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 market will be down, before it goes back up, says Extension Marketing Specialist Darrel Good. While we have been flirting with the loan rate and shallow LDP’s, Good says, “A harvest low is expected again this year, but not as low as in 2004 or 2005 unless the crop is larger than currently forecast. (With) a lot of optimism about corn demand in the year ahead, producers will likely store as much of the crop as possible.” Read his weekly newsletter.

Darrel Good says, “In the past, when large crops have resulted in harvest time price lows, the marketing year high cash price has tended to occur in the following spring or summer. Depending on basis levels in 2007, the market is currently projecting about a $.50 increase in spot cash prices from harvest to the spring/summer of 2007.”

Will higher corn prices buy soybean acres from you in 2007? Darrel Good says, “The economics of producing corn after corn rather than soybeans depends on the relative price and yield of the two crops and the difference in costs per acre. Over a wide range of yield ratios and soybean price levels, the breakeven price level for producing corn after corn rather than soybeans ranges from about $2.40 to near $3.00. The market is likely to give producers the necessary incentive to increase corn acreage.”

Weak new crop basis represents a market signal to avoid making cash sales, says Univ. of MO Marketing Specialist Melvin Brees. “The low cash bids suggest weak nearby cash demand, large old crop carryovers, higher transportation costs, competition for storage space, higher interest rates, and other factors that include anticipation of a glut of harvest time deliveries. Weak basis reflects the added handling costs and the squeeze on grain facilities, along with attempting to discourage grain deliveries.”

March ’07 corn futures prices offer a premium (or carry) of about 15¢ above the Dec ’06 futures and May ’07 futures offer carry of nearly 24¢. These price premiums are what the futures market is currently offering to store the corn and delay delivery and nearly covers all or on-farm storage costs and almost recovers commercial storage costs.

Soybean futures prices offer carries of about 13¢ for the Jan ’07, 23¢ for March, and 31¢ for May over November ’06 futures prices. While the carry in the soybean market will not recover all storage costs, the carries will contribute to the potential for storage gains. Basis gains of 10¢ or more would be needed also to fully recover storage costs.

Melvin Brees at Missouri says, declining prices in combination with weak basis would suggest maintaining beneficial interest (ownership) of the grain until harvest time lows are in place in order to capture possible LDPs, which may require storage to accomplish.

The cattle market outlook is getting brighter says Purdue’s Chris Hurt. “Beef supplies this year have been up about 6% yet prices are down only 3%. Cattle price prospects have improved with the opening of the Japanese market and it now appears that the average price for NE live steers in 2006 will be near $86, only $1.30 under last year’s record. There is little expansion in brood cows, and a small increase in the calf crop. Read his quarterly summary.

For the livestock feeder, Chris Hurt says the magnitude of the shift to more corn in 2007 is hard to quantify, and while 5-8 mil. more acres could be produced, that is beyond the producer comfort zone so corn prices could be volatile. Not so for bean meal, since surpluses will remain through next summer, but a 2007 soybean acreage cut is possible.

Is manure a viable alternative to commercial fertilizer? Answer these questions:

1. If you have poor ground, with low P & K values, put manure there first.
2. Manure will pay if application cost is 1-1.5¢ and transportation is under 5 miles.
3. Solid manure must be disked under and nitrogen will be lost until that occurs.
4. Liquid manure should be injected to avoid odor complaints and better use by crops.
5. Manure being sold has a higher value if frequent samples show consistent nutrients.
6. Fall-applied manure will lose 1/3-1/2 of the nitrogen content at 50+ soil temperature.

Unscramble environmental regulations with the help of “EZregs,” an Extension website created to help farm operators, green industry professionals, land use planners, and others working in the world of IL environmental regulations. Help is offered in areas of livestock, construction, pesticides, endangered species, and historic preservation. IL Extension specialists developed a special website.

You may have a good crop of duckweed and watermeal on your farm pond. Sorry, it is of no value, but needs management. Mechanical removal is ineffective says Extension’s Duane Friend, who suggests Diquat or Fluridone, available from farm supply stores. Beware that decaying pond weeds will deplete oxygen and threaten your fish. See also:
1) University of Illinois
2) Purdue University
3) Ohio State University

A new federal law on conservation easements raises the financial benefit for landowners who donate their land for conservation purposes, but who can continue farming without threat of encroaching development. The tax deduction was raised from 30% for all land owners to 100% for farmers and 50% for non-farming landowners. The timing of the benefit was also extended from 5 to 15 years. Consult your tax advisor for details.

Stu Ellis

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