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Corn Futures
Approach $6/bu.
July 2009 corn futures blew past the $5.50/bu. price
ceiling last week and traded in all-time-record territory, hitting a
high of $5.67 1/2, where it settled on the Chicago Board of Trade
(CBOT) open auction platform on Thursday. This recent strong surge in
prices is prompting speculation about the potential for $6 corn futures
prices, but for now it remains just that -- speculation.
"Farmers who still have corn unsold are sitting on a gold mine," says
Michael Woolverton, Kansas State University (K-State) agricultural
economist. "They might want to think strongly about selling a portion at
these high prices. A lot have already sold a good portion of their 2008
crop, but I would advise farmers to sell ahead only the amount that they
can cover with crop insurance."
Are $6 corn futures attainable? Maybe, maybe not, says Woolverton. He
points to two USDA reports that could move corn prices either higher or
lower. The first is the National Agricultural Statistics Service 2007
county estimates report for corn and soybeans, which will be released on
March 6. The second is the March 11 World Agricultural Supply and Demand
Estimates (WASDE) report.
"If we see less production in the county report than previously
estimated, it would lower the USDA's corn usage numbers and be very
bullish for corn," says Woolverton. "If it shows more corn production
than expected, then it would help take some pressure off the corn
markets and moderate prices somewhat."
The WASDE report could also swing corn markets either up or down,
depending on grain stocks and use data, he points out. "This will be the
one report that people are going to be watching very closely to look at
carryover ahead of planting," he says. "Wheat is already at a 60-year
carryover low, soybeans are close to the minimal carryover needed for
the year and the carryover for corn is getting worrisome as well."
At this time last year, corn carryover dipped to about 12% of usage,
says Woolverton. Corn stocks are even tighter now, with carryover at
about 11% of usage, he adds.
"Exports have been well above what anyone imagined for this marketing
year," he explains. "Usually, corn exports run about 2 billion bu./year.
This year, USDA projects corn exports to be 2.45 billion bu."
As prices move higher, however, usage will likely slow. "We may be
nearing the point where prices will start to ration use," points out
Woolverton. "So, we may see some softening of demand ahead."
The ethanol industry is one end user that is likely to scale back
production at current or higher corn prices, he points out. "Ethanol
profit margins went down last week to a negative 8 cents/gal loss," says
Woolverton. "The ethanol price has been stuck at about $2.10/gal. for
the past two weeks, even with the recent increases in oil prices."
On the other hand, current profits from distiller's grains has more than
offset the industry's losses in ethanol, he points out. So, unless
livestock feeders start to cut back, the ethanol industry may still be
able to operate at the current high corn prices, and continue to buy
corn at current levels, he adds.
Which way the corn futures markets will go and how much impact the
upcoming USDA reports will have on prices are anyone's guess, sums up
Woolverton. Still, "it's taken quite a while for corn prices to go up
this high," he emphasizes. "If this market turns bearish, prices could
go down really fast."
To read more information about the current grain market outlook from
K-State specialists, click here: www.agmanager.info/marketing/outlook/newletters/.
By John Pocock
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Corn Pricing Window Begins Now
The USDA made no changes to the supply and demand
balance sheet in the February update. There will be strong support for
corn prices due to continued tight inventories which will carry into the
2008 crop, and due to fundamental support for both wheat and soybeans.
Export demand remains a positive force as well as the continued need to
have new crop corn prices compete for 2008 acres with both soybeans and
spring wheat.
What's happening to export purchases? In the past four weeks, the pace
of export sales has quickened with sales registering a 33% increase over
the same four week period one year ago. Thus, high corn prices are not
yet causing foreign buyers to cut back on use.
To continue reading this article on corn prices and sales strategies,
click here: www.agecon.purdue.edu/extension/prices.
To read more about Hurt's thoughts on current corn use and demand, click
here: cornandsoybeandigest.com/ag-issues/news/0221-world-grain-demand-straining/.
By Chris Hurt, Purdue University
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Corn Production Vs. Conservation Reserve
Program
The debate surrounding the Conservation Reserve
Program (CRP) is an indication of the concern about production risk in
2008 and the implications for crop prices and the resulting impact on
livestock producers and, ultimately, on food prices, says University of
Illinois Extension Marketing Specialist Darrel Good.
"This concern may not subside until a clearer picture of 2008 U.S. and
world production prospects unfold," says Good. "While the current focus
is on acreage, prospective yield will become the focal point later in
this spring. Crop prices should continue to be well supported, but
perhaps in a wide range, for the foreseeable future."
Good's comments came as he reviewed high crop prices and the CRP.
Continued strong demand for U.S. crops, prospects for low levels of
year-ending stocks and uncertainty about the size of world crops in 2008
are keeping crop prices at very high levels.
To read more about the acreage available for CRP and crop production
uses, click here: cornandsoybeandigest.com/ag-issues/news/0221-conservation-reserve-program/.
Source: University of Illinois
Extension
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Corn Trend
Yields
A new study by University of Illinois (U of I)
agricultural economists challenges the assumption that improved
technology has recently caused corn trend yields to increase at a faster
rate.
"There has been considerable discussion in the agricultural community
that improved technology has caused corn trend yields to increase at an
increasing rate in recent years," says Scott Irwin, who prepared the
study with former graduate student Mike Tannura and Department of
Agricultural and Consumer Economics colleague Darrel Good. "There has
been a fairly widespread acceptance that a new and higher trend began in
the mid-1990s, and it should be used as a starting point for estimating
future yields."
Their full report, "Are Corn Trend Yields Increasing at a Faster Rate?"
(www.farmdoc.uiuc.edu/marketing),
is available in the Marketing and Outlook Briefs section of U of I
Extension's farmdoc Web site.
The authors investigated whether trend yields in the U.S. Corn Belt have
actually accelerated since the mid-1990s. They examined the impact of
weather and technology on corn yields from 1960 to 2007 in three states:
Illinois, Iowa and Indiana.
"We did not find evidence of a noticeable increase in the trend rate of
yield growth for corn in Illinois, Iowa and Indiana through 2007," says
Irwin. "Much of the increase in observed yields since 1996 has been the
result of generally more favorable weather than experienced in the prior
two decades."
To continue reading this article on corn yield trends, click here: cornandsoybeandigest.com/corn/news.
By Bob Sampson, University of Illinois
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Online Tools
Help Assess Planting Options
University of Nebraska-Lincoln (UNL) specialists have
developed downloadable spreadsheets to help growers select crops and
make planting decisions to achieve maximum profit for their farming
situation.
Crop prices, as well as spot, contract and futures prices, are so high
that it may appear it is impossible to make a mistake in choosing this
year's crop, but careful consideration can yield maximum profit with
minimum risk, says Matt Stockton, UNL agricultural economist at the West
Central Research and Extension Center. While almost any crop is likely
to make money this year, the best crop for the operation can make a lot
more, he says.
UNL provides some electronic decision tools to help farmers evaluate
their cropping alternatives, Stockton says. These tools were created in
Microsoft Excel and can be downloaded from the Internet at: agmanagerstools.com. The
spreadsheets require Excel.
Stockton says the decision aids are simple to use. Each of the nine
spreadsheets only compares two crops at a time and contains both
irrigated and dryland production.
To continue reading this article on how to evaluate cropping
alternatives in Nebraska, click here: cropwatch.unl.edu/.
Source: University of Nebraska-Lincoln
Extension
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Iowa Study Shows Sulfur Fertilizer Provides
Significant Yield Boost To Corn
A boost to corn yields from sulfur (S) fertilization
occurs "with high frequency" and "large magnitude," Iowa State
University (ISU) researchers John Sawyer, Brian Lang and Daniel Barker
report in an online article, entitled "Evaluation of Corn Response to
Sulfur Fertilization in Northeast Iowa."
"Across the two years and three studies, 82% of the sites had a
statistically significant yield increase to applied S fertilizer," they
write. "By study, statistically significant across-site yield increases
averaged 15, 18, and 38 bu/acre. Analyzed across S rate, the economic
optimum S rate was 14 lbs. S/acre for fine-textured soils and 24 lbs.
S/acre for coarse-textured soils. This research indicates a dramatic
change in need for S fertilization in northeast Iowa, and that S
application is an economically viable fertilization practice on many
soils."
To read the entire article in pdf format, click here: extension.agron.iastate.edu/soilfertility.
By John Pocock
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Transgenic
Corn May Pose Planting Challenges This Season
The percentage of transgenic corn hybrids increasing
in Ohio may prove to make this season's planting more of a challenge.
According to the U.S. Department of Agriculture, over 40% of Ohio's corn
acreage was planted to transgenic hybrids in 2007, up from 26% the
previous year. Peter Thomison, an Ohio State University (OSU) Extension
agronomist, says that number is expected to increase this year, and
could play a role in the dynamics of corn planting.
"How growers will be approaching the way they plant corn this year will
be more important than ever, given the increasing acres of transgenic
corn," says Thomison.
To continue reading this article about overcoming the challenges to
transgenic corn production, click here: extension.osu.edu/~news/story.php?id=4486.
For more information on corn management in general, log onto OSU
Extension's Agronomic Crops Team Web site at: agcrops.osu.edu/.
Source: Ohio State University
Extension
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Will Foliar
Fungicide Be Routine In The New Corn Production
Economics?
In 2007, many acres of corn in Wisconsin were sprayed
mid-season with fungicides, strobilurin or a strobilurin/triazole
combination, (in Iowa and Illinois an estimated six million acres of
corn were sprayed). Most acres applied had little or no disease at the
time of application. Reasons for spraying vary and include the high
price of corn, potential to control diseases and a possibility of
improved yield from "plant health" benefits.
Until this year, fungicide applications to production cornfields were
rarely practiced, because they were not profitable. Many of the hybrids
grown today have good overall tolerance to foliar diseases.
Results of fungicide trials have been mixed in Wisconsin.
To continue reading this article on foliar fungicide use in Wisconsin,
click here: corn.agronomy.wisc.edu/AA/2007/A052.htm.
By Joe Lauer, University of Wisconsin
Extension
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Access To Broad Insect Control Technology In
Corn Agreed Upon
Syngenta and DuPont announced recently a global
agreement that will provide DuPont's business, Pioneer Hi-Bred, access
to Syngenta's novel insect control corn event, MIR162. Under the
royalty-bearing agreement, Syngenta will grant Pioneer a non-exclusive,
global license with stacking rights to MIR162. Other terms of the
agreement were not disclosed.
"We are pleased with this important commitment which further
demonstrates the quality of Syngenta's biotech trait pipeline," says
Davor Pisk, Syngenta Seeds chief operating officer. "This agreement will
accelerate the rapid adoption of Syngenta proprietary technology to
better protect growers' corn crops worldwide."
To continue reading this article about the stacking rights to MIR162,
click here:
blog.cornandsoybeandigest.com.
Source: Syngenta
|
Energy-To-Agricultural Link Is Linchpin To Corn
Rally
With price volatility off the charts in the "quiet
months" of January and February, it's frightening to think what the
summer volatility might bring to the agricultural world. This month's
analysis involves a very detailed look at the implied corn usage by
ethanol.
Why focus on that? Because the energy-to-agricultural link formed by
corn and ethanol is the linchpin of this rally.
Given stagnant gasoline demand and a possible recession, the likelihood
of hitting the USDA's corn usage for ethanol approaches nil. The longer
it takes the USDA to correct its estimate, the more spectacular the
price corrections will be when it does.
To read more about the link between corn prices, crude oil and ethanol
in the Wells Fargo Feb. 2008, Row Crop Markets Report, click here: www.wellsfargo.com/com/research.
By Michael Swanson, Wells Fargo agricultural
economist
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Policies Key As Ethanol 'Revolution' Links
Agriculture, Energy Sectors
The recent boom in production of ethanol from corn
grain has tightly linked the agriculture and energy sectors in an
unprecedented fashion.
Purdue University researchers developed a model, based on a range of
possible oil prices, that predicts impacts of federal economic policies
on future consumer and government costs, ethanol production and many
other aspects of the two sectors.
"We are living through a revolution in American agriculture," says Wally
Tyner, a Purdue professor of agricultural economics. Tyner presented his
results on Feb. 15 at the annual meeting of the American Association for
the Advancement of Science in Boston.
Tyner says the prices of corn and crude oil, which prior to 2007
fluctuated almost independent of one another, have become more closely
linked thanks to the use of massive quantities of corn to make ethanol.
This year that's about one-third of the total national harvest.
"Now, oil and ethanol are both big players in agriculture," he says. "In
the future, they will march together, and their march will depend upon
government policies."
The model shows that the fixed 51-cent/gal. subsidy paid to ethanol
producers will become increasingly expensive for the federal government
as oil prices -- and levels of ethanol production -- rise.
To continue reading this article about the relationship between corn and
crude oil prices, click here: news.uns.purdue.edu.
Source: Purdue University Extension
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Lost And Found Oil Refinery
Capacity
Losing an important item or document usually brings a
moment of frustration, while finding a forgotten $20 bill often brings a
moment of joy. In the gasoline supply business, however, recent history
has taught us that "lost" or "found" refining capacity can have
longer-lasting effects on pump prices.
As the winter draws to a close, well ahead of the summer driving season,
gasoline prices are already rising, reaching $3.04/gal. this past
Monday. While increases over the past year have been driven mainly by
rising crude oil prices, which closed over $100/barrel (or $2.38/gal.)
on Tuesday for the first time ever, unusual refinery outages also
contributed to gasoline price pressure in 2006 and 2007. Will unusually
tight refining conditions contribute this spring, adding even more
pressure to gasoline prices?
To continue reading this article about the outlook for gasoline and
diesel prices this spring, click here: tonto.eia.doe.gov/oog/info/twip/twip.asp.
Source: Energy Information
Administration
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No Change In Flexible Lease Agreements And
DCP Payments
The rapid rise in corn and soybean commodity prices in
the past two years, and the resulting projected increase in gross crop
income/acre for the 2008 crop year, has caused many landlords to
consider sharp increases in cash rental rates on rented farm land for
2008.
Yet, many producers are concerned that the favorable crop prices may not
last long term, and that the gross income/acre in future years may not
be high enough to justify the higher cash rental rates being implemented
for the 2008 crop year. In addition, crop input costs for seed,
fertilizer, chemicals and fuel are also considerably higher for 2008.
As an alternative to the higher cash rental rates for 2008 and 2009,
some producers and landlords are considering a flexible cash rental
lease agreement, which allows the final cash rental rate to vary as crop
yields and market prices vary.
To continue reading this article about flexible cash rental agreements,
click here: cornandsoybeandigest.com/ag-issues.
By Kent Thiesse
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Nebraska Corn And Soybean Growers To Share
On-Farm Research
Corn and soybean growers are invited to attend the
Nebraska Soybean and Feed Grains Profitability Project on-farm research
update March 11 at the University of Nebraska-Lincoln's Agricultural
Research and Development Center near Mead.
The 9 a.m.-3 p.m. program will be at the August N. Christenson Research
and Education Building. The Nebraska Soybean and Feed Grains
Profitability Project is an on-farm research project designed to provide
farm operators with an understanding of how to conduct crop research on
their farms using their own machinery.
Pre-registration is encouraged by March 6. To register or for more
information about the Nebraska Soybean and Feed Grains Profitability
Project or how to conduct crop-related research on your farm, call (800)
529-8030 or visit the Web at: on-farmresearch.unl.edu/.
Source: University of Nebraska-Lincoln
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Michigan
On-Farm Field Crop Research Report Available
Michigan crop producers can find the latest
research-based field crop information in a publication recently made
available through Michigan State University (MSU) Extension.
"On-Farm Research and Demonstration" summarizes on-farm field trial
results conducted across Michigan during the 2007 growing season. Topics
include a research report summary of corn and soybean cropping systems,
corn hybrid trials, a soybean cyst nematode resistance demonstration,
soybean variety trials and variety trials of spring barley, oats and dry
field peas.
The publication offers one-page summaries of every project, including
contact information for the MSU Extension educator or specialist who was
involved. The summaries offer detailed information, including soil type,
tillage practices, previous crops, fertilizer and herbicide use and
planting and harvest dates.
There is no charge for the 52-page book, which is available from county
MSU Extension offices and at pest management meetings held across the
state.
To learn more about Michigan's plant agriculture initiative at MSU,
visit: www.greeen.msu.edu.
Source: Michigan State University
Extension
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Ohio Scientist Grosses $10/Row-Ft. Or
$90,000/Acre
Joe Kovach set out to gross $10/row-ft., equal to a
robust $90,000/acre, in his innovative farm plots of mixed fruits and
vegetables.
So far, based on the crops that he has in production, the Ohio State
University (OSU) scientist has achieved exactly that. The two final
crops in the lineup, apples and peaches, are set to start producing this
summer.
An ecological pest management expert, Kovach is midway through a
six-year study of four different types of polyculture modules -- plots
with a mix of such high-value crops as snap peas, green beans,
blueberries, raspberries, strawberries, tomatoes and edamame, or edible
soybeans.
He aims to determine the best-working layout -- best in terms of
economics, efficiency and pest density -- for intensive mixed plantings
by small farmers. He calls it "modular ecological design." The goal is
food for urban consumers that needs precious little oil to reach them.
"The whole concept of urban agriculture is to grow the food close to
where the people are," says Kovach, who holds joint appointments with
the Ohio Agricultural Research and Development Center (OARDC) and with
OSU Extension.
To continue reading this article on urban agriculture, click here: extension.osu.edu/~news/story.php?id=4487.
Source: Ohio State University
Extension
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Corn Futures Conundrum: A Note From The
Corn E-Digest Editor
Lately, I've heard a few anecdotal stories that corn
farmers who want to purchase futures contracts for late 2008 or early
2009 may find them hard to come by, unless they are willing to pay a
share of the margin calls to cover the cost of the contract. High prices
and high market volatility make these contracts risky for grain
elevators, and some may have stopped offering them or only offer them if
the farmer shares in the cost to maintain them.
If you're a farmer or an employee for a grain elevator with knowledge on
this topic that you'd like to share with others in a future Corn
E-Digest, please write to me (John Pocock) at: jpocock@csdigest.com. As always,
you're also welcome to write to me if you have ideas on other topics or
concerns or questions about this issue.
I hope to hear from you soon. Thanks for your readership!
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