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Northwest Iowa Dairy Outlooks

A local discussion of current science and issues concerning dairying in northwest iowa

Monthly Archives: September 2010

U.S. farm production expenditures dropped nearly $20 billion in 2009 after a record-setting high in 2008.

“2008 was an abomination,” said Jonah Bowles, agricultural market analyst for Virginia Farm Bureau Federation. “It was a difficult year for farmers, so it’s good news that expenses dropped.”

According to a report released by the U.S. Department of Agriculture’s National Agricultural Statistics Service, this was the first major decline in farm expenses in nearly a quarter-century. Average production expenditures per farm fell
6.4 percent in 2009.

Falling gas prices were a major factor behind the overall decline, which led to decreases in the cost of fuel, fertilizer and agricultural chemicals. The report said farmers spent $12.4 billion on fuels in 2009, down 22.5 percent from the previous year.

The average U.S. farm operation spent $5,658 on fuel in 2009—$1,642 less than in 2008.

And consumer gas consumption has mirrored that of farmers.

Total fuel expenditures nationwide included $7.22 billion for diesel, down 26.8 percent from 2008; $2.43 billion for gasoline, down 19.3 percent; $1.95 billion for liquefied petroleum gas, down 3.9 percent; and $800 million for other fuels, down 27.3 percent.

In addition to fuel, other input costs for farmers dropped in 2009. The average cost of fertilizer, lime and soil additives dropped 10.7 percent; the average cost of farm services decreased 4.2 percent; and average feed costs decreased
4 percent.

“Farm expenditures are constantly in flux, so if you take 2008 out of the equation, farmers are not much better off today than they were before that year,” Bowles said. “The nature of farming is volatile, and we’re just lucky that farmers are willing to take the risks.”

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The Southwest Farm Press Daily reports during the last two months Trading Funds’ KCBT wheat contract positions have acquired nearly 50,000 long contracts. Since mid-June, the KCBT Nearby wheat contract price has increased from about $5 to just over $7. Trading Fund purchases of about 55,000 wheat contracts are a major reason for the higher prices.

In the September 2009 USDA/WASDE Supply and Demand report, 2009/10 wheat marketing year U.S. ending stocks were projected to be 743 million bushels. World wheat ending stocks were projected to be 6.9 billion bushels. The projected U.S. 2009/10 marketing year average wheat price was $5.10.

The August 2010 USDA/WASDE Supply and Demand report projected 2010/11 U.S. wheat marketing year ending stocks to be 952 million bushels and world ending stocks to be 6.4 billion bushels. The five-year average U.S. wheat ending stocks is 670 million bushels and the five-year average world wheat ending stocks is 5.8 billion bushels.

U.S. wheat ending stocks above 900 million bushels and world ending stocks above 6.0 billion bushels may not support $7 KCBT wheat futures contract prices and $6 Oklahoma and Texas cash prices.

Major wheat harvests that may impact wheat prices include Canada, Argentina, and Australia. Speculation is that Russia may be a net wheat importer.

Kim Anderson with the Southwest Farm Press Daily suggests that current ending stocks expectations imply that during June 2011, KCBT July 2011 wheat contract prices may be around $6. Texas and Oklahoma cash prices are expected to be about $4.80. In comparison during the month of September 2009, the KCBT July 2010 wheat contract price averaged $5.18. The forward contract basis for 2010 harvest delivered wheat was about a minus 80 cents and the forward contract price for 2010 harvest delivered wheat was $4.38.

With KCBT July 2011 wheat contract price over $7, and the forward contract basis about a minus $1.25, implies a June 2011 forward contract price of $6. With about a 200 million bushel increase in U.S. wheat ending stocks (Sept 2009 vs. September 2010), how can the market justify offering $1.40 more for wheat?

It looks to me that producers may want to consider forward contracting a percentage of their expected 2011 harvested wheat at the next market bump if they haven’t started already. However if the 2011 wheat production is significantly below average, $6 wheat could be cheap.

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Wichita Falls residents who participate in the City’s Wednesday Curbside Composting Program can receive a FREE load of compost at the Wichita Falls Organics Facility during the Sanitation Department’s Compost Giveaway, Saturday, October 2nd from 9 a.m. to 3 p.m. at the Wichita Falls Landfill on Wiley Road. The compost will be loaded for participants with a limit of one pickup truck or 4×8 trailer-load per person.

Customers must bring a tarp to cover their load and present their water bill showing the $3.00 recycling charge to receive the compost. Commercial dump trucks and trailers will not be loaded. Compost will not be sold to the public during the giveaway. Anyone wishing to purchase compost is encouraged to visit one of the City’s compost partners, which includes Sutherlands, The Stone Yard and the Wichita Valley Nursery. For more information, please contact the Sanitation Division at 761-7977

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Sesaco Sesame Coordinators will be holding a grower meeting for Wilbarger and surrounding counties on Thursday September 23rd, 2010 at noon at the Texas Agriculture Experiment station in Chillicothe. A free lunch will be provided followed by a field tour of local sesame. We will have guests speakers discussing agronomics, economics, harvesting, 2011 contracts, along with Crop Insurance options for 2011. To RSVP or for any questions contact Zack Coker at 806-781-5908 or show up at Noon on the 23rd.

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For those of you interested, today we have had several reports of a Brown Pelican seen at Lake Wichita across the street from the State Hospital.
Odds are the Brown Pelican was blown up here by the hurricane that just went past us the other day,  This species is most common along the Louisiana coast, but is considered threatened.
He is in the company of White Pelicans, but keeping to himself.
If you get a chance go out and look. 

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–Heavy rainfall associated with the remnants of Hermine will continue to move north across Texas today and tomorrow.  Additional rainfall amounts follow: •North TX / Central Oklahoma – Widespread 3”-5”, isolated 6” •Central TX – Widespread 2”-4”, isolated 6” amounts –There is a slight threat for tropical tornadoes across the North Central TX / South Central OK through this afternoon.

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With the growing season winding down, hay and forage supplies are a mixed bag in Texas, according to AgriLife Extension Service personnel.

Local producers indicate that they had good yield with wheat hay, but some hay tested low on protein. That carried into the grass hay produced locally. Producers had great yields early, but report that the nutrient value may not be what they are use to. Late season yields were low due to moisture and the stressed plants produced lower value hay.
In the Coastal Bend and South Plains regions, there’s plenty of hay to go around. Throughout the eastern and northern parts of the state, though, stocks are either short or critically low.

Aaron Low, Extension agent in Cherokee County, says hay production in his region was hit with a double whammy. An unusually wet, cool winter and early spring delayed summer grasses coming out of dormancy. A midsummer drought followed, along with an extended triple-digit heat wave, bringing hay production to a halt. “It’s pretty much the same story throughout East Texas,” Low says.

Galen Logan, AgriLife Extension agent in Camp County, offers a similar account. Although many producers in his area got a second cutting, the season started late and supplies are low.

Logan says growers might offset low supplies by planting winter pastures. But unless the area gets more rain, they’ll just be wasting seed in dry ground. “It’s bad. I don’t know what we’re going to do,” he says.

North of Dallas in Collin County, there is a shortage of high-quality grass hay, says county agent Rick Maxwell. “But a lot of producers are baling up cornstalks, so I imagine we’ll be okay,” he says.

Maxwell cautions that cornstalks are low on energy and protein compared to grass hay. Producers will have to feed more of it and add supplements. But he believes most livestock producers will get through the winter without having to buy hay.