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Monday, April 5, 2010
• Acreage expansion of several crops will impact prices, according to Dan O'Brien at KS
St. He says, "Market expectations for larger production and total supplies of feed grains
and oilseeds in 2010 have increased, although confident projections of such are
premature. Assuming normal yields and steady demand for US grains in the 2010-11
marketing years for feed grains and oilseeds, increased production in 2010 would likely
lead to reduced prospects for grain prices for the coming 2010-11 marketing year. Wheat
market prospects for excessive supplies relative to demand and generally lower prices
have not been changed appreciably by the 2010 Planting Intentions report." Read his
• Purdue's Chris Hurt agrees with O'Brien, and he says with the demise of the brief
wheat revival and larger stocks of corn and beans, he expects "prices for the two
commodities to fall, leaving farmers with tighter profit margins." He says the Stocks and
Plantings reports have "a tone that would suggest weaker prices until we can perhaps see
lower prices begin to stimulate usage in the United States and around the world."
• But how low does he expect prices to go? Hurt says, "Corn could well be in the lower
$3 per bushel range. Soybeans certainly could drop back below the $9 per bushel mark,
as we think about new crop beans especially. This begins to squeeze, given relatively
high production cost, the margins for producers. We're reverting now a little bit back to
the norm in US agriculture. And the norm in US agriculture has been we have more
ability to produce than we have the ability to consume."
• 88.8 mil. acres of corn would imply harvested acreage of 80.72 mil. O'Brien says if the
USDA's projected yield of 160.9 bu is used, the 2010 production would be 12.99 bil. bu.
of corn. That would only trail the 13+ bil. bu. corn crops produced in 2007 and 2009.
• 78.01 mil. acres of beans would imply harvested acres of 76.9 mil. acres. With a 42.9
bu. average yield, the 2010 soybean crop would equal 3.30 bil. bu. of beans. O'Brien
says that would be the second largest soybean crop, only behind the 3.36 bil. bu. of 2009.
• USDA's track record for acreage estimates have been within 3.5% of the final estimate
for corn acreage and within 3.6% of the final estimate for soybean acreage 90% of the
time says O'Brien. The corn crop has been greater than the Intentions report on 12 times
and below the report on 8 times, over the past 20 years. Final bean acres have been
below the Intentions report 13 times and greater than the report on 7 occasions.
• You've already heard the USDA's Grain Stocks report found more grain than expected.
Corn stocks were at 7.69 bil. bu., up 11% from last year. Both on-farm and off-farm corn
storage was up by double digits. Soybean stocks were down 2% from last year, to 1.27
bil. bu. On-farm storage dropped by 7%, while off-farm storage is up 2%. Wheat stocks
are up 30% from last year, at levels unseen since 2000. IA St.'s Chad Hart says, "This
will continue to pressure wheat prices and could have implications for the feed markets."
• Concerns were expressed about light test weights resulting in a more rapid
disappearance than would normally be expected. KS St. economist Dan O'Brien says
that has not yet proven to be, "If low test weights of corn resulting from late maturity and
poor harvest conditions during fall 2009 were to impact corn usage as some market
analysts expected, then the impact would be reflected in these quarterly corn usage
numbers. The Dec-Feb 2010 usage figure seemingly does not reflect any significant
impact on usage from light corn test weights or poor quality in the 2009 U.S. corn crop."
• This is not a typical year to MN marketing specialist Ed Usset. He says new crop Dec
futures usually move higher in the spring, and in 12 of the last 20 years, the March to
May period offered the opportunity to sell futures 5% higher than the early January price,
which was $4.45. He says that did not happen in 1994, 2001 & 2002. He adds, "Unless
we see a strong rally in April or May, we will add 2010 to this list of atypical years."
You can find his perspectives on marketing at: http://edsworld.wordpress.com/
• Increased corn yields will increase profits. And OSU agronomist Peter Thomison has
10 keys to do that that. Some are simple. You know most. But here's the checklist:
1) Know the potential of the field, its yield history, and soil productivity.
2) Pick hybrids with high yield history, and use Bt hybrids where they might help.
3) Follow pest management practices with timely control on weeds and insects.
4) Aim to finish planting by 5/10, but if planting early, avoid poorly drained soils.
5) Adjust planted to give proper seed depth, population, and to optimize emergence.
6) Adjust population for each field, with higher populations on more productive soils.
7) Apply the most economical rate of N, and apply products to minimize N losses.
8) Use soil tests to guide P & K application rates and avoid unnecessary amounts.
9) Perform tillage only when necessary and under proper soil conditions.
10) Take advantage of crop rotation to produce 10% more corn following soybeans.
• If fertilizer application is a headache, follow the NE soil fertility recommendations at:
1) Delay N application in fields prone to flooding and side-dress after planting.
2) For other fields, apply 20-40% of N pre-plant and remainder after emergence.
3) In-season application will provide benefits during wet springs and in sandy soil.
4) If applying UAN or urea on heavy residue, use an inhibitor or controlled release.
5) A controlled release N applied at pre-plant or planting time is a sidedress alternative.
• Are soybean cyst nematodes anxiously awaiting your planter? MO agronomist Allen
Wrather says obtain an SCN soil test immediately, since the results come back a month
later. That will be in time to make any planting rotations if needed, since seed treatments
are non-existent for SCN. Wrather says resistant varieties are available and yield well.
• Select the proper varieties. Period. And MO agronomist Laura Sweets says you will
minimize your yield loss in soybeans. She is concerned about phythophthora, and says if
you use a race resistant variety and an appropriate fungicide, you should increase your
success. Variety selection is also important to reduce problems with Sudden Death
Syndrome, caused by fusarium, and with SCN. Cut your losses with variety choices.
• Fall weather was not kind to wheat and MO agronomist Bill Wiebold says few wheat
plants produced any tillers, which was necessary. That can be helped in the spring with
an early fertilizer application, but it was still too wet, and your yield potential is
declining. Wiebold says yield projections are hard to do, and if 60 heads per square foot
will be a yield maximum, then you can guess at 30 heads being close to a 50% crop yield.
• You can't prevent winter injury to your forage crop, but an early spring evaluation of
its viability will help manage its survival. IA St. agronomist Stephen Barnhart says
injury is more likely on species with limited hardiness such as alfalfa, orchardgrass and
ryegrass. Older stands are more susceptible to injury and it is more likely where four
summer cuts were made, a late fall cutting was made, or fall grazing was allowed. Read
• Floodwaters can damage forage and pasture just like farmsteads. If you have damage:
1) 30-50 lb of N will provide an economical increase in dry matter and animal gain.
2) If reseeding, select a crop that is compatible with the surviving crop.
3) Will soil moisture conditions and expected rainfall help or hurt the new crop?
4) Will weed competition be a problem for the newly planted crop specie?
• Will diesel prices rise? KS St. economist Kevin Dhuyvetter projected non-taxable
diesel fuel prices for the next 12 months, and all of the monthly averages are well above
the price of the corresponding month one year earlier. April and May will be 55% to
65% higher than spring planting time of last year. For the following 9 months, prices will
be 20% to 40% above the corresponding month a year earlier. Prices in 2009 were 46%
below that of 2008, but the 2008 price average was 146% above that of 2004.
• The latest Hogs and Pigs Report was quite positive, and more bullish than the trade
estimates ahead of the report, says MO economist Glenn Grimes. The report said:
1) The total number of hogs and pigs on farms was 2.8% less than March 1, 2009.
2) Retained stock for breeding was down 3.9%, compared to 2.6% trade expectations.
3) Market inventory was down 2.7%, compared to the trade estimate of 0.9%.
4) Winter farrowings were down 2.7%, spring will be down 4%, and summer off 2.4%.
• You may not need sunglasses yet, but Purdue economist Chris Hurt says the outlook for
pork is brighter with the combination of reduced supplies and increased demand. He is
forecasting profits at $18 per head for 2010, compared to $20 per head losses in 2008 and
2009. More: http://www.farmdoc.illinois.edu/marketing/weekly/html/032910.html
• Pork demand is an unusual calculation. Hurt says production will be down 3%, but
the amount of pork available per capita will be 5% less this year compared to 2009
because pork exports will expand 8% and that will take product from the meat case. He
says with a 2% drop in beef supplies, retail prices for pork will be sharply higher.
• Pork profitability will come from market prices moving into the low $60 range in late
spring and early summer, along with the outlook for lower feed costs. Chris Hurt says
the pork industry has reached the point of being able to survive with $3.50 corn, and
production costs should fall to $47 down from the low $50 range in 2008 and 2009.
• Should you expand? Chris Hurt says, "I cannot remember a time when there have been
so many possible negative events from outside the pork industry that should make
producers cautious." His reasons include odor and water complaints, criticism from
HSUS, and the negative implications of climate change. But he says the bottom line
reason is the fact that most lenders will be adverse to extending credit for expansion.
• If you are feeding cattle, have you priced DDGS lately? NE livestock economist
Darrell Mark says DDGS usually dips in price about 8% in March, compared to adjacent
months, but this year the drop was 20%. He says demand is part of the reason since cattle
on feed numbers are 6% under recent years, and he says there is an abundance of silage
and wet corn that needs to be fed. Additionally, supplies of DDGS are larger. He is
bullish on using DDGS because the cost of gain can decline dramatically with it. Read
• Sellers, buyers, and transporters of DDGS have long held complaints about uneven
load weights. Purdue researchers found the common discrepancies stemmed from odd
sized particles of DDGS, with smaller and larger particles segregated through the loading
process. Fines are in the middle just like broken kernels of grain in a bin, and the ratio of
fines to larger particles can have a distinct impact on the weight of a truck or railcar.
• It may look like a Haloween decoration, but it is not just orange-colored corn. It is
corn that has had a gene adjustment to create more vitamin A, and foods created with it
will have significant benefits for reducing childhood blindness and mortality in
developing countries. The corn has a higher level of carotene, like carrots and sweet
potatoes, and Purdue geneticist Torbert Rocheford says he's "turbocharged" it.
• How will you get agricultural information in the future? I don't have a crystal ball
either, but DuPont wants to ensure information continues to flow and is investing
$200,000 toward the agricultural communications program at the University of Illinois.
It is part of a $2 million plan to add three more teaching positions in ag communications.
• Another need of the future is for plant breeders, and currently universities are turning
out less than two-thirds of what the industry needs. Half of the current workforce of
plant breeders is expected to retire in the next 10-15 years, and more than 1,400 new
graduates will be needed annually by 2020. Scholarships are becoming abundant.
• The "You Must Be Kidding" Department. Farm kids usually know about the birds and
the bees well ahead of their city cousins. But everyone is just now learning that Hessian
flies, which dictate when you plant wheat, have three basic sexes. Three. There are
males, and there are two types of females, ones that produce males and ones that produce
other females. Purdue entomologist Jeff Stuart happened onto the fact of nature when
trying to modify Hessian fly mating habits so they could eliminate themselves.