evolution of waterhemp genes has been unusually rapid and weed scientist Pat Tranel says taking a weed’s genetic fingerprints will help farm operators better control waterhemp.

If weeds are growing above the soybean canopy it may be too late for a shower of glyphosate because of the lateness of the growth stage of the beans. Labels allow glyphosate to be used throughout flowering which is the R2 stage. But the R3, which is too late, begins when there is a 3/16 in. pod showing on the uppermost stem nodes.

What is your weed attitude? Extension weed specialists around the Cornbelt surveyed farmers to determine if glyphosate resistance was becoming a problem on their farms.
1) Awareness of potential resistance ranged 75-88% depending on farm size.
2) No more than 30% believed glyphosate resistant weeds were a serious issue.
3) Less than 20% had experienced a resistance problem on their farm.
4) 43% -65% (depending on farm size) had taken action to minimize resistance.

If you bought SCN resistant seed beans, check your soybean roots for performance. That is the recommendation of IA plant pathologist Greg Tylka, who says look for SCN females on the roots, which are small, white, and round, and about the size of the period at the end of this sentence. If you have numerous females, he says the SCN strain should be tested. Learn how.

Your volunteer Bt corn from last year has a small amount of the Bt toxin, but just enough for your corn rootworms to potentially build up some resistance. That is the thought of Purdue entomologist Christian Krupke who says the volunteer Bt corn was emitting a sublethal dose, but had substantial root damage from corn rootworms.

Some OH entomologists are about to pull the trigger on spraying for soybean aphids based on some fields in the northeastern part of the state having nearly 100% infestation. They say populations are not very high, but all plants have aphid colonies. And they say since aphid colonies can double in size rapidly, spray thresholds may soon be reached.

Dry areas of Wisconsin are becoming stressed from spider mites, which may be near or at economic thresholds for soybeans. The WI Crop Manager newsletter tells farmers:
1) Drought stress pushes mites to soybean fields as alfalfa fields as they are being cut.
2) Drought stress improves the food quality of the soybean plant for spider mites.
3) Drought halts the pathogens that normally suppress spider mite populations.
4) Hot temperatures hasten mite reproduction faster than predators can keep up.

It is rejuvenation time for pastures and forage crops says OH agronomist Mark Sulc who suggests a soil test to dictate lime and fertilizer needs, and a firm seedbed with shallow planting. He says seedlings need 6 to 8 weeks of growth after emergence to have sufficient vigor to survive the winter. But don’t harvest any of it this year.

Meat markets are not passing on the savings to consumers like auto dealers are promoting the clunker discount says Purdue economist Chris Hurt. He says finished cattle prices are down 10%, but retailers have charged higher prices in the past 6 months, and not until June were they reflecting the lower wholesale prices that began in 2008.

Hurt says the cattle herd is slowly shrinking, and is down 4% over the past 3 years. And “help is on the way.” Read more.
1) Finished cattle prices rise toward late summer when the weather cools down.
2) Lower retail prices will encourage more consumption.
3) Slaughter rates will moderate with small supplies coming from feedlots this fall.
4) Competitive poultry and pork supplies will decline 3% in the last half of this year.
5) Domestic beef demand will increase as consumers sense a stronger economy.

The worst may be over says Hurt, but profits may be elusive until next spring. He’s looking for finished steers in the mid to high $80’s in late summer. Hurt believes calf and feeder cattle prices will be higher also, but with feed price uncertainty.

For 20 of the last 22 months, hog margins have been below breakeven prices according to calculations by Iowa St. economist John Lawrence. And the bad news is their projections are for 6 more months of red ink before variable costs will be covered and 3 additional months before breakeven prices will be reached. Read his newsletter.

Lawrence says domestic and export demand can be boosted by organizational initiatives, but producers determine supply, and the only reason supply has dropped 1.5% this year is due to fewer hogs coming from Canada. He says sow slaughter rates have decreased and “US producers appear to be pushing on the accelerator rather than the brake.” His newsletter strongly urges sow liquidation to avoid the loss of 50% more equity by 2010.

To help pork producers improve profitability Iowa St. economists have created a decision making tool to track hog finishing gross margins, based on 2010 futures prices. Find it here.

What is the outlook for the livestock producer? Ag economists from across the country gathered last week to compare notes. Livestock economist Dillon Feuz of Utah State summed up the consensus, saying, “The reality is that the dairy industry, swine industry, and cattle feeding sector of the beef industry have lost a tremendous amount of equity in the last year. Domestic demand and export demand probably are going to remain week for much of this year and maybe most of 2010. Uncertainty is not likely to be reduced either. Therefore, all of the factors that got us in the present condition are still with us. Without some fairly significant reductions in supply (number of sows, number of milk cows, number and weight of fed steers) the losses will continue and equity will continue to dissipate. We may be reaching a time when many lenders will cease to finance these struggling operations and they will be forced to liquidate.”

Based on the latest estimates, MO economist Glenn Grimes says sow slaughter remains low and he sees no sign the breeding herd is being reduced very much. “It now looks like it will require bankruptcy by a substantial number of producers to get the sow herd reduced enough to get back in a profitable situation for the average cost producer.”

Cornbelt farmers are invited to IL Agronomy Day on August 13 from 7 am to 12 noon. Details are here. Urbana, IL, field tours address:
1) Waterhemp, mechanical weed control, balancing P & K, spring N for wheat.
2) Sweet corn, soybean pathogens, tomato diseases, aerial fungicides for corn.
3) Switchgrass, biomass markets, biofuel crop pests, input price volatility.
4) Soybean aphids, corn nematodes, Japanese beetle injury, corn rootworm control.

Posted by Stu Ellis on 08/07 at 02:20 AM | Permalink

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