Top Producer
April 8, 2006
Outlook
A quicker start in 2006
Although the advisers
we follow always are
cautious about pricing
this early in the season,
they
are
more
aggressive this year than
last, with several locking
in almost $2.50 for corn
and
$6.20-$6.40
on
soybeans on up to 40%
of the 2006 crop (Total
market value of cash
sales,
futures
and
options as of March 1;
for specific amounts, at
www.ToProducer.com,
click Track Records).
With the University of
Illinoiss
AgMAS
no
longer tracking advisers,
Top Producer is pleased
to add several to our
monthly
report
and
yearly wrap up. Doane
Outlook
Hedger
is
biased to conservative
futures
and
options
hedges
based
on
analysts outlook; Doane
Systematic
Hedger
follows an aggressive
but disciplined technical
system; Progressive Ag
Marketing seeks to add
10¢ to 20¢ to producers
prices while reducing
risk.
The prices and
sales we report are
based on actual trades
made on behalf of
farmers
enrolled
in
Prudential Securities AgHedge program. Sales
positions are updated on
our Web site, usually the
first
week
of
the
month.Linda H. Smith
Summer Outlook
Tune in via the Internet
for special audio outlook
and advice sessions
following USDAs crop
reports on May 12, June
9 and July 12. For details
regarding times and
speakers,
check
www.ToProducer.com
and/or
e-mail
LSmith@farmjournal.co
m to receive an e-mail
reminder the day before
the reports.
Join us in
person
when
Top
Producer Seminars go
on summer tour:
Aug.
8Richmond, Ind.; Aug.
9Champaign, Ill.; Aug.
10Bettendorf, Iowa; and
Aug. 11Des Moines,
Iowa. Click the button at
our Web site for more
information.
Will acreage happen?
Such
a
dramatic
surprise in prospective
plantings
has
never
occurred in the history of
the market, says Jim
Bower of Bower Trading
in Chicago. So history is
no guide as to how close
actual
acreage
may
come. What we do know
is that at this stage,
weather is the single
most
important
determining factor.
The CornBean Battle
USDAs March Planting
Intentions report will be a
news highlight for corn
and soybeans. On the
one
hand,
higher
production costs this
year
have
traders
expecting a shift out of
corn. On the other,
ethanols
soaring
demand for corn means
we will need evergrowing
supplies
of
it.
Dont
expect
a
major move one way or
the other soon, however.
The economics strongly
favor rotation, and while
a few producers say they
are reducing corn acres
modestly, the reason is
not profitability.
A recent analysis by
Iowa State University
ag economists Josh
Roe, Bob Jolly and
Robert Wisner shows
soybean
production
currently
is
more
profitable
by
about
$17/acre than corn after
beans.
Theres
an
$80/acre disadvantage
to corn after corn versus
a 50/50 rotation. The
economists
cite
the
following
factors
to
consider in going to
more corn:
Corn yield loss of 10% to
13%
following
corn
Higher
energyrelated costs (fertilizer,
trucking,
drying)
Machinery and
equipment
changes
More on-farm
grain storage and drying
facilities
More
labor
Possible loss of
timeliness
Loss of risk
diversification
benefits
More disease
and
pest
management
For
assumptions,
full
discussion
and
the
minimum
corn
price
needed at various corn
and bean yields to
prompt
a
different
rotation,
visit
www.ToProducer.com
Web
Extra.
Heres
what farmers say they
are doing:
>>David
Ward
of
Mapleton,
Minn.,
is
making no change in his
50/50 corn soybean
rotation despite high fuel
and fertilizer costs for
corn. He applied fall
anhydrous. We also
used a lot of manure.
Across
southern
Minnesota
I
would
expect thats the same
pattern.
>>Gary Niemeyer of
Glenarm, Ill., is planting
100
acres
more
soybeans than last year
but its minor and is more
of a rotational concern.
>>Hayden Eicher of
Warrenton, Va.: Im not
changing rotation but I
am
changing
crop
management. He applied
no phosphorus and no
potassium with the hope
that the decline in natural
gas prices will translate
to lower fertilizer prices
this fall.
>>Bill Chase of Wolsey,
S.D., is injecting wheat
into his rotation on 20%
of his acres because he
can raise it profitably,
corn costs are high and
he can use the straw in
his
cattle
operation.
Wheat prices are strong
and it has lower input
costs, he says.
>>Julius
Schaef
of
Randolph,
Iowa,
is
making
no
change,
especially because his
storage is set up for his
existing rotation.
>>Gordon Wassenaar of
Prairie City, Iowa, was
2/3
corn
and
1/3
soybeans last year and
will switch back to 60%
corn and 40% soybeans
this year, but his main
reason for planting more
soybeans in 2006 is that
were extremely dry now.
Drought is moving north.
Ill take my chances with
soybeans.
>>David
Roehm
of
Leesburg, Ohio: Were
cutting back on corn
acres about 33%. In
southern Ohio, soybeans
are more consistent than
corn.Sonja
Hillgren
TOP
PRODUCER
SPRING
2006