A1A South

CHAMPAIGN, Ill. — Soaring energy prices will yield sharp increases for corn and soybean production next year, cutting into farmers’ profits and stretching already high food costs, according to a new University of Illinois study.

Costs to get crops in the ground will jump by about a third in 2009, fueled by fertilizer prices expected to surge 82 percent for corn and 117 percent for soybeans, said Gary Schnitkey, an agricultural economist who conducts the annual survey of input costs.

Fertilizer – the biggest non-land expense for corn and soybean farmers – is tethered to the same cost spiral that has driven steep gasoline and heating price increases over the last few years, said Schnitkey, a professor of agriculture and consumer economics.

“Roughly 80 percent of the cost of producing nitrogen fertilizer is natural gas, so as natural gas costs have gone up so have the costs of those inputs,” he said. “Phosphorus and potassium are mined, and as energy costs increase, mining costs increase.”

With commodity prices high, the increased production costs should merely trim farm profits rather than sinking balances into the red, said Schnitkey, who predicts farmers will likely post solid earnings again in 2009.

“But it’s one of those things,” he said. “When are the good times going to end? Could it be next year? And what happens if a drought or some other disaster cuts yields dramatically?”

While farmers will likely absorb some of the added costs, Schnitkey says consumers also should expect to pay more for products ranging from cereals and syrups to grain-fed beef.

“There’s not going to be a reduction back to lower food costs as long as we have these higher production costs,” he said. “Energy prices are driving a lot of what’s going on and ultimately that hits the consumer.”

Along with fertilizer, grain farmers also will see hefty cost increases next year for inputs ranging from seed to fuel for tractors and other machinery, according to the study.

The study projects non-land production costs for corn will total $529 an acre next year, up 36 percent from 2008 and nearly 85 percent higher than the average of $286 per acre from 2003 to 2007. At $321 an acre, soybean input costs are projected to rise 34 percent from 2008 and more than 78 percent from the 2003-2007 average of $180 an acre.

Schnitkey says the per-acre costs are based on high-producing farmland in Central Illinois, but corn and soybean farmers across the country will see similar increases.

Assuming cash-rent fees of $200 an acre, the study projects a break-even price of $3.82 a bushel for corn in Central Illinois, based on an average yield of 191 bushels an acre. Soybeans would break even at $9.65 a bushel, based on yields of 54 bushels per acre.

Schnitkey says 2009 prices should be significantly above break-even prices. Based on futures markets, corn should sell for about $6 a bushel next year, with soybeans in the $13 to $14 range.

“Looking further ahead, though, a lot of things could happen to bring that down,” he said. “Demand could bring on more land in Argentina and Brazil, or the Ukraine might get its act together and increase production.”

Higher production costs will likely force farmers to try to hold down cash-rent payments, monitor commodity markets closely to sell at the best price and consider increasing crop-insurance levels, Schnitkey said.

“Input prices will have doubled in just a few years and that’s a major investment for farmers,” he said. “If something bad happens that hurts yields, their downside risk is much higher now.”

Source: University of Illinois at Urbana-Champaign

FLORIDA:

Topsoil moisture 13% short, 75% adequate, 12% surplus. Subsoil moisture 4% very short, 14% short, 75% adequate, 7% surplus. Peanuts 89% pegged, 69% 2007, 81% 5-yr avg. Washington, Jackson counties cotton doing well; late planted cotton, growing slow. Some hay harvested, Washington County. Weed control applications, Brevard County. Southern Peninsula soil moisture adequate to surplus. Less wet areas of Panhandle soils dried quickly leaving moisture short to adequate. Soil moisture adequate, central locations. Vegetable growers marketed okra, watermelon, avocadoes. Watermelon harvesting slowed. Avocado movement expected to increase. Washington County harvested squash, cucumbers, butter beans, okra, southern peas. Daily showers beneficial to growth of foliage, new citrus fruit. Harvest over for season; processing plants closed. Growers focusing on grove maintenance, scheduled management practices, canker and psyllid control. Next season’s fruit sizing well. Oranges sizes ranging between golf ball, baseball size. Grapefruit running larger. Trees look good in well kept groves; growers preparing for new season. Pasture Feed 2% poor, 28% fair, 55% good, 15% excellent. Cattle Condition 1% poor, 34% fair, 60% good, 5% excellent. Panhandle, north pasture condition poor to excellent; cattle, fair to excellent. Central pasture condition poor to excellent; cattle poor to excellent. Southwest pasture condition fair to excellent, most good. Past two weeks some pasture received more rain than needed. Hendry County some stockponds filling from recent rains. Statewide cattle condition poor to excellent, most good.

GEORGIA:

Days suitable for fieldwork 6.2. Topsoil moisture 17%  very short, 39% short, 43% adequate, 1% surplus. Corn 7% very poor, 17% poor, 32% fair, 36% good, 8% excellent; 98% silked, 95% 2007, 97% avg.; 81% dough, 80% 2007, 84% avg.; 52% dent, 50% 2007, 52% avg.; 6% mature, 10% 2007, 12% avg. Soybeans 5% very poor, 17% poor, 48% fair, 28% good, 2% excellent; 96% emerged, 99% 2007, 99% avg.; 38% blooming, 25% 2007, 41% avg.; 8% setting pods, 6% 2007, 15% avg. Sorghum 3% very poor, 11% poor, 45% fair, 40% good, 1% excellent; 93% planted, 95% 2007, 97% avg. Apples 0% very poor, 1% poor, 19% fair, 23% good, 57% excellent. Hay 12% very poor, 26% poor, 41% fair, 20% good, 1% excellent. Pecans 0% very poor, 9% poor, 44% fair, 41% good, 6% excellent. Tobacco 0% very poor, 5% poor, 31% fair, 48% good, 16% excellent. Peaches 69% harvested, 82% 2007, 72% avg. Peanuts 93% blooming, 82% 2007, 93% avg. Tobacco 18% harvested, 22% 2007, 26% avg. Watermelons 90% harvested, 89% 2007, 89% avg. Scattered rain has helped improve corn, hay and soybean production, in some counties. Pasture and hayfield conditions improved slightly due to rains. A high number of Tobaccco budworms have been spotted in peanuts. Farmers are expecting more insects problems to arise in other crops. Drought conditions are still prevalent in areas of the state. Other activities included irrigating crops as needed and gaining control on crop insect damage.

Driving through middle Georgia, the irrigated crops looked a lot better than the non-irrigated crops. Lots of pigweed in the sorghum.

Corn: Corn at or beyond silking progressed 21 points during theweek, reaching 34 percent by week’s end. Progress was 38 points behind last year and 26 points behind the 5-year average. Development remained behind in the Corn Belt due to late planting and excessive moisture. In the northern and western Corn Belt, rains continued in Iowa, Kansas, Minnesota, Nebraska, and Wisconsin, with up to 5 inches falling in isolated areas. Silking progress advanced 30 points or more during the week in Illinois, Indiana, and Nebraska. Development was behind normal in all major corn-producing States, except Colorado, North Carolina, and Pennsylvania. Corn condition ratings improved 1 point during the week to 65 percent good to excellent.

Soybeans: Development advanced rapidly in most States, with 19 percent of the acreage at the national level reaching the blooming stage during the week. Blooming was occurring on 45 percent of the acreage by week’s end. Despite the improvement, acreage at or beyond the blooming stage remained 25 points behind the previous year’s pace and 20 points behind the 5-year average. Developmental delays were evident in all States except Michigan and North Carolina, where ideal weather conditions kept development 10 and 9 points ahead of normal, respectively. Only half of the soybean-producing States had 50 percent or more of their acreage blooming. Condition ratings of the soybean crop increased 2 points during the week to 61 percent good to excellent.

Winter Wheat: Acreage of winter wheat harvested reached 71 percent by week’s end, 7 points behind last year and 8 points behind the usual harvest pace. Major harvest activity was evident in Michigan, Nebraska, and Ohio, with 43 percent of the crop harvested during the week in Michigan and Nebraska. Producers in Ohio harvested 55 percent of their acreage in the last week. Harvest was complete in Arkansas, Kansas, North Carolina, Oklahoma, and Texas. Meanwhile in Idaho, Montana, South Dakota, and Washington, less than 10 percent of the acreage had been harvested. The most significant harvest delays across the country were in Colorado and South Dakota, where harvest was 38 and 54 points behind the average, respectively.

Cotton: Four-fifths of the cotton acreage was at or beyond squaring, 1 point behind last year and 5 points behind the 5-year average. Acreage setting bolls, at 42 percent, was 1 point ahead of last year but 2 points behind the 5-year average. Acreage developing to the squaring stage in Kansas was well ahead of the 5-year average development pace of 60 percent, with 95 percent at or beyond squaring. Elsewhere, squaring progress was within 12 points of normal, and was complete in Arkansas. Cotton acreage setting bolls was behind last year’s pace in many States, but was ahead in Oklahoma and Texas on the southern Plains; Alabama, Georgia, and South Carolina in the Southeast; and in Missouri. When compared with the 5-year average pace of boll setting, acreage in Arizona and Mississippi was delayed 11 points or more, while acreage in all other States remained within 8 points of normal. Condition ratings dropped 1 point during the week to 45 percent good to excellent.

Sorghum: Heading progressed only 5 points during the week to 33 percent headed, 12 points behind last year and 5 points behind the 5-year average. Heading was ahead of normal in Colorado, Louisiana, New Mexico, and Oklahoma. Elsewhere, heading was delayed. Significant delays were evident in Arkansas and South Dakota. Fifty-six percent of the crop had reached or exceeded coloring in Louisiana and Texas, and one-fifth of the acreage in Colorado was at or beyond coloring. The condition of sorghum was rated at 51 percent good to excellent, 1 point above the previous week’s rating.

Rice: With major progress limited to the lower Delta States and Missouri, rice heading moved only 5 points during the week to 17 percent headed. That number was 11 and 9 points behind last year and the average, respectively. Progress was behind last year and the usual pace in all States, and no rice in California had headed. However, progress was within 15 points of last year and within 12 points of normal in all States. Sixty-seven percent of the rice crop was rated in good to excellent condition, a decline of 5 points from last week’s rating.

Small Grains: Spring wheat heading was nearly complete with 95 percent headed, 2 points behind last year but 1 point ahead of the 5-year average. Heading progress was within 6 points of normal in all States except Idaho and Minnesota, where progress trailed the average by 14 and 8 points, respectively. Heading was complete in South Dakota and Washington. Condition ratings increased to 63 percent good to excellent, 2 points above a week earlier. Ninety-three percent of the barley acreage was heading, 5 points behind last year but equal to the 5-year average. Progress was behind last year and normal in Idaho, Minnesota, and Montana. Fifty-eight percent of the barley acreage was rated in good to excellent condition, compared with 67 percent last week, with declines noted in all States except Minnesota (a 4-point improvement). Oat acreage was 98 percent headed, 2 points behind last year but the same as the 5-year average. Harvest advanced only 2 points during the week to reach 12 percent, which was 11 and 7 points behind last year and normal, respectively. Harvest in Nebraska was significantly behind last year and the 5-year average, lagging 36 and 33 points, respectively. The crop was rated 62 percent good to excellent, an increase of 1 point from the previous week.

Other Crops: Seventy-four percent of the peanut crop was pegging, 10 points ahead of last year’s progress and the same as the 5-year average pace. In Georgia and Oklahoma, peanuts were pegging at a slower pace than normal. However, when compared with last year’s pegging pace, only Oklahoma was behind. Peanut condition, rated 61 percent good to excellent, improved 1 point from last week.

Source:  USDA