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Features
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Weekly outlook
Soybean
price strength
changes marketing strategies
[NOV.
5, 2002]
URBANA — Three weeks
ago, when the cash price of soybeans was near the CCC loan rate, the
recommended marketing strategy was to store soybeans and place them
under loan in order to generate cash flow and provide downside price
protection. With rising soybean prices, however, that recommendation
has changed.
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"Now that the cash
price of soybeans is well above the loan rate, the loan price
provides less protection from lower prices," said Darrel Good,
University of Illinois Extension economist. "So one alternative
would be to buy put options, thereby protecting the current price of
soybeans stored on the farm. Nearest-the-money March put options,
for example, have a premium of about 22 cents. Owning the put
options would still allow producers to participate in higher prices
but would provide protection from lower futures prices in the form
of an increased premium. In addition, producers could collect
marketing loan gains, should the price drop below loan value."
Good says another
alternative is to sell cash beans at the higher prices now being
offered. Then, if you expected higher prices, you could purchase
call options to replace the cash inventory.
Several key factors
have led to the recent price recovery of soybeans, especially the
unchanged U.S. production forecast in the USDA’s October Crop
Production Report.
"This report
confirmed the need to reduce consumption of U.S. soybeans during the
current marketing year. Less-than-ideal weather conditions in some
areas of South America have delayed plantings somewhat and raised
questions about the potential size of the 2003 harvest. Two
consecutive weeks of large export sales of U.S. soybeans were also
price supportive," Good said.
For the year, the
USDA has projected that the shortfall in U.S. production will play
out in the form of reduced exports.
"At 850 million
bushels, the projection of exports for the current marketing year is
20.2 percent less than the current estimate of exports during the
2001-02 marketing year. Through the first nine weeks of the 2002-03
marketing year, cumulative export inspections are 15 percent less
than during the same period last year, with almost all of the
decline being in shipments to the European Union," Good said.
"As of Oct. 24,
however, unshipped sales of U.S. soybeans totaled 307 million
bushels, only five million (1.6 percent) less than outstanding sales
of a year ago. Sales to the European Union are still relatively
small, but sales to China and unknown destinations (perhaps China)
are 39 percent larger than at this time last year. The recent jump
in export sales of U.S. soybeans and the slow start to the South
American planting season may be related."
[to top of second column in
this article]
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Most of the recent
increase in soybean prices has resulted from higher prices of
soybean oil, according to Good.
"On a close-to-close
basis, the December 2002 soybean meal futures price increased $5.60
per ton (3.4 percent) from Oct. 9 to Nov. 1. In contrast, the
December 2002 soybean oil futures price increased by .0265 cents per
pound (13.8 percent). Compared to prices on the same date last year,
the average cash price of soybeans in central Illinois on Nov. 1 was
35 percent higher, the average price of soybean meal in central
Illinois (rail, 48 percent protein) was 1.8 percent lower, and the
average price of soybean oil (crude, central Illinois) was 50
percent higher.
"Soybean oil prices
are continuing to recover from the 30-year low established in
February 2001 as production of competing oilseeds declines and U.S.
and world inventories of soybean oil are being reduced. The
expectations of declining consumption of U.S. soybean meal this
year, and the resulting smaller crush, should result in further
reductions in soybean oil stocks."
The direction of
soybean prices over the next few months will be dictated by a
combination of the rate of U.S. export sales, the development of the
South American crop and the size of the USDA’s November forecast for
the U.S. crop.
"Low prices in the
face of a smaller U.S. crop were based on the expectation that South
America would be able to fill the gap left by the shortfall in U.S.
production. While that may still happen, there is less certainty now
than a month ago. The size of the shortfall in U.S. production is
still uncertain. The USDA will release a new forecast of the size of
the U.S. harvest on Nov. 12. There is some expectation that the crop
size will be increased in that report. In recent history, the
November forecast has been above the October forecast about 65
percent of the time," Good said.
Good emphasizes that there is really no
way to predict the exact outcome of these reports.
[U
of I news release]
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Farm
decision workshop
[NOV.
5, 2002]
URBANA — Addressing
decision-making challenges in a risky environment is the theme of a
University of Illinois Extension workshop to be offered at four
locations in December. "Farm Income 2003" will be offered Dec. 10 at
Mount Vernon, Dec. 11 at Springfield, Dec. 12 at Rochelle and Dec.
17 at Urbana. The workshops run from 8:30 a.m. to 4 p.m.
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"Recent farm income variability, the
implementation of a new farm bill, an uncertain economic outlook and
continued competition in the world market provide significant
challenges for farm and farm-related business managers," said Darrel
Good, U of I Extension marketing specialist who is organizing the
workshop.
Good said the workshop will consist of
three general sessions — "Illinois Farm Income Situation," "Outlook
for Commodity Prices" and "Which America Will Produce Soybeans?" —
and four breakout sessions.
"One of the breakout sessions addresses
farm land lease options and will provide an overview of trends in
farmland leases, issues associated with alternative leases and an
evaluation of lease alternatives," said Good.
"The second breakout will address a
number of new developments and pressing issues in agricultural
policy and law, including elevator failure, genetically engineered
crops and impact of the farm bill.
[to top of second column in this
article]
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"The third breakout deals with crop
insurance and will help producers make an informed decision on crop
insurance.
"The final breakout will address issues
such as assessing producer marketing performance and development of
successful approaches to marketing grain."
Presenters include Good and U of I
colleagues in the Department of Agricultural and Consumer Economics:
Dale Lattz, Gary Schnitkey, Robert Hauser, Donald Uchtmann, Bruce
Sherrick and Scott Irwin.
Preregistration is $25 per person, and registration at the door is
$30, as space permits. The fee covers handout materials, coffee
breaks and lunch. Registration can be completed online at
http://www.farmdoc.uiuc.edu,
or a registration brochure can be obtained from the local U of I
Extension office. Questions can be directed to Darrel Good at (217)
333-4716 or
d-good@uiuc.edu.
[U of I news release] |
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Colder, wetter October
than average
[NOV.
4, 2002]
"After
four months of above-average temperatures throughout Illinois, the
trend was reversed in October, and precipitation was 15 percent
higher than average. Temperatures 3.1 degrees colder than average
(51.6 F) were accompanied by 3.35 inches of precipitation, nearly
half an inch above average," says Jim Angel, state climatologist
with the Illinois State Water
Survey, a division of the Illinois Department of Natural
Resources.
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"Although too late to benefit crops,
ample rainfall in southern Illinois during October allowed recovery
from extremely dry conditions this past summer," says Angel.
Northwestern Illinois also was wet, and precipitation in central and
northeastern Illinois was below average in October, but these areas
were not as dry as southern Illinois last summer.
Hutsonville reported the warmest
temperature, 93 on Oct. 2. Mount Carroll reported the coldest
temperature, 21 on Oct. 20, and also the largest one-day rainfall,
2.43 inches on Oct. 2. Belleville reported the largest monthly
rainfall total, 5.30 inches.
What kind of winter can we expect?
Sea-surface temperatures along the equator in the Pacific Ocean this
year are warmer than average due to a weak El Nino. Strong El Nino
events typically have brought Illinois mild winter weather with
warmer temperatures and less snowfall. In fact, the National Oceanic
and Atmospheric Administration Climate Prediction Center is calling
for an increased chance of warmer-than-average temperatures this
winter.
[to top of second column in this
article]
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However, the six previous winters in
Illinois since 1950 when weak El Ninos were present paint a
different story. Four of those winters were colder than average
(starting with the coldest: 1977-1978, 1976-1977, 1969-1970 and
1963-1964), with lots of snowfall in 1976-1977 and 1977-1978. Winter
1970-1971 was near average, and only winter 1994-1995 was above
average.
"Still other
factors, such as a stronger-than-predicted El Nino, the amount of
snow cover to the north and tropical storm activity to the south may
also have an influence on what winter will be like. My best advice?
Be prepared because even an average winter includes snow, ice and
cold temperatures," says Jim Angel.
[Illinois State Water Survey
press release] |
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Ethanol and diesel blends
E-diesel shows promise in UI tests
[NOV.
4, 2002]
URBANA — Two John Deere
9650 combines moving side by side through the same Illinois
cornfield in the fall of 2001 looked identical in all respects from
the outside. But deep inside the engines, there was a major
difference between the twin machines. One combine ran on pure diesel
fuel, the other on a blend of 10 percent ethanol, 89 percent diesel
and 1 percent additive.
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"The operators reported that they could
not tell the difference between the two machines day to day," said
Alan Hansen, a University of Illinois agricultural engineer who has
been conducting side-by-side studies each spring and fall since
2000. "Producers found that the combine running on the
ethanol-diesel blend could keep up pretty well with the combine
running on diesel only."
Although performance was not noticeably
different to the operators, Hansen said there were still some
differences. For example, because ethanol has less energy content
than diesel, machinery using the blend had slightly greater fuel
consumption — an increase of 3 to 5 percent.
The same increase in fuel consumption
showed itself in other side-by-side tests conducted with John Deere
9400 tractors and 9650 Caterpillar Challenger tractors.
The ethanol-diesel blend, better known
as E-diesel, may not have as much energy content as pure diesel, but
politically it packs a lot of punch. Backers see E-diesel as a major
new market for ethanol and Midwestern corn, not to mention an
effective way to help engine manufacturers meet tough new emission
standards from the U.S. Environmental Protection Agency.
According to Hansen, emission tests
performed at national laboratories have shown consistent results:
"With a 10 percent blend, you can expect as much as a 25 to 30
percent reduction in particulate emissions — soot and smoke."
The prognosis for E-diesel is good,
Hansen noted, but there are still many hurdles to surpass before
engine manufacturers will feel confident backing warranties for
engines that run on the blend. In particular, concerns revolve
around durability, safety and performance.
U of I researchers, led by Hansen,
fellow agricultural engineer Qin Zhang and agricultural economist
Rob Hornbaker, have been conducting in-lab durability tests since
1999 on engines running on E-diesel. Funding and support has been
provided by the Illinois Department of Commerce and Community
Affairs, the Great Lakes Regional Biomass Energy Program, and the
Illinois Corn Marketing Board.
In their first series of laboratory
tests, U of I researchers used a 15 percent ethanol-diesel blend in
a Cummins 5.9 liter engine, which has an injector system that relies
entirely on fuel for lubrication.
[to top of second column in this
article]
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Ethanol lowers a fuel’s ability to
lubricate the engine, Hansen noted, although the additive in the
blend does contain a small amount of a lubricity agent.
After running for 500 hours in the
laboratory, the Cummins engine came through in good condition, but
there was some abnormal deterioration of the resin that encapsulates
a sensor in the injection system.
"There are some nonmetal components in
the fuel injection system that you have to be careful about," Hansen
said.
A second 500-hour test was performed on
a different engine, using a 10 percent ethanol-diesel blend this
time. The engine, currently being taken apart and studied, is
expected to be in pretty good condition, Hansen said. However, there
appears to be some swelling of nonmetal seals in the injection pump
as a result of the ethanol.
These laboratory tests have proven to
be somewhat more severe than in-field tests, he added. The studies
of E-diesel used on tractors and combines under actual field
conditions have not shown any such wear problems on the engine.
Performance may also be an issue with
ethanol, Hansen said, because the rule of thumb is that for every 5
percent of ethanol that you add to a blend, energy content goes down
by 2 percent. That is why fuel consumption is slightly higher with
E-diesel; it takes more fuel to supply the same power.
When it comes to safety issues, the
concern is flammability. Ethanol is not as flammable as gasoline,
but it is more flammable than diesel. So to use E-diesel, diesel
fuel tanks will need safety features similar to those found in
gasoline fuel tanks.
According to Hansen, some of the
national laboratories are "looking deeply into the safety issue,
developing guidelines on how the blend can be used."
While researchers search for ways to
make E-diesel an effective and economical alternative for off-road
vehicles, such as farm machinery, engine manufacturers will be
watching closely.
As Hansen
pointed out, it can take five to 10 years for manufacturers to phase
in new engine designs that reduce emissions and meet tough new EPA
standards. But if you switch to E-diesel, the environmental benefits
are immediate.
[U of I press release] |
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Logan County 4-H
Achievement Night coming
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[NOV.
4, 2002]
Each year Logan County 4-H members, leaders and clubs
receive recognition at Achievement Night for various
accomplishments. This year, the local 4-H Achievement and
Recognition Night will be Thursday, Nov. 7, beginning at 7 p.m. at
the Lincoln Park District’s Rec Center on Primm Road in Lincoln.
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Some awards that will be given include
national awards, county outstanding awards, club awards and Club of
the Year.
[4-H news release] |
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Commercial corn plot results
[OCT.
28, 2002]
2002 Logan County commercial corn
plot
State Bank, Scott
Wurth Family, Fort Trust Farms and U of I Extension cooperating
Planted: 5-29-02
Harvested:
10-22-02
Plot length: 600
feet; four 30-inch rows of each variety planted
Fertility:
177-69-120
Herbicide: 2.5
quarts Topnotch |
12-row border
from east |
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|
(numbers may be off by .01 due to rounding
differences) |
Hybrid |
Test weight |
Wet weight |
Moisture |
Yield at 15% |
Difference from check |
FS 6863CL |
58 |
990 |
16.6 |
125.97 |
2.39 |
Check (NK N72-V7) |
57 |
1000 |
19.0 |
123.58 |
n/a |
FS 6432 |
56 |
1140 |
15.2 |
147.49 |
23.91 |
BoJac 5505 |
57 |
1070 |
17.6 |
134.51 |
-1.81 |
Check (NK N72-V7) |
56 |
1110 |
19.5 |
136.33 |
n/a |
BoJac 6110 |
58 |
1110 |
17.3 |
140.05 |
3.73 |
AgVenture 777 |
57 |
1020 |
16.6 |
129.79 |
-14.62 |
Check (NK N72-V7) |
56 |
1170 |
19.1 |
144.41 |
n/a |
AgVenture 813 |
58 |
1180 |
16.4 |
150.50 |
6.10 |
NK N68-K7 |
57 |
1150 |
16.3 |
146.85 |
2.27 |
Check (NK N72-V7) |
57 |
1170 |
19.0 |
144.59 |
n/a |
NK N65-M7 |
57 |
1020 |
15.8 |
131.03 |
-13.56 |
Diener 9269Bt |
58 |
1320 |
16.0 |
169.17 |
26.00 |
Check (NK N72-V7) |
57 |
1150 |
18.4 |
143.17 |
n/a |
Diener DB1091 |
56 |
1360 |
15.1 |
176.16 |
32.99 |
Campbell 6670 |
56 |
1100 |
15.1 |
142.48 |
-20.21 |
Check (NK N72-V7) |
58 |
1310 |
18.6 |
162.69 |
n/a |
Campbell 6675 |
57 |
1220 |
15.8 |
156.72 |
-5.97 |
DeKalb DKC60-D8AF |
57 |
1260 |
14.9 |
163.59 |
9.41 |
Check (NK N72-V7) |
57 |
1240 |
18.5 |
154.18 |
n/a |
DeKalb DKC60-15 |
58 |
1380 |
15.8 |
177.28 |
23.09 |
Horizon 73333BTG |
56 |
1120 |
17.0 |
141.83 |
-16.28 |
Check (NK N72-V7) |
58 |
1270 |
18.4 |
158.11 |
n/a |
Horizon 7426G |
58 |
1170 |
17.4 |
147.44 |
-10.66 |
Stine 9803 |
58 |
1230 |
17.0 |
155.76 |
-3.32 |
Check (NK N72-V7) |
58 |
1270 |
17.9 |
159.08 |
n/a |
Stine 9014BT |
60 |
1180 |
17.2 |
149.06 |
-10.01 |
Trisler 5145 |
56 |
1200 |
16.1 |
153.60 |
-7.98 |
Check (NK N72-V7) |
57 |
1290 |
17.9 |
161.58 |
n/a |
Trisler 5253BT |
57 |
1360 |
18.5 |
169.10 |
7.52 |
Wyffels W7303 |
59 |
1420 |
16.7 |
180.46 |
19.22 |
Check (NK N72-V7) |
58 |
1300 |
18.7 |
161.25 |
n/a |
Wyffels W7180 |
58 |
1370 |
15.5 |
176.62 |
15.37 |
Sun Prairie 2677 |
57 |
1130 |
15.7 |
145.33 |
-1.91 |
Check (NK N72-V7) |
56 |
1160 |
16.8 |
147.24 |
n/a |
Sun Prairie 2687 |
57 |
1060 |
18.5 |
131.80 |
-15.44 |
Asgrow RX740 |
58 |
1280 |
16.2 |
163.65 |
11.16 |
Check (NK N72-V7) |
56 |
1210 |
17.4 |
152.48 |
n/a |
Asgrow RX708YG |
58 |
1150 |
15.7 |
147.91 |
-4.58 |
LG Seeds LG2587 |
58 |
1240 |
15.8 |
159.29 |
12.11 |
Check (NK N72-V7) |
58 |
1175 |
17.9 |
147.18 |
n/a |
LG Seeds LG2585 |
57 |
1140 |
15.5 |
146.97 |
-0.21 |
Great Lakes 6358 |
55 |
1350 |
15.0 |
175.07 |
16.40 |
Check (NK N72-V7) |
57 |
1250 |
16.8 |
158.67 |
n/a |
Great Lakes 6259 |
59 |
1270 |
15.9 |
162.95 |
4.28 |
Pioneer 33D31 |
58 |
1110 |
17.4 |
139.88 |
-9.72 |
Check (NK N72-V7) |
57 |
1190 |
17.6 |
149.60 |
n/a |
Pioneer 33P67 |
58 |
1460 |
17.8 |
183.10 |
33.50 |
Crows 4908 |
57 |
970 |
15.4 |
125.20 |
-29.74 |
Check (NK N72-V7) |
57 |
1240 |
18.1 |
154.94 |
n/a |
Crows 5360 |
58 |
1140 |
15.6 |
146.79 |
-8.15 |
Golden Harvest H9247BT |
57 |
1420 |
16.9 |
180.03 |
28.62 |
Check (NK N72-V7) |
57 |
1200 |
17.3 |
151.41 |
n/a |
Golden Harvest H8906 |
57 |
1040 |
15.5 |
134.08 |
-17.33 |
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
Summary |
Top five hybrids based on yield |
Top five hybrids compared to check |
1. Pioneer 33P67, 183.10 |
1. Pioneer 33P67, +33.50 |
2. Wyffels W7180, 180.46 |
2. Diener DB1091, +32.99
|
3. Golden Harvest H9247Bt, 180.03 |
3. Golden Harvest H9247Bt,
+28.62 |
4. Wyffels W7180, 176.62 |
4. Diener DB9369Bt, +26.00
|
5. Diener DB 1091, 176.16 |
5. FS 6432, +23.91 |
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] |
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