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Will You
Add More Corn Acres?
Corn futures prices reached new highs after USDA
released its April 9 report on world supply and demand. May 2008 corn
futures spiked at $6.16/bu., and Dec 2008 corn futures peaked at
$6.28/bu. on the Chicago Board of Trade’s open auction platform last
Wednesday. On the electronic platform, the July 2009 corn futures
contract hit a record high of $6.40/bu.
Tight corn stocks and less acres committed to corn than anticipated
caused the market to jump, says Melvin Brees, agricultural economist at
the Food and Agricultural Policy Research Institute (FAPRI) at the
University of Missouri (MU). "The market is showing that we had more of
a cut in corn-planting intentions than we expected," he says. "At this
point, we expect corn acreage to increase from the March report, but how
much remains to be seen."
Weather still looms as a major concern. "Every day that it stays wet
makes it more difficult to plant more corn," points out Brees. "The
advantage of crop rotations comes into play, as well."
If wet, cool weather delays planting, corn growers would risk losing
yield more than soybean growers would. A higher fuel and fertilizer cost
for corn compared to soybeans may also put a limit on the corn acres
farmers plant, says Brees. In addition, farmers may face restrictions on
the type of corn futures contracts that they can obtain.
"The volatile markets and margin requirements have squeezed grain buyers
on cash flow and credit limits," explains Brees. "It’s taking a
tremendous amount of cash flow to handle the futures margins that are
necessary to hedge forward contracts, and a lot of buyers aren't
offering cash contracts for fall delivery. However this is not universal
and the situation may change."
Yet, in Minnesota at least, relatively few grain buyers have placed a
60-days-out limitation on corn futures markets, says Scott Dubbelde,
Farmers Cooperative Elevator Company general manager, Hanley Falls, MN.
"Depending on the market, there is a limited amount of capital available
to the grain system," he says. "However, we're writing forward contracts
on a normal contracting system from today through January 2009."
Each company that buys grain is different, points out Dubbelde. "Some
are large in grain purchases and some are small," he says. "So, it's
okay that there are differences in what grain elevators will offer for
futures contracts. When deciding to enter into a futures contract, both
the farmer and the grain elevator need to ensure that their level of
capital and risk is appropriate."
Risk management is an important factor for both grain buyers and
grain sellers, confirms Brees. "If grain buyers don't offer forward
contracts, it puts more of the risk management burden on the farmer," he
says. "In that case, the farmer either has to do a futures hedge and be
faced with margin calls or use options. Either way, the farmer will be
looking at a cash-flow situation that can put a strain on finances."
The cash-flow risk for soybeans will likely be much less than it will be
for corn in 2008, adds Brees. "A person might be more inclined to go
with soybeans than corn this spring to protect against their cash-flow
risk," he says. "Right now, corn looks to be more profitable than
soybeans, but soybeans look very profitable, as well. So, it's more of a
cash-flow decision."
Buying and selling grain is no longer business as usual, acknowledges
Dubbelde. "It takes a record amount of capital to be in the grain
business these days," he says. "Grain elevators will be left with higher
interest costs than normal, but the system does work. It just takes a
lot of dollars to keep the system working and a lot of interest cost."
Some grain elevators are struggling to meet the demand for forward
contracts, because the demand is simply unprecedented, explains
Dubbelde. "Nineteen out of the last 20 years, the farmer was basically
interested in marketing this year's crop and sometimes a little beyond
this year's crop," he says. "There wasn't a lot of interest in forward
contracts for multiple crop years, because there wasn't a lot of
opportunity to make a profit from doing so. Now, with the higher grain
prices and higher input costs, farmers are more interested in selling
futures contracts for multiple years. There are record-high corn prices,
record-high input costs and record volumes to be sold forward."
The increased risk brings the potential for both extremely high and
extremely low returns. "We are a farmer-owned cooperative, and we have
open books on our business," points out Dubbelde. "So there is
transparency in our business, and our farmers can see how we are doing
at any time."
The Farmers Cooperative Elevator Company is fortunate to be able to
offer corn and soybean futures contracts into 2009, he adds. "We are a
grain, feed and seed co-op, and we serve our members by handling those
products," says Dubbelde. "Any limitations that we put on what we buy
and sell potentially limits our future."
For more information on the Farmers Cooperative Elevator Company, click
here: www.farmerscoopelevator.com/.
To read a recent article from FAPRI-MU on how to avoid the risk
management squeeze when marketing grain, click here: www.fapri.missouri.edu/farmers_corner.
To read the latest FAPRI-MU corn crop commentary, click here: www.fapri.missouri.edu.
By John Pocock
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10% Chance For $7.53 July 2008 Cash Corn
Price
The latest probabilistic price forecast for corn is
available online from Jim Hilker, Michigan State University economist.
Hilker forecasts 10% odds that the cash price for July 2008 corn futures
will hit $7.53/bu. at the maturity date of that contract. He gives 50-50
odds that the cash price for the July 2008 futures contract will be
either above or below $5.94/bu at the maturity date.
However, Hilker made this forecast on April 8, the day before the July
2008 corn futures price hit a record high price of $6.28 ½/bu., before
settling at $6.20/bu. on the electronic platform of the Chicago Board of
Trade.
Hilker plans to update the price forecast on April 15. To view
Hilker’s April 8 probabilistic price forecast for corn, click here: www.msu.edu/~hilker/crnfut.htm.
By John Pocock
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Unprecedented Market
Volatility
The agricultural market's price volatility has been
unprecedented. Minor adjustments to acreage expectations and usage have
sent the markets moving further and faster than at any point in recent
history.
The current predictable concern involves a slow start of planting which
can diminish yields, but the real yield breaker has been and will be
July drought and heat.
There is a legitimate concern that crop markets could break. If cash and
futures become too disjointed, traditional and excellent hedging
mechanisms could break, too. Now is the time to think and prepare your
options.
To read the latest agricultural market update from Wells Fargo Bank,
click here: www.wellsfargo.com/com/research.
By Michael Swanson, Wells Fargo Bank
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Yield Contest Winner Provides Last-Minute
Corn Growing Tips
While many farmers in the traditional Corn Belt have
yet to start field work, Sam Santini Jr., Stewartsville, NJ, says he’s
about ready to plant.
"We’re right on time,” says Santini, who won first place last year
in the National Corn Growers Association (NCGA) A non-irrigated
division, with a 313.7308/bu. corn yield. “We typically start planting
between April 18 and April 20, and we’ll be ready again this year.”
Timely planting is essential to high yields, emphasizes Santini. “If
the soil is ready, you’ve got to plant on time,” he says.
“However, the optimal planting date for my area is May 1, so I always
push for that day to plant my corn-yield-contest plots.”
Besides timely planting, what’s his secret for 300-plus-bu. corn?
“Everything has to be managed exactly right,” he says. “Fertility
is the key, but I experiment all the time to find out what works best
for my area. Picking the right hybrid, plant population and maturity are
also essential.”
Seed population levels depend on what the soil can handle, says Santini.
“I experiment with it somewhat, but I usually plant at a population of
about 32,000 seeds/acre.”
Planting corn after corn is no barrier to award-winning yields,
stresses Santini. His yield-contest-plots have grown corn for 20
straight years and in 18 out of 20, his plots have yielded the highest
in New Jersey, he points out. Last year, his winning corn contest plot
was planted to a triple-stack: Dekalb DKC61-66.
“For corn-on-corn, the triple-stack is the way to go,” says Santini.
“It takes care of all the rootworm problems you might have,” he
adds. “I used to apply soil insecticides at planting to take care of
insect problems, but with triple-stacked corn, I haven’t needed to use
insecticides.”
This multi-year yield contest winner also uses a two- or three-pronged
weed-control strategy. Last year, he applied Guardsman Max and Prowl
herbicides on his winning contest plot. However, planting a
triple-stacked hybrid also allows him to apply Roundup herbicide.
“I use all Roundup Ready corn,” says Santini. “Just in case weed
problems develop late in the season, I can come back in and take care of
it without injuring the crop.”
Other tips for high corn yields include optimizing planter settings.
“The planter should be calibrated every year,” says Santini, who
uses a John Deere model 1760NT planter in 30-in. rows. “You should
also make sure that the planter settings are adjusted so that the seed
depth is just right.”
For more information on the NCGA yield contest, visit: www.ncga.com/CYC/main/index.asp.
By John Pocock
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Nitrogen
Strategies For A Wet Spring
This true or false quiz comes from the Iowa Soybean
On-Farm Network. It’s a part of their Nitrogen (N) management
handbook, which can be accessed in full online at www.isafarmnet.com/pdf/Nmanagement.pdf.
True or False:
1. All you need to know about N management in corn is the anticipated
yield level and previous crop.
False. Several factors influence N availability and supply to the
crop, to the extent that most Midwestern states have dropped yield goal
from their N recommendations.
2. Although soybeans can fix N, the real reason corn after soybeans
needs less N is the lack of corn residue tying up N.
True. First, soybeans tend to use more N than they fix. And second,
as soil bacteria break down crop residues, they tie up N. The more crop
residue to be processed (as in the case of a corn crop vs. a soybean
crop), the more N the soil bacteria need.
To continue taking this quiz on N management strategies for corn, click
here: cornandsoybeandigest.com/corn.
To read a related article on how high corn prices and saturated soils
affect N management, click here: blog.cornandsoybeandigest.com.
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Delayed
Planting Increases Odds For Black Cutworm Problems
Crop producers and others involved in agriculture are
keeping track of and bemoaning the continuing storm fronts that keep
dropping lots of rain onto already sodden fields. Near-future forecasts
suggest more rain is on the way. To add insult to injury, the storm
fronts likely are carrying adult black cutworms into Illinois. As the
females drop out, they will seek attractive sites for laying eggs, and
they should have no trouble finding plenty of fields in which weeds are
growing.
Winter annual and perennial weeds, in particular, will attract
egg-laying black cutworm females. Consequently, as planting is delayed,
black cutworm larvae will hatch and begin feeding on the weeds. As the
weeds are killed, the cutworms will need additional food and will be
large enough to cut corn plants as seedlings emerge from the soil.
To continue reading this article about the potential for black cutworm
problems in Illinois, click here: www.ipm.uiuc.edu/bulletin/article.php?id=892.
By Kevin Steffey, University of Illinois
Extension
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Finding
Value In Precision Agriculture Technology
If farmers are considering incorporating
precision-agriculture equipment into their farm operations, now might be
an ideal time to adopt the technology.
With the costs of crop production inputs rising and precision
agriculture systems getting cheaper, equipment such as real-time kinetic
(RTK) auto-steering, yield monitors and variable-rate applicators may
add economical value to the farm in the form of higher input savings and
a greater net return.
"The primary purpose of precision agriculture technology is to improve
production efficiency, boost savings with seed and fertilizer
applications, and cut costs associated with labor, fuel and equipment
wear and tear," says Randall Reeder, an Ohio State University Extension
(OSU) agricultural engineer. "In the past, it may not have always been
economically feasible for farmers with medium-size operations to adopt
precision agriculture, but with today's rising costs, there may now be a
place on the farm for the technology."
Various components of a precision agriculture system each contribute to
a savings for the farmer, notes Reeder. With an RTK auto-steer system,
for example, part of the savings comes from the elimination of overlaps
and skips, due to the 1-in. driving accuracy.
"Really, how much you save depends on how sloppy you were before
switching to an RTK auto-steer system," says Reeder. "With a row-marker
system, conservatively speaking, growers might be farming 102 acres in a
100-acre field because of the overlaps. This translates into spending 2%
more in all materials, from seed to fertilizer to herbicides to labor.
But with an RTK system, you eliminate guess-row errors and overlaps."
To continue reading this article about the potential savings to the
farmer from using precision technology equipment, click here: www.ag.ohio-state.edu/~news/story.php?id=4553.
To read about an OSU study about the benefits of precision agriculture
technology through variable-rate fertilizer-nutrient application, click
here:
ohioagmanager.osu.edu/~ohioagmanager/news/3-08.php#barker.
By Candace Pollock, Ohio State University
Extension
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Custom Rates
Increasing
As would be expected with increasing fuel costs,
average 2008 custom rates for farm work have also risen, compared to
2007 and 2006 custom rates. Most custom rates for farm work in 2008 are
listed at 5-10% above the rates a year earlier, with an average increase
of about 7%. In addition to higher fuel costs, increasing cost for new
and used machinery is also a factor in the higher custom rates.
These results are based on the annual Iowa Farm Custom-Rate Survey that
is coordinated and analyzed by Iowa State University (ISU).
To continue reading this article about ISU’s custom-rate survey, click
here: cornandsoybeandigest.com/ag-issues/news/0408-custom-rates-increasing/.
The complete 2008 Iowa Farm Custom Rate Survey is available online at:
www.extension.iastate.edu.
Results from a custom-rate survey in Nebraska are available at: www.agecon.unl.edu.
By Kent Thiesse, MinnStar Bank
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Bubbles And Funny
Money
Money floats around the world attempting to find a
place to get lost. This excess investor money is looking for a quick
buck and now it is being parked in commodity markets for gold, platinum,
wheat, corn, beans, etc. If you have ever observed bubbles and cycles,
usually toward the end there is a run up in asset values created by
speculation.
To continue reading this article about the risks associated with
speculative investments, including grain, click here: cornandsoybeandigest.com/ag-issues/news/0408-bubbles-funny-money/.
By David Kohl, Road Warrior of
Agriculture
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Wanted: Your Innovative
Ideas
If you or someone you know has an innovative idea to
save time or money when growing corn or soybeans, we’d like to hear
from you. No idea is too big or too small.
Your suggestion could be a piece of equipment that’s been built from
scratch, or several pieces of equipment that have been torn down and
re-assembled as a single unit, or simple modifications to existing
machinery. It’s always interesting to see anhydrous applicators,
planters, sprayers and tillage tools that farmers have constructed to
help them farm better, bigger or more efficiently.
However, machinery innovations aren’t the only way to save money or
add to efficiencies. We’re interested in any cost-saving ideas that
you’ve implemented to stay profitable. For example, have you been
involved in any machinery sharing ventures, group input buying clubs or
been working with a consultant that has helped you increase your bottom
line?
If you have an idea you’d like to share, please send an e-mail to CSD@csdigest.com or call Managing
Editor Susan Winsor at 952-851-4662, or click on the link below to enter
your thoughts.
snap-surveys.com/prismb2b
Thanks for in advance for your help.
By Corn & Soybean Digest
Editors
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Yield Bonus
Contest Offers $100,000 In Prize Money
Corn growers across the Midwest can compete to win a
total of $100,000 in prize money by entering the 2008 Best of Both
Worlds Yield Bonus Contest sponsored by AMVAC Chemical Corp.
The contest is designed to encourage growers to document and achieve a
positive yield differential when a qualifying granular insecticide from
AMVAC is applied in combination with a corn-rootworm-trait hybrid as
compared to the corn rootworm trait alone. University field trials in
several Midwestern states in 2007 showed an average yield increase of 12
bu./acre from the practice.
Contest participants will be asked to compare yields from corn rootworm
hybrids planted with and without an AMVAC brand soil insecticide. The
eligible participant documenting the largest yield increase in bu./acre
of the corn rootworm trait plus insecticide treatment vs. the corn
rootworm trait corn alone will win $50,000. Second and third place
winners will receive $30,000 and $20,000, respectively.
The contest begins on April 15, 2008, and is open to qualified growers
in Iowa, Illinois, Indiana, Ohio, Minnesota, Michigan, Nebraska, North
Dakota, South Dakota and Wisconsin.
Full contest details, including yield documentation requirements, are
available at: www.amvac-chemical.com.
Source: AMVAC Chemical Corp.
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Gut Reaction:
Cow Stomach Holds Key To Turning Corn Into Biofuel
An enzyme from a microbe that lives inside a cow’s
stomach is the key to turning corn plants into fuel, according to
Michigan State University (MSU) scientists.
The enzyme that allows a cow to digest grasses and other plant fibers
can be used to turn other plant fibers into simple sugars. These simple
sugars can be used to produce ethanol to power cars and trucks.
MSU scientists have discovered a way to grow corn plants that contain
this enzyme. They have inserted a gene from a bacterium that lives in a
cow’s stomach into a corn plant. Now, the sugars locked up in the
plant’s leaves and stalk can be converted into usable sugar without
expensive synthetic chemicals.
“The fact that we can take a gene that makes an enzyme in the stomach
of a cow and put it into a plant cell means that we can convert what was
junk before into biofuel,” says Mariam Sticklen, MSU professor of crop
and soil science.
To continue reading this article about how the contents from a cow’s
stomach will help to convert plant fibers, called cellulose, into energy
for biofuel production, click here: newsroom.msu.edu.
To view a graphic illustrating how MSU’s new corn variety has been
genetically modified to improve ethanol production, go to: special.newsroom.msu.edu.
Source: Michigan State University
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Ethanol
Roots
Almost daily some news item or commentary confirms
just how far ethanol has entered our consciousness. The price of ethanol
futures contracts in Chicago or news of mergers between ethanol
processors truly qualifies as business news -- that is, information
important enough to be known by an informed general public. Likewise,
critics of corn-based ethanol appear more exercised than ever before in
pointing out the fuel's limitations (and thereby confirming its current
importance). Perhaps one way to treat this daily sensory overload is to
study just how an ethanol industry developed over the course of the last
few decades.
Fortunately, a new book authored by Wendy Fernstrum provides an
important sense of context. The book, High Octane: How Minnesota Led
the Nation in Ethanol Development, traces how ethanol production
developed in one state. This may appear to be a somewhat narrow angle
for a huge topic. The author, however, does an excellent job in relating
how Minnesota both reflected and diverged from larger trends.
To continue reading this article about the ethanol industry’s start as
reflected in Fernstrum’s new book, click here: farmindustrynews.com/biofuels/0401-farmer-owned-plants-ethanol-roots/.
To learn more about the book’s author and/or to order the publication
online, click here: wendyfernstrum.com/books.html.
By John Kestner, Farm Industry
News
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2008 Corn -- A Note From The Corn
E-Digest Editor
USDA’s March 31 prospective planting report shows
many farmers are planning to plant more soybeans this spring than many
analysts were expecting. Since then, corn futures prices have increased
significantly to attract more acreage back into corn. The question now
is: How many farmers will accept the higher offer for corn and increase
their corn acreage this spring compared to their plans in March?
There are still many concerns with weather, fuel and fertilizer prices
and some potential limitations to futures markets contracts that may
cause farmers to stick with their original plan. On the other hand,
$6-plus corn prices currently beckon.
What’s your decision -- plant more corn acres than you were planning
to in March -- or not? If you have a comment about your decision to
plant either more or less corn this spring than you were initially
planning to plant, please write to me (John Pocock) at: jpocock@csdigest.com. Just let me
know your name, where you farm, why you will increase your corn acres or
keep them as planned and whether or not I have permission to use your
comment in a future Corn E-Digest newsletter.
As always, you’re welcome to write to me if you have a comment on any
topic related to corn production or if you have concerns or questions
about this issue. I look forward to hearing from you.
Best of luck to you this planting season and thanks for your
readership!
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