Archive

Archive for January, 2010

2010 Crop Vision

January 29th, 2010

Contributed by Steve Johnson, Extension Farm Management Field Specialist

Steve Johnson

The link below provides a web cast presented by Steve Johnson looking at the 2010 crop year. The presentation covers:

  • Latest U.S. corn & soybean supply, demand and price outlook
  • Highlights grain storage, marketing and cash flow decisions
  • Provides 5 strategies for reducing input costs
  • Highlights 2010 crop risks & revenue strategies
  • Summarizes 5 strategies & 5 web sites for managing 2010 crop risk & revenue

johnson_steve1-29-10

Crop Outlook, Crops

Expected impact of Morrell plant closing on hog prices

January 26th, 2010

Contributed by John Lawrence, ISU Extension Economist

John LawrenceSmithfield Foods announced January 20th that it will close the Sioux City, Iowa John Morrell hog processing plant in April. The closing will directly impact the estimated 1500 employees that will lose their jobs and hundreds of other workers that provided services to the plant or to the employees.

Hog producers in the region will also be impacted, but not as dramatically as might be expected. It is never good for a seller to lose a buyer and the reduction in packer capacity is expected to have a small negative impact on the basis compared to what would have been had the plant remained open. Hog producers selling to the plant will have to find another buyer and may have higher transportation cost to ship to a more distant plant. In addition, producers that have do not have a track record with a buyer may will want to start shopping around early to determine where their hogs do best.

To read more on the impact of the Morrell plant closing, visit the Iowa Farm Outlook web site.

Livestock

Climate Change Webcast

January 20th, 2010

Climate change legislation and regulations now making headlines will impact the economy, consumers and agriculture when they are enacted.  To help Iowans better understand the proposed policy and its expected implications for agriculture, Iowa State University Extension will offer a statewide webcast on Monday, Feb. 1, starting at 7 p.m. 

“While the policy details are far from finalized, we can surmise the likely implications for agriculture in the policy alternatives being discussed,” said Chad Hart, Iowa State University Extension economist.

The two hour ISU Extension webcast will feature leading economists in energy economics and agricultural policy. These economists have studied the cap and trade policy, modeled the effects on agriculture, and testified before Congress about the expected impact on crop and livestock costs and returns. Local webcast sites will hold discussions to surface questions for the expert panel.

James Bushnell, the Cargill Chair in Energy Economics at Iowa State, will provide an overview of the possible impacts for utility and transportation costs. Pat Westhoff, with the Food and Agricultural Policy Research Institute at University of Missouri, will outline the implications for crop producers. Dermot Hayes, Iowa State University economist, will discuss the implications for livestock producers. Chad Hart, Iowa State University Extension economist, will summarize the general outlook for agriculture under the proposed legislation.

The webcast will be held at select ISU Extension county offices beginning at 7 p.m. on Feb. 1.  There is no charge for this event, but pre-registration is required by calling a host site.  Sites with low pre-registration may cancel and direct people to another location; call the host office on Feb. 1 to confirm site participation. For a complete list of webcast host sites visit www.extension.iastate.edu/agdm/info/meetings.html.

Meetings and Events

Client Corner: What types of enterprise budgets are available?

January 14th, 2010

Contributed by Craig Chase, ISU Extension Farm Management Field Specialist

I’ve just glanced through your Vegetable Production Worksheets and wanted to know if info is available on the type and/or quantity of fertilizer assumed for each crop and also the quantity of fuel used for each crop.

I also see that these enterprise budgets were based on “small farm” production activities. Are there enterprise budgets available for larger-scale farming and livestock production?

Craig Chase

The vegetable budgets reflect 2-5 acres in production with a wide variety of crops grown.  The fertilizers used are primarily organic; alfalfa meal, worm castings, compost in relatively small quantities, etc.  Rarely are there any commercial fertilizer N-P-K products used.

Most of the labor is conducted by hand, with the exception of the primary tillage which is done by a large garden tiller.   There are other universities that have large scale vegetable production budgets; California, Michigan, and others.  AgDM File A1-25 lists a number of resources where you should find some of the large-farm budgets.

If you are looking for more conventional crop budgets (corn, soybean, etc.), we do have some of those that would outline the level of fertility and the field operations that would be conducted.  A separate publication would be able to estimate fuel usage for those operations.
For this information, you could use  Agricultural Decision Maker (AgDM) files A1-20 “Estimated Costs of Crop Production in Iowa - 2010” and A3-27 “Fuel Required for Field Operations“.
The organic row-crop budgets use only composted manure for fertility along with alfalfa in the rotation. Keep in mind the tractor and implement set is usually smaller in an organic system so the fuel usage is likely to be less than its conventional counterpart. 

There are several livestock budgets located on the AgDM site as well.  Information file B1-21 would outline the detail of those budgets.

Crops, Organic Crops and Livestock

USDA’s January Surprise

January 12th, 2010

Chad Hart, ISU Extension Grain Marketing Specialist, provides a summary of the USDA December Crop Reports.

chad_hartUSDA updated its crop production, stocks, and use estimates today. And if the market was looking for bearish information, the reports provided it.

 Crop Production:
For corn, national average yields are projected at 165.2 bushels per acre, up 2.3 bushels from last month’s record estimate. Corn production is projected at 13.15 billion bushels, up 230 million bushels. With this revision, the 2009 crop becomes the largest corn crop the U.S. has ever produced, exceeding the 2007 crop by 113 million bushels. For soybeans, national average yields are projected at 44 bushels per acre, up 0.7 bushels from last month. Soybean production is projected at a record 3.36 billion bushels. So both the corn and soybean yield and production records fell in 2009.

Grain Stocks:
The stocks report showed corn stocks are up 9 percent from last year, at 10.9 billion bushels. The stock situation was helped by a larger corn disappearance over the first three months of the marketing year as 3.89 billion bushels of corn were used, versus 3.64 billion bushels last year. But the record size of this year’s crop more than offset the strong disappearance numbers and stocks increased. A similar story holds for soybeans. Soybean stocks are up 3 percent from last year even though disappearance from September to November was 30 percent higher than last year.

World Ag. Supply and Demand Estimates:
On the demand side, soybean demand continues to build. Soybean exports were raised again, another 35 million bushels to 1.375 billion, based on continued Chinese demand. But some other soybean markets, such as Taiwan, Egypt, and Canada, have grown year over year as well. Soybean crush is projected at 1.71 billion bushels, up 15 million on the strength of soybean meal exports.  The demand growth is greater than the production update, so soybean ending stocks for the 2009/10 marketing year are projected at 245 million bushels, down 10 million. With the boost in soybean exports and crush and the reduction in ending stocks, USDA raised the midpoint of their season-average price range to $9.65 per bushel, up 15 cents from last month. For corn, feed and residual demand was raised to 5.55 billion bushels, based on the stock disappearance numbers.  Ethanol demand held at 4.2 billion bushels, but food and seed demand was lowered 10 million bushels as shipments of high fructose corn syrup were off.  Corn exports were held steady at 2.05 billion bushels. The record crop pushed projected 2009/10 corn ending stocks to 1.764 billion bushels, up 89 million. The midpoint of USDA’s corn season-average price range was raised to $3.70 per bushel, up 15 cents.

Crop Outlook

Why consider a basis contract?

January 11th, 2010

Contributed by Steve Johnson, Extension Farm Management Field Specialist

johnsonsteve_2008_1in_72Corn quality concerns are great for a large number of 2009 bushels being stored on-farm. Bins need to be leveled to improve air flow and reduce crusting. The centers of the grain bins should be cored where cracked kernels and foreign material likely concentrate. If there is concern for corn that will not store beyond mid-March on-farm, consider moving that corn early to mid-winter rather than waiting until spring.  By mid-March, many of the piles of corn stored covered and uncovered in the Western Cornbelt will need to be processed or dried.

Five Reasons to Consider a Basis Contract

Here are a few reasons to move on-farm stored corn sooner than later this winter.

1) High moisture levels and lack of air flow in grain bins will not allow that corn to store into the spring months.

2) The discounts for foreign material (FM) were increased by many processors since early November, anticipating the challenge that lies ahead for maintaining corn quality.

3) Corn basis will likely widen into late winter as farmers need to generate cash and corn movement increases.

4) The excessive fall moisture could leave many gravel roads difficult to navigate once the frost leaves.

5) A basis contract fixes the basis and eliminates storage costs, but allows the producer to benefit from higher futures price.

 

Storing the 2009 corn crop on-farm will likely be a bigger challenge than in recent years. Waiting for a spring price rally carries with it the risk of holding corn that could go out of condition. Facing the potential for an abnormally wide basis late winter brings an additional risk.

 

A basis contract allows a producer to move corn in early to mid-winter and eliminate the cost of storage and basis risk, yet provide cash flow. A basis contract is a marketing tool that most producers have available to them. Consider how to use the tool this winter to reduce risk and hopefully increase revenue from your 2009 corn crop.

 

The full version of this article is available from the Crop Marketing Strategies web site. For more on grain marketing, visit the Crop-Marketing section on the Ag Decision Maker web site.

Crops

Managing Livestock Financial Issues

January 8th, 2010

At a time when Iowa livestock producers continue to grapple with the tough economy, Iowa State University Extension wants to make it easier for producers to find ISU educational resources they need.

“We want livestock producers to easily find ISU people and information that can help them work through year-end financial issues and develop financial plans for next year,” said John Lawrence, ISU Extension livestock economist. “We know many producers are feeling financial and emotional stress, so we have placed our materials on one Web page for their convenience.”

A new Web page, Managing Financial Tough Times for Livestock Producers, at www.extension.iastate.edu/livestock/managingFinancialLivestock.htm, has materials organized on seven sub-pages – Iowa Concern; Ag Decision Maker; Center for Agricultural Law and Taxation; financial management tools specific to beef, dairy and pork producers; and tips to help parents talk to kids about the financial situation.

Farm Financial Planning is Iowa State University Extension’s farm financial analysis program and can also be beneficial in tough financial times. It consists of one-on-one financial counseling, a computerized analysis of the farm business, and referral to other extension programs or outside services that may be useful.

Livestock