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.

The buoyancy in the bean market makes it difficult to forward price, and that is even adding uncertainty to your planting plans. U of I Specialist Darrel Good says the bean market’s bounce after the USDA’s planting intentions report, had several causes:
1) South American production is big, but was substantially cut by USDA April 10.
2) Census Bureau reports of exports are coming in larger than USDA’s estimates.
3) Substantial sales of the new crop, including to China, are currently being booked.
4) More soybeans are being crushed domestically than USDA had anticipated.
5) Higher prices for oil and precious metals are boosting values of all commodities.

So how do you price your new crop beans? Darrel Good expects harvest prices below loan values with expected acreage and a trend yield. He says, “With NOV futures near $6.00, and assuming that the monthly average farm price will have the same relationship to futures prices as the average of the past 5 years, the futures market currently reflects a 2006-07 average farm price near $5.95. That is $.30-$.35 above the average expected for the current year.” Read his analysis.

Higher feed costs are eating pork profits says Extension’s Chris Hurt, “Profits will be squeezed by lower hog prices and rising corn prices. The magnitude of the corn price increase will be driven by massive demand growth for ethanol production and by weather uncertainty. Even with normal yields in 2006, the escalated corn production costs and the expected continued rapid growth in ethanol use mean that hog producers are on a collision path with higher corn prices either in the 2006/07 marketing year or in the 2007/08 marketing year.” He expects only breakeven prices this fall. Read his analysis.

If you have hogs to sell, Chris Hurt is not recommending forward pricing since lean hog futures prices are now roughly equivalent to his price forecast. He says historically, there has been a strong tendency for futures prices to experience seasonal increases in late-April and the first-half of May. The October and the December contracts have added on average somewhat over $1. If futures are able to rise over the next month, hedging could be considered, especially for those who need to be assured of profitable prices.

What is your corn planting rate and how does that compare to your seed cost? How about adjusting your planting rate based on the cost of seed corn, like your N strategy? Iowa State researchers say, “First, as seed price increases, Maximum Return to Seed (MRTS) decreases. Second, the decrease in MRTS is more evident at the 180 bushel yield level than with the 220 bushel yield level. With the lowest seed price, a seeding rate of 33,000 resulted in the highest MRTS for both yield levels. Yet, as seed price increases, seeding 3-6% fewer seed (1,000 to 2,000 fewer seeds per acre) results in the highest MRTS.” Read more.

Reducing your level of tillage may yield lower production costs, says Extension Farm Management Specialist Gary Schnitkey. He found a savings of more than $11 per acre between deep tillage and strip tillage, based on a $2.50 per gallon fuel cost. Read his newsletter.

Would you turn down a share of a $250 million winning lottery ticket? Probably not, but $250 million is what IL farmers are turning down annually with soybean production practices that allow SCN to thrive. Nematologist Terry Niblack found SCN in 85% of IL soybean fields, with half of the fields exceeding economic thresholds for treatment.

If you want to recapture your yield being lost to Soybean Cyst Nematode, consider:
1) The best solution would be to rotate varieties with different sources of resistance.
2) Nematodes often do not produce any visible symptoms in a soybean field.
3) With today’s high-yielding varieties, your yields should be 70-85 bu. per acre.
4) Check the results available from the VIPS website.
5) Per acre profits may increase $100 by planting high-yielding resistant varieties.

After evaluating dozens of market advisory services for 10 years, Extension Marketing Specialist Darrel Good says, “It is difficult to predict the year-to-year pricing performance of advisory programs based on past pricing performance. However, there is some evidence that performance is more predictable over longer time horizons, particularly at the extremes of performance rankings.” Read the AgMAS evaluation.

The AgMAS study shows that the frequency of advisory programs pricing in the top third of the season price range over 1995-2004 is modest, 17-25% for corn and 17-19% for soybeans says Darrel Good. “Limited evidence is found that advisory programs, as a group, outperform market benchmarks, particularly after considering risk.” But he added, “It is possible that advisory programs provide valuable information and analysis to farmer-subscribers, yet fail to exhibit superior pricing performance.”

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The Midwest is enamored with ethanol*, but U of I ag economists say arguments for continuing its government support are soon going to wear out. David Bullock suggests, “Ethanol proponents will need to justify the subsidies along the lines of national defense or creating a lower-cost industry for the future.” And he warns, “Pulling (oil) out of the (Saudi Arabian) desert is cheaper than trying to grow energy through corn.”

Alternatives to corn for energy production are fields of biomass or grass, but how do you convert that to energy? Cows and other ruminants do it with bacteria producing enzymes and U of I researcher Bryan White says those enzymes break down various plant products, producing soluble sugars that can be used for alternative energy sources. He is evaluating over 200 bacterial enzymes to find the best and most efficient ones.

Stu Ellis

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