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Features

Weekly outlook

Weather market

[JULY 17, 2002]  URBANA — With so much production uncertainty, it is likely that corn prices will continue to be quite volatile over the next several weeks, said a University of Illinois Extension marketing specialist.

"The crops in the drier areas of the Corn Belt have already suffered yield-reducing stress," said Darrel Good. "Perhaps the market has been too complacent about the adverse crop conditions and therefore too optimistic about yield potential for the 2002 crop.

"This week’s USDA report of crop conditions will be an important benchmark in answering that question. The market seems to be expecting stable conditions from the previous week. Any significant deviation from these expectations would likely have important price implications."

Good noted that if yield prospects continue to decline, as suggested by current crop ratings, producers will experience better pricing opportunities over the next several weeks.

Good’s comments came as he reviewed the corn market. July 2002 corn futures reached a contract low of $1.98 in early May. December 2002 futures reached a low of $2.15 at about the same time. A combination of late planting, expectations that acreage would fall short of March intentions and a period of hot, dry weather sent prices higher in May and

June. July futures moved to a high of $2.35, and December traded to $2.54 on July 2.

"While crop ratings have continued to decline, corn prices have dropped significantly since July 2," said Good. "July futures matured at $2.1425, and December futures settled at $2.3235 on July 12. The average cash price of corn in central Illinois declined from $2.25 to $2.07 during that same period.

"A number of fundamental factors have contributed to the price decline of the past two weeks. Foremost, was the USDA’s June 28 report on acreage, which indicated that corn plantings were very near March intentions. The market had anticipated a report showing a decline of about a million acres."

Second, Good added, significant rainfall in some areas and moderating temperatures in the eastern Corn Belt reduced the anxiety about yield prospects. Third, weekly export shipments continue to run well below the pace needed to reach the USDA projection for the current year. With only about seven weeks left in the 2001-02 marketing year, it appears that shipments could fall a bit short of the USDA projection. Fourth, the USDA’s July update of U.S. and world supply and consumption prospects reflected expectations of more abundant supplies.

"Finally, the market generally expects U.S. corn acreage to increase again in 2003, so that a reduction in inventory over the next year is now viewed with alarm," said Good.

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The USDA’s World Agricultural Outlook Board maintained the June projection of the U.S. average corn yield in 2002 at 135.8 bushels per acre. When coupled with the larger acreage estimate, the projected harvest grew from 9.65 billion bushels in June to 9.79 billion in July. In addition, the board reduced its forecast of 2002-03 marketing year exports by 50 million bushels. Stocks of U.S. corn are still expected to decline by the end of the next marketing year but not as dramatically as projected last month.

"In addition to a larger U.S. crop, the USDA’s July report contained a larger forecast for the Chinese corn crop," said Good. "That crop is projected at 4.92 billion bushels — 4 percent larger than projected last month, 10 percent larger than the 2001 crop and 18 percent larger than the 2000 crop.

"The USDA still expects world corn consumption to exceed production in the year ahead, for the third consecutive year, but the expected draw down in stocks is not as large as projected last month."

While the USDA’s July projections of U.S. and world production painted a picture of more abundant corn supplies, a great deal of uncertainty about production persists.

"The extremely variable weather conditions in the Midwest make it difficult to assess crop conditions," said Good. "In addition, the wide range of maturity of the crop, especially in the eastern Corn Belt, means that production uncertainty may persist for several more weeks. The market will continue to respond to the USDA’s weekly report of crop conditions and maturity, weather conditions and weather forecasts."

On Aug. 12 the USDA’s National Agricultural Statistics Service will release the first projection of the size of the 2002 U.S. corn crop. That report will reflect objective yield estimates in key production states and any acreage changes uncovered in the August survey.

"Historically, there has often been a significant difference between the August production forecast and the final production estimate," said Good. "The magnitude of that difference is obviously influenced by weather conditions following the August survey. The lateness of this year’s crop in some areas, and the fragile condition of the crop in many areas, suggests that yields will be especially dependent on August and September weather."

[U of I news release]

[JULY 16, 2002]  URBANA — The worst may be yet to come for pork producers in 2002, said a Purdue University Extension marketing specialist.

"After disappointing prices during the first half of 2002, the pork industry may still not have seen the worst, as losses are expected to mount this fall and winter," said Chris Hurt. "During the last half of 2002 and the first half of 2003, pork supplies are expected to be nearly 3 percent larger than during the same period a year earlier.

"Large supplies will keep hog prices depressed, while rising feed prices will increase costs. The period of losses is expected to span from this fall until the late spring of 2003."

Hurt’s comments came as he reviewed the present and projected state of the hog industry in the wake of USDA reports. The USDA’s June inventory report indicated that the nation’s breeding herd was only slightly larger than one year ago, but the market herd was up 2 percent. The largest numbers of market hogs were at heavier weights.

"For example, the number of pigs which will be ready for market in July were 4 percent greater, but those that will be ready for market from August to November were only 1 percent greater," said Hurt. "The recent large rate of increase in slaughter numbers should taper off into August, but market weights are expected to continue to rise about 1 percent over the next year."

The breeding herd seems to have grown in the past year in some traditional family farm states, while shrinking in some more corporate-oriented states. The breeding herd was up a surprising 10 percent in Nebraska. Other increases were 7 percent in Illinois, 6 percent in Ohio and 1 percent in Iowa.

However, some Midwestern states had decreases, including Indiana, down 6 percent; Missouri, down 3 percent; and Minnesota, down 2 percent. Two corporate-oriented states reported fewer sow numbers. Colorado, which has seen sow depopulation in recent reports, was down 12 percent and Oklahoma producers took a break from expansion, posting a 3 percent decrease in their breeding herd. Texas remained in strong expansion, with an 11 percent breeding herd rise.

"The larger-than-expected number of hogs to come to market this year is a result of a larger expansion in the breeding herd last year," said Hurt. "Pork producers responded to a period of strong profits spanning from the spring of 2000 through the summer of 2001. During this period, estimated profits averaged over $10 per live hundredweight, or about $27 per head.

"Producers report a 2 percent increase in sow farrowing intentions this summer and a 1 percent increase for this fall."

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Live hog prices are expected to average in the higher $30s this summer, with a plunge to the lower $30s as a fourth quarter average. Lows could reach the higher $20s during some weeks, most likely from mid-October through November, Hurt said.

"Prices are expected to average in a range of $31 to $35 in the first quarter of 2003 and in the mid-$30s during the second quarter," he noted. "Based on these hog price projections and current futures prices for corn and soybean meal, losses are expected to average about $20 per head this fall, $17 per head in the winter, and $12 in the spring quarter of 2003.

"Unfortunately, there is a possibility that losses could be larger."

Hurt noted that the increases in corn and soybean meal prices this summer have already added about $2 per live hundredweight to the costs of production, with current estimates of about $39 per live hundredweight. Weather over the next two months will largely determine whether feed prices continue to move higher or abate. If the crop is severely damaged by dry conditions this summer, hog production costs will be driven sharply higher.

"With $3 per bushel corn futures and $240 per ton soybean meal futures, costs of production would be pushed to $44 per hundredweight," said Hurt. "Under this situation, losses this fall would be extreme, averaging an estimated $34 per head.

"Losses of this magnitude would cause some additional liquidation of the breeding herd, further depressing hog prices from current projections. Of course, weather could also be benevolent and provide yields that approach normal."

Hurt recommended that producers consider the possibility of sharply higher feed costs and evaluate the use of call options for upside price protection. There are no opportunities to lock in profitable hog returns at the current time, so most will want to take a wait-and-see attitude with regard to forward pricing hogs.

"Low hog prices for this fall and winter have been well anticipated by the futures market, and sometimes this means that prices will not be as low as anticipated," said Hurt. "Those who cannot withstand, or are unwilling to undertake, a nine-month period of losses should evaluate the alternative of starting to liquidate or reduce their herd size now."

[U of I news release]

Pesticide container recycling available

[JULY 8, 2002]  The Illinois Department of Agriculture has arranged to offer free pesticide container recycling again this summer. Sites will begin recycling in July and continue through August. Collection sites will accept only No. 2 high-density polyethylene plastic agricultural containers that are clean and dry. Participants are also responsible for properly rinsing them and removing all caps, labels, booklets and foil seals.

Collection sites in our immediate area include Mason County Service Company at Easton on the afternoon of July 31 (contact Jim Kiel at 800-331-0548); Lincoln Land FS at Greenview on the morning of Aug. 1 (contact Mark Millburg at 217-243-6561), AgLand FS at Lincoln on the afternoon of Aug. 1 (contact Tim Bennett at 217-732-3113), and Williamsville Ag Center at Williamsville on the morning of Aug. 2 (contact Brad Jones at 217-566-3383).

The collection program is a great way to dispose of pesticide containers. It is a cooperative venture between the Illinois Department of Agriculture, Growmark, the Illinois Fertilizer and Chemical Association, Tri-Rinse, United Agri-Products, UAP Richter, the Illinois Farm Bureau and University of Illinois Extension.

Insects everywhere

It seems like this summer we have had an abundance of insect problems. The drier, warmer weather made us guess we would probably have an abundance of problems. There are plenty of insects wherever we look, whether it is around the home, in the garden or in the fields.

One of the more common insects the past three weeks or so has been the leatherwing beetle. It is also called a soldier beetle. These beetles look like lightning bugs without the lights. They are actually beneficial, as they eat other insects. When the numbers are as large as this year, they usually seek an alternate food source — pollen. These beetles have been very noticeable around linden and basswood trees the past few weeks.

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[Photos provided by John Fulton]
[Leatherwing beetle]

[Japanese beetle]

Another insect that has been causing havoc in the area is the Japanese beetle. It is beetle smaller than a June bug but gold and green in color. It can cause severe damage if beetle numbers are high. Control recommendations are generally to spray with Sevin (carbaryl) insecticide. Treatments are more effective in the morning or evening. Using diazinon insecticide would also provide some control. The other side of the Japanese beetle situation is that there is a grub stage, so control of the grub in a month or so may be beneficial to your lawn and help reduce next year’s adult population.

[John Fulton]

Honors & Awards

Logan County 4-H Shows

• 4-H Food and Nutrition Show results

• 4-H Home and Family Show results

National FFA scholarship awarded to local student

[JULY 17, 2002]  INDIANAPOLIS, Ind. — FFA’s national organization awarded a $1,000 Valent BioSciences Corporation scholarship to Kent Leesman of Hartsburg-Emden High School. Valent BioSciences sponsors the scholarship as a special project of the National FFA Foundation. Kent plans to use the funds to pursue a degree in agronomy at University of Illinois in Urbana-Champaign.

The Valent BioSciences scholarship is one of 1,178 awarded through the FFA’s national scholarship program this year. Currently, 187 corporate sponsors generously contribute more than $1.9 million to support the program. This is the 18th year that scholarships have been made available through the National FFA Foundation by business and industry sponsors to reward and encourage excellence and enable students to pursue their educational goals.

Scholarship recipients were selected from more than 7,000 applicants from across the country. Selections were based on the applicant’s academic record, FFA and other school and community activities, supervised agricultural experience program in agricultural education, career plans and financial need.

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FFA is a national youth organization of 457,278 student members preparing for leadership and careers in the science, business and technology of agriculture. There are 7,312 local chapters in all 50 states, Puerto Rico and the Virgin Islands. FFA strives to make a positive difference in the lives of students by developing their potential for leadership, personal growth and career success through agricultural education. Visit www.ffa.org for more information.

[FFA news release]

Ag Announcements

Special baking contests at state fair

[JULY 1, 2002]  Contestants are invited to prepare gingerbread houses and Spam recipes to enter at the Illinois State Fair in August.

Awards will be given for the most creative entries in the Brer Rabbit® Molasses Gingerbread House Contest at the state fair. Both beginners and gingerbread house enthusiasts are invited to compete for cash and prizes. In 2001, judges picked winning entries ranging from traditional to elaborate, including a castle, a detailed tree house with garden and another resembling the "Old Woman in a Shoe." Any theme entry is welcome that uses Brer Rabbit molasses and is up to a foot tall, wide and deep, base not included. Entrants must also bake and enter one dozen gingerbread cookies.

Winners are selected based on appearance (50 percent), originality and creativity (40 percent), and taste (10 percent). Creators are awarded $150 for first place, $75 for second and $25 for third. People of any age may enter, with one entry per person or group. Several people may work on one entry, but one person represents the group. 

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The Illinois State Fair will be one of 70 fairs hosting the Spam® Oven Roasted Turkey Contest. Using the Spam turkey and up to nine other ingredients, contestants are to create an original main dish, appetizer, casserole, stew, stir-fry, salad sandwich or any other recipe. To focus on convenience, cooking time may not exceed 30 minutes.

Judges select winners based on taste appeal (40 percent), appearance (30 percent) and originality (30 percent). The three best entries win cash awards of $150, $50 and $25, and first-place winners advance to national judging for a $2,500 shopping spree and an all-expense-paid trip to Minneapolis.

To enter either contest, contact the entry department at the Illinois State Fair, 782-6661, by July 15. More details for the gingerbread contest are on page 90, and those for the Spam contest are on page 86 of the general premium book.

[News release]

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