DON SAYS---,
Friday, September 3, 2010
Hello, folks:
Maybe YOUR harvest hasn’t started yet, but it’s going on around you. Some silage corn is gone---in fact we have a young lady working for us at the Nauvoo office whose husband just cut silage and guessed the corn content to be a---are you sitting down?---about 55 bushels to the acre!
On the other hand, across Illinois and further south combines are running here and there with most folks reporting disappointing yields---as much as 25% less than expected. However, everyone knows the earliest combined stuff is generally the worst, so perhaps it gets better?
The amazing thing is how quickly moisture content is coming down in the corn. Stuff that was testing 30+% a week or so ago is now in the low 20’s. Stalk quality is not good on a fair amount of corn around here, so combines will go as quickly as Labor Day comes and goes.
According to Illinois Ag Stats, the dry-down pattern in corn is very similar to what we experienced in 2007. If this continues to hold true, it would mean that we are looking at the possibility of over 60% of our corn being out of the fields by the end of September. Helping make this possible is a weather forecast from the National Oceanic and Atmospheric Administration (NOAA) calling for a warmer-than-normal September with ‘normal’ moisture.
Dan Griffiths, our resident millwright and hands-on Company Engineer, has been holding a lot of contractor’s feet to the fire so projects at both Ferris and Dallas City can be completed quickly. However, even though Ferris will be 100% ready to go early next week, Dallas City is still plagued by some equipment deliveries that are being held up. But everything that can be accomplished is being pushed hard by Dan, as he juggles decisions on what needs his attention next. He knows you’re about ready, so his usual jovial(?) demeanor is getting a bit more growly as “D-Day” approaches. “Doin’ the best we can,” he will tell you if you ask. Maybe his choice of words will be just a tad different than mine, but you get the picture---:o)
What do you have when funds (speculators) are interested in buying into commodities at a time when a crop size is in question AND demand for our products is high? You got it---HIGHER PRICES!
We’re heading right into the teeth of harvest, and look at what is happening with grain prices:
Spot Corn (Thursday’s close) $3.97 25 cents higher than last week
New Crop 3.97 16 higher
Dec Corn 4.26 16 higher
Open Navigation 2011 4.44 14 higher
New Crop 2011 4.16 10 higher
Spot Soybeans $9.83 same as last week
New Crop 9.74 down 4
Dec Beans 10.02 down 8
Open Nav 2011 10.03 down 1
New Crop 2011 9.57 down 2
New Crop Wheat 6.09 up 10
How long the fund buyers want to stay in commodities investing is a question that market analysts are pondering, as the overall dollar impact on grain prices can move considerably. These folks are playing with grain and other commodities simply because the world wants this stuff and are willing to pay for it; AND putting money into the stock market is like burying it in your back yard after you’ve told your neighbor what you’re doing---not a money-making proposition. Our export picture continues to be strong, adding even more logic to the ‘long’ position speculators are hanging on to in grains.
SOME AG-RELATED NEWS---,
NOTE---for the many of you who were asking earlier about what our storage and drying rates are going to be for this harvest year---they are posted on our web site home page under the bullet “2010 STORAGE AND DRYING RATES” you’ll find on the left-hand column. Any questions about these and other marketing issues can be directed to Dale or Jeff at Tel 217-755-4221.
Not much happening in Iowa as of this date in the way of harvesting---but in southern Illinois, Indiana and Missouri the combines are running. Lots of 150 bu per acre numbers being heard, with those local farmers declaring that these yields represent some 25%-35% less than was expected. However, corn moistures are in the 21%-22% range. Southern Missouri (Boonville) farmers are full-bore in 17% corn. Other related concerns are rumors of ear drop on some of the fast-drying corn as winds begin to blow.
The USDA has designated 55 Illinois counties as natural disaster areas, along with 8 southeast Iowa counties. The announcement makes way for financial help to farmers who have suffered significant production losses due to weather. Among those Illinois counties can be found Hancock, Brown, Schuyler, McDonough, Pike, Henderson, Henry and many more. In Iowa those 8 counties are Clinton, Dubuque, Lee, Muscatine, Des Moines, Jackson, Louisa, and Scott.
Speaking of DROUGHT---yes, that’s right---the National Drought Monitor showed expansion of drought in the Southern Plains, Mid-South and Eastern Corn Belt, as late-summer dryness has intensified. Defined as “abnormal dryness” in Illinois, Indiana, Michigan and Ohio, some 75% of topsoils in these regions are rated as “short” or “very short”. Same problem continues to exist in south-central, central and northeastern Texas, with some 70% of topsoils also falling into these same categories.
The Food and Agriculture Organization (FAO) says surging wheat prices drove international food prices up 5% last month to the biggest month-on-month increase since November, 2009. The reason? Russia and some satellite countries curtailing exports due to extreme drought conditions in that region of the planet. In fact Russia Prime Minister Vladimir Putin stated this week that Russia will consider lifting its grain export ban ONLY after the next year’s harvest has been reaped. Mr. Putin said that the ban was extended to “provide stability and predictable conditions for all market participants.” Adding fuel to this fire is the strong belief that Russia will be a net importer of wheat---perhaps quite a bit of wheat.
The bottom line of reports like this one, folks, is that MORE PEOPLE ARE OUT THERE, EATING. It’s a reality that our markets are trying to accurately plug into their daily supply/demand numbers, as well as attempting to make sense of the political ebbs and flows from all corners of the globe that also affect prices. Beyond all the rhetoric, however, is the knowledge that we must continue to raise more stuff to eat because there are more people eating. This is good news for the American farmer!
Boone, IA, is the site of the Farm Progress Show this year. And thousands of farmers showed up to see the sights AND show their support for atrazine, the mainstay herbicide most have used in their grain operations for decades.
Along with dozens of ag organizations across the Heartland, these folks have signed an online petition at www.agsense.org that will be sent to U.S. EPA Administrator Lisa Jackson, voicing concerns about her agency’s willy-nilly approach to yet another review of atrazine based on non-scientific pressures being applied by some environmental groups.
If you’re a user of atrazine and believe that EPA’s decisions on how to treat the use of atrazine show be based strictly on science and not emotion, check out the above wet site and add your support.
Ethanol production AND demand are in high gear and looking for more space to grow. June of this year saw some 854-thousand barrels of production per day---160 thousand barrels MORE than a year ago! Topping this is that DEMAND during this time was an all-time high of 857-thousand barrels, up from 721-thousand last year!
Can you imagine what demand would be like if we had ethanol in ALL areas of the U.S., from coast-to-coast? Don’t know whether you knew it or not, folks, but there are still large pockets both east and west that have NO---ZERO---ZIP---ZILCH---NADA ethanol blended gas stations. Amazing---how many years have we been doing this now? Talk about a NO ENERGY POLICY situation!
AND IN CONCLUSION---,
Remember a year or so back when I reported that some futurists were touting the use of corn cobs to become the replacement stuff for corn, for making ethanol? Well, it’s just possible those futurists might have been a tad optimistic.
Purdue University believes that farmers would need to get paid about $100 per ton in order to make corn cobs a viable product that you all might gather from the tail end of a combine. Remember the pictures of those special “cob wagons” that made all the news back then? Great big suckers that tucked neatly under the ‘other end’ of your combine so that when once filled, you would take it to a place in the field, replace it with an ‘empty’ and continue on while someone moved the loaded wagon to the ethanol plant.
OH---did I mention these wagons are MOTORIZED so they can separate out the yucky stuff coming out of your combine from the cobs? This ‘might’ push prices of cobs up a bit.
OH---did I mention it will take about a bazillion acres of cobs to run an ethanol plant on just cobs? Bottom line is that it would take a helluva lot more than just a couple of you deciding to go along with this program. In fact some of Purdue University’s research shows that if farmers were indeed paid somewhere around $100 a ton for cobs, then some 40% of local farmers would participate.
OH----did I mention that those cob wagons are predicted to cost about $28,000 for LEASING these special cob wagons regardless of the number of acres it would be used on?
One more OH---Purdue University also found that farmers ‘might’ be tempted to join this program if government subsidies were forthcoming. REALLY?
I’ve run out of OH’s, but I do have one more thought---maybe this pig won’t fly. Every once in a while we run into an idea that simply doesn’t fit the way things work. I’m guessing this is one of those. I’m strongly suggesting that the folks who are looking for that “just right” cellulosic product for making ethanol cheaper than we’re doing it with corn keep looking. Obviously I’ll report on what next comes down the pike!
Hey, thanks for checking in! Labor Day weekend is here, and it signals the end of summer and the beginning of harvest in our business. From all of us in our end of this process, folks, we wish you all the SAFEST harvest you’ve seen, and let the fruits of what comes to you be what they are. It’ll be different next year, so go with the flow and leave the worrying to worriers. And a BIG thanks for doing business with us!
Best Regards,
Don Griffiths
For all the Employees and families of
Colusa Elevator Co
Email: don@colusaelevator.com
