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Weekly outlook

Post-harvest rally?

[OCT. 29, 2002]  URBANA — The elements that generally result in a quick recovery in cash prices for corn following harvest, namely a weak harvest basis and a significant decline in cash prices into harvest, do not exist this year, said a University of Illinois Extension marketing specialist.

"The implication is that higher cash prices will have to be generated more by higher futures prices than by an improving basis," said Darrel Good. "Higher futures prices, in turn, will require a change in market fundamentals — either a smaller production forecast in November or a rate of consumption that exceeds current projections.

"History is not on the side of a lower production forecast. The November forecast has been equal to or above the October forecast in 15 of the past 20 years and in five of the past six years. Yield reports this year do not point to a lower forecast."

Good’s comments came as he reviewed the price situation for corn. Harvest-time corn basis in 2002 has been very strong in many areas, perhaps record strong in some markets. The small crop and resulting ample storage space account for part of the strength in basis, as does strong domestic demand in some markets. In addition, producer sales are generally reported as light, as producers apparently believe that there is a strong possibility of a post-harvest rally in prices.

In each of the past four years, there has been modest to significant recovery in cash prices in central Illinois — for example, from harvest lows. That recovery has occurred by early November to early December. In 1998, the cash price in that market reached a low of $1.72 in mid-September and recovered to $2.14 by mid-November. In 1999, the cash price bottomed at $1.67 in early October and rallied to $1.87 in early November.

In 2000, the harvest low of $1.51 occurred in mid-September, with a price rally to $1.98 by mid-November. Last year, the harvest low of $1.79 came in the third week of October, with a recovery to $2 by the first week of December.

"The composition of the post-harvest recovery in cash prices is important," Good noted. "In 1998, 22 cents of the 42-cent recovery in cash price came from basis improvement. In 1999, 17 cents of the 20-cent recovery in cash prices was from basis improvement. In 2000, 20 cents of the 47-cent recovery was from basis improvement, and last year 13 cents of the 21-cent recovery was from basis again.

"The other similarity in the price pattern in each of the past four years was the significant decline in cash prices from spring, before harvest, into harvest. In each of those years, the cash bid for harvest delivery peaked in March. The decline from the spring peak ranged from 40 cents to $1 per bushel."

Good noted that the price pattern for the 2002 crop has differed from that of the previous four years in every respect. First, the harvest-time price, currently averaging about $2.40 in central Illinois, is significantly higher than in each of the previous years. Second, the price is about 50 cents higher than harvest bids in the spring. Third, the harvest-time basis bottomed at about minus 15 cents this year compared with minus 30 cents to minus 35 cents in the previous four years.

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"The elements that generally result in a quick recovery in cash prices following harvest, namely a weak harvest basis and a significant decline in cash prices into harvest, do not exist this year," he said.

In the short run, Good added, the burden of higher prices seems to fall to consumption. For the year, the USDA has forecast a 6 percent increase in domestic processing use of corn, reflecting an expected 15 percent increase in use of corn for fuel alcohol.

"There is no reason to doubt the projected increase, with monthly consumption figures confirming the expansion," he said. "Exports of U.S. corn are expected to increase by about 5 percent during the current year, to a total of two billion bushels. Through the first eight weeks of the marketing year, cumulative export inspections are about 28 percent less than shipments of a year ago. The lack of shipments to South Korea is of most concern, as the decline reflects ongoing exports from China.

"Unshipped sales as of Oct. 17 were 7.5 percent less than outstanding sales of a year ago. Again, smaller sales to Asian destinations are of most concern. While it is still early in the marketing year, there is some concern about the U.S. export potential this year. It will likely require large imports by Mexico and Canada to propel exports to the projected level."

Finally, the USDA projects a 3.6 percent decline in feed and residual use of corn during the current marketing year. The projected decline reflects an expected reduction in the number of animals fed and a decline in the amount of grain fed per animal. The USDA’s Monthly Hogs and Pigs report released on Oct. 25 confirmed a decline in the size of the breeding herd.

Based on the projected quarterly pattern of livestock production, most of the decline in feed and residual use would be expected to occur later in the marketing year, said Good. The first indication of use will come from the Dec. 1 Grain Stocks report to be released on Jan. 10.

"While prospects for quick recovery in cash corn prices do not appear as likely as in recent years, the generally low level of U.S. and world inventories should prevent a significant decline in prices in the near-term," said Good. "It may be that prospects for the size of the 2003 crop in the United States will become the most important price factor."

[U of I news release]

Commercial corn plot results

[OCT. 28, 2002] 

Thanks to the following for their cooperation and assistance:

State Bank of Lincoln

Fort Trust Farms

Scott Wurth Family

Cooperating Corn Companies

Syngenta for providing check corn

Average of hybrids: 152.99

Average of check: 150.58

Average of plot: 152.19

Results of non-replicated plots should always be used in conjunction with other plot results and your own experience when selecting hybrids.

[John Fulton]

Does soybean cyst nematode
promote other diseases?

[OCT. 26, 2002]  URBANA — Although soybean cyst nematode, SCN, ranks as the top cause for yield losses in Illinois soybean fields, recent research indicates that it also plays a role in the development and spread of other major diseases, such as sudden death syndrome, SDS, and possibly brown stem rot, BSR.

"That’s bad news for Illinois farmers, considering that SCN occurs in more than 80 percent of the soybean fields in the state," said Terry Niblack, nematologist in the Department of Crop Sciences at the University of Illinois. "While SDS is fully capable of acting on its own, it now appears that SCN hastens the development of symptoms from that disease and increases the severity, leading to even greater yield losses."

She notes that BSR also has become more widespread and severe in Illinois than in the past. Once again, it appears likely that SCN has played a role in those changes

Such an interaction between the fungus that causes BSR and SCN was not considered likely until recently, when researchers at Iowa State University found that SCN can actually break resistance to BSR.

"In addition, we have found that BSR is now moving farther south in the state, at the same time that SDS has been moving farther north," Niblack said. "Our old rules of thumb — that BSR is only a northern problem and SDS is only a southern problem — have been showing signs of breaking down."

To meet the challenge, collaborative efforts are under way among researchers from the Department of Crop Sciences and educators from University of Illinois Extension to address the problems posed by those soybean disease interactions. Work in the laboratory, greenhouse and the field at a number of locations is focused on studying the interactions between SCN and the fungi involved in SDS and BSR.

Major collaborators in the project on SDS are plant pathologists Wayne Pedersen and Glen Hartman. Niblack is also working on BSR with plant pathologists Dean Malvick and Darin Eastburn. Soybean breeder Brian Diers is also contributing resistant lines for the research project. Primary funding is provided by the Illinois Soybean Checkoff Board.

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"In this research, we will be looking at how SCN infection affects the development of foliar symptoms from SDS and BSR," Niblack said. "We especially hope to find out exactly how and why this interaction occurs."

Another part of the research will focus on determining whether the interaction depends on the number of nematodes present, the genotype of the fungus, the pedigree of the soybean variety in a field or other factors that have not yet been identified.

"We especially would like to find out how the disease interactions affect management practices," Niblack said. "Growers need to understand whether it is more important to choose a variety with resistance to the nematode or to the fungus that causes one of the other diseases. Even more problems would arise if we determine that all three pathogens can interact in the same field."

Based on the research up this point, Niblack recommends that growers with SCN and SDS or BSR in the same field should take care of the SCN problem first by growing a resistant variety.

"This strategy is based on the simple fact that SCN is always present in the field reducing yields, regardless of the environment," she said. "At the same time, SDS and BSR do not develop every year. As the work on this problem continues, we should come up new management practices that will help control the problem of interaction between SCN and other soybean diseases."

[U of I news release]

Low production may hamper
exploitation of higher prices

[OCT. 25, 2002]  URBANA — Relatively higher grain prices compared with those in the past few years may not offset lower yields caused by Illinois’ adverse weather conditions this growing season, warned a University of Illinois Extension farm management specialist.

"While the summer’s price upswing has been welcomed by producers, some may find that the higher prices may not completely offset lower revenue caused by lower yields as a result of adverse weather conditions," said Dale Lattz. "In addition, higher grain prices will reduce the amount of farm program payments. There most likely will be limited loan deficiency payments, and no counter-cyclical payments are scheduled for this fall."

Further aggravating the potential economic bad news is the fact that the new farm bill does not include provisions for market loss assistance and oilseed payments that have been paid out in the past few years.

"Higher grain prices will offset much of the drop in farm program payments for producers with average or above-average yields," said Lattz. "This will not be the case for producers with a shortfall in production.

"Even for producers with normal yields, their cash flow will be altered considerably this year due to the drop in farm program payments. Others who had been in the practice of prepaying expenses before the end of the year may decide not to this year."

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Lattz outlined the situation in a Sept. 30 report, "Cash Flows Tight on Many Grain Farms This Year Because of Reduced Government Payments," that is part of the "Farm Economics: Facts and Opinions" series from the University of Illinois College of Agricultural, Consumer and Environmental Sciences. The report is available at http://www.farmdoc.uiuc.edu/manage/
newsletters/fefo02_18/fefo02_18.html.

He noted, however, that a significant drop in grain prices could change the developing scenario.

"For some producers, crop insurance proceeds will offset some of the loss in revenue due to lower yields," said Lattz. "The drop in farm program payments also has cash flow and income tax planning ramifications that producers need to examine."

The full report includes tables comparing estimated farm program payments for 2001 and 2002 for a central Illinois grain farm. Lattz noted that differences in farm program payments between 2001 and 2002 will vary from farm to farm depending upon a number of factors.

"These factors include base acres and yields for different program crops, crop rotations, and actual yields," he said.

[U of I news release]

[OCT. 24, 2002]  URBANA — The fertilizer applicator moving across the University of Illinois agricultural engineering farms passed a crucial test in the past year — an eye test.

U of I’s fertilizer applicator possesses something that you don’t usually find on farm machinery. It has a high-tech eye, a single camera mounted roughly 12 feet in front of the boom. Researchers tested the vision sensor last year and found that it was extremely accurate in determining whether plants are under stress due to a lack of nitrogen.

According to agricultural engineer Qin Zhang, the sensor’s ability to detect nitrogen stress in plants was comparable to leaf tests using a SPAD meter.

This year, Zhang said, the goal is to merge the sensor with variable-rate technology. The result will be a machine that uses its high-tech eyesight to scan the plants as it moves across the field. The resulting data is then sent to a computer that controls the variable-rate applicator. The applicator varies the rate of fertilizer according to the nitrogen needs of different plants. And it does the job on the fly in real time.

As Zhang and fellow agricultural engineer Alan Hansen put it, such machines are the next big step for variable-rate technology.

Currently, Hansen explained, farmers must map the field in a separate pass, either aerial or on-ground. Then the map is plugged into a computer and used to vary the rate of fertilizer. But there is a considerable delay between creating the map and actually applying the nitrogen.

With this new system, the images are taken and processed literally seconds before the fertilizer is applied.

To determine nitrogen stress in corn plants, the applicator-mounted sensor analyzes the reflectance of light coming from the plants, Hansen said. But this is no easy task. The sensor must be able to distinguish the light bouncing off the plant from the light bouncing off the background soil. What’s more, it must be able to do the job under all kinds of environmental conditions.

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"If you have a cloudy day, your camera will see the crop differently," he pointed out. Therefore, the sensor must be able to take into account the effect of a cloudy day on light reflecting from the plants.

According to Zhang, the variable-rate sprayer is able to change the rate of nitrogen being applied by individual nozzles, making it possible to vary the rate on different rows. The key is making sure that the right nozzle hits the right plants with the right amount of fertilizer as determined by the on-board sensor and computer.

U of I work on this project dates back to 1997, when it was started by professors John Reid and Shufeng Han with funding from the Case Corporation. Zhang is now leading the effort to create a prototype applicator by 2003 — a machine that is fully capable of scanning the crop, determining nitrogen stress and varying the rate of fertilizer applied, all in a single pass. This work is being funded by the Illinois Council on Food and Agricultural Research.

According to Hansen, the new developments in sprayer technology may have the potential of reviving interest in variable-rate technology. As he explained, the first wave of enthusiasm over variable-rate equipment in the 1990s has waned because of economic considerations.

The selling point has always been more accurate applications with variable rates. Increased accuracy would bring savings in chemicals, not to mention less risk to the environment.

"But there’s still some skepticism as to the economic benefits of this technology," Hansen said.

Since the early days, however, the technology has become more reliable and computing power has soared, he added. Combine those advances with an ability to vary rates on-the-go in real time, and the variable-rate system may eventually find itself riding a new wave of interest.

[U of I news release]

Soil temperature maps help with timing of nitrogen fertilizer application

[OCT. 23, 2002]  Illinois farmers have a tool to help them determine when to apply post-harvest nitrogen fertilizer since daily maps of soil temperatures across Illinois are available on the Web, at http://www.sws.uiuc.edu/warm/soiltemp.asp, from the Illinois State Water Survey, a division of the Illinois Department of Natural Resources.

The maps are based on continuous observations of soil temperatures at selected Illinois Climate Network sites and are updated by 4 a.m. each day. "These maps serve as a guide to general soil temperatures within a given region and reflect existing temperature trends across the state as the fall season progresses. Given the variability of temperatures within a local area, it is important that farmers and applicators verify the soil temperature of each field before applying nitrogen fertilizer in the fall," says ISWS meteorologist Bob Scott.

The maps represent soil temperatures observed between 9 and 10 a.m. the previous day across Illinois at a depth of 4 inches below a bare soil surface and daily (midnight to midnight) 4-inch bare soil maximum and minimum temperatures at the same locations.

The Illinois Agronomy Handbook, available from the University of Illinois College of ACES, states that fall soil temperatures determine when ammonium-containing nitrogen fertilizer may be applied without the occurrence of excessive nitrification. The rate of nitrification is reduced at soil temperatures of 50 degrees and below. Application of anhydrous ammonia with a nitrification inhibitor can begin at soil temperatures below 60 degrees. The soil temperature at 10 a.m. each day is used in making the determination.

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Map users should be aware of current soil temperatures and short- to long-term weather forecasts. According to Scott, "Soil temperature fluctuations during fall may result in periods with soil temperatures below the accepted threshold for nitrogen application followed by an extended period with soil temperatures above the accepted threshold. The date of the first soil temperature below 50 each fall is often several weeks before the last soil temperature above that value."

Other maps on the site show average dates when soil temperatures drop and remain below 60 and 50, respectively. Due to occasional periods of warm weather in winter, the handbook does not recommend fall application of nitrogen south of Illinois Route 16, roughly the southern third of the state.

The Web resource, created through a grant from the Illinois Department of Agriculture Fertilizer Research and Education program, also includes soil temperatures at 4 and 8 inches under sod, air temperatures, dew point temperatures, wind speed and direction, solar radiation, potential evaporation, and precipitation in map and table formats.

[Press release from Illinois State Water Survey]

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