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Features

U of I report provides guidance
on updating acres, yields

[JUNE 27, 2002]  URBANA — A recent University of Illinois Extension report examines changes in the new farm bill and offers producers a method for selecting between four alternatives in updating acres and yields. "Updating Acres and Yields under the Farm Security and Rural Investment Act of 2002" was prepared by Gary Schnitkey and Dale Lattz, U of I Extension farm management specialists.

"The new law includes provisions authorizing direct and counter-cyclical payments for 2002 through 2007 crops," said Schnitkey. "These payments will be determined using base acres and program yields. Farmers and landowners have one-time decisions to make concerning these acres and yields. They either can ‘update’ acres to reflect acres from 1998 through 2001 or they can ‘not update’ and have acres based on those used to calculate Agricultural Marketing Transition Act (AMTA) payments.

"If base acres are updated, farmers also can update yields used to determine counter-cyclical payments."

Under the new law, three types of payments are available for program crops — direct payments, counter-cyclical payments and loan deficiency/marketing loan payments.

Direct payments are available for corn, soybeans, wheat, oats, grain sorghum, barley, upland cotton and rice. Payments will be made for 2002 through 2007 crops, and the payment will be the same in each year. Payments for a crop on a farm will equal per-bushel payment rate times program yield times the result of base acres times .85.

"The 2002 program implemented a counter-cyclical program for all program crops," said Schnitkey. "Those payments equal the trigger price, which is the higher of loan rate or season-average price, times yield times base acres times .85."

The trigger price, he explained, equals a target price minus the direct payment rate. The season-average price is calculated by the USDA for 12 months, with the first month occurring near the beginning of harvest.

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"The yield is an important variable that farmers have to make a decision about," he noted.

Schnitkey summarized the options available to producers.

"When base acres are not updated, programs yields are also used to determine counter-cyclical payments," he said. "Farmers can choose to update acres and use program yields in determining counter-cyclical payments. Another option is to update acres and use the 70 percent difference method to update yields. Finally, farmers can update acres and use the 93.5 percent method to update yields."

Schnitkey and Lattz note that in some cases farmers will have to trade off the corn base acre for the ability to update yields. For example, some farms have a relatively high corn base compared to the current corn plantings. Updating acres will result in the loss of corn base acres, suggesting that the farm maintain its current base acres. However, maintaining current base acres will not allow a farmer to update yields, meaning that the counter-cyclical payments will be lower than when base acres are updated.

The report examines a number of options available to producers in making these choices.

Copies of the report can be accessed on the Web at http://web.aces.uiuc.edu/farm.doc/
manage/newsletters/fefo02_11.html.

[U of I news release]

Weekly outlook: Reports and prices

[JUNE 26, 2002]  URBANA — Weather conditions and crop prospects will be the dominating price factors for the next few months, said a University of Illinois Extension marketing specialist.

"U.S. corn and soybean yield prospects may be the most important price factors, but developments in other areas will also be critically important," said Darrel Good. "In particular, the market is taking note of dry conditions in Australia, flooding in parts of China and Russia, and the slow development of the monsoon in India.

"For coarse grains, world production has been at a relatively high level since 1995-96. Individual countries have had shortfalls in production, but the U.S. has had consistently large crops since 1996."

For wheat, Good added, world production has been relatively large since the consecutive small crops of 1994-95 and 1995-96.

"The current relatively low level of U.S. and world stocks and the generally low prices of wheat and coarse grains suggest that production shortfalls could have significant price impacts," he said. "The market is beginning to reflect production concerns, but price action may be relatively conservative until the U.S. crops reach the critical reproductive stages of growth."

Good’s comments came as he reviewed the markets where corn and soybean prices continue to demonstrate seasonal strength, influenced by a high rate of consumption and U.S. and world crop concerns.

For soybeans, both the domestic crush and exports continue at a pace above that projected by the USDA. The expected return of China to the import market should keep the pace of U.S. exports high, especially in the light of continued problems in Argentina.

"Based on the USDA’s weekly export inspection report, U.S. exports through June 20 were 5 percent larger than cumulative shipments of a year ago," said Good. "For the year, the USDA has projected a 3.5 percent increase. Unshipped sales as of June 13 totaled some 97.5 million bushels, compared to 74.2 million bushels of outstanding sales on the same date last year.

"Similarly, the cumulative domestic crush during the first three quarters of the marketing year is estimated at 1.3 billion bushels, 4.7 percent larger than the crush during the same period last year. For the year, the USDA has projected an increase of 3.3 percent."

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Good said that for corn, the pace of exports compared to that of last year, accelerated in the second and third quarters of the marketing year. The USDA’s export inspection report indicated that cumulative shipments as of June 20 were 3 percent larger than the total of a year ago. However, unshipped sales as of June 13 totaled 252.5 million bushels, compared to 290.1 million on the same date last year. For the year, the USDA projects that exports will reach 1.925 billion bushels, 10 million less than shipments of a year ago.

"Corn exports were very large during the summer of 2001," said Good. "The recent rapid pace of shipments will have to continue if the USDA projection is to be reached."

The USDA’s June Grain Stocks report will be released on June 28. The market will use the June 1 corn stocks estimate to gauge the rate of domestic use of corn during the third quarter of the marketing year.

"If the pace of consumption was in line with the USDA projection, June 1 stocks of corn should have been near 3.67 billion bushels, about 250 million less than on the same date last year," said Good. "Soybean stocks on June 1 should have been near 690 million bushels, based on the estimates of use during the third quarter of the year."

In addition to the grain stocks report, the market will have considerable interest in the acreage report to be released on the same date.

"Late planting, particularly in the eastern Corn Belt, suggests that the acreage report will reflect a fair amount of intentions rather than actual plantings," said Good. "Still, the report will be an important benchmark for judging the final planted acreage of the major crops. The market expects the report to show a significant switch from corn to soybean acreage due to the lateness of the planting season in some areas.

"The report is also expected to reflect failed wheat acres being planted to other crops. Some private analysts have projected a significant increase in sorghum acreage, compared to March intentions, due to replanting of failed wheat acreage. In addition to the acreage of individual crops, the report will give some perspective on the magnitude of abandoned acreage."

[U of I news release]

Weekly outlook: USDA reports

[JUNE 25, 2002]  URBANA — It is premature to suggest that the highest corn and soybean prices of the year have been established, said a University of Illinois Extension marketing specialist.

"Consumption of both corn and soybeans continue at a rapid pace, and considerable production uncertainty remains," said Darrel Good. "Some sort of averaging strategy for pricing remaining old crop inventories still appears attractive.

"New crop soybean prices are still below the Commodity Credit Corporation (CCC) loan rate. Harvest delivery prices for corn are marginally below the loan rate in most areas. The market is offering an average price of about $2.15 for delivery from harvest to the summer of 2003. That is equal to the midpoint of the USDA’s projection for the marketing year average price."

Good’s comments came as he reviewed recent USDA reports. The monthly reports of World Agricultural Supply and Demand Estimates and Crop Production provided some fundamental support for corn and wheat price prospects. In the case of wheat, the USDA now forecasts the 2002 U.S. crop at only 1.823 billion bushels, which is 63 million smaller than the May forecast and 135 million smaller than the 2001 harvest. The forecast represents the smallest crop since 1988. U.S. stocks at the end of the 2002-03 marketing year are projected at 555 million bushels, the smallest year-ending inventory in six years.

Wheat production in the rest of the world is forecast at 540.2 million tons. That forecast is 2.6 percent larger than the 2001-02 crop but 4.2 million tons smaller than the May forecast.

"Compared to last month’s forecast, smaller crops are expected in Australia, China, eastern Europe and the former Soviet Union," said Good. "World wheat stocks are expected to decline for the third consecutive year. Still, wheat supplies are expected to be large enough that consumption can continue at a normal pace."

For corn, the major surprise in the June report was a smaller forecast of the 2002 U.S. crop. The May forecast was based on the March Prospective Plantings report and trend yields. This month, the USDA lowered its expectation of corn plantings by one million acres due to delayed planting in the eastern Corn Belt. In addition, the projected average yield was reduced from 137.9 bushels to 135.8 bushels to reflect the expected impact of late planting.

As a result, the 2002 crop is now forecast at 9.65 billion bushels, 285 million smaller than the May forecast and only 143 million larger than the 2001 crop. With expanded exports and increased domestic processing use of corn, the smaller crop is expected to reduce stocks at the end of the 2002-03 marketing year to 1.3 billion bushels, the lowest level in six years.

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"While this month’s downward revision in the projected size of the 2002 U.S. corn crop was a friendly surprise, the market had a modest response," said Good. "The reduced forecast was logical, but there is still a lot of uncertainty about both acreage and yield. The USDA’s National Agricultural Statistics Service will release an acreage report on June 28. This report will reflect an early June survey, so it will not be the final word on planted acreage.

"However, the report will provide a good benchmark for judging actual planted acreage. Yield prospects will reflect weather conditions for the remainder of the summer. The National Weather Service is projecting near-normal precipitation and temperature for the majority of the growing season. The market will continue to take a wait-and-see attitude about yield prospects."

The June report also contained a smaller forecast of foreign coarse grain production. At 629 million tons, the forecast is 2.2 percent larger than last year’s crop, but 1.7 million tons smaller than the May forecast. World coarse grain stocks at the end of the 2002-03 marketing year are forecast at 111.2 million tons, the lowest year-ending inventory in seven years.

For the 2002-03 U.S. soybean marketing year, the USDA lowered the projection of beginning stocks by 20 million bushels, increased the 2002 crop projection by 20 million bushels, reduced the export projection by 10 million, and increased the projection of year-ending stocks by 10 million bushels. The first projections for the 2002-03 marketing year for the rest of the world will be released next month.

"The average daily cash price of corn in central Illinois moved to the highest level since harvest on June 13, while the highest post-harvest price of soybeans was established on June 5," said Good. "It is common for the highest cash prices of the marketing year to be established in June. The relatively favorable near-term weather outlook suggests that prices may soften somewhat."

However, Good repeated, it is too early to assume that the highest prices of the year have been reached.

[U of I news release]

The farm bill

[JUNE 24, 2002]  With a new farm bill in place, the questions turn to how to make the most of some opportunities this farm bill provides. Keep in mind that information is just now coming out on the bill and is not from the official source (the Farm Service Agency). It just seems like U of I Professor Bob Hauser has just about the best information out there at this time.

Provisions of the farm bill, as now known, are these: the Loan Rate Program, counter-cyclical payments, direct payments, payment caps, Conservation Title, and changes to programs for milk and wool and for mohair, to name a few.

Loan rates were basically increased for corn and decreased for soybeans. The 2002 loan rates are $2.06 for corn and 5.16 for soybeans in Logan County. This is changed from $1.95 and 5.41 for 2001. These rates come in to play with market prices that are below these rates.

The Counter Cyclical Program is based on a 12-month price average, to compensate producers during very low commodity price periods. Payments will be triggered when corn prices fall below $2.32 per bushel for 2002 and 2003, and $5.36 for soybeans. These payments are figured on payment bushels.

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The Direct Payment Program provides a fixed payment of 28 cents per bushel of corn and 44 cents per bushel of soybeans, based on payment bushels.

Many of the other provisions are still being checked out, but for most farmers in our area it looks like about $15 per acre more will be available than under the past farm bill.

For more information, follow the U of I Farmdoc link: http://web.aces.uiuc.edu/farm.doc/
policy/index.html. There is also a calculator there to look at some of those scenarios that are available to you.

[John Fulton]

Local FFA shines at convention

[JUNE 22, 2002]  Floods of blue corduroy jackets filled the Prairie Capital Convention Center June 11 to kick off the 74th annual Illinois FFA Convention. FFA members from across the state were recognized for their outstanding achievements throughout the year.

Section 14 members were very involved over the three-day convention with luncheons, main sessions and elections.

Illinois FFA members and guests were honored to have our national FFA secretary, Robin Niehaus, visiting her home state for the convention.

The newly elected 2002-2003 Illinois FFA officer team is Jay Kelley of Section 5, president; Rebecca Yandell from Section 25, vice president; Emilee Bocker of Section 2, reporter; Drew DeRiemacker from Section 3, secretary; and Meagan Wells of Section 23, treasurer.

Aside from elections, Section 14 members received various awards. Kent Leesman racked up awards in the Risk Management Essay Contest, being in the top ten in the nation, being a top ten chapter president and a STAR Farmer finalist. Chelsea Frost of PORTA was an FFA talent performer, along with several Section 14 members in the FFA Band and Chorus. Natalie Coers of the Hartsburg-Emden FFA Chapter was named among the top ten chapter reporters.

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Kate Wrage of the Hartsburg-Emden FFA Chapter was recognized as the Section 14 candidate for her American FFA degree.

Eleven Section 14 FFA members were honored to receive their state FFA degree as the convention came to a close.

For more information about the Illinois FFA, visit www.illinoisffa.org or www.ffa.org.

[Natalie Coers, Section 14 FFA reporter]

Illinois FFA convention news

[JUNE 17, 2002]  As the 74th state FFA convention got under way last week, Section 14 members gained recognition for their outstanding achievements from the past year.

At the second session three Section 14 members were recognized for winning their respective proficiency areas. Kent Leesman of Hartsburg-Emden won in the Grain Production Entrepreneurship area for his work on the family farm. Chelsea Frost of Porta won in the Safety area for her work as a lifeguard, and John Sullivan of Porta won in Wildife Production and Management Entrepreneurship. 

Also, Kate Wrage of Hartsburg-Emden was recognized for being a Section 14 American FFA Degree candidate.

Robin Niehaus, the national FFA secretary, gave the keynote address entitled "Full Speed Ahead."  She challenged FFA members and guests to sing in the car, put the pedal to the metal and turn on their headlights for a journey of a lifetime.

We wish all the members who received awards the best of luck in national competition.

[Natalie Coers, Section 14 FFA reporter]

Bt corn doesn’t harm
earthworm populations

[JUNE 17, 2002]  URBANA — Creatures in the soil, such as earthworms and mites, have a positive effect on soil quality and, in the long run, farmers may want to manage their soils to protect and nurture these creatures. This is the focus of a new study at the University of Illinois and the Illinois Natural History Survey.

"We know soil invertebrates are beneficial," said Ed Zaborski, a soil invertebrate ecologist with the Illinois Natural History Survey. "They have a positive impact on the soil system and, ideally, we would like to manage farmland to produce the best possible benefits from them."

Zaborski’s study looks at earthworms and mites as possible indicators of soil condition and how they respond to insect control strategies. He makes up bags of crop residues and buries them in field plots consisting of three different corn hybrids, each with a Bt line and a non-Bt line. Half of the plots are treated with insecticides. Every few weeks, some of the bags are collected and the invertebrates extracted. Through the process, he can discover the numbers and species of invertebrates that are decomposing the residue.

"We can determine the impact of insecticides, the growing crop and the quality of the residues. After analyzing the residues, we’ll know the rate of decomposition for several points in time. So, we can look at the effect of insect control strategies on the soil process and decomposition."

Zaborski says there doesn't seem to be any negative effect to earthworms caused by the Bt endotoxin.

"For the lines of corn used in our study, it looks like the impact of genetically engineering corn to produce the Bt toxin was no greater than the genetic differences between various corn hybrids."

He has also discovered that certain soil mites might respond to a particular residue based partially on their reproductive strategy. Invertebrates that reproduce quickly and in large numbers when food is plentiful are known as "r" strategists. In one corn variety, mites with these characteristics were more abundant on residue containing the Bt gene than on the non-Bt variety.

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"One reason could be that, if the plant could not break down the Bt toxin, some residues would be slightly higher in nitrogen. That means there’s a greater amount of protein available there to support a rush of microbial activity, and mites would benefit from feeding on these microbes."

Zaborski’s approach is a unique way to study the effect of Bt crops on the soil.

"Often, researchers test a very small set of animals. I’m looking at a couple hundred different species. It’s a whole interacting, functioning community. And I’m measuring the community, instead of individual species, which offers a much better chance of finding any risk associated with the technology," he said.

Initial results also show that, in crops treated with insecticides, juvenile night crawlers were more abundant than in crops not sprayed with insecticides.

"We’re not sure why this happened," he said. "One hypothesis is that the insecticides killed spiders and beetles that would be predators of earthworms. So the spraying improves the reproductive success of earthworms. Unfortunately, those predators can also help control crop pest."

[Gary Beaumont,
University of Illinois College of ACES]

Honors & Awards

Logan County 4-H Bicycle Show results

[JUNE 26, 2002]  The Logan County 4-H Bicycle Show was on June 15. Ten 4-H’ers participated in this year’s show. Mathew Runyon of Broadwell won the bicycle award, donated by Lincoln McDonald’s Restaurant.

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Ag Announcements

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