USDA’s September 10 crop report projected a record 10.961 billion bushels production for the U.S. corn crop.  USDA will issue three more crop reports, on October 12, November 12, and in mid‑January.  Based on the history of past USDA crop reports, corn production usually increases in future reports.  This news combined with harvest time price pressure, increasing estimated 2004/2005 ending stocks, and disappointing old crop exports are among the causes of the downtrend that continues to break technical support at lower price levels.  The result is disappointing harvest time corn prices.

 The corn markets are providing storage signals into next summer.  Market carries and weak harvest‑time basis are market signals to store corn.  Deferred 2005 corn futures contracts for March, May, and July all offer premiums over the December 2004 contract or market carries of $0.10, $0.16, and $0.21, respectfully.  These carries will roughly cover storage and interest costs for on‑farm corn storage and, along with seasonal basis gains, may recover commercial storage costs.  However, there is no guarantee that the futures market will continue to offer these returns and, unless the carry is hedged, the price premiums may be gone when the deferred months arrive.  Basis is also weakening and typically recovers after harvest and into the following spring and summer, signaling potential storage returns for basis gain.  While the markets are providing storage signals and a number of market factors could result in higher prices, it is important to understand that storing unpriced corn to capture higher prices is speculation on higher prices and/or basis strengthening.  Will corn prices recover in the next few months?  According to Melvin Brees of the Food and Agricultural Policy Research Institute (FAPRI), the market factors that could turn prices around are:  strong domestic and international demand that could bring prices back up into the $2.40 range in spring 2005, declining world corn supplies, and reduced Chinese export competition.

 The soybean markets are signaling short‑term storage potential.  Good early harvested soybean yield reports, expected harvest deliveries, and negative market reaction to positive news has pressured recent soybean price bids.  However, declining USDA production estimates, strong domestic and international demand, and projected 2004/2005 ending stocks of 190 million bushels suggest opportunities for post‑harvest soybean price rallies.  In addition, it appears the carry offered by January and March 2005 futures contracts, along with typical seasonal basis gains, should cover storage costs into early 2005.  Future soybean prices will again depend on the South American crop.  Increased South American production is expected in 2005 along with record high world soybean ending stocks.  These factors, coupled with the possibility of good U.S. production prospects next spring and summer, limit potential gains and increase the risks of lower prices into late spring/summer 2005.  If you are still bullish on longer‑term soybean prices, capturing short‑term storage gain with wintertime cash sales and re‑owning soybeans with futures/call options appears to be a better plan than longer‑term storage.

 Livestock feeders may want to take advantage of harvest period low corn and soybean meal prices in October and November. 

LDPs are Back
Lower grain prices have resulted in corn, grain sorghum, and soybean prices that are below CCC loan prices.  The CCC marketing loan provisions allow using the loan or collecting the LDP (loan deficiency payment).  Remember that the LDP can be incorporated into marketing strategies in three ways:  price support mechanism, price insurance, or price enhancement speculative tool.  It is also important to insure eligibility requirements, which include maintaining beneficial interest (title, control, and risk of loss), crop quality, and government program compliance requirements are met.

* Price Support - The LDP is intended to make up the difference when the PCP (posted county price), which is based on cash price, is below the county CCC loan price.  Collecting the LDP on grain delivered and sold at harvest effectively supports the net price received at about county loan price.  It is important to make sure the FSA forms (CCC‑709) have been completed and signed prior to harvest.

* Price Insurance - The market loan or LDP can serve as “price insurance.”  If the grain is placed under loan, the loan can be repaid at the PCP without interest if the PCP is below loan price.  This insures loan price because when the grain is sold at lower cash prices, the net price will include the market loan gain from repaying the loan at the PCP.  If the gain is not under loan, the LDP effectively provides price insurance at loan price  because it can be collected anytime as long as the producer retains eligibility.  This is sometimes referred to as using the LDP as a “free” put option, since the LDP makes up the difference between the lower cash (PCP) prices and the loan (strike) price.

 * Price Enhancement - While the program was designed for price support or protection, the LDP can also be used as a speculative tool to enhance the price of stored grain.  The objective of this strategy is to collect the LDP when prices are low and basis is weak.  This creates a larger LDP, since the spread between cash prices (PCP) and the loan price is greater.  Then, when prices recover, the grain is sold at higher prices and the already collected LDP results in an even higher net price.  It is important to understand that claiming the LDP and storing the grain is speculative and eliminates the price protection features of the program.  If prices decline after the LDP is claimed, the net price can be less than loan price.

Livestock Risk Protection ‑ Swine
Specific Coverage Endorsements may be purchased for up to 10,000 head of hogs that are expected to reach market weight near the end of the insurance period.  The length of insurance available for each SCE is from 13 to 26 weeks.  The annual limit on swine is 32,000 head per producer for each year (July 31 to June30).  Pork producers may select coverage prices ranging from 70‑95% of the expected ending value.  At the end of the insurance period, if the actual ending value is below the coverage price, the producer may be paid an indemnity for the difference.  Expected ending values, coverage process, rate, and per cwt. and cost of insurance may be viewed of the RMA website.  Ending values are calculated from price series data reported by the USDA Agricultural Marketing Service and posted on the RMA website at the end of the insurance period.

Livestock Risk Protection - Feeder Cattle
Specific Coverage Endorsements may be purchased for up to 1000 head of feeder cattle that are expected to weigh up to 900 pounds at the end of the insurance period.  All cattle to be insured must be located in a state approved for the Livestock Risk Protection Program prior to being insured.  The length of insurance available for each SCE is from 13 to 52 weeks.  The annual limit is 2,000 head per producer for each crop year.  Coverage will be available for calves, steers, and heifers, including predominately Brahman and dairy cattle.  Feeder cattle producers choose from two weight ranges:  Under 600, and 600 to 900 pounds.  Producers may select coverage prices ranging from 70‑95% of the expected ending value.  At the end of the insurance period, if the actual ending value is below the coverage price, the producer may be paid an indemnity for the difference.  Actual ending values are based on weighted average process as reported in the Chicago Mercantile Exchange feeder cattle index.

Livestock Risk Protection - Fed Cattle
Specific Coverage Endorsements may be purchased for up to 2,000 head of heifers and steers weighing between 1,000 and 1,400 pounds to be marketed for slaughter near the end of the insurance period.  The length of insurance available is from 13 to 52 weeks.  The annual limit is 4,000 head per producer for each crop year.  Producers may select coverage prices ranging from 70‑95% of the expected ending value.  At the end of the insurance period, if the actual ending value is below the coverage price, the producer may be paid an indemnity for the difference.  Ending values are based on weighted prices reported by the USDA Agricultural Marketing Service and will be posted on the RMA website at the end of the insurance period.

For more information:
General Information about the program:  http://www.rma.usda.gov
Contact your insurance agent.
To locate approved livestock insurance agents visit: http://www3.rma.isda.gov/apps/agentslpi/
To obtain “Daily LRP Coverage Prices, Rates, and Actual Ending Values”, visit:  http://www3rma.usda.gov.apps/livestock‑reports/

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Winter Weeds
With current mild temperatures and adequate soil moisture, winter weeds will soon begin emerging.   At high densities, many of these common winter weeds can significantly reduce wheat yield, yet are often ignored. 

Common chickweed is common throughout wheat fields, and research indicates it will affect yield at densities of 2.7 plants or more per square foot.  Some data suggest that the weed is allelopathic, producing chemicals which inhibit wheat growth (as well as growth of other weeds).  Missouri research showed yield reductions of 28% with 15 chickweed plants per square foot.

Cheat and downy brome have such a detrimental effect on wheat yield that herbicide application is almost always warranted when one of these weeds is present.  Yields are particularly affected by early season competition, with the grassy weed utilizing water and nutrients prior to the crop forming a canopy.  Because of the similarity in growth habit between wheat and the weed, control measures are limited.  Sencor is the only herbicide which provides good control of these weeds, while not adversely affecting rotation to corn or soybeans.  Carefully consult the label prior to using Sencor: plant growth stage, soil type, and variety are all critical.

Wild onion and wild garlic are found in many wheat fields.  While not strong competitors with the crop, they impart a strong odor to milk and beef products.  Presence of  their bulbs in harvested grain results in dockage.  While the weeds look similar, control measures differ, and proper identification of the weed is a crucial aspect of control.  The (non-flowering) leaves of wild garlic are smooth, round, and hollow (those stems which bear flowers are solid).  The bulbs of wild garlic also have a thin membrane coating them; the covering on wild onion bulbs is net-veined and fibrous.  The leaves of wild onion are flat and not hollow.

Tall Fescue and Fescue Toxicosis
Tall fescue is widely grown throughout Missouri, in part due to its ease of establishment, wide adaptation, long grazing season, tolerance to environmental stress, and pest resistance. However, it is often infected with a fungal endophyte which can have detrimental effects on herd performance. Studies indicate that most tall fescue pastures are infected 60 to 80 or more percent with the endophyte (as a rough measure, if tall fescue is growing, with very few exceptions, the endophyte is present).  A MU study indicates that producers may not be managing the endophyte in the most efficient way, and in winter should feed hay first, then stockpiled fescue. 

The fungus is not transmitted plant to plant in a field, but rather is seed transmitted. As the seed germinates, the fungus moves within the space between the plant cells into developing shoots. During vegetative growth, the fungus grows into the leaf sheath only, and does not grow into the blade. Toxins produced in the sheath, however, are translocated to the blade. Later, the fungus grows up into the developing seed. When that seed germinates, it is infected as well. 

Cattle (and sheep and horses) feeding on infected fescue may exhibit one of several toxicosis syndromes, including reproduction problems, low calf weaning weights, and poor gains. Milk production on endophyte-infected grass may be reduced by up to 50 percent.  Livestock problems on infected fescue result from the compound ergovaline, which is produced by the fungal endophyte. Ergovaline is present in the hay and seed of endophyte-infected fescue, and feeding can result in poor animal performance.

 A two-year study at MU Southwest Research Center showed that the current practice of managing fescue problems in stockpiled hay may not be the best. Waiting longer to feed stockpiled fescue results in a lower ergovaline content, while still maintaining the fescue’s nutrient value.  Typically, pasture to be stockpiled for winter is grazed through August, fertilized, and allowed to regrow until a killing frost. The pasture is then grazed. This research suggests that waiting later in the winter to feed the stockpiled fescue leads to a lower ergovaline content.

In its first year, the study found ergovaline content in mid-March was less than 20% of what it had been in mid-December. Previous studies indicate that an ergovaline content above 150 ppb (parts per billion) can lead to problems. In this study, ergovaline content dropped below that critical level by the end of January. In its second year, results of the study were similar to those of the first. The study also supposed that differences in ergovaline content are related to weather, with lower levels of the toxin showing up in years with cool, wet fall weather.

Crude protein (CP) values for the stockpiled fescue increased slightly from mid-December to mid-March, while ADF (acid detergent fiber) and NDF (neutral detergent fiber) remained equivalent over the same time period.

Time to Lime
Hopefully, soil samples will be pulled and tested soon, and appropriate action taken.  If it is needed, this is an optimal time to apply lime.  Research indicates that properly liming a soil with a pH of 4.5, to raise the pH to 6.0, can increase soybean yield by 15%.  At yields of 38 bushels per acre, that amounts to an increase of 5.7 bushels per acre. 

Adjusting lime to the appropriate range increases crop growth in several ways: it improves nutrient availability (especially P and K), increases fertilizer efficiency, increases the longevity of legume stands, and improves the activity of some herbicides. 

Why do soils become acidic?  Soil type, cropping history, and type of N fertilizer will all affect soil acidity.  Soil tests processed by the University of Missouri Soil Testing Lab report lime recommendations in pounds of ENM per acre.  All agricultural limestone is analyzed for purity and grind fineness.  These factors determine the ENM of a particular liming agent.  The larger the ENM value, the less lime which needs to be spread over a given area.   

When lime is incorporated (through tillage), it will raise soil pH faster than when left of the soil surface.  If left on the surface, lime will move into the soil (with water movement) at a rate of about 1 inch per year.  Regardless of the ENM or incorporation method, lime should be added as soon as possible when a need is detected, as it takes several months to a year to raise the pH to the desired level.