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Weekly outlook

Prices and prospects

[MAY 20, 2003]  URBANA -- Recent price strength provides an opportunity for producers to advance sales of both old and new crop corn and soybeans, said a University of Illinois Extension marketing specialist.

"The strong basis in some areas and inverted futures market suggests that all old crop inventory should be sold," said Darrel Good. "Long positions to speculate on summer weather markets may be less costly in the futures market than in the cash market under the current price structure.

"New crop prices for both corn and soybeans are well above the loan rate in many areas and above the USDA's projected average for the 2003-04 marketing year if trend-line yields are reached in 2003."

Good's comments came as he reviewed recent market actions. Corn and soybean prices were generally higher again last week, although some weakness was noted on Friday (May 16). Both old and new crop soybean futures established new contract highs, and the central Illinois average cash price of soybeans moved to the highest level in nearly five years.

Old crop corn futures moved to the highest level since early November 2002, while spot cash prices and new crop futures moved to the highest level since early September 2002.

"Much of the buying interest in corn and soybeans since the first of May was generated by wet weather in many areas and the resultant slowdown in planting progress," said Good. "Additionally, soybean exports continued at a pace above that projected by the USDA. Given that much of the friendly news for corn prices was associated with the new crop, it is somewhat surprising that July 2003 futures were stronger than December 2003 futures."

July futures moved from a 2-cent discount to December futures at the first of the month to a 45-cent premium on May 16. In contract, July 2003 soybean futures moved from a 78.5-cent premium to November futures on May 1 to a 70.25-cent premium on May 16.

"Given the relative abundance of old crop corn supplies and the tightness of old crop soybean supplies, the spreads might have been expected to move in opposite directions," said Good. "The market may be expecting a sharp decline in the rate of U.S. soybean exports, as importers increasingly turn to South American supplies. In fact, the USDA's weekly export inspection report released on May 19 indicated that exports for the week ended May 15 totaled only 3.7 million bushels."

Good noted that is about one million bushels below the weekly rate required to reach the USDA projection for the year. Reports of some imports of South American soybean meal into the United States may also be a signal that, while tight, supplies may be adequate until the new harvest. The level of June 1 inventories will not be revealed until June 30.

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The soybean price pattern continues to be more interesting than the corn price pattern. Since 1973-74 (29 years), the average cash price of soybeans in central Illinois has established a marketing-year high in the spring or summer months 19 times. The high occurred in April once, May four times, June four times, July eight times and August twice.

"For a historical perspective, then, we are in the time frame when highs in cash prices should be expected, with some chance the high may have been established last week," said Good. "With the entire growing season to unfold, however, prices could continue to be volatile."

An examination of price patterns for November 2003 futures provides less confidence that a high has been established. The November contract has reached a high in May only once (1990) over the past 32 years. The high to date for the November 2003 contract of $5.76 is the lowest high for a November contract since 1972.

The recent strength in corn prices has left prices well within the range established since September 2002. The only unusual feature of prices to date continues to be the very narrow trading range for new crop contracts. December 2003 futures have a trading range of only 38.5 cents. Since 1971, the December contract has had a low trading range of 41 cents (1972) and a high of $2.05 (1974). Since 1989, the trading range has varied from 55 cents to $1.50.

"Historical price patterns are of some interest and may provide some general guidelines for the current year, but market fundamentals will dictate how prices unfold over the next few months," said Good. "The market for corn and soybeans will likely continue to focus on U.S. crop weather, planting progress and early crop conditions.

"Another look at planted acreage of corn and soybeans will not be available until the release of the USDA's acreage report on June 30. One popular private source has forecast an increase in both corn and soybean acreage compared to March intentions."

[University of Illinois news release]

[MAY 14, 2003]  URBANA -- Total noncapital living expenses for Illinois farm families rose an average 2.9 percent between 2001 and 2002 and are up 4.5 percent since 2000, according to a University of Illinois Extension study.

"The total noncapital living expenses of 1,216 farm families enrolled in the Illinois Farm Business Farm Management Association averaged $44,475 -- or $3,706 a month for each family," said Dale Lattz, U of I Extension farm management specialist. "The sample farms, which were mainly grain farms, were located primarily in central and northern Illinois."

In addition to the living expenses, the average farm family spent $4,380 in 2002 to buy capital items such as the personal share of the family automobile, furniture and household equipment, said Lattz.

"The grand total for living expenses averaged $48,855 for 2002, compared with $48,097 for 2001," he said. "This represents a $758 increase per family."

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Income and Social Security tax payments decreased in 2002 compared with the year before. The amount of income taxes paid in 2002 averaged $9,867, compared with $11,475 in 2001.

"The amount of taxes paid was at its lowest level since 1990," said Lattz.

Medical expenses were higher in 2002 compared with 2001. In 2002, medical expenses averaged $6,335.

"This is the first year medical expenses averaged over $6,000," Lattz said. "Medical expenses include out-of-pocket costs for health insurance, along with doctor and hospital expenses."

The complete report is available online at http://www.farmdoc.uiuc.edu/manage/
newsletters/fefo03_09/fefo03_09.html.

[University of Illinois news release]

Corn, soybean costs drop
across Illinois in 2002

[MAY 13, 2003]  URBANA -- Total costs per acre to produce corn in Illinois dropped an average of 5 percent from 2001 to 2002, and total costs per acre for soybeans also dropped over the same period, according to a University of Illinois Extension study.

"Total costs to produce corn for all combined areas of the state were $401 per acre in 2002," said Dale Lattz, U of I Extension farm management specialist, who wrote the report, "Costs to Produce Corn and Soybeans in Illinois-2002," based on data from the Illinois Farm Business Farm Management Association record-keeping project. "This figure represents a 5 percent decrease in one year.

"Total costs per acre to produce soybeans also decreased, from $338 per acre in 2001 to $326 per acre in 2002."

Driving the decreases, Lattz said, were reductions in fertilizer, non-land interest charge and land costs.

"For corn, total costs per acre were the lowest since 1995, when they were $395 per acre," said Lattz. "Total costs per bushel were the highest since 1997. Total costs per acre for soybeans were the lowest since 1995."

The entire report is available online at: http://www.farmdoc.uiuc.edu/manage/
newsletters/fefo03_08/fefo03_08.html.

Production costs varied among the state's regions and soil types. Total per acre costs for corn averaged $411 in the northern section and $416 in the central section for areas with high soil ratings. Costs were $391 per acre in the central section for farmland with low soil ratings and $350 per acre in the southern section. Soybean costs in the high soil areas of northern and central Illinois were $337 and $341 respectively. Costs in the low soil areas of central Illinois were $312 per acre and $275 per acre in southern Illinois.

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"Costs were lower in the southern part of Illinois primarily because of lower land costs," said Lattz. "The total of all economic costs per bushel in the different sections of the state ranged from $2.59 to $3.61 for corn and from $6.24 to $8.09 for soybeans.

"Variations in this cost were related to weather, yields and land quality. Southern Illinois had the highest costs per bushel to produce corn and soybeans because of below average yields caused by last summer's dry weather."

Farms located in the 22 counties north and northwest of the Illinois River constitute the northern region. Farms from 36 counties below a line from about Mattoon to Alton are in the sample for southern Illinois. The remaining 44 counties make up central Illinois.

[University of Illinois news release]

[MAY 13, 2003]  URBANA -- Most Illinois farmers face a May 31 deadline to submit a claim in order to receive their share of a $110,000,000 national settlement recently approved by the U.S. District Court in Chicago, said Don Uchtmann, University of Illinois Extension agricultural law specialist.

"Although quite a few Illinois producers have submitted their claim, many others are eligible to participate in the StarLink settlement and receive about $1 or $2 per acre, maybe more, for each acre of non-StarLink corn harvested as grain in 2000," said Uchtmann.

The exact payment per acre depends on how many U.S. farmers submit claims.

"If a particular farm operator doesn't submit a timely claim, that farm operator's share of the settlement will just be distributed among others who do submit timely claims," he said.

"The settlement is a compromise between farmers who filed the class action lawsuits and the companies that developed and sold StarLink seed. The class action settlement is intended to compensate all farmers who grew non-StarLink corn in year 2000 for damage they allegedly incurred because of the StarLink incident."

StarLink was a genetically engineered corn variety approved for feed use in the U.S. but not for food use or export. After StarLink was discovered in taco shells, aggressive steps were taken to channel all grain containing traces of StarLink into approved uses. But the presence of StarLink throughout much of the 2000 corn supply allegedly scared away buyers and depressed the U.S. price for the entire crop.

Under the court-approved settlement, there are several types of potential claims, said Uchtmann, but the most common type will be the "Corn Loss Proof of Claim" for non-StarLink corn acres harvested for grain in 2000.

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"Since very few farmers 'opted out' of the proposed settlement by the March 21 deadline, over 99 percent of the year 2000 harvested corn acres are potentially eligible for payment. About $70 million will be distributed, pro rata, over the corn acres documented by claimants, but the farm operator must mail the Corn Loss Proof of Claim by the May 31 deadline," he said.

Farmers who lost the original form mailed to farmers before March 21 can get a new form and filing instructions from the Internet. The form is not hard to fill out, especially if the farmer has copies of the Farm Service Agency forms (form FSA-578) showing year 2000 corn acres for each farm. FSA offices can provide a copy of this form if needed. The form asks for acres of corn but does not request yield information.

"It's the farm operator who submits the form," said Uchtmann, "and then the farm operator has a responsibility to account to landlords who shared in the crop."

An article titled "How to file claims by May 31 for compensation from the non-StarLink farmer's class action settlement" is available on the farmdoc website. It provides valuable, practical information and tools and a link to the official "Non-StarLink Farmer Litigation" website, where the claim form can be obtained.

[University of Illinois news release]

Corn progress

[MAY 12, 2003]  With over 90 percent of the corn planted, at least the first time, it is important to scout fields at this time for stand evaluation and pest problems. Beginning with stand evaluation, the rule of thumb is simply that a decent corn stand at this time of year is probably going to yield as well, or better, than a replanted one. With another shower this week, we would be looking at 91 percent maximum yield from a great stand (30,000 plants) planted May 19, and we can go down to a stand of 20,000 plants planted between April 20 and May 4 to achieve at least a 91 percent yield.

There are no guarantees the second time around either. That 30,000 plant stand is hard to achieve. Much of the guesswork comes in from the reason behind stand loss. If herbicide problems, some insect problems (such as maggot or beetle) and disease problems are at the core of the stand problem, then the stand may not dwindle further. If seedling diseases or other insects (such as grubs, wireworms and cutworms) are the culprits, then stands may be further reduced.

Scouting programs may give you the answers needed for your decision. In the case of insects that may further reduce your stands, many of these do not have rescue treatments available for them. That means you either live with what you have, or you replant and use a recommended insecticide at replanting. Black cutworm damage should show up for the first time in Logan County this week, based on moth captures in traps and degree accumulation data. Wireworm and grub problems are also just beginning to be noticed.

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Cool, damp conditions also lead to some of the seedling disease problems, such as penicillium. Many of these problems can't be evaluated until the permanent root system takes over (another three weeks or so). The end result is that stands must be evaluated individually, and you should use the smallest area you are willing and able to manage differently. At any rate, don't plant alongside an existing row. That system generally takes yield from both the old and new planting.

On the soybean side, stand reductions of 30 percent to 40 percent are generally not going to yield less than perfect stands that are replanted. The big thing is the number of gaps and the length of gaps in stands. The other consideration is the amount of shading provided by the soybean stand and the effectiveness of the shading in a herbicide program.

[John Fulton]

Honors & Awards

Logan County 4-H meats judging team wins contest

[MAY 16, 2003]  The junior meats judging team from Logan County 4-H placed first in a multi-county contest at Morton. Members of the junior team were David Fulton, Daniel Fulton, Allicent Pech and Colleen Pech.

Individual junior placings were Daniel Fulton, third, and Colleen Pech, fourth. Andrew Fulton placed fourth in the senior division.

The local team was coached by Don Miller.

[News release]

Pictured in the front row are members of the Logan County 4-H junior meats judging team: David Fulton, Daniel Fulton, Allicent Pech and Colleen Pech. In the back row are Tom Carr, a contest official; Andrew Fulton, fourth-place individual in the senior division; and Dave Seibert, a contest official.

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