By Dick Hagen
The Land Staff Writer
November 23, 2007 11:17 am
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Spurred by record new crop prices and demand, U.S. farmers, according to U.S. Department of Agriculture, are harvesting an all-time record corn crop of 13.3 billion bushels.
But a new Farm Futures survey suggests this year is just the prelude to an unprecedented battle to buy acres in 2008. The chief combatants in this turf war will be corn and soybeans plus a renewed interest in wheat.
It already looks like soybeans are the likely winner for “new acres” next year. The Farm Futures survey, from data collected in August, indicated soybean acres would surge to 72.6 million, up from 64.1 million in 2007. Next year’s corn intentions slide to 84.9 million acres, down from 92.9 million acres this year. Other crop reporting agencies, however, are suggesting about a 4.5-million-acre gain in soybean seedings with a similar decline in corn. The reality is that until planters finish their work next spring, nobody really knows who wins.
Speaking at the Farm Progress Show at Decatur, Ill., market analyst Arlan Suderman said, “High input costs and attractive soybean prices are luring farmers away from corn’s charm. Unfortunately, corn can’t afford to give up 8 million acres without significantly reducing demand. That sets up a classic bidding war for acres over the next six months.”
Wheat fever
Wheat acres might drop slightly from 60.5 million this year to 59.8 million next year. The recent boom in wheat prices could be changing this scenario day by day.
“There’s no doubt wheat has rather suddenly become the ‘other hot commodity’ but I doubt it will affect corn acres, at least not corn acres within 50 to 60 miles of an ethanol plant,” predicted Bob Koestler, a Freeborn county farmer and sales manager at Albert Lea Seed Inc. in Albert Lea.
“But it may catch some guys switching out of soybeans into winter wheat or spring wheat,” he said. “Many farmers don’t realize we can grow winter wheat in Minnesota. There are great cold-hardy winter wheat varieties now available plus either seed-applied, or foliar-applied fungicides to help minimize disease problems. But the biggest challenge with wheat in southern Minnesota-northern Iowa is finding a market. You just don’t grow wheat and take it to your local elevator. Many elevators simply aren’t buying wheat anymore but we provide a list of places buying wheat.”
Tony Ziller, of Ziller Seeds at Bird Island, markets soybeans, wheat and forage seeds. His preview is potentially a big push for spring wheat from U.S. Highway 12 and north. “Much of this area got hurt badly by drought this year,” Ziller said. “Soils haven’t yet recharged with moisture. So for guys able to contract 2008 wheat at $6.50 or such (July 2008 prices, Sept. 21), wheat really is looking like a ‘least risk’ crop, even more so than soybeans.”
He noted that wheat is a crop more sensitive to weather variations, thus yields are unpredictable. He mentioned yields as high as 75 bushel in the Bird Island area this summer but “about 60 bushels” would catch most. He predicted there would be new growers next year, even into southern Minnesota. “Around here I think we’ll see farmers growing wheat who haven’t grown the crop in many years.”
Ziller hesitated to predict which crop, corn or soybeans, will lose acres to new wheat seedings. “I simply don’t know because neither crop can afford to lose acres. The reality is that both soybeans and corn need more acres so who knows which will be the winner.”
Wheat seed shortage?
He predicted a wheat seed shortage, perhaps for both spring and winter wheat varieties. Knutson is the big seller for Ziller Seeds. “Unfortunately, we may see quite a run on bin-run wheat for seed. That potentially spells out both quality and disease issues.”
Koestler noted that wheat following corn could be a challenge because of leaf disease problems, making wheat after soybeans the better choice, whether it’s winter or spring wheat.
Wheat seed prices are $11.75 for 50-pound bags at Albert Lea Seed. With a recommended seeding rate of 125 to 140 pounds per acre growers can expect seed costs of about $30 per acre. “But your total costs, not including land, are only going to be between $75 and $100 per acre — that’s seed, tillage, seeding and fuel. Corn production costs, excluding the land, typically are running $350 to $400 per acre today,” Koestler said.
In a corn-on-corn program, fertilizer costs, especially nitrogen, can be crowding $200 per acre. Koestler suggests producers to take a hard look at the net per acre return when deciding on crop choices for 2008.
He suggested farmers consider slipping in some wheat acres as a way to minimize financial risks. He said markets are suggesting at least two good growing years for wheat at these stronger prices because drought-induced wheat shortages are worldwide and won’t get fixed in a single crop year. Both Australia and Russia, major wheat producing countries, have already announced export restrictions on their wheat production.
Another bonus of wheat in your rotation is that it is good at breaking disease cycles, be that soybean cyst problems or certain corn diseases such as corn nematode.
A key to winter wheat is seeding time. For southern Minnesota an approximate 20-day window after Oct. 5; mid-September or earlier in northern Minnesota. “Plant to early, or too late and you’ve hurt the winter hardiness of the wheat.”
Temptation of bean prices
Are the current soybean prices equally tempting for more acres?
Koestler said “yes,” but certain disease pressures such as soybean aphids, soybean sudden death syndrome, and of course soybean cyst nematode issues need to be considered. “Plus you probably have a higher production cost with soybeans than with wheat, and no particular assurance that your soybean yields will be any better.”
A plus for new varieties however is that there now are cyst nematode resistant soybeans with absolutely zero yield drag. “But you need to learn how to manage even these cyst-resistant soybeans because there are various races of soybean cyst nematodes. It becomes a bit more scientific in how you put your resistant soybeans into your rotation.”
Koestler has mapped out his crop rotation for the next five years with a major change from his formerly traditional corn-soybean pattern. His new strategy is two years alfalfa, followed by one, or possibly two years corn, then soybeans and then back into alfalfa.
His new mission is simple: use the nitrogen credits from his alfalfa to substantially reduce his fertilizer bill for his corn.
Using alfalfa to dodge $500 N
Corn following alfalfa can completely eliminate the need for supplemental nitrogen Koestler said, and with nitrogen prices now crowding $500 he sees alfalfa as a key input resource to keep corn a money-making crop.
“My first-year corn following alfalfa gets zero nitrogen fertilizer. University studies show alfalfa provides all the nitrogen needed and then some. Even second year corn-on-corn, there’s still 60 to 75 pounds of available nitrogen in the soil so that crop needs only about 70 pounds of additional N,” Koestler said. His point being that with nitrogen costing nearly $500, and likely to cost even more in the future, using alfalfa to replace a good hunk of your commercial fertilizer just simply makes economic sense.
Nearly half of his 2008 corn crop followed alfalfa and got zero nitrogen applied. His nitrogen bill for this year’s crop, thanks to those alfalfa credits is only about half of what it would have been without alfalfa in his rotation.
He conservatively estimates alfalfa in his rotation is saving him upwards of $60 to $85 an acre in corn fertilization and application expenses. Plus the added bonuses of improved soil structure, much improved soil microbial activity and plenty of top-quality forage for his Angus feeder cattle operation. He still has extra alfalfa hay to sell, this year baled alfalfa bringing $120 per ton.
He runs his alfalfa only two years and usually gets four to five cuttings per year in that shorter rotation. Iowa State University research shows little increase in additional nitrogen credits once you get beyond that second year of alfalfa.
“I don’t get any more nitrogen credits going into that third year, so instead I rip it after two years of alfalfa production. I direct seed so often I get an extra cutting that first year,” he said.
He uses what he calls a “high-fall dormancy” alfalfa that greens up fast after each cutting which usually gives him at least one extra cutting per year.
View of Sept. 1, 2008, carryover
The August Farm Futures survey showed Sept. 1 corn supplies could fall to just 685 million bushels, even with significant rationing in exports and feed usage. Soybean stocks would barely grow despite the increase in seedings because exports and biodiesel continue to grow. Wheat supplies are projected to stay tight so wheat could be the “trump card” in many areas.
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