Extension 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.

It will be hard to reduce the 2.4 bil. bu. corn carryout we have, says Extension’s Darrel Good:

• 73.7 mil. 2006 harvested acres and a 149.5 bu. trend yield is still an 11.02 bil. bu. crop.
• Even with more domestic use and 2 bil. exports, 8/07 carryout will still be over 2.1 bil.
• To tighten the carryout with a 10 bil. 2006 crop, acreage will have to decline 7.8 mil.
• With a 1 mil. cut in acres, yield has to fall to 135.7 bu., for production to fall to 10 bil.

If you are pricing old corn, Extension Specialist Darrel Good says current fundamentals do not support what the futures market is currently offering for old crop corn. In short:

• The average price for the past 4 months was probably near $1.85 per bu.
• Correlating that with the 22.5% stocks-to-use ratio gives a $1.85 marketing year price.
• Futures prices thru Sept. indicate an average price of $2.05, and a $1.95 year average.
• Old crop futures prices are $.20 higher than suggested by known fundamentals.

If you are pricing new corn, Darrel Good says the current market still appears to be overvalued if we reduce corn acres modestly in 2006 and still have a trendline yield.

• New crop futures range from $2.43 for Dec ’06 up to $2.58 for July ’07 delivery.
• New crop futures indicate a 2006/07 marketing year average of $2.36.
• A $2.36 price requires a much smaller crop than what a trend yield would produce.

Did you miss out on the top of the soybean market, or are there still some opportunities? Darrel Good at the U of I says the soybean market direction will be determined by:

• US and Brazil both estimate its crop over 2.1 bil. bu., above last year’s 1.95 bil. bu.
• Argentina has had weather stress, but the 1.49 bil. bu crop will exceed the 2005 crop.
• Exports to China are 31% behind 2005, but it could catch up with recent sales.
• China could shift its delayed purchases from the US to South American sources.
• Increased bean acres in 2006 would be coming in the face of a 500 mil. bu. carryout.

If you are pricing soybeans, Darrel Good says fundamentals suggest lower prices:

• Probably 60% of the crop already has been sold at an average of $5.75 per bu.
• The remaining 40% will average $5.00 to achieve USDA’s expected $5.45 average.
• The futures market is indicating a $5.60 average for the balance of the year.
• “Price declines could be substantial if significant production problems do not surface.”

Deskwork will keep you farming and a bushel of new computer tools will make it easier. U of I Extension’s downloadable tools include: crop insurance option evaluator, premium calculator, family budget, ratio calculator, crop budget and rent calculators, and a tool to help determine whether to shift acres between crops.

Lower crop insurance premiums would be welcome, and you may get a letter from your agent offering that, but don’t rework your crop budgets just yet. U of I Extension Specialist Gary Schnitkey says it is a pilot program for 2006 only, and you will not see the financial benefit until 2008 because of administrative complexities. His analysis in short:

• The program encourages insurance companies to cut costs and give that to farmers.
• Your agent will not know at sign-up if your premium will be reduced by the program.
• The program may result in reduced crop insurance services from the company.
• If company profits are reduced, it may result in crop insurance industry changes.

Are you rural or urban? While most of you would opt for “rural,” the US government may have your county listed as “urban” and you may be missing out on funding for rural development opportunities. U of I ag economist Andy Isserman wants the US Census to create a new category of “mixed” which would ensure 51% of rural folks are not ignored.

If you apply pesticides, and have employees who do, you’ll want to review EPA’s new manual “How to Comply” with the Worker Protection Standards. Download a copy. Rules have changed, including:

• Untrained workers need basic pesticide information before entering treated areas.
• Decontamination timetable and requirements for location of supplies.
• Modification in the language and size for treated-area warning signs.
• Early-entry exception for irrigation tasks and for limited contact tasks.
• Optional use of separable glove liners beneath chemical-resistant gloves.
• Option times for agricultural pilots on wearing of gloves
• Exemptions for certified or licensed crop advisors and persons they supervise.

If buying or selling farmland, you’ll find options and opportunities at the Chicago Farmer’s Farmland Investment Fair set for Feb. 4 at Joliet Junior College. Seminars will cover buying & selling issues, hunting leases, organics, eminent domain, and tax laws. $45 registration fee covers exhibits, seminars & lunch.

If you missed Extension’s Farm Income 2006 seminars, the presentations are available. Topics include: price and income outlooks, input cost implications, farm finances, tax & law issues, and Farm Bill considerations. Download one or all, and be better informed.

After USDA’s Farm Bill hearings around the US, the House Ag Committee will embark on a similar tour, beginning 2/6 in NC (Noon) and 2/7 in AL (10 AM). Use your computer to listen to the testimony.

With growing interest in ethanol, you need to know the latest about building a plant:

• How-to guide produced by the Illinois EPA
• 250 IA farmers building an ethanol plant say their consultant stole their $3.8 mil.
• A TX ethanol plant will be using free dried cow manure for energy to process corn.

Stu Ellis